Feeds:
Posts
Comments

Archive for the ‘Local government’ Category

Time for a confession. My left-wing friends are correct. I’m an idiot.

Why?

Because I’m an anti-tax libertarian, yet I keep writing favorably about a provision that will raise my taxes. I’m talking specifically about the provision, currently in both the House and Senate tax plans, to eliminate the deduction for state and local income taxes (and maybe also property taxes, though the House proposal will retain deductibility for the first $10,000).

I think this distortion in the tax code is very bad policy and I hope the loophole is entirely eliminated (including the property tax deduction).

But as I look at all the provisions in both bills and speculate about the contours of a final agreement, it’s highly likely that the net result will be a tax hike on one of my favorite people – me!

Sigh. I’ve joked in the past that “it ain’t easy being libertarian,” but it will definitely hurt to put my money where my mouth is (and it reminded me why GOPers should have made tax reform a tax cut by including some spending restraint).

That being said, let’s remind ourselves why the deduction is a bad idea.

Citing the self-destructive example of a recent tax hike in Illinois, Andrew Wilford of the National Taxpayers Union points out that the deduction enables and encourages state and local politicians to impose higher taxes.

…eliminating SALT would…remove this incentive for local governments to overtax its citizens. … this incentive to hike taxes can prove significant enough to drive state policy. In Illinois, residents were forced to bear the burden of a 32 percent hike on their taxes because of the state’s unwillingness to tackle its growing pension funding problem. Tax increases did not solve this underlying spending problem, but it was politically expedient— in part because state lawmakers knew that the federal government would pick up part of the tab.

It also violates my ethical-bleeding-heart rule, as Brian Riedl explains in the New York Post.

Wealthy families are four times more likely to utilize SALT than other families. Only 24 million of 125 million tax filers earning under $100,000 take the deduction, typically lowering their taxes by $1,000. By contrast, 20 million of the 25 million filers earning over $100,000 take the deduction… In fact, half the savings accrue to the richest 5 percent of taxpayers — and in New York, half of the SALT savings go to families making over $500,000.

But I don’t want today’s column to fixate on the policy argument.

Instead, let’s look at whether voting to get rid of the deduction is electoral suicide for Republicans from high-tax states such as New York and California.

Looking at the situation in the Golden State, that’s certainly the argument from the folks at Vox.

Just three of the 14 California House Republicans went against leadership… Republicans in California clearly ran on cutting taxes — but this tax bill could raise taxes on their constituents. …it also sets up their constituents for more risk. Cutting the state and local tax deduction puts undue burden on the state’s budget… “At this point it looks like California Republicans are eager to lose their seats in 2018,” Tyler Law, a spokesperson for the Democratic Congressional Campaign Committee, said.

Though Kimberly Strassel of the Wall Street Journal has a more upbeat (if you’re a Republican) assessment. She starts by explaining how California GOPers were targeted.

The House GOP passed its tax-reform bill on Thursday, and special medals of valor go to the 11 of 14 California Republicans who voted in support. The lobbyist brigade had joined with Democrats to target the Golden State delegation, seeing it as their best shot at peeling off enough Republicans to kill the bill. The assault was brutal, dishonest and all-out. …Gov. Jerry Brown unleashed on state Republicans, calling them “sheep” for supporting an end to most state and local tax, or SALT, deductions, and sending them letters deploring the tax hit on residents of high-tax California. Minority Leader Nancy Pelosi accused them of “looting” the state. Her Senate counterpart, New York’s Chuck Schumer, warned of “political fallout” that would be “catastrophic.”

They fought back by arguing that the Democrats are the high-tax party.

What proved most effective, however, was the state Republicans’ willingness to go on offense and throw SALT in Gov. Brown’s face. California has the heaviest tax burden in the country and only just implemented a punishing new 12-cent-a-gallon-increase in its gasoline tax. Mr. McCarthy used the occasion to release a video pouncing on that hike and noting that “if Gov. Brown is worried about the tax burden, let’s make cutting [taxes] a federal and state project.” Other state Republicans ran with that message, even more bluntly. “Why punish the rest of the nation because California is stupid?” asked Rep. Duncan Hunter in a local TV interview. Even Rep. Darrell Issa, who voted “no” on Thursday (along with Dana Rohrabacher and Tom McClintock ), zapped a letter back to Gov. Brown, noting that if SALT had become a big issue, it was “a direct result of the tremendous weight that your misguided policies have put on California taxpayers.”

At the risk of sounding like a mealy-mouthed Washington apparatchik, I’m going to agree with both Vox and the Wall Street Journal.

The bottom line is that voting for tax reform probably does endanger GOP lawmakers from high-tax states, which is the message that the leftists at Vox are peddling in hopes of preserving the awful status quo.

