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Posts Tagged ‘Local government’

Some people say that California is the worst-governed state (I would probably choose Illinois or New Jersey, but it’s a close race).

And if you wanted to pick the worst-governed place in California, San Francisco might be at the top of the list.

The city manages to combine horrible zoning laws with insufferable red tape (there have been efforts to ban everything from Happy Meals to…umm…foreskins).

Most disturbing of all, San Francisco now has a major problem with public defecation (not that the sewer system is anything to brag about).

In an article for City Journal, Erica Sandberg explores the latest bit of upside-down governance from The City by the Bay.

San Francisco is surreptitiously placing homeless people in luxury hotels by designating them as emergency front-line workers, a term that the broader community understands to mean doctors, nurses, and similar professionals. …the city has evoked emergency-disaster law to keep the information private. Officials refuse to notify the public about what is happening in their community and are blocking the press by withholding the list of hotels and preventing reporters from entering the properties. …obfuscation is ultimately futile. Security guards standing outside hotel entrances, where they had never been before, are clear indicators that something is amiss. An uptick in crime, drug activity, and vagrancy around the hotels is another clue.

This sounds crazy, but it gets even worse.

The Department of Public Health manages the controversial free alcohol, cigarette, and cannabis program for homeless people placed in the hotels. …A public-records investigation into the matter has revealed that, as of June 16, DPH approved $3,795.98 to buy the homeless guests vodka and beer (cigarettes have been scrapped). …concerned inside sources report destroyed rooms and rampant illegal drug use. In one hotel, guests are given needle kits and are advised to call the front desk before shooting up. …The hotels were pressured into accepting the homeless guests, though they were also eager for the chance to recoup some revenue lost to the Covid-19 lockdowns. …The city-sponsored guests also receive personal grooming, sanitary, and cleaning supplies, three delivered meals, and laundry service for clothes and linens.

Free hotel room, along with free food and laundry service? And booze and pot?

Who knew being homeless was such a good racket!

Since I’m a fiscal wonk, this is the part that captured my attention.

Rooms are rented at close to $200 per night, totaling $6,000 a month—nearly double the cost of a private one-bedroom apartment in San Francisco.

Though I shouldn’t be surprised by such profligacy. The state government’s “success story” was spending “billions of dollars” to cause homelessness to “dip by 1 percent.”

And San Francisco’s government had a different program for the homeless that cost about $700 per night. So maybe the new approach described in above article is a fiscal bargain.

By the way, it appears that taxpayers across the country are contributing to this insane policy.

Hotel owners consented to the arrangements fully aware of the potential pitfalls, having been assured that FEMA dollars would cover at least some of the damages incurred.

Good ol’ FEMA. Always ready, willing, and able to foolishly spend taxpayer money.

P.S. While San Francisco is a bit of a mess, folks in other cities (such as Seattle, Chicago, New York City, Detroit, etc) can make a legitimate claim that they have the nation’s worst local government.

P.P.S. When he crunched all the numbers, Dean Stansel of Southern Methodist University found that the Riverside-San Bernardino-Ontario metropolitan statistical area in California had the worst policy in the country (San Francisco was #38 out of the 55 MSAs with at least 1 million residents).

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I’m a long-time critic of the Federal Reserve, Fannie Mae, and Freddie Mac, but I had no idea they would produce something as bad as the 2008 financial meltdown. It’s not easy to predict the timing and severity of a crisis.

Unless we’re talking about the ticking time bomb described in this video.

In theory, of course, state politicians and their local counterparts are supposed to set aside enough money to pay the lavish future benefits they promise their bureaucrats.

Far too often, however, that doesn’t happen. And that means the governments (to be more accurate, their taxpayers) have a big “unfunded liability.”

This racket is a good deal for the bureaucrats – who get lots of pay now and lots of promised benefits in the future. And it’s a good deal for the state and local politicians who get votes and campaign contributions from the bureaucrats.

But, as explained in a new report from the American Legislative Exchange Council, it is a fiscal disaster that is going to explode at some point in the not-too-distant future.

Unfunded state pension liabilities total $4.9 trillion or $15,080 for every man, woman and child in the United States. State governments are often obligated, by contract and state constitutional law, to make these pension payments regardless of economic conditions. As these pension payments continue to grow, revenue that would have gone to essential services like public safety and education, or tax relief, goes to paying off these liabilities instead. …Most state pension plans are structured as defined-benefit plans. Under a defined-benefit plan, an employee receives a fixed payout at retirement based on the employee’s final average salary, the number of years worked and a benefit multiplier.

There are several ways to measure the degree to which a state has dug a big hole by promising big goodies to bureaucrats.

Figure 2 shows per-capita unfunded liabilities on a state-by-state basis. Tennessee is in the best shape, followed by Indiana and Wisconsin (thanks in part to former Governor Scott Walker). Alaska has the biggest fiscal hole, along with Illinois (no surprise) and Connecticut (no surprise).

It’s important to recognize, though, that some states have more income than others.

So in addition to a per-capita estimate of pension liabilities, here’s a map showing the burden as a share of each state’s economic output. Once again, Tennessee, Indiana (the #22 is a misprint), and Wisconsin rank the highest. Alaska stays at the bottom, joined by Mississippi and New Mexico.

Let’s also give credit and blame to states that are the top 10 and bottom 10 on each map.

In addition to Tennessee, Indiana, and Wisconsin, good states include Utah, Nebraska, South Dakota and Texas (honorable mention to Florida, which just missed).

Bad states are led by Alaska, with Nevada, New Mexico, Mississippi, Illinois, and Ohio also being governed by particularly short-sighted politicians.

So what’s the solution for the bad states? The ALEC report gives the answer.

Ultimately, one of the best ways to solve the pension crisis is to change the way pension plans are structured. Changing from the current defined-benefit system toward a defined-contribution system for new employees will improve the health of state pension plans by giving employees full control over their retirement savings.

By the way, it’s worth noting that blue states may have a bigger problem than red states, but this is a bipartisan mess.

In a recent column in the Wall Street Journal, Steve Malanga says there is plenty of blame to share.

The crisis in state pension systems is a result of decades of fiscal mismanagement. The problem, however, goes well beyond deeply indebted Illinois and New Jersey. Many state and municipal retirement funds have been on an unrelenting downward trajectory… This fiscal nightmare stems in part from politicians’ habit of increasing employee benefits while markets are booming, thereby squandering fund surpluses. …Politicians have consistently neglected to contribute to these systems even during good budgetary times, preferring to fund more popular programs. …Meanwhile, elected officials and pension administrators have endorsed overly optimistic economic assumptions that made their systems look affordable.

Let’s close today’s grim column with another way of measuring the problem.

Here’s a map from the Tax Foundation that shows how much money is set aside in pension programs compared to the level of benefits that bureaucrats are promised.

Looking at the data from this angle, Kentucky has the biggest hole, followed by New Jersey, Illinois (the only state to be in the bottom 10 on all three maps), and Connecticut, while the good states are led by Wisconsin, South Dakota, and Tennessee.

The bottom line is that some states have a very grim future, which is why even Warren Buffett is advising investors and entrepreneurs to steer clear of doing business in those places.

P.S. Unfortunately, you can’t avoid the massive unfunded liabilities of Social Security, Medicare, and Medicaid by moving across state lines.

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Like most libertarians, I support decentralization and federalism. Under the right circumstances, I’m even sympathetic to the idea of secession (hooray for Brexit!).

This is why I have no problem with a community based on voluntary socialism. History tells us that approach doesn’t work (largely for the reasons captured in this cartoon), but people should be free to try over and over again.

Which brings us to “CHAZ.”

For those who haven’t been following the news, protestors in Seattle (motivated in part by legitimate concerns about police misbehavior) have seized control of a neighborhood and declared it to be the “Capital Hill Autonomous Zone.”

Some people see CHAZ as an example of self-government based on a strange mix of libertarian impulses (pro-gun, for example) and leftist impulses (anti-cop, for example).

The Washington Post has a rather sympathetic report about the group, written by Gregory Scruggs.

For the past several days, Ochoa, 28, has been serving as an unarmed volunteer “sentinel,” or guard, in the protest zone. Ochoa, a self-described leftist libertarian recently furloughed from the Seattle International Film Festival, and other volunteers have been serving four-hour shifts to help to keep the peace. …Core to the zone is a vision of a self-governed community with no formal policing. Instead, volunteers, many of them avowed police abolitionists, have begun to organize their own safety force. …Volunteers say this work is a way to highlight what a city without police might look like. “We have a chance to really build something here, so I have a vested interest in defending that as a part of my community,” said Ochoa, who lives in the city’s Capitol Hill neighborhood. …Markinson describes himself as an anti-fascist, anti-racist community defense advocate. He is a gun owner… Markinson views Seattle’s ongoing experiment as part of a lineage of anarchist neighborhoods… a sentinel who gave his name as James Madison stood at the southern barricade with an AR-15 draped over his chest, as he has done on other nights. …“There are a few of us who are armed.” …a hand-painted sign approaching the barricades offers watchwords: “In a world without cops we must never again become the cops ourselves.”

If nothing else, CHAZ is anti-authority, at least if traditional city government is the definition of authority.

But is it a viable system?

Robert Tracinski, in an article for the Bulwark, discusses potential problems.

…the Capitol Hill Autonomous Zone, endearingly nicknamed CHAZ…is the product of anti-police protests in Seattle that led the mayor to order the abandonment of one of the city’s downtown police precincts, ceding a six-block area of Seattle’s downtown to the protesters, who have turned it into a kind of anarcho-socialist utopia, with free food, free music, no cops, and lots of peace and love, man. …CHAZ certainly set a record for socialist utopias when it comes to running out of food. Within the first day, they were already sending out the alarm: “The homeless people we invited took away all the food at the Capitol Hill Autonomous Zone. We need more food to keep the area operational…” I’ve checked to see whether this is parody, and as far as I can tell, it’s not. …Another area where they are well ahead of schedule for a socialist utopia is in putting up walls and establishing checkpoints with internal passports. …This leads us to the big question about the “autonomous zone”: Whose “autonomy” is it? Certainly, it’s not the autonomy of the people who actually live there, who did not invite the protesters and never had the opportunity to vote on whether they wanted to reject the protection of the Seattle PD and establish new protectors. …With leadership seemingly up for grabs, CHAZ is the scene of sporadic petty scuffles, which activists are asking people not to film because it might make them look bad. Yes, well, I’m sure the Minneapolis PD felt the same way. …My favorite description of CHAZ is from a Seattle Times article which says it has “mostly been peaceful.” That’s a favorite bit of journalistic spin. “Mostly peaceful” is how you describe something that’s violent when you don’t want the reader to draw that conclusion.

Tracinski certainly is correct that existing property owners haven’t consented to the new system.

And he’s probably correct in that the new form of authority in CHAZ may be even more arbitrary and unfair than the old system (time will tell).

But he only scratches the surface of the issue that is of greatest interest to me, which is whether CHAZ has a viable economic system.

Ideally, local businesses will be free to operate and to transact with the outside world. And if there are no taxes and nobody to enforce red tape, we might almost see an example of anarcho-capitalism.

For what it’s worth, I’m guessing Seattle bureaucrats intend to retroactively collect taxes and take other steps to make sure there is no long-run reduction in the burden of government for CHAZians.

What about in the short run? In a column for Spectator USA, Ben Sixsmith suggests that authorities should adopt a hands-off attitude and let CHAZ sink or swim.

A group of anarchists and leftists collected in Capitol Hill, known for its hipster and LGBT scenes, they have barricaded themselves into a small area and established an anarchic intentional community… Seattle’s aspiring revolutionaries had only just announced the creation of CHAZ, as a place in which progressives can live free of corporate consumerism and police violence, when a local rapper-cum-warlord named Raz Simone began stalking the place with an armed militia. …I believe that the state and federal authorities should leave them alone. If people are being raped and killed in CHAZ then the officials will have to get involved, of course, but otherwise they should be left to their own devices. …for radical leftists to establish their own territory is, frankly, refreshing. For years they have been insisting that the culture, communities, education, religious beliefs et cetera of their fellow citizens be transformed in accordance with their own idiosyncratic ideas. Everyone has had to conform with their progressive beliefs. The CHAZers? They aren’t trying to reshape America. They are trying to build a place of their own. How is that not preferable? …Of course, I think CHAZ will be an embarrassing failure. I suspect it will collapse in a heap of shortages, grievances and recriminations… If it all collapses of its own accord, then a lot of radical progressives are going to have a tough, useful lesson in the value of civilized institutions.

In other words, let’s allow CHAZ to be a test case.