But I want to close with the observation that enacting tax reform will improve the electoral outlook for blue-state Republicans even if it’s not necessarily good for current GOP incumbents.

That’s because voters in high-tax states will be much more likely to resist bad state tax policy if there’s no federal deduction to mitigate the burden.

And that means politicians in blue states will be under even greater pressure to lower tax rates rather than increase tax rates. If they don’t do the right thing, more and more taxpayers will escape, as the Wall Street Journal opines.

The liberal tax model is to fleece the rich to finance spending on entitlements and government programs that invariably grow faster than the economy and revenues. IRS data on tax migration show this model is now breaking down in progressive states as the affluent run for cover and the middle class is left paying the bills. Between 2012 and 2015 (the most recent data), a net $8.5 billion in adjusted gross income left New Jersey while $6.2 billion poured out of Connecticut—4% of the latter state’s total income. Illinois lost $13.6 billion. During that period, Florida with no income tax gained $39.3 billion in AGI. …As these state laboratories of Democratic governance show, dunning the rich ultimately hurts people of all incomes by repressing the growth needed to create jobs, boost wages and raise government revenues that fund public services. If the Republican House and Senate tax-reform bills follow through with eliminating all or part of the state and local tax deduction, progressive states will have an even harder time hiding the damage. They should be the next candidates for reform.

Indeed, the mere prospect of tax reform already is causing statists to rethink their approach.

Even in New Jersey.

The Republican tax reform…already it’s having a political impact in at least one high-tax, ill-governed state. Democrat Steve Sweeney, president of the New Jersey Senate, said last week that the GOP decision to eliminate the state and local tax deduction could throw a new tax increase on millionaires into doubt. …Excellent news. Making politicians in Trenton, Albany, Sacramento and Springfield nervous about raising taxes is one desirable outcome of tax reform. These politicians have been passing the burden of their tax-and-spend policies onto taxpayers in other states via the state and local deduction. If that goes away, Democrats will have to rethink their policies lest they drive from their states the affluent taxpayers who finance most of state government. …Here’s a radical idea: Cut taxes and make New Jersey more desirable for people to work and invest. Tax reform in Washington could also spur reform in the states.

If tax reform happens and the deduction for state and local taxes is eliminated, the left’s class-warfare agenda will become much less appealing – and much harder to implement.

And in that kind of environment, it should be much easier for Republican politicians to win votes.

For all intents and purposes, tax reform for Republicans could be like Obamacare for Democrats.

Allow me to explain. When Obamacare was enacted, I worried that it might be a long-term political victory for the left even though it was very painful for Democrats in the short run. Simply stated, voters in the future (and we’re now entering that future) would become more reluctant to vote for Republicans once they were hooked on the heroin of government dependency.

Federal tax reform would have a similar impact, except the GOP will be the long-run winners. Voters in high-tax states will be more reluctant to vote for Democrats once a $100 tax hike (for instance) actually costs $100. Which is why genuine tax reform is a win-win situation.

Read Full Post »

I don’t like the income tax that’s been imposed by our overlords in Washington. Indeed, I’ve speculated whether October 3 is the worst day of the year because that’s the date when the Revenue Act of 1913 was signed into law.

I don’t like state income taxes, either.

And, as discussed in this interview about Seattle from last week, I’m also not a fan of local income taxes.

From an economic perspective, I think a local income tax would be suicidally foolish for Seattle. Simply stated, this levy will drive some well-heeled people to live and work outside the city’s borders. And when revenues fall short of projections, Seattle politicians likely will compensate by increasing the tax rate and also extending the tax so it is imposed on those with more modest incomes. And that will drive more people out of the city, which will lead to an even higher rate that hits even more people.

Lather, rinse, repeat.

Though I pointed out that this grim outcome may be averted if the courts rule that Seattle doesn’t have the legal authority to impose an income tax.

But I also explained in the discussion that a genuine belief in federalism means that you should support the right of state and local governments to impose bad policy. I criticize states such as California and Illinois when they expand the burden of government. And I criticize local entities such as Hartford, Connecticut, and Fairfax County, Virginia, when they expand the burden of government.

But I don’t think that Washington should seek to prohibit bad policy. If some sub-national governments want to torment their citizens with excessive government, so be it.

There are limits, however, to this bad version of federalism. State and local governments should not be allowed to impose laws outside their borders. That’s why I’m opposed to the so-called Marketplace Fairness Act. And they shouldn’t seek federal handouts to subsidize bad policy, such as John Kasich’s whining for more Medicaid funding.

Moreover, a state or local government can’t trample basic constitutional freedoms, for instance. If Seattle goes overboard with its anti-gun policies, federal courts presumably (hopefully!) would strike down those infringements against the 2nd Amendment. Likewise, the same thing also would (should) happen if the local government tried to hinder free speech. Or discriminate on the basis on race.

By the way, it’s worth pointing out that these are all examples of the Constitution’s anti-majoritarianism (which helps to explain why the attempted smear of James Buchanan was so misguided).

The bottom line is that I generally support the rights of state and local governments to impose bad policy, so long as they respect constitutional freedoms, don’t impose extra-territorial laws, and don’t ask for handouts.

And I closed the above interview by saying it sometimes helps to have bad examples so the rest of the nation knows what to avoid. Greece and France play that role for the industrialized world. Venezuela stands alone as a symbol of failed statism in developing world. Places like Connecticut and New Jersey are poster children for failed state policy. And now Seattle can join Detroit as a case study of what not to do at the local level.

Read Full Post »

Since I’m a fiscal wonk, it’s sometimes tempting to overstate the importance of good tax policy. So I’m always reminding myself that all sorts of other factors matter for a jurisdiction’s competitiveness and success, including regulation and government effectiveness (and, for national governments, policies such as trade and monetary policy).

That being said, taxes are very important. In some cases, you could almost say tax policy is suicidally important.

Here’s some of what the Wall Street Journal reported earlier this week.

Hartford, Connecticut…is edging closer to joining a small club of American municipalities: those that have sought bankruptcy protection. …The city must pay nearly $180 million on debt service, health care, pensions and other fixed costs in the coming fiscal year beginning July 1. That is more than half of the city’s budget, excluding education.

This sounds like a run-of-the-mill story about a city (like Detroit) that has spent itself into fiscal trouble, mostly because of a bloated and over-compensated bureaucracy.

But tax policy is the story behind the story. Here’s the headline that caught my attention.

As I’ve written before, this is the “Fox Butterfield” version of financial reporting (he’s the New York Times reporter who was widely mocked for repeatedly expressing puzzlement that crime rates fell when crooks were locked up).

Simply stated, it would be more accurate to state (just as it was in Detroit) that the city is in trouble “because of” high property taxes, not “despite” those onerous levies.

Imagine being a homeowner or business with this type of burden.

Since 2000, Hartford has increased its property-tax, or millage, rate seven times. The rate is now more than 50% higher than it was in 1998. At the current level, a Hartford resident who owns a home with an assessed value of $300,000 currently pays an annual tax bill of $22,287, at rate of 7.43%. A West Hartford homeowner with a similar house pays $11,853 at a rate of 3.95%.

Wow, you get to pay twice as much tax on your home simply for the “privilege” of subsidizing an inefficient and incompetent city bureaucracy (not to mention the problem of excessive state taxes).

No wonder some major taxpayers are escaping, leaving the city (and state) even more vulnerable.

…the impending departure of one of its biggest employers, Aetna Inc. …Aetna and the other four biggest taxpayers in the city contribute nearly one-fifth of the city’s $280 million of property-tax revenue. Property-tax receipts make up nearly half of the city’s general-fund revenues.

To make matters worse, the city exempts a lot of property owners, which is one of the reasons for higher tax burdens on those that don’t get favored treatment.

Half of the city’s properties are excluded from paying taxes because they are government entities, hospitals and universities. …In Baltimore, about 32% of the property is tax exempt, and in Philadelphia it’s 27%.

Excuse me if I don’t shed a tear of sympathy for Hartford’s politicians. The city is in dire straits because of a perverse combination of excessive taxation and special tax favors. Combined, of course, with lavish remuneration for a gilded bureaucracy.

That’s the worst of all worlds. It’s Detroit all over again. Or you could call it the local-government version of Illinois.

Needless to say, I don’t want my tax dollars involved in any sort of bailout.

P.S. Though it would be amusing if Hartford politicians thought this bailout application form was real rather than satire.

Read Full Post »

The federal income tax is corrosive and destructive. It’s almost as if a group of malicious people decided to deliberately design a system that imposes maximum damage while also allowing the most corruption.

The economic damage is not only the result of high tax rates and pervasive double taxation, but also because of loopholes that exist to bribe people into making economically unwise decisions.

These include itemized deductions for mortgages and charitable contributions, as well as the fringe benefits exclusion and the exemption for municipal bond interest. And there are many other corrupt favors sprinkled through a metastasizing tax code.

But there’s a strong case to be made that the worst loophole is the deduction for state and local taxes. Why? For the simple reason that it encourages, enables, and subsidizes bad policy.

Here’s how it works. State and local lawmakers can increase income taxes or property taxes and be partially insulated from political blowback because their taxpayers can deduct those taxes on their federal return.

And it’s a back-door way of giving a special break to upper-income taxpayers because the deduction is more valuable to people in higher tax brackets.

Let’s look at an example that’s currently in the news. Democrats in the Illinois state legislature want a big increase in the personal income tax. If they succeed and boost taxes by an average of $1000, high-income taxpayers who take advantage of the deduction may only suffer a loss of as little as $600 since their federal tax bill may fall by almost $400.