If it adopts a bunch of leftist policies (which seems likely), then we’ll almost surely see another example of socialism failing, even when it’s voluntary.

Though I’m crossing my fingers that the CHAZians adopt a libertarian approach to economics.

Given that Seattle has a very left-leaning government, we then might finally get an example to disprove Jacob Leddy.

Sadly, I don’t think that will happen. The city’s crazy politicians will be more than happy to tolerate CHAZ if it’s a socialist experiment, but they’ll send in the cops if it morphs into a libertarian experiment.

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One week ago, I wrote about how the welfare state creates high implicit marginal tax rates, thus making it difficult for low-income people to climb out of poverty and dependence.

But that’s not the only way that poor people are victimized by big government.

Another very serious problem is the way local and state governments impose a plethora of fees, fines and charges that can wreck the lives of the less fortunate.

In a column for the New York Times, Professor Bernadette Atahuene of the Chicago-Kent College of Law opines on the problem of greedy local governments.

I coined the term “predatory cities” to describe urban areas where public officials systematically take property from residents and transfer it to public coffers… Ferguson, Mo., is one well-known predatory city. As a 2015 Department of Justice report showed, the police in Ferguson systematically targeted African-Americans and subjected them to excessive fines and fees. …local courts issued arrest warrants for unpaid fines and fees… Minor offenses, like parking infractions, resulted in jail time… The Ferguson Police Department and courts prioritized revenue raising over public safety, transforming Ferguson into a predatory city.

Professor Atahuene cites the pernicious policies of New Orleans and Washington, D.C. (and note that asset forfeiture is one of the problems).

New Orleans is another. …Orleans Parish Criminal District Court’s primary source of funding was the fines and fees it collected. This created a structural incentive for judges to aggressively and erroneously pursue payment from those with no ability to pay, turning New Orleans into a predatory city. Washington, D.C., is yet another predatory city. While civil asset forfeiture laws allow the police to seize property that they suspect was involved in a crime, in Washington, D.C., property owners had to post bonds of up to $2,500 in order to challenge the seizure. If the owner could not raise money in time, the D.C. Police Department sold the property, and the money went into its annual budget. In a two-year period, the Police Department made $4.8 million in profit by seizing money from over 8,500 people as well as seizing 339 vehicles.

Every decent human being should get upset about the grotesque way that politicians are mistreating their residents.

Especially since poor people are being disproportionately victimized.

By the way, it appears that Professor Atahuene is not a libertarian. She wants Congress to approve a big bailout, based on the theory that state and local politicians will be less likely to engage in what I’ve called “rapacious revenue-raising tactics” if they get big buckets of money from Uncle Sam.

Needless to say, I think that would be a mistake.

But I don’t think someone needs to agree with me on everything, or even most things, if we can periodically find common ground on proposals that would improve the lives of people (not just on the need to curtail greedy local governments, but also on issues such as over-criminalization and police unions).

P.S. I wonder if there would be fewer petty fines, fees, and charges if they were levied on the ability to pay, thus making higher-income people more sensitive to the problem?

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What’s the most poorly governed city in the United States?

Those are all good options, but Seattle may deserve this award. Following municipal elections last November, the City Council is controlled by hard-left members who want to impose the local version of “democratic socialism.”

In a National Review article from February, Christopher Rufo describes their agenda.

Seattle has effectively become the nation’s laboratory for socialist policies. Since the beginning of the year, the socialist faction on the Seattle City Council has proposed a range of policies on taxes, housing, homelessness, and criminal justice that put into practice the national democratic-socialist agenda. In the most recent session, socialist councilwoman Kshama Sawant and her allies have proposed massive new taxes on corporations, unprecedented regulations on landlords (including rent control and a ban on “winter evictions”), the mandated construction of homeless encampments, and the gradual dismantling of the criminal justice system, beginning with the end of cash bail. …In order to consolidate their newfound power, the progressive-socialists have begun to manipulate the democratic process in their own favor: first, by providing all Seattle voters with $100 in taxpayer-funded “democracy vouchers,” which are easily collected by unions, activists, and socialist groups; and second, by implementing a ban on corporate spending in local elections… the progressive-socialists are no longer interested in gaining reasonable concessions; they intend to overthrow capitalism itself.

The Wall Street Journal opined this week on the latest development in Seattle’s suicidal approach.

The economy is on life support, but that isn’t stopping the Seattle City Council from trying to soak employers with a new tax on hiring. …The proposal is a reprise of the council’s 2018 tax on each new hire that was repealed amid public opposition. The new proposal “is 10 times larger than the 2018 version, and it’s also in an economy that’s about 1,000 times worse,” says James Sido of the Downtown Seattle Association…a 1.3% payroll tax on most Seattle businesses with $7 million or more in payroll. …Businesses would be assessed based on the prior year’s payroll, but revenue has cratered this year amid the pandemic. …businesses on the margin that have been forced to lay off or furlough employees may not bring them back if it means crossing that $7 million payroll threshold. The tax would discourage smaller companies from growing in Seattle. …Seattle is the hardest hit city in the U.S., with unemployment rising 105.92% between January and March. Only a socialist would think now is the time to further punish job creation.

Good points.

Though I would add that it’s never a good time to raise taxes and punish job creation.

Here’s what the greedy members of the City Council don’t understand (or pretend not to understand):

It’s complicated and difficult to move out of a country.

It’s a potentially expensive hassle to move out of a state.

It’s relatively easy to move out of a city.

And that’s why Seattle’s experiment with socialism is bound to fail.

If the socialists on the City Council impose this tax, there inevitably will be an out-migration of entrepreneurs and businesses to surrounding suburbs. That will be bad for ordinary people in the city (a point that workers in the economy’s productive sector already understand).

And when that happens, I wonder if they’ll learn that it is possible to run out of other people’s money?

P.S. Seattle’s politicians already have destroyed jobs and ruined businesses with a big increase in the minimum wage.

P.P.S. The constitution of the state of Washington prohibits an income tax, so there’s an ongoing debate whether Seattle’s tax grab – if enacted – would survive a court challenge.

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I’m a big fan of federalism. After all, compared to what happens when Washington screws up, there’s a lot less damage if a state or city imposes a bad law.

Moreover, it’s relatively easy to move across a border if a state or city is doing something foolish. Leaving the country, by contrast, is a much bigger step (and a lot harder if you have some money).

That being said, politicians outside of Washington deserve plenty of scorn (to show that Washington has no monopoly on venality and incompetence, I periodically share columns that highlight “Great Moments in State Government” and “Great Moments in Local Government“).

And the coronavirus crisis is giving us plenty of new evidence.

Writing for the Federalist, John Daniel Davidson takes aim at control-freak politicians.

…some mayors and governors…think they have unlimited and arbitrary power over their fellow citizens, that they can order them to do or not do just about anything under the guise of protecting public health. We’ve now witnessed local and state governments issue decrees about what people can and cannot buy in stores, arrest parents playing with their children in public parks, yank people off public buses at random, remove basketball rims along with private property, ticket churchgoers… The most egregious example of this outpouring of authoritarianism was an attempt by Louisville, Kentucky, Mayor Greg Fischer to ban drive-in church services on Easter. …he also threatened arrest and criminal penalties for anyone who dared violate his order, and in an Orwellian twist, invited people to snitch on their fellow citizens. …this didn’t just happen in Louisville. Two churches in Greenville, Mississippi, that were holding drive-in services for Holy Week said police showed up and ordered churchgoers to leave or face a $500 fine. …the targeting of churches, while undoubtedly the most offensive overreach by state and local governments, is hardly the only instance of government gone wild. In Michigan, Gov. Gretchen Whitmer has taken it upon herself to declare what items are and are not “essential,” dictating to grocery stores what they can and cannot sell… Among the nonessential, and therefore banned, items are fruit and vegetable plants and seeds. …(Lottery tickets, on the other hand, are still permitted.)

There’s so much outrageous material in this article that it’s almost impossible to focus on one item.

I’ll simply note that it is entirely predictable – but totally disgusting – that Governor Whitmer in Michigan has exempted sales of lottery tickets from her lockdown order. I guess risk is okay if it’s for the purpose of getting more revenue by screwing poor people.

Since we’re on the topic of Governor Whitmer and Michigan, this tweet indicates that it’s okay to put infants in danger. After all, they don’t line the pockets of government by purchasing lottery tickets.

Let’s look at more examples of nanny-state authoritarianism.

David Harsanyi’s column in National Review is appropriately scathing.

Free people act out of self-preservation, but they shouldn’t be coerced to act through the authoritarian whims of the state. Yet this is exactly what’s happening. …politicians act as if a health crisis gives them license to lord over the most private activities of America people in ways that are wholly inconsistent with the spirit and letter of the Constitution. …What business is it of Vermont or Howard County, Ind., to dictate that Walmart, Costco, or Target stop selling “non-essential” items, such as electronics or clothing? …it is an astonishing abuse of power to issue stay-at-home orders, enforced by criminal law, empowering police to harass and fine individuals for nothing more than taking a walk. …The criminalization of movement ends with…three Massachusetts men being arrested, and facing the possibility of 90 days in jail, for crossing state lines and golfing — a sport built for social distancing — in Rhode Island. …In California, surfers, who stay far away from each other, are banned from going in the water. Elsewhere, hikers are banned from roaming the millions of acres in national parks. …Would-be petty tyrants, such as Dallas judge Clay Jenkins, who implores residences to rat out neighbors who sell cigarettes.

So many awful examples, but I’m especially nauseated by Judge Jenkins and his call for snitching. Makes me wonder if he’s related to Andrew Cuomo, Richard Daley, or David Cameron.

I’ll close with two amusing items.

First, every red-blooded American should cheer for this jogger (and you should cheer for him if you’re a red-blooded person from abroad as well).

Second, here’s some satire that is both seasonal and accurate (though, to be fair, the disciples weren’t practicing social distancing).

P.S. Maybe this is the kind of harassment that led to “Libertarian Jesus“?

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Is Greece the international version of New Jersey or is New Jersey the American version of Greece?

Is New Jersey the national version of Chicago, or is Chicago the the local version of New Jersey?

The answer is yes, regardless of how the question is phrased because – in all cases – we’re talking about examples of how politicians (and short-sighted voters) create “Goldfish Government.”

Let’s examine Chicago to see how this process works.

The Washington Post noted early last year that the new mayor was going to face an enormous fiscal challenge because of the reckless choices made by previous generations of politicians.

The city has been underfunding its pensions for decades, with dire results. Chicago’s pension plans collectively have only about a quarter of the assets they’ll need to pay benefits, one of the worst funding ratios in the nation. To put that hole in dollar terms, Chicago is about $28 billion short of what it needs, even under relatively favorable assumptions about future returns, or about $10,000 for every man, woman and child living in the city. …radical surgery still needed. Within a few years, pension contributions are projected to suck up more than 20 percent of the city’s budget. And Chicago can’t count on much help from the state, which is dealing with its own, equally severe case of pension underfunding. …what’s happening in Illinois is merely the earliest and most extreme manifestation of a quandary that will soon be dominating the public conversation in many states: how to pay for retirement promises to public employees without entering a fiscal death spiral. …shoddy accounting allowed generations of politicians all over the country to curry favor with public-sector workers by offering them ever-fatter pension packages, gaining immediate benefit while deferring the political cost of paying for all those benefits until much later. Later is now arriving. …Chicago has been losing lower- and middle-class residents for years, in part because of its heavily regressive tax burden. And when Chicago and Illinois both start raising the rates on upper earners — as they will have to, and soon — they run the risk that those people ,too, will start trickling away, either to smaller cities without the burdensome pension-legacy costs.

Megan McArdle pointed out that Chicago is a mess because of “public choice” – i.e., politicians make short-sighted and irresponsible decisions in order to maximize votes and power.

Throw in a recession sometime in the next couple of years, and Chicago is going to be in a full-blown crisis. …it’s the fault of generations of politicians before them who promised an ever-richer array of benefits to government workers. Particularly, they liked to raise the retirement benefits. …The whole point of giving workers pension benefits instead of cash was that you didn’t have to pay for them; you could promise the benefits now and gather up the votes that the grateful workers tossed at your feet, all without costing current taxpayers a single dime. …Future taxpayers mostly weren’t voting in 1982 municipal elections. …Chicagoans, welcome to “later.” The municipal pensions only have about 25 percent of the assets they’ll need to cover projected benefits, a shortfall of roughly $28 billion. …If you use a more cautious method, you come up with a shortfall of more than $40 billion. …Moody’s Investors Service rates the city’s general obligation debt as junk bonds. …Chicago is now approaching the point where the growth of its obligations will outpace the growth of any possible revenue stream it might use to cover them. It’s a few steps from there to municipal bankruptcy.