For politicians, this is an ideal racket. They can promise various interest groups $1000 of goodies while reducing take-home pay by a lesser amount.

Let’s review some recent commentary on this topic.

The Wall Street Journal opined on the issue last weekend.

Chuck Schumer aspires to raise taxes on every rich person in America, save one protected class: coastal progressives. …Like many other Democrats, he’s apoplectic about a plan to end the state and local tax deduction. …One goal of tax reform is to reduce unproductive tax loopholes, and ending the state and local deduction would generate revenue to finance lower rates: The deduction is worth about $100 billion a year… About 88% of the benefits in 2014 flowed to taxpayers who earn more than $100,000, while 1% went to those who earn less than $50,000. California alone reaps nearly 20% of the benefit…and a mere six states get more than half. …The folks underwriting this windfall are in Alaska, South Dakota, Wyoming and other places without a state income tax. …Eliminating the deduction would be a powerful incentive for Governors to cut state taxes on residents who are suddenly exposed to their full liability. …killing the state and local deduction would pay a double dividend: The first is creating a more equitable tax code with a broader base and lower rates. The second is spurring reform in states that are long overdue for a better tax climate.

Writing earlier this year for National Review, Kevin Williamson was characteristically blunt.

It’s time for…blue-state…tax increases that would fall most heavily on upper-income Americans in high-tax progressive states such as California and New York. …eliminate the deduction for state income taxes, a provision that takes some of the sting out of living in a high-tax jurisdiction such as New York City (which has both state and local income taxes) or California, home to the nation’s highest state-tax burden. Do not hold your breath waiting for the inequality warriors to congratulate Republicans for proposing these significant tax increases on the rich. …allowing for the deduction of state taxes against federal tax liabilities creates a subsidy and an incentive for higher state taxes. California in essence is able to capture money that would be federal revenue and use it for its own ends, an option that is not practically available to low-tax (and no-income-tax) states such as Nevada and Florida. It makes sense to allow the states to compete on taxes and services, but the federal tax code biases that competition in favor of high-tax jurisdictions.

And Bob McManus adds his two cents in an article for the Manhattan Institute’s City Journal.

Voters in all heavy-tax, high-spending states have no one to blame for their situation save themselves. At a minimum, it seems clear that deductibility—by softening the impact of federal taxation—encourages outsize state and local spending. States that take advantage of deductibility—mostly in the Northeast and on the West Coast—are in effect subsidized by states that have kept tighter control on their spending. …New York’s top-of-the-charts spending puts the state at the pinnacle…with New Yorkers paying a national high of 12.7 percent of income in state and local levies. Local property taxes in New York are astronomical and not coming down any time soon. …deductibility has powerful friends—among them the public-employee unions… New York and the nation would benefit if deductibility was jettisoned. …end the incentive for the tax-and-spend practices that have been so economically corrosive to big-spending Blue states.

Let’s close with the should-be-obvious point that the goal isn’t to repeal the state and local tax deduction in order to give politicians in Washington more money to spend. Instead, every penny of that revenue should be used to finance pro-growth tax reforms.

That creates a win-win situation of better tax policy in Washington, while also creating pressure for better tax policy at the state and local level.

For what it’s worth, both Trump and House Republicans are proposing to get rid of the deduction.

P.S. I mentioned at the start of this column that it would not be unreasonable to think that the tax code was deliberately designed to maximize economic damage. But even a curmudgeon like me doesn’t think that’s actually the case. Instead, our awful tax system is the result of 104 years of “public choice.”

P.P.S. Itemized deductions and other loopholes create distortions by allowing people to understate their income if they engage in approved behaviors. There are also provisions of the tax code – such as depreciation and worldwide taxation – that force taxpayers to overstate their income.

Read Full Post »

While most of my disdain is reserved for the federal government in Washington, I periodically share horror stories about foreign governments and state governments.

And today we’re going to add to our collection of bone-headed policies by local governments.

In some past cases, the examples captured systemic flaws. In other cases, we looked at specific bad examples. Today, we have an interesting mix.

We’ll start with an example of bad policy that is easy to mock. It focuses on the predatory interventions by a town, as illustrated by this story from Alabama.

Teens in Gardendale are in for a rude awakening this summer when it comes to cutting grass. According to the city’s ordinance, you must have a business license. Teenagers have been threatened by officials…to show their city issued license before cutting a person’s lawn for extra summer cash. Cutting grass is often one of the first jobs many have in the summer. But a business license in Gardendale costs $110. And for a job, just for a couple of months, that can be a bit extreme.

What’s really disappointing about this story is that adults are ratting out the teenagers.

I can understand that they’re irked that they pay the license fee while the kids don’t, but that’s still wrong.