Unsurprisingly, Chicago’s relatively new mayor wants to keep the scam going.

As reported by the Chicago Tribune, she wants to extract more money from taxpayers.

Chicago Mayor Lori Lightfoot…said there’s “no question” residents will need to pay more in taxes or fees to plug a looming city budget shortfall… “There’s no question we’re going to have to come to the taxpayers and ask for additional revenue.” …Lightfoot did not specify what sort of revenue she expects to raise — whether it would come in the form of new taxes, a property tax hike or increased fees. …referring to her campaign promise to seek cuts before asking taxpayers for more money, Lightfoot added, “I meant what I said on the course of the campaign: We have a lot of hard choices we’re going to have to make regarding city finances.”

Like previous mayors, she’s buying votes with other people’s money.

The Wall Street Journal opined last year about her surrender to the teacher unions (a Chicago tradition, as illustrated by the adjacent cartoon by Lisa Benson).

Except it wasn’t really a surrender since she was already on their side (as perfectly captured by this Ramirez cartoon).

So the net result is a combination of bad fiscal policy and bad education policy.

Chicago Mayor Lori Lightfoot and the Chicago Teachers Union on Thursday struck an agreement to end an 11-day strike, and by the looks of it the union was bargaining with itself. The mayor is touting the new contract as the most generous in Chicago history, and she’s right. …The new contract includes a 16% raise over five years (not including raises based on longevity), a three-year freeze on health insurance premiums, lower copays, …and more than 450 new social workers and nurses. …you can bet it will be expensive. Last week the mayor proposed a slew of tax increases including levies on ride-hailing services and restaurant meals. This week her staff suggested that property taxes may have to increase . . . again. Michelle Obama the other day complained that white people were leaving the city to escape minorities who are moving in. No, they’re fleeing Chicago’s high taxes and lousy schools—and so are minorities.

This story from Reason is a powerful (and nauseating) example of how a money-hungry city is making life miserable for ordinary people.

Chicago police pulled Spencer Byrd over for a broken turn signal. Byrd says his signal wasn’t broken, but that detail would soon be the least of his worries. …Byrd was giving a client, a man he says he had never met before, a ride… Police pulled both of them out of the car and searched them. Byrd was clean, but in his passenger’s pocket was a bag of heroin… Police released Byrd after a short stint in an interrogation room without charging him with a crime. But when Byrd went to retrieve his car, he found out the Chicago Police Department had seized and impounded it. …The program impounds cars when the owner beats a criminal case or isn’t charged with a crime in the first place. It impounds cars even when the owner isn’t even driving, like when a child is borrowing a parent’s car. …Byrd calls his car his “livelihood,” and he has been fighting for close to two years now to recover it. He says he has $3,500-worth of tools locked in the trunk, and he can’t retrieve them. …Like tens of thousands of other Chicagoans, Byrd was a victim of years of the city’s fiscal negligence. …to try and nickel-and-dime…out of these massive budget gaps. …The result is a uniquely punitive impound system, in which Chicago profits off restricting the ability of its residents to drive.

Amazingly, Chicago’s politicians want to dig an even deeper hole.

The Wall Street Journal has a new editorial examining a scheme to borrow even more money in hopes of keeping the gravy train rolling.

Chicago has been seeking to take advantage of historically low interest rates by refinancing debt—even as its credit rating has deteriorated amid swelling budget deficits and pension payments. …In 2017 state and city politicians contrived a shell scheme to lower the city’s borrowing costs. The city essentially sold off sales-tax revenue that it receives from the state to a corporation specially created to pay creditors. …Voila, Chicago’s financial magicians spun junk into gold. …Chicago’s budget woes are mounting, and financial alchemists are diluting the claims of existing creditors. If the city were to renege on its $8 billion in GO debt, those bondholders would surely demand a slice of the sales-tax revenue now pledged to other creditors. This is what happened in Puerto Rico. …Chicago’s population has declined for each of the past four years, and taxpayers are getting tapped out. On top of a $50 million increase in property taxes this year, Mayor Lori Lightfoot has imposed a new “congestion” fee on Uber and taxi rides, doubled the tax on restaurant meals, and raised a special personal property tax on computer cloud software. Yet a recession would probably blow a gigantic hole in its budget and could cause its pension funds to run dry. Does anyone think that city politicians wouldn’t prioritize public workers over bondholders?

So when will this house of cards collapse?

I have no idea. There’s a famous quote from the late economist Rudiger Dornbusch, who observed that, “In economics, things take longer to happen than you think they will, and then they happen faster than you thought they could.”

The people buying bonds from Chicago are betting that the collapse won’t happen in the near future.

But that was the same mentality of the people who bought Greek bonds in, say, 2005.

I’ll simply observe that what’s happening in Chicago is confirmation of my “First Theorem of Government.”

And I’ll also make an easy prediction that the people buying Chicago bonds will want a bailout when the you-know-what hits the fan.

Needless to say, the answer should be a resounding no.

P.S. If you want to know all my Theorems of Government, click here.

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Based on rhetoric, the Democratic Party is committed to a class-warfare agenda.

They want higher income tax rates, higher capital gains taxes, higher Social Security taxes, higher death taxes, a new wealth tax, and many other tax hikes that target upper-income taxpayers.

There are various reasons why they push for these class-warfare tax hikes.

I don’t pretend to know which factor dominates.

But that’s not important because I want to make a different point. Notwithstanding all their rhetoric, Democrats are sometimes willing to shower rich people with tax breaks.

The Wall Street Journal exposes the left’s hypocrisy in the fight over the deduction for state and local taxes.

Democrats have…grown more concentrated in the richest parts of the country. That explains the strange spectacle of a Democratic presidential field running on the most redistributionist agenda in memory even as Democrats in Congress try to expand a tax break for high-earners in the New York City, San Francisco and Los Angeles metropolitan areas. …Coastal Democrats have failed with gimmicks at the state and federal level to eliminate the SALT cap. The latest effort is the Restoring Tax Fairness for States and Localities Act, which passed the House Ways and Means Committee last week. …The bill would raise the SALT deduction cap in 2019 and eliminate it in 2020 and 2021. …The Tax Foundation found the biggest benefit from the unlimited deduction went to households with incomes above $1 million.

A related issue is the federal government’s special tax exemption for interest paid to holders of state and local government bonds.

I explained in 2013 why it’s bad tax policy.

Josh Barro explained the previous year why this tax break is a boon for the rich.

In 2011, 35,000 taxpayers making more than $200,000 a year paid no federal income tax. …61 percent of those avoided tax for the same reason: their income consisted largely of interest on tax-exempt municipal bonds. As Washington looks…to eliminate tax preferences for the wealthy, why not eliminate this exemption? …Nearly all of those bondholders are either for-profit corporations or individuals with high incomes. The higher your tax bracket, the greater the value of the tax preference… muni bonds have an unfortunate feature…subsidies are linked to the interest rate. That means issuers who must pay higher interest rates get more valuable subsidies. Perversely, the worse a municipality’s credit, the greater incentive it is given to borrow more money.

Needless to say, it’s not a good idea to have a tax break that benefits the rich while subsidizing profligate states like New Jersey and Illinois.

In a column for Real Clear Policy, James Capretta analyzes how Democrats are working hard to preserve a big loophole.

The push to get rid of the Cadillac tax is short-sighted for both parties, but particularly for the Democrats. …In its estimate of H.R. 748, CBO projects that Cadillac tax repeal would reduce federal revenue by $200 billion over the period 2019 to 2029, with more than half of the lost revenue occurring in 2027 to 2029. …When examined over the long-term, repeal of the Cadillac tax is likely to be one of the largest tax cuts on record. …If the Cadillac tax is repealed, the government will have less revenue to pay for the spending programs many in the party want to expand. And Republicans will be able to say that it was the Democrats, not them, who paved the way for this particular trillion dollar tax cut.

Not only is it a big tax cut to repeal the Cadillac tax, it’s also a tax cut that benefits the rich far more than the poor.

Here are some distributional numbers from the left-leaning Tax Policy Center. I’ve highlighted in red the most-important column, which shows that the top-20 percent get more than 42 percent of the tax cut while the bottom-20 percent get just 1.2 percent of the benefit.

For what it’s worth, I don’t care whether tax provisions tilt the playing field to the rich or the poor.

I care about good policy.

That’s why I like the Cadillac tax, even though it was part of the terrible Obamacare legislation.

In other words, I think principles should guide policy.

My Democratic friends obviously disagree. They beat their chests about the supposed moral imperative to “soak the rich,” but they’re willing to shower the wealthy with big tax breaks so long as key interest groups applaud.

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Identifying the worst government policy would be a challenge. Would it be minimum wage laws, which deprive low-skilled workers of a chance for employment and upward mobility? Would it be class-warfare tax rates that generate large amounts of economic damage compared to potential (if any) revenue?

Those are tempting choices, but there’s a strong case that nothing is as foolish as rent control.

Here’s a map showing which states impose or allow this destructive form of intervention.

California politicians are very susceptible to bad ideas.

True to form, as reported by the New York Times, they actually want to impose statewide rent control.

California lawmakers approved a statewide rent cap on Wednesday covering millions of tenants, the biggest step yet in a surge of initiatives to address an affordable-housing crunch nationwide. The bill limits annual rent increases to 5 percent after inflation and offers new barriers to eviction… a momentous political swing. For a quarter-century, California law has sharply curbed the ability of localities to impose rent control. Now, the state itself has taken that step. …Economists from both the left and the right have a well-established aversion to rent control, arguing that such policies ignore the message of rising prices, which is to build more housing. Studies in San Francisco and elsewhere show that price caps often prompt landlords to abandon the rental business by converting their units to owner-occupied homes. And since rent controls typically have no income threshold, they have been faulted for benefiting high-income tenants.

I’m glad the article included the evidence from economists, especially since the headline is grossly inaccurate. If we care about evidence, it’s far more accurate to say that rent control will exacerbate the state’s housing problems.

Which is why the Wall Street Journal opined that this type of intervention is especially destructive.

California already boasts the highest housing costs in the country, and even liberals have come around to acknowledging that not enough homes are built to meet demand. The state has added about half as many housing units as needed to accommodate population growth, and more than half of Californians spend 30% of their income on rent.Blame a thousand regulatory burdens. Local governments limit what housing developers can build and where. They layer on permitting fees, and then there are the state’s high labor costs and expensive green-energy mandates and restrictions that opponents can exploit to block projects for years. …The upshot is that an “affordable” housing unit in California costs $332,000 to build and nearly $600,000 in San Francisco, according to state budget figures. Developers can’t turn a profit on low- and middle-income homes… And now Democrats want to constrain housing prices by fiat. Mr. Newsom and Democratic legislators are pushing a law to limit annual rent increases across the state to 5% plus inflation. …Building permits in the first seven months this year have fallen 17% compared to 2018 despite an increase in state subsidies. …California’s progressive regulatory complex is contributing to this housing slowdown by driving businesses and people from the state. More than 700,000 residents have left since 2010.

By the way, the politicians in Albany already made the same mistake.

And, as you might expect, the Wall Street Journal‘s editorial page had the correct response.

Law by law, Gov. Andrew Cuomo and Democrats are chipping away at the policies that made New York City livable after decades of decline… Democrats this week are ramming through rent-control bills that…effectively dictates rents for one million or so rent-regulated apartments and restricts landlords’ ability to evict tenants who don’t pay. …Once a tenant moves out—which doesn’t happen often since folks can pass on the entitlement to friends and relatives—landlords would be required to offer the unit to another tenant at restricted rates. …Nor could they raise rates by more than 2% annually to pay for improvements or evict a nonpaying tenant who “cannot find a similar suitable dwelling in the same neighborhood.” Since landlords would have less incentive to make fixes, more apartments will deteriorate and come to resemble New York City’s squalid public housing. …One result will be less housing investment… Progressives are vindicating CEO Jeff Bezos ’s decision to pull Amazon’s second headquarters out of New York. Don’t be surprised if other businesses follow.

You won’t be surprised to learn that politicians in other nations sometimes make the same mistake.

The U.K.-based Guardian wrote about how rent control has backfired in Sweden.

Half a million are on the waiting list for rent-controlled flats in Stockholm, meaning a two-tier system, bribes and a thriving parallel market… the system is experiencing acute pressures. Building of rental homes almost dried up after a financial crisis in the early 1990s, and there is a dire shortage of properties. Demand is such that it is almost impossible to get a direct contract. With nearly half of all Stockholmers – about 500,000 people – in the queue, it can take 20 or 30 years to get to the top of the pile. …The result is a thriving rental property black market, with bribes of as much as 100,000 kronor per room to obtain a direct contract, McCormac says. Many people sublet space in their rental apartments. …“Rent controls were supposed to enable people to live in central locations, but now it is having the opposite effect,” McCormac says. “People without social connections will have a very hard time finding a flat,” says Kleberg.