“One of the men that cuts several yards made a remark to one of our neighbors, ‘that if he saw her cutting grass again that he was going to call Gardendale because she didn’t have a business license,” said Campbell. …Mayor Stan Hogeland said when operating a business for pay within the city limits, you must have a business license.

Hey, Mr. Mayor, I have a better idea. Get rid of licensing rules and give freedom a try.

If your residents want to freely contract with each other, let them. Whether they’re kids or adults.

Makes me wonder if Gardendale is one of those places that puts the boot of government on the necks of kids who set up – gasp! – unlicensed lemonade stands?

If so, I imagine Daniela Earnest and Julie Murphy can offer the mayor some useful advice.

Now let’s shift to an example of local government abuse that is more troubling. And apparently more systemic.

A column in the Washington Post reveals that local governments try to make families pay if their kids wind up in the legal system, even if they’re ultimately declared not guilty of any offense.

In dozens of one-on-one meetings every week, a lawyer retained by the city of Philadelphia summons parents whose children have just been jailed, pulls out his calculator and hands them more bad news: a bill for their kids’ incarceration. Even if a child is later proved innocent, the parents still must pay a nightly rate for the detention. Bills run up to $1,000 a month… The lawyer, Steven Kaplan…is paid up to $316,000 a year in salary and bonuses, more than any city employee, including the mayor.

I haven’t given any thought to whether families should cough up money if kids are found guilty and then incarcerated.

But I find it to be outrageous that bills are sent to families when the kids are found to be not guilty.

And let’s be honest. Such a policy is not about criminal justice. It’s about figuring out new ways of pillaging people to finance bureaucracy.

To add insult to injury, most of the families are poor, so it’s very difficult to collect revenue. Indeed, very little money is collected after paying the lawyer.

Because these parents are so often from poor communities, even the most aggressive efforts to bill them seldom bring in meaningful revenue. Philadelphia netted $551,261 from parents of delinquent children in fiscal 2016.

And when you look at the consequences for poor families, it’s hard to think this is a good policy. Especially if the kid isn’t convicted of any crime!

When parents fail to pay on time, the state can send collection agencies after them, tack on interest, garnish 50 percent of their wages, seize their bank accounts, intercept their tax refunds, suspend their driver’s licenses or charge them with contempt of court.

Here’s an example from the west coast.

When Mariana Cuevas’s son was released from a California jail, after being locked up in a juvenile hall for more than 300 days for a homicide he did not commit, the boy’s public defender, Jeffrey Landau, thought his work was done. The case had been dismissed; his client was free. But at a celebratory dinner afterward, Cuevas, a Bay Area home cleaner, pulled out a plastic bag full of bills and showed Landau that the state had tried to collect nearly $10,000 for her child’s imprisonment. …In fiscal 2014-2015, Alameda County, which contains Oakland, spent $250,938 collecting $419,830 from parents. An internal county report called that “little financial gain.”

This is astounding. Trying to pillage a poor family for $10,000 when the kid didn’t commit the crime. If you care about decency and justice, this may even be worse than civil asset forfeiture.

Let’s close with another example of easy-to-mock local government.

The New York Post reports that the city is largely incapable of getting rid of incompetent teachers. So they’re paid to sit in a room and do nothing.

In one of the “reassignment centers,” 16 exiled educators sit in a city Department of Education building in Long Island City, Queens, including a dozen packed into one room — where they do virtually no work. They listen to music, do crossword puzzles, chat — and as this exclusive Post photo reveals, doze on the taxpayer’s dime. The rules forbid beach chairs and air mattresses, but not nap time. The teacher sprawled on the floor, pulled a wool hat over his eyes to shut out the fluorescent lights and slept. Others prop up two chairs to recline or just lay their heads on the table. …the city denies the existence of the derided holding pens. “There are no more rubber rooms,” DOE officials told The Post last week, saying reassigned staffers are given “administrative duties.” …The DOE refused to say how many removed teachers and other tenured staffers remain in limbo, but sources estimate 200 to 400 get paid while awaiting disciplinary hearings. Their salaries total $15 million to $20 million a year. …They mainly just kill time to get through a six-hour, 20-minute day. “I’m so exhausted from being in this place doing nothing,” one said. Several teachers on the payroll have been benched for up to five years due to a stunning bureaucratic breakdown.

Yes, this is bureaucratic breakdown.

But if you really want to understand the story behind the story, the real problem is that the unions representing government employee unions give a lot of money to politicians. Those politicians then turn around and “negotiate” contracts that provide excessive pay to regular bureaucrats and absurd protections to bad bureaucrats.

In this case, bad teachers are removed from the classroom, but it’s very difficult to fire them. So they get paid to do nothing.