And Germany is making the same mistake – even though it should have learned from the mistakes under Hitler’s national socialism and East Germany’s communism.

…the kinds of ideas traditionally associated with planned economies are gaining more and more support all over Germany. …Substantial numbers of people have moved to Germany’s major cities…the supply of housing has failed to keep pace with these significant developments, and this is largely because construction approval processes are so long-winded and the latest environmental regulations have made building prohibitively expensive. …In Germany’s capital, Berlin, …it now takes 12 years to draft and approve a zoning plan, which in many cases is a prerequisite for the development of new dwellings. …An initiative in Berlin calling for the expropriation of private real estate companies has collected three times as many signatures as it needed to initiate a petition for a referendum. …Kevin Kühnert, chairman of the youth organization of the center-left SPD…has gone as far as calling for a complete ban on private property owners renting out their apartments. …Berlin’s Senate approved the main components of a rent freeze in the German capital. …Advocates of such central economic planning react sensitively when they are reminded that it has already been tried… An earlier rent freeze was approved in Germany on April 20, 1936, as a gift from the National Socialist Party to the citizens of Germany on Adolf Hitler’s 47th birthday. The National Socialists’ rent cap was adopted into the GDR’s socialist law by Price Regulation No. 415 of May 6, 1955, and it remained in force until the collapse of the GDR in 1989.

Now let’s review some economic research.

Three Stanford professors researched the issue, looking specifically as San Francisco’s local rent control rules.

Using a 1994 law change, we exploit quasi-experimental variation in the assignment of rent control in San Francisco to study its impacts on tenants and landlords. Leveraging new data tracking individuals’ migration, we find rent control limits renters’ mobility by 20% and lowers displacement from San Francisco. Landlords treated by rent control reduce rental housing supplies by 15% by selling to owner-occupants and redeveloping buildings. Thus, while rent control prevents displacement of incumbent renters in the short run, the lost rental housing supply likely drove up market rents in the long run, ultimately undermining the goals of the law. …In the long run, landlords’ substitution toward owner-occupied and newly constructed rental housing not only lowered the supply of rental housing in the city, but also shifted the city’s housing supply towards less affordable types of housing that likely cater to the tastes of higher income individuals. Ultimately, these endogenous shifts in the housing supply likely drove up citywide rents, damaging housing affordability for future renters…it appears rent control has actually contributed to the gentrification of San Francisco, the exact opposite of the policy’s intended goal. …rent control has contributed to widening income inequality of the city.

To be fair, rent control is just one of several bad policies that mess up the city’s housing market.

Now let’s shift to the other side of the country.

Jeff Jacoby of the Boston Globe shared evidence from a disastrous experiment in Massachusetts.

…a handful of Democratic lawmakers want to bring the horror of rent control… This isn’t happening only in Massachusetts. …Oregon’s governor just signed a statewide rent-control law and efforts to overturn rent-control bans are underway in Illinois, Colorado, and Washington state. …the folly of rent control is so well-established that to deny it requires, as Hillary Clinton might say, a willing suspension of disbelief. Massachusetts and most other states have banned rent control because the harm it causes far outweighs any benefit it confers. When politicians impose a ceiling on rent, the results are invariable: housing shortages, depressed real estate values, increased decay, less new construction. …The longer rent control persists, and the more harshly it is enforced, the worse the problem grows. …in New York City, where strict rent controls date back to World War II, the annual rate at which apartments turn over is less than half the national average, while the share of tenants who haven’t moved in more than 20 years is more than double the national average. …Acknowledging the damage caused by rent control is neither a right- nor left-wing issue. …the communist foreign minister of Vietnam…made…the…point in 1989: “The Americans couldn’t destroy Hanoi,” Nguyen Co Thach remarked, “but we have destroyed our city by very low rents.” …When Massachusetts voters struck down rent control in 1994, it was in the teeth of preposterous fearmongering by hardline tenant activists… What happened in reality was that tens of thousands of apartments were decontrolled with no ill effects… When tenants were analyzed by occupation, it was high-earning professionals and managers who predominated among the beneficiaries of rent control; semi-skilled and unskilled workers lagged far behind. Rent control always ends up benefiting the young, strong, and well-to-do at the expense of the old, weak, and poor.

Meanwhile, Meghan McArdle opined in the Washington Post about the perverse economic consequences of rent control.

…there are a few questions where there’s near unanimity, and rent control is one of them. Pretty much every economist agrees that rent controls are bad. …the policy appears to be making a comeback. …City governments may have to relearn why their predecessors pruned back rent-control policies. Rent control is supposed to protect poor, deserving tenants from the depredations of greedy landlords. And it does, up to a point. …The problem is that rent control doesn’t do anything about the reason that rents are rising, which is that there are more people who want to live in desirable areas than there are homes for them to live in. Housing follows the same basic laws of economics as other goods that consumers need… rent control also reduces the incentive to supply rental housing. …an actual solution to skyrocketing rents: Build more housing, so that the rent controls won’t be necessary… To do that, cities would need to ease the costly land-use regulations that make it so difficult for developers to fill the unmet demand. …Alas, that’s not going to happen… Declining housing stock is just one of the many potential costs of rent controls; others include a deteriorating housing stock as landlords stop investing in their properties, and higher rents. Yes, higher, because rent control creates a two-tier housing market. There are cheap, price-stabilized apartments that rarely turn over, because why would you give up such a great deal? Then there are the uncontrolled apartments, which everyone else in the city has to fight over, bidding up the price. …the people getting the biggest benefit are white, affluent Manhattanites.

By the way, you hopefully have noticed a pattern.

Rich people generally get the biggest benefits under rent control.

Let’s close with a look at how economists from across the philosophical spectrum view rent control

Here’s some survey data from the University of Chicago.

Incidentally, there’s an obvious reason why politicians persist in pushing bad policy. In the case of rent control, it’s because tenants outnumber landlords.

So even if politicians understand that the policy will backfire, their desire to get votes will trump common sense. Especially if they assume they can blame “greedy landlords” for the inevitable housing shortages and then push for government housing subsidies as an ostensible solution.

Another example of Mitchell’s Law.

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In 2016, Bernie Sanders was considered very extreme for wanting to transform America into a very expensive European-style welfare state.

If the Democratic Party’s presidential debates this summer are any guide, that radical approach is now mainstream. Almost all the candidates have been competing over who could most quickly turn American into Greece.

The Mayor of New York City, Bill de Blasio, was especially determined to show that he was even more radical than Bernie Sanders. At one point, while watching de Blasio bellow about class-warfare taxes, I thought about a satirical version of the Pizza Hut commercial, with the Vermont Senator exclaiming “No one out-crazies the Bern.”

But give de Blasio credit for tryring. His only signature moment in an otherwise lackluster campaign occurred when he said he wanted to “tax the hell out of the wealthy.”

He even has a www.taxthehell.com website where he outlines his various proposals to cripple investment and entrepreneurship by imposing confiscatory taxes.

In other words, he is like Crazy Bernie in that he seems to really believe in ever-larger government. Consider these excerpts from a Q&A session he did with New York Magazine.

…our legal system is structured to favor private property. I think people all over this city, of every background, would like to have the city government be able to determine which building goes where, how high it will be, who gets to live in it, what the rent will be. I think there’s a socialistic impulse, which I hear every day, in every kind of community, that they would like things to be planned in accordance to their needs. And I would, too. Unfortunately, what stands in the way of that is hundreds of years of history that have elevated property rights… Look, if I had my druthers, the city government would determine every single plot of land, how development would proceed. And there would be very stringent requirements around income levels and rents. That’s a world I’d love to see, and I think what we have, in this city at least, are people who would love to have the New Deal back, on one level. They’d love to have a very, very powerful government, including a federal government… I’m calling for a millionaires tax… need to see the wealthy paying their fair share. It frustrates me greatly that we don’t have the power here to tax the wealthy in this city.

Not only does he talk the talk, he also walks the walk.

Albeit in a bad way.

Here are some excerpts from a news report about one of his attacks on property rights.

Liberal New York City Mayor Bill de Blasio is rolling out a new plan that would potentially allow the city government to seize buildings of landlords who force tenants out — a plan his opponents say amounts to “straight communism.” De Blasio…wants to take action against landlords who try to force tenants out by making the property unliveable — and pulled out an executive order to create a Mayor’s Office to Protect Tenants. He said that in the event the government intervenes, the buildings would then be controlled by a “community nonprofit.” …“My first reaction was: Is this communist Cuba?” state Assemblymember Nicole Malliotakis, who ran against De Blasio in the 2017 mayoral race, told Fox News. “ I can say that as a daughter of Cuban refugees who fled Castro’s Cuba in 1959, this is what happened to her family, she had her home taken, my grandfather had his gas station taken.” “This is extreme even for Mayor de Blasio, because we know that he has socialist leanings, but this is straight communism and I think it’s very scary to America-loving, democracy-loving people.”

By the way, I’m guessing that landlords are in a tough position because of NYC’s rent control laws.

To be fair, many of the problems in New York City didn’t start with de Blasio.

There’s a long history of wasting money.

To be more specific, unfunded pensions are the biggest reason NYC is in deep trouble.

…the city is staring bankruptcy in the face. …but there’s been little talk about one of the main causes of the city’s growing debt: public employee pensions. As of today, nearly 75 percent of the city’s $197.8 billion deficit is due to pension and other retirement liabilities. …Sick of high taxes, residents and businesses are already leaving in droves… NYC offers five different pension plans to its municipal employees, from teachers to members of the school board. These pensions serve as a source of retirement income to former city employees and are defined benefit plans, meaning that benefits are guaranteed by the employer. …it’s no surprise that the pension plans’ funded ratio, which shows the ratio of the plans’ assets to liabilities, has dropped to 71.4 percent for NYCERS and 58.6 percent for TRS—thanks to accumulated debt. …for every dollar spent on NYCERS payroll, 34 cents goes toward pensions, and that number is 10 cents higher for TRS. …Pension contributions make up 11 percent of the city’s total budget and consume 17 percent of the city’s tax revenues. And it’s worth remembering that in the city ranked number one in local tax burden in the United States.

As you might suspect, Mayor de Blasio certainly isn’t doing anything to address this problem.

I’m simply noting that the problem existed before he took office and presumably would still exist with any other mayor.

And there are other officials in New York City who deserve scorn.

Manhattan District Attorney Cy Vance is a traveling man with some high-end tastes. The prosecutor spent $249,716 on meals and work trips to everywhere from the City of Angels to the City of Lights over the past five years, according to records obtained via a Freedom of Information Law request. Vance paid for it all – including a $4,780 roundtrip flight to London and a $2,800 stay at a five-star Paris hotel – with money his office obtained from state-asset forfeiture funds largely tied to big-sum legal settlements with banks, records show. He controls more than $600 million stemming from forfeitures. …the other city district attorneys say they did not use asset forfeiture money to cover their work travel expenses. …Vance also does not skimp when it comes to eating out… He spent $645 at Patroon on East 46th Street to cover dinner… Vance also has expensed five meals at Tribeca’s Odeon for a total of $897… During his Paris visit, he spent $94 at Le Nemrod, $124 at Marco Polo, $72 at Le Saint Regis and $169 at Le Christine, according to the expense reports. …DAs have wide-ranging flexibility on how asset forfeiture money is used. Expenditures must cover “law enforcement” issues — but few other rules exist.

Here’s a map showing Vance’s travel.

By the way, the most outrageous part of this story isn’t the luxury travel or the expensive meals.

What really irks me is that his high-flying lifestyle is made possible by asset forfeiture, which is what happens when the government steals someone’s property – oftentimes without any finding of guilt!

The bottom line is that New York City has a terrible mayor, but the problem goes way beyond one person.

Which is why this final story, from Bloomberg, should be the canary in the coal mine when contemplating the future of the city.

New York leads all U.S. metro areas as the largest net loser with 277 people moving every day — more than double the exodus of 132 just one year ago. Los Angeles and Chicago were next with triple digit daily losses of 201 and 161 residents, respectively. This is according to 2018 Census data on migration flows to the 100 largest U.S. metropolitan areas compiled by Bloomberg News. …While New York is experiencing the biggest net exodus, the blow is being softened by international migrant inflows. From July 2017 to July 2018, a net of close to 200,000 New Yorkers sought a new life outside the Big Apple while the area welcomed almost 100,000 net international migrants. …Some areas are affected by high home prices and local taxes, which are pushing residents out and deterring potential movers from other parts of the country. About 200,000 residents left New York last year. Los Angeles had a decline of nearly 120,000 and Chicago fell by 84,000.

Here’s the map showing the cities losing the most people and gaining the most people.

By the way, it’s no coincidence that most of the fast-growth cities are in states with no income taxes.

P.S. Mayor de Blasio wants to “tax the hell out of the wealthy” in New York City, but fortunately he’s been somewhat frustrated in that goal because of limits on his power.

P.P.S. Because taxpayers in NYC no longer have unlimited ability to deduct their state and local taxes on their federal returns, the 2017 tax law almost certainly is contributing to the exodus from New York City. And every time one of those taxpayers escape, NYC gets closer to fiscal crisis.

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San Francisco used to be famous for cable cars.

Now it’s getting well known for its “poop patrol” and maps that warn people about the ubiquitous presence of human excrement.

Why are people defecating on city sidewalks? Because there’s a major problem with government-created homelessness thanks to rent control and zoning restrictions.

And homelessness gives us our topic for today because we have an astounding example of government waste.

More specifically, a story from the San Francisco Chronicle nicely summarizes the efficiency and competence of the public sector.

An experiment to put a homeless shelter in a San Francisco public school gym has so far been a costly failure, …costing taxpayers about $700 for each person who spends the night. …only five families have used the facility at 23rd and Valencia streets in the Mission, with an average occupancy of less than two people per night… The facility is completely empty several nights each month, Kositsky said, although shelter workers are on-site seven nights a week and through holidays, whether anyone shows up or not.

I’ve been to San Francisco many times. Hotels are not cheap.

But I’ve never had to pay anywhere close to $700 per night.

Though maybe this San Francisco program is a bargain since it costs the state $1.3 million per year to house a homeless person.

So why did the city create this boondoggle? For the same reason that many programs are created. Politicians and bureaucrats exaggerated about a problem.

Supervisor Hillary Ronen and the school’s administrators…advocated for the shelter, saying there were dozens of families facing homelessness at Buena Vista Horace Mann who needed someplace to sleep. The principal at the time, Richard Zapien, said he had identified 60 families in unstable housing.

But here’s a passage that captures the real story.

This program was created to funnel money to a non-profit group and I wouldn’t be surprised to learn that officers of this group are supporters (campaign cash, get-out-the-vote, etc) of the politicians who created the program.

The city has been paying the nonprofit Dolores Street Community Services $40,000 per month to manage the shelter, and if it were to be successful, would spend up to $900,000 per year to serve up to 20 families at a time with all-night staffing, food and support services to help them find permanent housing.

In other words, we have another example of how government is a racket.

No matter how flawed and foolish a program may be, never forget that it’s putting unearned money in the pockets of some group of people. And that group of people know how to play the game, since they then recycle some of the loot back to the politicians.

Politicians don’t care if the money is wasted. They don’t care if there’s rampant fraud.

They’re simply buying votes. With our money.

P.S. There is a sure-fire way of reducing this kind of corrupt behavior, but don’t hold your breath expecting it to happen.

P.P.S. Though you may want to hold your breath if you visit the city.

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The Bureaucrat Hall of Fame recognizes government employees who go above and beyond the call of duty in terms of getting over-paid or being under-worked.

Or both.

Adding insult to injury, many recipients of this award are employed by bureaucracies that shouldn’t even exist.

Today we’re going to look at the Oakland police department, which is a part of the government that presumably should exist (though Camden, NJ, shows that maybe we shouldn’t make that assumption).

The Oakland PD is notorious for being over-compensated, but one cop stands out.

Eric Boehm of Reason has the sordid details.

When Oakland, California, police officers are needed at Golden State Warriors basketball games and other special events, Malcolm Miller is the officer in charge of making those assignments. Often, he assigns himself. As a result, Miller has become one of the highest paid officers in the department. He’s earned nearly $2.5 million over the past five years—most of it overtime pay—according to data collected by Transparent California, a watchdog group.

What a scam.

It’s highly likely that Mr. Miller is a basketball fan, so he’s figured out a great racket.

He basically gets a big pile of money for going to the games.

He and his colleagues are making out like bandits.

…he’s hardly the only officer to take advantage of poor oversight and a general lack of accountability. According to the audit, 217 officers worked roughly 520 hours of overtime last year, helping to cost the department more than $30 million in overtime pay—about twice as much as had been budgeted. Over the past four years, overtime expenditures have ranged from $28 million to $31 million. Proper documentation of overtime work was lacking in 83 percent of cases, the auditors found.

Though Officer Miller might not be the worst of the group.

One officer was paid for more than 2,600 hours of overtime—equal to 108 days of round-the-clock work—in just a single year.

So how do cops get away with this scam?

Simple, they make sure to negotiate contracts that have sweetheart provisions that they can exploit.

And why does Oakland agree to such contracts?

Well, as Michael Ramirez illustrated, bureaucrat unions give lots of money to state and local politicians, and those politicians then conspire with the unions to give them contracts with the sweetheart provisions.

Let’s close by looking at an example of this kind of scam.

Perhaps the most stunning part of the audit is the explanation of a department-wide policy that allows Oakland cops to accrue 1.5 hours of “comp time” for every hour of overtime worked. When an officer cashes in that comp time and isn’t working, other officers have to work overtime to fill the gap. That creates a cascade of additional overtime pay—10 hours of overtime creates 15 hours of comp time, which some other cop has to work, earning 22.5 hours of comp time (if they’re also working overtime), and so on.

Here’s the accompanying illustration.

How ridiculous. Extra money for overtime, combined with being able to work fewer hours in the future. Which then gives other cops an opening to rack up more overtime pay.

Everyone wins…except for taxpayers.

P.S. Some bureaucrats earn admission to the Bureaucrats Hall of Fame by misbehaving. Often in very strange ways.

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While I constantly criticize the statist policies that are imposed in California, I can understand why people want to live there.

There’s plenty of sunshine, a temperate climate, low humidity, and nice scenery.

I even realize that lots of people like San Francisco, even though it’s too chilly and too urban (and too officious and too regulatory) for my tastes.

And too expensive. Not just for me. For almost everyone.

In a column for the Washington Post, Karen Heller opines that San Francisco faces some serious problems. Here are some excerpts from her piece.

In a time of scarce consensus, everyone agrees that something has rotted in San Francisco. Conservatives have long loathed it as the axis of liberal politics and political correctness, but now progressives are carping, too. They mourn it for what has been lost, a city that long welcomed everyone and has been altered by an earthquake of wealth. …Real estate is the nation’s costliest. …a median $1.6 million for a single-family home and $3,700 monthly rent for a one-bedroom apartment. …In the shadow of such wealth, San Francisco grapples with a very visible homeless crisis of 7,500 residents, some shooting up in the parks and defecating on the sidewalks, which a 2018 United Nations report deemed “a violation of multiple human rights.” Last year, new Mayor London Breed assigned a five-person crew, dubbed the “poop patrol,” to clean streets and alleys of human feces. …“Our rich are richer. Our homeless are more desperate. Our hipsters are more pretentious,” says Solnit, who once wrote that “San Francisco is now a cruel place and a divided one.” …San Francisco has…the lowest percentage of children, 13.4 percent, of any major American city, and is home to about as many dogs as humans under the age of 18. …the African American population has withered to 5.5 percent compared to 13.4 percent a half century ago.

While Ms. Heller does a good job of describing how San Fran has become a city that’s unaffordable for anyone who’s not a rich, single, hipster, she doesn’t explain why that’s the case.

Though she does quote one resident who says it’s the fault of the free market.

“This is unregulated capitalism, unbridled capitalism, capitalism run amok. There are no guardrails,” says Salesforce founder and chairman Marc Benioff, a fourth-generation San Franciscan who in a TV interview branded his city “a train wreck.”

Is Mr. Benioff right? Has San Francisco become Hong Kong on the Bay?

Interestingly, Farhad Manjoo also wrote about the city.

But his column for the New York Times puts the blame on his fellow leftists.

…look at San Francisco… One of every 11,600 residents is a billionaire, and the annual household income necessary to buy a median-priced home now tops $320,000. Yet the streets there are a plague of garbage and needles and feces… At every level of government, our representatives, nearly all of them Democrats, prove inadequate and unresponsive to the challenges at hand. …Creating dense, economically and socially diverse urban environments ought to be a paramount goal of progressivism. …Urban areas are the most environmentally friendly way we know of housing lots of people. We can’t solve the climate crisis without vastly improving public transportation and increasing urban density. …Yet where progressives argue for openness and inclusion as a cudgel against President Trump, they abandon it on Nob Hill and in Beverly Hills.

And he argues that the solution is…gasp…capitalism!

More specifically, he says government-imposed zoning must be curtailed so the market can provide more housing.

…California lawmakers used a sketchy parliamentary maneuver to knife Senate Bill 50, an ambitious effort to undo restrictive local zoning rules and increase the supply of housing. …because the largest American cities are populated and run by Democrats — many in states under complete Democratic control — this sort of nakedly exclusionary urban restrictionism is a particular shame of the left. …This explains the opposition to SB 50, which aimed to address the housing shortage in a very straightforward way: by building more housing. The bill would have erased single-family zoning in populous areas near transit locations. …wealthy progressive Democrats are…keeping housing scarce and inaccessible…to keep people out. “We’re saying we welcome immigration, we welcome refugees, we welcome outsiders — but you’ve got to have a $2 million entrance fee to live here, otherwise you can use this part of a sidewalk for a tent,” said Brian Hanlon, president of the pro-density group California Yimby.

This is very remarkable analysis, especially since it comes from someone who is so far to the left that he actually proposed to criminalize billionaires.

By the way, I’m obviously not a fan of zoning laws, but it’s easy to understand why some people defend them.

In part, they like the fact that such laws artificially increase the value of their property. And I’m sure some of them are genuinely fond of their neighborhoods and don’t want things to change.

And I’ll even admit they have a point when they argue that changing zoning laws is a bit like breach of contract. After all, people move into a neighborhood under a certain set of rules and regulations.

But my sympathy has very narrow limits. And if you want to understand why, watch this video from the folks at Reason.

The bottom line is that the mess in San Francisco is a teachable moment. It’s helping folks on the left understand that government regulations impose very real costs.

And the fact that Farhad Manjoo is on the right side (at least on this one issue) means a teachable moment actually became a learnable moment.

P.S. San Francisco also has onerous rent control laws. So local officials not only make it difficult to build housing, they also make it difficult to make a profit on housing that’s already there. That means big windfalls for a few insiders, but scarce housing for everyone else.

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There are several options if you want to measure economic freedom and competitiveness among nations (rankings from the Fraser Institute, Heritage Foundation, and World Economic Forum).

You also have many choices if you want to measure economic freedom and competitiveness among states (rankings from the Tax Foundation, Mercatus Center, and Fraser Institute).

But there’s never been a good source if you want to know which local jurisdiction is best.

Dean Stansel of Southern Methodist University is helping to fill this gap with a report looking at the relative quality of government policy in various metropolitan statistical areas (MSAs encompass not just a city, but also economically relevant suburbs).

…the level of economic freedom can vary across subnational jurisdictions within the same country (e.g., Texas and Florida have less-burdensome economic policies and therefore much greater economic freedom than New York and California). However, levels of economic freedom can also vary within those subnational jurisdictions. For example, the San Jose metro area has substantially higher economic freedom than Los Angeles. The same is true for Nashville compared to Memphis. In some places, metropolitan areas straddle state borders, skewing state-level economic data. This report quantifies those intra-state disparities by providing a local-level version of the EFNA, ranking 382 metropolitan areas by their economic freedom levels.

So who wins this contest?

Here are the five most-free MSAs. It’s worth noting that all of them are in states with no income tax, which shows that good state policy helps.

What if we limit ourselves to large cities?

Here are the five most-free MSAs with population over 1 million. As you can see, Houston is in first place and zero-income-tax Texas and Florida are well represented.

Now let’s shift to the localities on the bottom of the rankings.

Which MSA is the worst place for economic freedom in America?

Congratulations to El Centro in California for winning this booby prize. As you can see, jurisdictions in New York and California dominate.

What if we look are larger jurisdictions, those with over 1 million people?

In this case, Riverside-San Bernardino-Ontario is the worst place to live.

Though if you want to focus on big cities, the NYC metro area deserves special mention.

Now let’s consider why economic freedom matters.

I’ve shared charts showing how more economic freedom leads to more prosperity in nations.

The same thing is true for states.

So you shouldn’t be surprised to discover that it also is true for metro areas.