P.S. Of course, that reminds me of the standard joke that most bureaucrats get paid to do nothing. There’s even a video version of that joke.

Read Full Post »

I wrote just yesterday that it’s tough to be a libertarian because “public choice” means never-ending pressure for bigger government.

But the good part of working in public policy as a libertarian is that I never lack for topics. Simply stated, governments do so many foolish things (not just in Washington, but also overseas, as well as state governments and local governments) that I have a target-rich environment for analysis and commentary.

But sometimes there’s a personal motivation. I’m a resident of Fairfax County in Virginia, and my profligate local government levies a very onerous property tax on my house.

And what do I get in exchange? The lion’s share of the county budget goes to government schools, but that doesn’t benefit me since I found those institutions inadequate and put my kids in private schools.

The other major line item in the budget is police and fire protection. I’ve been fortunate to never need those services, but I recognize that they have value. But this still leaves the question of whether I’m overpaying or underpaying for the theoretical benefits I’m receiving.

If this story from the Washington Post is any indication, it’s the former rather than the latter.

One Fairfax County firefighter tripled his salary to more than $270,000 with overtime pay. A county police officer took home $175,000… A fire captain pocketed $163,000 in additional compensation, more than many of his colleagues make in a year. The eye-popping figures have prompted Fairfax County supervisors to review overtime pay and other compensation for employees as the county faces a budget squeeze. …more than 1,700 county employees who are not department heads earned more than $100,000 in 2016, according to county figures.

Needless to say, the unions representing these bureaucrats pushed back.

Public safety unions and officials strongly pushed back against the idea that overtime pay might be excessive, saying that some employees must work extra hours because of staffing shortages… Some were also rankled because many public safety employees have endured pay freezes in recent years and earn far less than many residents in one of the nation’s most expensive counties. “They are complaining about guys who are working overtime trying to make the median income for the jurisdiction,” said Joseph Woloszyn, president of the Fairfax County chapter of the Police Benevolent Association.

It’s certainly true that Fairfax is a rich county, driven in large part by the overpaid federal workforce, along with the various contractors, lobbyists, cronyists, and other insiders who have their snouts comfortably buried in the federal trough.

Given how all this unearned wealth distorts the local labor market, I have no problem with the idea that cops and firefighters presumably need to be paid more than the national average. After all, employers should pay what’s necessary to attract a sufficient number of qualified individuals to fill appropriate jobs.

This doesn’t mean, however, that 1,700 bureaucrats should be getting six-figure salaries. Or that police and fire departments are the right size.

Though I admit that this excerpt makes me wonder.

…the Fairfax County fire chief…said his department has been dealing with a chronic shortage of firefighters. Currently, he said, the department has 56 vacancies, forcing some to work shifts as long as 48 hours or be recalled to work each day.

In any event, I should count my lucky stars that I don’t live in Orange County, California, where the average firefighter is obscenely overpaid.

The bottom line is that firefighters and cops do real jobs and those jobs involve some danger. But that doesn’t mean they should be over-compensated.

P.S. And if you want good nationwide data on firefighters, here are some jaw-dropping numbers.

…vehicle fires declined 64 percent from 1980 to 2013. Building fires fell 54 percent during that time. When they break out, sprinkler systems almost always extinguish the flames before firefighters can turn on a hose. …as the number of fires has dropped, the ranks of firefighters have continued to grow — significantly. There are half as many fires as there were 30 years ago, but about 50 percent more people are paid to fight them. …Firefighters responded to 487,500 structure fires across the United States in 2013, which means each of the nation’s 30,000 fire departments saw just one every 22 days, on average. And yet, taxpayers are paying more people to staff these departments 24-7. As a result, the amount of money shelled out for local fire services more than doubled from 1987 to 2011, to $44.8 billion, accounting for inflation.

For what it’s worth, I very much suspect that the numbers in Fairfax County would match the nationwide data.

So it’s likely that firefighters (and cops) in Fairfax are overpaid. But it’s even more likely that there are too many of them given the possible dangers.

P.P.S. If you think libertarians are doctrinaire and impractical about firefighting, you’ll like this picture.

P.P.P.S. If you think firefighters are overpaid, you’ll like this video.

P.P.P.P.S. I don’t want to neglect police officers, so here’s some humor about a compassionate Pennsylvania cop and a Texas police exam. And here’s what to do if you need cops in a hurry.

Read Full Post »

What word best describes the actions of government? Would it be greed? How about thuggery? Or cronyism?

Writing for Reason, Eric Boehm has a story showing that “all of the above” may be the right answer.

At first it seems like a story about government greed.

When Mats Järlström’s wife got snagged by one of Oregon’s red light cameras in 2013, he challenged the ticket by questioning the timing of the yellow lights at intersections where cameras had been installed. Since then, his research into red light cameras has earned him attention in local and national media—in 2014, he presented his evidence on an episode of “60 Minutes”…on how too-short yellow lights were making money for the state by putting the public’s safety at risk.