Last but not least, here’s a map showing freedom in all MSAs.

I’m not surprised to see so much red in California and New York, but I didn’t realize that Ohio (thanks for nothing, Kasich), Oregon, and West Virginia were so bad.

And the good results for Texas and Florida are predictable, but I didn’t think Virginia would look so good.

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I’ve periodically opined about why politicians should not try to control people’s behavior with discriminatory taxes, such as the ones being imposed on soda.

And I’ve cited some examples of how these taxes backfire.

If the following headlines are any indication, we can add Philadelphia to that list.

For instances, this story from the Philadelphia Inquirer.

Or this story from the local CBS affiliate.

These examples reinforce my view that it is not a good idea to let meddling politicians impose more taxes in an effort to control people’s behavior.

Some of my left-leaning friends periodically remind me, however, that there’s a difference between anecdotes and evidence. There’s a lot of truth to that cautionary observation.

To be sure, I could simply respond by saying a pattern is evident when a couple of anecdotes turns into dozens of anecdotes. And when dozens become hundreds, surely it’s possible to say the pattern shows causality.

That being said, it is good to have rigorous, statistics-based analysis if we really want to convince skeptics.

So let’s look at the results of some new academic research from scholars at Stanford, Northwestern, and the University of Minnesota. We’ll start with the abstract, which nicely summarizes their findings about the impact of Philadelphia’s big soda tax.

We analyze the impact of a tax on sweetened beverages, often referred to as a “soda tax,” using a unique data-set of prices, quantities sold and nutritional information across several thousand taxed and untaxed beverages for a large set of stores in Philadelphia and its surrounding area. We find that the tax is passed through at a rate of 75-115%, leading to a 30-40% price increase. Demand in the taxed area decreases dramatically by 42% in response to the tax. There is no significant substitution to untaxed beverages (water and natural juices), but cross-shopping at stores outside of Philadelphia completely o↵sets the reduction in sales within the taxed area. As a consequence, we find no significant reduction in calorie and sugar intake.

Here are some of their conclusions.

We draw several lessons about the effectiveness of local sweetened-beverage taxes from these analyses. First, the tax was ineffective at reducing consumption of unhealthy products. Second, in terms of revenue generation, the tax was only partly effective due to consumers substituting to stores outside of Philadelphia. Third, low income households are less likely to engage in cross-shopping, and instead are more likely to continue to purchase taxed products at a higher price at stores in Philadelphia. The lower propensity for low income households to avoid the tax through cross-shopping leads to a relatively larger tax burden for those households. In summary, the tax does not lead to a shift in consumption towards healthier products, it affects low income households more severely, and it is limited in its ability to raise revenue.

If you’re wondering why consumers responded so strongly, here’s a chart from the study showing the price difference after the tax was imposed.

The bottom numbers in Figure 3 show that some sales still occurred in the city, but a persistent gap between city sales and suburban sales appeared.

And here’s what happened to sales inside the city (taxed) and outside the city (untaxed).

Wow. This data makes me wonder if suburban sellers will start contributing to the Philadelphia politicians who have generated this windfall?

Others have noticed how the tax is hurting rather than helping.

The Wall Street Journal opined about the failure of Philly’s soda tax.

When Philadelphia became the first major U.S. city to pass a soda tax in 2016, Mayor Jim Kenney said it would improve public health while funding universal pre-K. Two years in, the policy hasn’t delivered on that elite ideological goal. But the tax has come at the expense of working people… On Jan. 2, Brown’s Super Stores announced the closure of a ShopRite on Haverford Avenue. The supermarket is close to the city limit, and customers discovered they could avoid the soda tax by shopping outside Philly. …the once-profitable store began losing about $1 million a year. …That means fewer opportunities for workers with a criminal record. Mr. Brown’s supermarkets employ more than 600 of them, with the majority in Philadelphia. Some of the ex-cons have become his most-valued employees.

And Kyle Smith explained in National Review how the tax backfired.

Philadelphia’s outlandish soda tax is what Democratic-party politics looks like when it lets its freak flag fly. So many classic elements are there: (failed) social engineering and “think of the children!” on one side, paid for with a punitive tax on poor people and destroyed businesses, which means destroyed jobs, which in turn means lives upended. …Now that beer is, in some cases, cheaper than soda in Philadelphia, alcohol sales are up sharply. …the total loss attributable to the tax in sales of all items was $300,000 a month per store. Other, untaxed drinks also suffered sales declines within the city, suggesting people were simply saving up their shopping trips for when they left town.

I don’t feel compelled to add much to what’s been cited.

Though I will cite a headline from the Seattle Times to reinforce one of the points in the academic study about consumers bearing the cost of the tax rather than the soda companies.

And my one modest contribution to all this analysis is this comparison of the winners and loser from Philadelphia’s new tax.

For what it’s worth, similar comparisons could be developed for just about every action by every government. Academics call this “public choice” while ordinary people realize it’s just common sense.

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I often write about the failure of government.

In other words, there’s lots of evidence that government spending makes things worse.

Needless to say, this puts a lot of pressure on folks who favor bigger government. They desperately want to find any type of success story so they can argue that increasing the size and scope of the public sector generates some sort of payoff.

And they got their wish. Check out the ostensibly good news in a story from the San Fransisco Chronicle.

Investing billions of dollars in affordable housing and homeless programs in recent years has apparently put the brakes on what had been a surge in California’s homeless population, causing it to dip by 1 percent this year, a federal report released Monday showed. …The report put California’s homeless population this year at 129,972, a drop of 1,560 in the number of people on the streets in 2017. …“I think San Francisco has shown that when targeted investments are made, we see reductions in homelessness here,” Kositsky said. He pointed out that family, youth and chronic veterans homelessness dropped in the city’s last full count — although the number of chronically homeless people went up.

Maybe I’m not in the Christmas spirit, but I don’t see this as a feel-good story.

Are we really supposed to celebrate the fact that the government spent “billions of dollars” and the net effect is that the homeless population dropped just 1 percent?

The story doesn’t contain enough details for precise measurements, but even if we assume “billions” is merely $2 billion, then it cost taxpayers close to $1.3 million to get one person off the street. For that amount of money, taxpayers could have bought each of them a mansion!

In other words, the program has been a rotten investment. Heck, it makes Social Security seem like a good deal by comparison.

To be sure, maybe the number isn’t quite so bad because we’re comparing multi-year outlays with a one-year change in the homeless population. Though maybe the number is even worse because taxpayers actually coughed up far more than $2 billion.

The bottom line is that if my friends on the left see this as an example of success, I’d hate to see their definition of failure.

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I wrote back in 2011 about a bizarre plan in California to regulate babysitting.

You may be thinking that’s no big deal because California is…wellCalifornia.

But other governments also want to control private child care decisions. The latest example is from the District of Columbia, which is going after children’s play groups.

Lenore Skenazy explains the craziness in a column for Reason.

For 45 years, parents have brought their two-year-olds to the Lutheran Church of the Reformation as part of a cooperative play school endeavor. It’s a chance to socialize with other haggard moms and (presumably some) dads dealing with the terrible twos, and it’s volunteer run. …The problem—which isn’t actually a problem, unless you define it as such—is that because the play group has some rules and requirements, including the fact that parents must submit emergency contact forms, as well as tell the group when their kid is sick, the play group is not a play group but a “child development facility.” And child development facilities are subject to regulation and licensing by the government. As Lips points out, this actually creates an incentive for parent-run play groups to be less safe, because if they don’t have rules about emergency contact info, and how to evacuate and such, they are considered officially “informal” and can go on their merry, possibly slipshod, way… Take a step back and you see a group of people—toddlers and parents—enjoying themselves. They’re meeting, playing, and perfectly content. But another group is trying to butt in and end the fun—and the convenience.

And what is that “annoying group”? It’s the bureaucrats who issued the play group a “statement of deficiencies.”

The Wall Street Journal also opined on the issue.

The District of Columbia is literally targeting preschool play dates, claiming that parents need city approval before they can baby-sit their friends’ toddlers. Since the 1970s, parents have organized play dates at the Lutheran Church of the Reformation on East Capitol Street. They formed a nonprofit to pay for the rent, insurance, snacks and Play-Doh, and each family chips in about $200 a year to cover expenses. …The fun and games ended Sept. 7 when gumshoes from the D.C. Office of the State Superintendent of Education showed up. They claimed the Capitol Hill Cooperative Play School counts as a day care center and is operating unlawfully. If the bureaucrats get their way, the co-op would have to hire a director with a background in childhood education or development, apply and pay for a license, obtain permits and abide by all other day-care regulations.

And you won’t be surprised to learn that day-care regulations in DC are ridiculously expensive and misguided.

Anyhow, the WSJ also observes that the play school could evade red tape by being less-well organized. Heckuva set of incentives!

…the day-care police claim the Capitol Hill Cooperative Play School is “formal” because it has a website, draws participants from a hat to limit play-date sizes, and hosts scheduled get-togethers. In other words, the parents aren’t organized enough for the government’s satisfaction but are too organized to escape its harassment. …State Superintendent of Education Hanseul Kang is pushing for more government control over the play dates. She wants mandatory emergency drills, sign-out sheets, CPR and first-aid certification for parent volunteers, limits on the frequency and number of hours co-ops can meet, among other requirements. Nannying the nannies will make life tougher on parents—who have a greater interest than the D.C. government does in ensuring their kids are in good hands.

The final sentence of that excerpt is key.

Parents aren’t perfect, but they have a far greater stake in making right decisions than a bunch of busy-body bureaucrats looking to expand their power.

P.S. This is one of the reasons I support school choice (and also object to throwing more money into government schools). Parents are far more likely to do right for their kids than faraway self-interested bureaucrats.

P.P.S. The bureaucratic version of the keystone cops would include the play-group police in addition to the milk police and the bagpipe police.

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Back in 2012, I was both amused and horrified to learn that the Greek government actually required entrepreneurs to submit…um…stool samples if they wanted to set up online companies.

Well, there’s apparently a surplus of that…er…material on the streets of San Francisco. A local radio station even shared a map of places to avoid (or to seek out, who am I to judge?).

It’s become such a big problem that the city’s government decided to act. But instead of enforcing rules against public defecation, they’ve created a new bureaucracy. I’m not joking.

Some people are questioning the city’s priorities, as reported by the Sacramento Bee.

San Francisco’s…flush with potty problems — the city has received 14,597 complaints about feces on its sidewalks since January… Now city leaders have unveiled plans for a six-person poop patrol to try to address the issue… But the very concept of a poop patrol inspired skepticism, mockery and, yes, poop emojis… “Instead of telling people to USE A BATHROOM!! San Francisco is going to send out a pooper scooper Patrol to pick it up,” wrote one person. “Lord help us all.” …Others posting to Twitter had questions. “Will the poop patrol get hazardous duty pay?” asked one person, while another wanted to know.

Business Insider has details about this new “poop patrol.”

In San Francisco, you can earn more than $184,000 a year in salary and benefits for cleaning up feces. As members of the city’s “Poop Patrol,” workers are entitled to $71,760 a year, plus an additional $112,918 in benefits… The staffers will begin their efforts each afternoon equipped with a steam cleaner for sanitizing the streets. The full budget for the initiative, $830,977, signifies a concerted effort to address the city’s mounting feces problem, which has resulted in more than 14,500 calls to 311.

That’s a lot of money, though this is a rare instance of where I won’t make my usual argument about bureaucrats being overpaid.

In any event (as is so often the case), bad government policy is the root cause of the problem.

While the high salaries of sanitation workers may incentivize further cleanup, the city will ultimately have to contend with its affordability crisis if it hopes to eliminate the problem. That would mean addressing restrictive zoning laws that make it both difficult and expensive to add affordable developments.

Yes, there’s this simple concept called supply and demand. And when San Francisco politicians don’t let people use their property to create more housing, then ever-higher prices are an inevitable result. But I guess they are too busy dealing with real problems…such as toys in Happy Meals.

To be sure, I’m not under any illusion that abolition of zoning laws and creation of a laissez-faire housing market would completely solve the poop problem. Much of that anti-social behavior is probably linked to mental illness and/or drug abuse.

But less zoning would mean less s**t. Seems like a compelling bumper sticker to me.

P.S. I don’t know if this story belong in my series on “Great Moments in Local Government” or if the poop patrol belongs in the “Bureaucrat Hall of Fame.”

P.P.S. Things can always get worse. Senator Kamala Harris has a hare-brained proposal that would trigger even higher prices for rental housing.

P.P.P.S. San Francisco also has a poop problem even when people use toilets instead of sidewalks.

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When I first created the Bureaucrat Hall of Fame, I confess that my standards were a bit slack. I awarded membership to government workers that are grossly overpaid (see here and here, for instance), but otherwise didn’t really do anything special to merit awards.

In recent years, I’ve been more judicious. I only give the “honor” to bureaucrats who go above and beyond the call of duty.

  • A new Jersey bureaucrat got almost $250,000 per year for simultaneously holding six different government jobs.
  • Figuratively screwing taxpayers wasn’t good enough for a welfare bureaucrat in Pennsylvania.
  • The civil servant at the Veterans Administration who overlooked deadly waiting lists but had…um…time on his hands for other things.

There’s even a foreign wing in the BHoF

We’re going to expand our list today, but by using a different approach. We’re going to have a poll so you can decide which bureaucrat is most worthy.

Is Darryl De Sousa the most deserving?

Federal prosecutors have charged Baltimore Police Commissioner Darryl De Sousa with three misdemeanor counts of failing to file federal taxes… De Sousa, 53, willfully failed to file federal tax returns for 2013, 2014 and 2015 despite having been a salaried employee of the Police Department in those years, prosecutors said Thursday. …“There is no excuse for my failure to fulfill my obligations as a citizen and public official,” he said in a statement. “My only explanation is that I failed to sufficiently prioritize my personal affairs.” …Mayor Catherine Pugh expressed “full confidence” in De Sousa. …De Sousa earned $93,104 in 2013, when he is first accused of failing to file taxes. He earned $101,985 in 2014 and $127,089 in 2015. …The Police Department routinely suspends with pay officers accused of a misdemeanors pending the outcome of the case. De Sousa remained on the job Thursday. He currently earns a salary of $210,000 a year.

Does Thomas Tramaglini merit this award?

The Kenilworth school superintendent charged Monday with defecating in public was caught in the act at the Holmdel High School football field and track after surveillance was set up due to human feces being found “on a daily basis,” police said. Thomas Tramaglini, 42, …was running at the track on the athletic fields at 5:50 a.m. before he was arrested. Track coaches and staff at Holmdel High School told the district’s resource officer that they found human feces on or near the football field and track daily… Tramaglini is also charged with lewdness and littering.

Should Donn Thompson win the prize?

Los Angeles firefighter Donn Thompson had a busy year in 2017. If his pay stubs are to be believed, he literally never stopped working. Data obtained by Transparent California…show that Thompson pulled down $300,000 in overtime pay during 2017, on top of his $92,000 salary. Over the past four years, Thompson has earned more than $1 million in overtime… To earn that much in overtime pay, Thompson would have had to work more hours than actually exist in a single year. Either the highly paid firefighter found a way to stretch the space-time continuum or something fishy is going on. …earning $302,000 at a rate of $47.40 per hour would require working more than 6,370 hours. Add that to the 2,912 hours he worked as a salaried employee, and you get more than 9,280 hours worked, despite the fact that there are only 8,760 hours in a year. …Thompson…might very well be the highest paid firefighter in American history. …During 2017, the Los Angeles Fire Department had 512 employees who cashed in with at least $100,000 in overtime pay… Thompson was one of 26 employees to get at least $200,000 in overtime pay.

This is a tough contest.

In Baltimore, I suspect ordinary people don’t get a mulligan when they commit a crime, so Mr. De Sousa’s kid-glove treatment stands out. I’m also impressed (in a bad way) that his salary soared from $93K to $210K in just five years. Nice work if you can get it.

On the other hand, Mr. Tramaglini has…um…layed down a special type of marker. Was he inspired by fellow bureaucrats from the Postal Service and Environmental Protection Agency?

But let’s not forget Mr. Thompson. Claiming to have worked more hours than actually exist is rather extraordinary. Though ripping off taxpayers apparently is a tradition for firefighters, particularly in California.

As they say in Chicago, vote early and vote often.

If you like making your opinion heard, my most recent poll was about which state will be the first to suffer political collapse. And my favorite poll was to pick the best political cartoonist.

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I wrote last July about how greedy politicians in Seattle, Washington, were trying to impose a local income tax.

That effort has been stymied since there’s anti-income-tax language in the state constitution (Washington is one of nine states without that punitive levy), but that doesn’t mean the city’s tax-and-spend crowd has given up.

There’s a proposal for a new scheme to impose a “head tax” on successful companies.

The top three percent of the high grossing businesses in Seattle will carry the load of Seattle’s proposed employee head tax. Backers are calling it the “Progressive Tax on Business.” The tax will apply only to those companies with $20 million or more annually in taxable gross receipts as measured under the City’s Business and Occupation tax. The city estimates that will be 500 businesses. …the tax is based on total revenues and not net-income. …Councilmember Mike Obrien has been pushing to a head tax for two years and doesn’t believe businesses will leave Seattle because of it.

I suppose this might be a good opportunity to point out that this tax is bad for growth and that it will encourage out-migration from the city.

Or perhaps I could make a wonky point about how this tax is related to the income tax in the same way a gross receipts tax is related to a sales tax.

But I’m motivated instead to focus on the very heartening response to this tax grab by both business and labor.

Here’s how the city’s leading employer is responding.

Amazon is…making its opposition known to a proposed Seattle tax by bringing a halt to all planning on a massive project scheduled for construction in Downtown Seattle, and may tweak its plans to occupy a new downtown skyscraper. “I can confirm that pending the outcome of the head tax vote by City Council, Amazon has paused all construction planning on our Block 18 project in downtown Seattle and is evaluating options to sub-lease all space in our recently leased Rainier Square building,” says Amazon Vice President Drew Herdener. …Jon Scholes, president of the Downtown Seattle Association, said the City Council should take heed of Amazon’s decision.

But some of the class-warfare politicians are oblivious to real-world concerns.

Two supporters of the tax, City Council members Kshama Sawant and Mike O’Brien, seemed unmoved by Amazon’s decision. “I understand Amazon doesn’t like it. I’m sure they would love to go to a city that has no taxes. And maybe they will find that place,” O’Brien said. …Added Sawant, “Amazon is perfectly capable of paying that, double, even four times that.” She also called Amazon’s tactic “extortion.”

I don’t know if Sawant is an idiot or a demagogue. What’s she’s basically arguing is that if a victim runs away from a mugger, the victim is an extortionist.

Wow, that’s a novel (and French) way of looking at the world.

That being said, there’s probably nothing surprising about the business community resisting a tax on business. So here’s the part of the story that really warms my heart.

Private-sector workers also are protesting.

Construction workers shouted down Seattle City Councilmember Kshama Sawant on Thursday as she attempted to speak in favor of Seattle ‘s proposed new “head tax” at an open-air news conference. The construction workers shouted “No head tax!” each time Sawant tried to speak in favor of the measure… The conference, held outside Amazon’s Spheres, was intended to show support for the head tax and opposition to Amazon’s announcement of a construction pause on a massive downtown construction project. But the group of about 20 construction workers showed up and drowned out Sawant’s message. …construction workers…praised Amazon for providing well-paying jobs to thousands of Seattle-area residents.

Unsurprisingly, Ms. Sawant doesn’t care about workers. She simply wants the money so she can buy votes.

Amazon would pay more than $20 million of that total under the proposal. …Sawant maintains that Amazon could easily afford to pay that amount.

Let’s close with some good news. Seattle isn’t normally considered a hotbed of free market thinking (though a disproportionate share of my readers are in the state of Washington).

So I’m guessing Ms. Sawant and her greedy colleagues probably are not very happy about this (admittedly unscientific) polling data.

This is very encouraging. Hopefully it’s a sign of the good things that can happen with private workers (unionized or not) and private employers join forces to protect themselves from politicians.

It will be interesting to see how the City Council responds. If they move forward with this tax grab, Seattle truly will be in the running to the Greece of America.

And if that trend continues, don’t be surprised if Amazon’s soon-to-be-announced second headquarters eventually morphs into its primary headquarters (hopefully without any cronyism).

P.S. It goes without saying (but I’ll say it anyhow) that the state of Washington should never, ever, allow a state income tax.

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Back in 2013, I shared a poll to see who people would pick as their “favorite political cartoonist.” Michael Ramirez currently has the lead, which doesn’t surprise me when you look at options (here, here, here, and here) I provided.

But if there was a prize for the most depressingly accurate political cartoon, he also would win the prize for his depiction of what happens when state and local politicians “negotiate” compensation packages for bureaucrats.

Simply stated, politicians have a giant incentive to provide lavish benefits to interest groups that then recycle some of the loot back to elected officials in the form of campaign contributions.

But the real key to the scam is that the bill gets imposed on future generations.

The American Legislative Exchange Council has a must-read report on the giant funding gaps that this has produced in the pension plans for state and local government bureaucrats.

If net pension assets are determined using more realistic investment return assumptions, pension funding gaps are much wider than even the large sums reported in state financial documents. Unfunded liabilities (using a risk-free rate of return assumption) of state-administered pension plans now exceed $6 trillion—an increase of $433 billion since our 2016 report. The national average funding ratio is a mere 33.7 percent, amounting to $18,676 dollars of unfunded liabilities for every resident of the United States. …the personal share of liability for every resident in each state, an indicator of the severity of the taxes to be borne now or in the future by each taxpayer for promises made but not funded. In Alaska, each resident is on the hook for a staggering $45,689, the highest in the nation. Connecticut, Ohio, Illinois, and New Mexico follow for the five highest per person unfunded pension liabilities.

This map is the most important takeaway from the report. It shows which states have the highest per-capita unfunded liabilities.

I’m not surprised to see Alaska, Illinois, Connecticut, and New Jersey near the bottom of the rankings. All of them were choices in my poll on which state was “most likely to collapse.”

But perhaps New Mexico, Hawaii, and Ohio should have been on that list as well.

For further background on the issue, here are some passages from a pension primer published by Forbes.

Years ago, as an actuarial student, …I remember…first, the eye-popping idea that state constitutions promised state and local employees that they could keep their existing benefits, not just for past service accruals, but for all future years of employment; and, second, the notion that it was generally accepted for public plans to be un- or underfunded… this is the story that’s repeated over and over again.  Pensions are made more generous — with high accrual rates, low retirement eligibility ages, generous cost of living provisions — as a means of providing more generous compensation to state and local employees, without actually needing to pay anything from the current year’s budget.  Costs are deferred until well after current legislators have themselves retired. …pension debt is even worse than ordinary state debts, for instance, bond issues for building up infrastructure.  Pension debt is nothing other than borrowing to pay for present-day employee salaries.

In other words, bureaucrat pensions are a scam, an opportunity for politicians to buy off a powerful voting bloc today while imposing the bill on the future.

Bureaucrats are making out like bandits, as the New York Times recently reported.

A public university president in Oregon gives new meaning to the idea of a pensioner. Joseph Robertson, …who retired as head of the Oregon Health & Science University last fall, receives the state’s largest government pension. It is $76,111. Per month. That is considerably more than the average Oregon family earns in a year. Oregon — like many other states and cities, including New Jersey, Kentucky and Connecticut — is caught in a fiscal squeeze of its own making. Its economy is growing, but the cost of its state-run pension system is growing faster. More government workers are retiring, including more than 2,000, like Dr. Robertson, who get pensions exceeding $100,000 a year. The state is not the most profligate pension payer in America… “It’s an affront to everybody who pays taxes,” said Bruce Dennis, a retired carpenter from outside Portland who earned a $54,000-a-year pension by swinging a hammer for 45 years. No one gives him extra money.

But there’s a problem with this scam.

As Margaret Thatcher famously noted, sooner or later you run out of other people’s money.

And we’re getting to that point, as illustrated by this article for the Wall Street Journal. It cites what’s happening on the state level in Connecticut.

Connecticut has just 31.7% of what it needs to pay its employees’ future retirement benefits, according to state financial reports. A fund for teachers has 52.3%. Together, that adds up to more than $37 billion in unfunded pension liabilities, or about $10,300 per Connecticut resident. Connecticut’s unfunded pension liabilities resulted from nearly 40 years of politicians making promises about benefits without adequately funding them, according to a 2015 study by the Center for Retirement Research at Boston College.

And it gives an example of trouble at the local level from a city in Michigan.

East Lansing, home of Michigan State University…is struggling with almost $125 million in unfunded pension and retiree health-care liabilities, has been cutting services… East Lansing asked MSU to pony up $100 million over 20 years to help shore up the city’s underfunded pension plan. The alternative, the city said, was asking voters to approve a 1% income tax that would hit university employees and working students. After negotiations went nowhere, the city brought the income-tax proposal before voters in a referendum last November. …On Nov. 7, East Lansing residents shot down the income-tax referendum, forcing the city to debate what services to cut to save money for the pension obligations. …The city hopes to shed another 17 police and fire positions over the next two years… Altmann suggested a long list of potential cuts to make more room in the budget for increased pension payments: closing the fire station on MSU’s campus, shuttering the city’s pool, aquatic center, dog park and soccer complex, suspending bulk leaf pickup and plowing of public sidewalks and ending annual jazz, folk, film and art festivals.