Three cheers for Mr. Järlström. Just like Jay Beeber, he’s fighting against local governments that put lives at risk by using red-light cameras as a revenue-raising scam.

But then it became a story about government thuggery.

…the Oregon State Board of Examiners for Engineering and Land Surveying…threatened him. Citing state laws that make it illegal to practice engineering without a license, the board told Järlström that even calling himself an “electronics engineer” and the use of the phrase “I am an engineer” in his letter were enough to “create violations.” Apparently the threats weren’t enough, because the board follow-up in January of this year by officially fining Järlström $500 for the supposed crime of “practicing engineering without being registered.”

Gasp, imagine the horror of having unregistered engineers roaming the state! Though one imagines that the government’s real goal is to punish Järlström for threatening its red-light revenue racket.

But if you continue reading the story, it’s also about cronyism. The Board apparently wants to stifle competition, even if it means trying to prevent people from making true statements.

Järlström is…arguing that it’s unconstitutional to prevent someone from doing math without the government’s permission. …The notion that it’s somehow illegal for Järlström to call himself an engineer is absurd. He has a degree in electrical engineering from Sweden… it’s not the first time the Oregon State Board of Examiners for Engineering and Land Surveying has been overly aggressive…the state board investigated Portland City Commissioner Dan Saltzman in 2014 for publishing a campaign pamphlet that mentioned Saltzman’s background as an “environmental engineer.” Saltzman has a bachelor’s degree in environmental and civil engineering from Cornell University, a master’s degree from MIT’s School of Civil Engineering, and is a membership of the American Society of Civil Engineers

In other words, this is yet another example of how politicians and special interests use “occupational licensing” as a scam.

The politicians get to impose “fees” in exchange for letting people practice a profession.

And the interest groups get to impose barriers that limit competition.

A win-win situation, at least if you’re not a taxpayer or consumer.

Or a poor person who wants to get a job.

Some of the examples of occupational licensing would be funny if it wasn’t for the fact that people are being denied the right to engage in voluntary exchange.

Such as barriers against people who want to help deaf people communicate.

If you want to help a deaf person communicate in Wisconsin, you’ll have to get permission from the state government first. Wisconsin is one of a handful of states to require a license for sign language interpreters, and the state also issues licenses for interior designers, bartenders, and dieticians despite no clear evidence that any of those professions constitute a risk to public health in other states without similar licensing rules. …It’s hard to imagine any health and safety benefits to mandatory licensing for sign language interpreters, which is one of eight licenses highlighted in a new report from Wisconsin Institute of Law and Liberty, a conservative group. …Since 1996, the number of licensed professions in the Badger State has grown from 90 to 166—an increase of 84 percent, according to the report. Licensing cost Wisconsin more than 30,000 jobs over the last 20 years and adds an additional $1.9 billion annually in consumer costs.

Or restricting the economic liberty of dog walkers.

…according to the Colorado government, people who watch pets for money are breaking the law unless if they can get licensed as a commercial kennel—a requirement that is costly and unrealistic for people working out of their homes, often as a side job. This is not simply a case of an outdated law failing to accommodate modern technology. There are more nefarious motives—those of special interests who want to protect their profits by keeping out new competition. …it is time to add “Big Kennel” to the list of special interests that support ridiculous occupational licensing schemes.

Or trying to deny rights, as in the case of horse masseuses.

…an Arizona state licensing board finally backed down from an expensive, unnecessary mandate that nearly forced three women to give up their careers as animal masseuses. …the Arizona State Veterinary Medical Examining Board said it would no longer require animal massage practitioners, who provide therapeutic services to dogs, horses, and other animals, to obtain a veterinary license. Obtaining that license requires years of post-graduate schooling, which can cost as much as $250,000. “All I want is the freedom to do my job, and I have that now,” Celeste Kelly, one of three plaintiffs in the lawsuit, said in a statement. …the state board tried to driver her out of business by threatening her with fines and jail time if she didn’t get a veterinary license.

The good news is that there’s a growing campaign to get rid of these disgusting restrictions of voluntary exchange.

The acting head of the Federal Trade Commission is getting involved. On the right side of the issue!

Maureen K. Ohlhausen, the new acting chair of the Federal Trade Commission, thinks it’s high time that the FTC start giving more than lip service to its traditional mandate of fostering economic liberty. And the first item in her crosshairs is the burgeoning growth in occupational licenses. Over the past several decades, licensing requirements have multiplied like rabbits, she noted. Only 5 percent of the workforce needed a license in 1950, but somewhere between one-quarter and one-third of all American workers need one today. …depending on where you live, you might need a license to be an auctioneer, interior designer, makeup artist, hair braider, potato shipper, massage therapist or manicurist. “The health and safety arguments about why these occupations need to be licensed range from dubious to ridiculous,” Ohlhausen said. “I challenge anyone to explain why the state has a legitimate interest in protecting the public from rogue interior designers carpet-bombing living rooms with ugly throw pillows.”