This is not going to end well.

And the problem seems to get worse every year.

Doesn’t matter who is slicing and dicing the data. The numbers always look grim.

When the next recession hits, many of these simmering problems are going to explode.

P.S. In addition to extravagant and unfunded pensions, don’t forget that state and local bureaucrats (and their federal cousins) are overpaid.

P.P.S. And if you don’t believe that they’re overpaid, then please explain why they don’t voluntarily leave their jobs for positions in the economy’s productive sector?

P.P.P.S. Also keep in mind that there are negative macroeconomic repercussions when bureaucrats are overpaid.

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I periodically fret that individualism is dying in the United States and that Americans are morphing into handout-loving Europeans.

Well, the spirit of 1776 is not completely dead. There are still some Americans who stand up against the greedy, grasping, and oppressive state. I heartily applaud the guy in this video (and not just for personal reasons) for doing what I have thought about many times.

Sonny Bunch, writing for the Washington Free-Beacon, applauds pro-liberty vandalism.

Obviously we shouldn’t cheer all those who destroy the state’s property or all those who circumvent efforts to enforce the law. But some laws are unjust. Some of the state’s property serves to oppress. Sometimes you need a hero. …some laws are good and just. Prohibitions against rape and murder, for instance. We need them. Without laws we are savages. But speed cameras are not included in the “good and just” category. They are revenue-producing monstrosities designed to suck people of their money in order to fill the coffers of bureaucrats… If the corruptocrats in D.C. try to imprison this hero, I promise to lead the resistance in an effort to spirit him southward. We shall protect you, brother. You are one of us now.

I fully concur.

Moreover, this apparently wasn’t a one-off gesture. Washingtonian reports that numerous cameras were knocked out of action.

An unidentified man suspected of smashing 11 of the District’s traffic cameras that produce tickets for drivers who speed or run red lights is being celebrated by some as a hero after DC Police released footage of one camera’s violent demise. Police say that the cameras, located mostly around Northeast DC, were reported to be malfunctioning last Tuesday. When officers checked out the locations, they found the cameras damaged as a result of vandalism.

By the way, I have no objection to cameras that nail jerks who blow through an intersection 3 seconds after a light has turned red. Those are people who risk innocent lives.

But the cameras I’ve noticed are set in spots where the speed limit is set absurdly low. In other words, they are the modern-day version of the speed traps that used to characterize corrupt small towns.

Some people object to speed cameras but think red-light cameras are okay. As already noted, I agree with their safety concerns, but that’s not how government operates.

They’ve turned red-light cameras into a scam, as explained in this Reason video. Greedy politicians actually do dangerous things like shortening the yellow light simply because they want to produce more cash. No wonder they actually cause accidents!

Moreover, Holman Jenkins of the Wall Street Journal explained several years ago how cameras are first and foremost set up to generate money, not to promote safety.

And here’s something else that irritates me. I’m guessing that the cops will put a lot of time and energy into tracking down the guy who knocked the cameras out of commission. Why? Because this is an issue that generates revenue for politicians.

Which raises the bigger issue of whether law enforcement resources are wisely allocated. We saw in Florida that local cops ignored dozens of calls and warnings about the nutjob loser who killed the students in Parkland, Florida (the FBI also dropped the ball as well since they were tipped off). I wonder how often those same cops were busy operating speed traps, engaging in asset forfeiture, and otherwise shaking down residents for cash?

The good news is that the heroic vandal who has gone after D.C.’s cameras is just the tip of the iceberg. Arizona residents basically killed a revenue-camera scam with civil disobedience. And Houston voters voted to shut down the shakedown being operated by their city government.

This spirit of resistance should be nationwide.

Here are three closing observations.

  1. Let’s hope this guy doesn’t get caught.
  2. Let’s also hope that other motorists follow his example and destroy other speed-trap cameras.
  3. Finally, let’s hope that a jury will engage in nullification if the guy is caught.

P.S. There’s also a group of people in England who are acting to thwart greedy, grasping government, albeit in a less revolutionary way.

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Centralization of government power is generally a very bad idea.

But this does not mean that state governments and local governments do a good job.

I’ve previously shared many examples of “great moments in state government” and today I’m going to augment my similarly sarcastic collection of “great moments in local government.”

We’ll start with one of America’s most poorly governed cities. Yes, we’re talking about Chicago.

The city can’t be bothered to stop real crime (indeed, it encourages and enables criminals by disarming law-abiding citizens), but it will nail small business owners with heavy fines for things that shouldn’t even be illegal.

A number of neighborhood small business owners are complaining that the city is overzealously policing sign permits, saying they’ve had to pay thousands of dollars in fines for words painted on their shop windows. “It just seems unfair to make you get a permit for every window panel,” said Scott Toth, owner of Craft Pizza at 1252 N. Damen Ave. …Toth had paid a contractor to paint “boiled bagels,” the hours of a pizza by the slice daily promotion, “pastries” and Sparrow Coffee in a window. Toth got a ticket for that window panel as well as three others that featured the restaurant’s logo. …hand-painted lettering at Dove’s Luncheonette advertising “breakfast, lunch, dinner,” and window script advertising “wedding dress cleaning” and “leather repair” at Wicker Park Cleaners also earned tickets, according to owners of those spots.

If you want to know what the city has achieved, here’s a “before” photo. Obviously a clear and present danger to public safety.

And here’s the “after” picture. Feel safer? Has government protected you?

I don’t know about you, but I’ll sleep more soundly knowing that there’s a crackdown on the scourge of illegal window signs.

Here are some details on Chicago’s inane law.

…city law enforced by the Department of Buildings states that permits are required for non-illuminated painted or vinyl advertising signs or lettering that take up more than 25 percent of any single window. The cost for each on-premise window sign is $200 per sign, plus a Department of Buildings zoning review fee that can vary from $50 to $1000 depending on the size of the sign. …The city requires that a professional contractor apply the lettering or images. Violators face fines of $350 to $15,000 per day until the signs are removed

Now let’s look at how Los Angeles is fleecing citizens.

…it is currently illegal for a pedestrian to step into a crosswalk after the red hand starts, even if there is sufficient time to safely cross. A Los Angeles Times investigation found that 17,000 people in the city were ticketed over a four-year period for stepping off the curb after the countdown had started. …”I don’t believe pedestrians should be preyed upon just to fill local coffers,” Santiago said in May.

Of course, Mr. Santiago is a politician, and I’m guessing he’s a big spender, so he presumably wants to prey on a different group of people.

Here’s a story from Arizona, as reported by Reason. It starts innocently enough, with one person wanting to buy some land but the owner rejecting the price.

For thirty years, Stapleton raised horses and plied his trade as a blacksmith while the city slowly grew up around him. During that time, says Stapleton, no one seemed to care much about his property or what he did with it. Until the former mayor of Phoenix set eyes on it. In 2006, Larry Herring, a representative for former mayor Phil Johnson offered Stapleton $225,000 for his property. Johnson intended to build condominiums next door. Stapleton told Herring his offer was much too low.

But then went awry. The property owner was threatened.

Herring, Stapleton says, told him if he didn’t sell, “bad things are going to happen to you” and that “a stone wall is going to fall on you.”

Unfortunately, city bureaucrats turned the threat into reality.

Shortly after rebuffing Herring’s offer, city officials cited Stapleton with six violations of the zoning code, everything from a fence that was too high, to vehicles improperly parked. The fines were $2,500 and came with the threat of six months in jail for each violation. Stapleton argued each of the violations were for long-standing features of his property, necessary for raising horses. “These things are farm things, and it’s a farm,” Stapleton says. “You didn’t bother me for thirty years. Now somebody wants the property, you want to bother me. And they were going to send me to jail to do it.” Stapleton chose to fight. The city rejected his request for a jury trial and in May 2007, a city judge fined Stapleton $15,000 and sentenced him to three years probation on the condition that he address his code violations or go to jail. At the same time the city was punishing Stapleton it was granting multiple variances to the ex-mayor’s development next door, one of them to allowed him to build a fence a foot higher than the one for which it fined Stapleton.

In a column for the New York Post, Walter Olson describes an insane proposal to help criminals in Philadelphia.

…in Philadelphia, …the city council will consider a bill to force owners of hundreds of small corner stores to take down glass partitions that protect their managers and clerks from being robbed and assaulted. It’s all being rationalized in the name of social justice. …Councilwoman Cindy Bass, who’s sponsoring the measure, …says…“Have you ever been served food at a sit-down restaurant establishment through a solid barrier? That is not acceptable. …What message does it send our children?”

Walter responds to the Councilwoman’s rhetorical question.

…it sends several messages. One is a moral that echoes down through the ages: Human beings threatened with violence have the right to protect themselves. …Philadelphia Health Commissioner Tom Farley, …is often quoted in the press demanding stronger government action to reduce gun violence. But that’s what the barriers deter. Philadelphia has a shooting every six hours, to say nothing of knifings and strong-arm robberies. The barriers reduce theft, too.

Now let’s close with an unbelievable story from Southern California about citizens getting abused. Let’s start by excerpting a horrifying anecdote.

Garcia got in trouble with Coachella City Hall in 2015 after a city code inspector discovered he had expanded his living room, making space to run a small day care center, without first getting building permits. Silver & Wright, a law firm contracted as Coachella’s city prosecutor, took the building permit case to criminal court, filing 29 misdemeanor charges. Garcia signed a plea agreement, brought his house up to code, paid a $900 fine to the court and moved on with his life.

Sounds annoying, right?

It gets worse. Far worse.

When Cesar Garcia pulled the letter out of his mailbox, he immediately recognized the name of the law firm on the envelope – Silver & Wright. …What did they want now? Garcia opened the letter, prepared for the worst, but was still shocked by what he found inside. The law firm had sent him a bill for $26,000. When he protested, the price climbed to $31,000.

And this sleazy firm, which acts on behalf of local governments, apparently makes a practice of targeting powerless people.

 Empowered by the city councils in Coachella and Indio, the law firm Silver & Wright has repeatedly filed criminal charges against residents and businesses for public nuisance crimes – like overgrown weeds, a junk-filled yard or selling popsicles without a business license – then billed them thousands of dollars to recoup expenses. …an extensive review of public records…identified 18 cases in which Indio and Coachella charged defendants more than $122,000 in “prosecution fees” since the cities hired Silver & Wright… With the addition of code enforcement fees, administration fees, abatement fees, litigation fees and appeal fees, the total price tag rises to more than $200,000.

Other examples are equally egregious.

…a Coachella family with a busted garage door and an overgrown yard filled with trash and junk was billed $18,500. An Indio man who sold parking on his land without a business license was billed $3,200. And an Indio woman who strung a Halloween decoration across the street in front of her home – then pleaded guilty to a crime no more serious than a speeding ticket at her first court appearance – was billed $2,700. …Juan Alvarado, a disabled Coachella homeowner…was prosecuted for converting his garage into a studio apartment without getting a building permit, then was billed $7,800 for the total cost of the case against him. …Indio prosecuted Fiesta Latina, a family-owned furniture store in the city’s struggling downtown district, because it didn’t have a permit for a sign on the roof. Then the store was billed $3,327 by Silver & Wright.

Utterly disgusting. Not only this story, but the other ones as well.

These local governments are basically extortion rackets. And the targets are usually the less fortunate.

These examples basically make my point that jury nullification is a very valuable tool (at least in cases where the local governments actually allow a trial rather than rely on bureaucratic edicts). I want fellow citizens to be a potential line of defense for the oppressed and mistreated.

But my final point is counter-intuitive. As much as I despise the actions of thuggish bureaucrats and politicians at the city and county level, I prefer local government over state government (or national government, or global government) for the simple reason that it’s much easier to escape their predatory behavior.

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During the Obamacare bill-signing ceremony, Vice President Biden had a “hot mic” incident when he was overheard telling Obama that “this is a big f***ing deal.”

And he was telling the truth. It was a big deal (albeit a wrong deal) from a fiscal perspective and a health perspective. And it also was a very costly deal for Democrats, costing them the House in 2010 and the Senate in 2014. But it definitely was consequential.

Well, there’s another “big f***ing deal” in Washington, and it’s what just happened to the state and local tax deduction. It wasn’t totally repealed, as I would have preferred, but there’s now going to be a $10,000 