Hooray for Ms. Ohlhausen. She’s directing the FTC to do something productive, which is a nice change of pace for a bureaucracy that has been infamous in past years for absurd enforcement of counterproductive antitrust laws.

A column in the Wall Street Journal highlights Mississippi’s reforms.

State lawmakers in Mississippi are taking the need for reform to heart. Two weeks ago Gov. Phil Bryant signed into law H.B. 1425, which will significantly rein in licensing boards. …H.B. 1425 explicitly endorses competition and says that the state’s policy is to “use the least restrictive regulation necessary to protect consumers from present, significant and substantiated harms.” Under the law, the governor, the secretary of state, and the attorney general must review and approve all new regulations from professional licensing boards to ensure compliance with the new legal standard. This should be a model for other states. …Mississippi’s law…covers all licensing boards controlled by industry participants, spells out a pro-competition test, and requires new rules to be approved by elected officials accountable to voters. Mississippi has smartly targeted the core problem: Anticompetitive regulations harm the economy, slow job growth, and raise consumer prices.

Here’s some of the national data in the WSJ column.

Keep in mind, as you read these numbers, that poor people disproportionately suffer as a result of these regulatory barriers to work.

In the 1950s only about 1 in 20 American workers needed a license, but now roughly 1 in 4 do. This puts a real burden on the economy. A 2012 study by the Institute for Justice examined 102 low-income and middle-income occupations. The average license cost $209 and required nine months of training and one state exam. …Even the Obama administration saw the problem. A 2015 report from the White House said that licensing can “reduce employment opportunities and lower wages for excluded workers.” In 2011 three academic economists estimated that these barriers have result in 2.85 million fewer jobs nationwide, while costing consumers $203 billion a year thanks to decreased competition.

Professor Tyler Cowen explains in Time that licensing laws explain in part the worrisome decline in mobility in America.

Some of the decline in labor mobility may stem from…the growth of occupational licensure. While once only doctors and medical professionals required licenses to practice, now it is barbers, interior decorators, electricians, and yoga trainers. More and more of these licensing restrictions are added on, but few are ever taken away, in part because the already licensed established professionals lobby for the continuation of the restrictions. In such a world, it is harder to move into a new state and, without preparation and a good deal of investment, set up a new business in a licensed area.

Last but not least, we have a candidate for the Bureaucrat Hall of Fame. Elizabeth Nolan Brown explains for Reason that a paper pusher in Florida managed to use occupational licensing fees as a tool of self-enrichment.

In Palm Beach County, Florida, all topless dancers are required to register with county officials and obtain an Adult Entertainment Work Identification Card (AEIC), at the cost of $75 per year. The regulation is ridiculous for a lot of reasons, but at least applicants—many of whom are paid exclusively in cash—were able to pay the government-ID fee with cash, too, making things a little more convenient and a little less privacy-invading. But not anymore, thanks to the alleged actions of one sticky-fingered government employee. …Pedemy “diverted” at least $28,875 (and possibly an additional $3,305) from county coffers between October 2013 and mid-November 2016. The money came from both adult-entertainer fees—approximately 70 percent of which were paid in cash—and court-ordered payments intended for a crime Victims Services Fund.

At the end of the article, Ms. Brown looks at the bigger issue and asks what possible public purpose is being served by stripper licensing.

Demanding strippers be licensed in the first place is a problem… There’s no legitimate public-safety or consumer-protection element to the requirement—strip club patrons don’t care if the woman wriggling on their laps is properly permitted. Government officials have portrayed the measure as a means to stop human trafficking and the exploitation of minors, but that’s ludicrous; anyone willing to force someone else into sex or labor and circumvent much more serious rules with regard to age limits isn’t going to suddenly take pause over an occupational licensing rule they’ll have to skirt. The only ones truly affected are sex workers and adult-business owners. Not only does the regulation drive up their costs…, it gives Palm Beach regulators a database of anyone who’s ever taken their clothes off for money locally—leaving these records open to FOIA requests or hackers—and gives cops a pretense to check clubs at random to make sure there aren’t any unlicensed dancers. Those found to be dancing without a license can be arrested on a misdemeanor criminal charge.

Though I guess we shouldn’t be too surprised. If you peruse “Sex and Government,” you’ll find that politicians and bureaucrats like to stick their noses in all sorts of inappropriate places. Including the vital state interest of whether topless women should be allowed to cut hair without a license!

Read Full Post »

Older Posts »

%d bloggers like this: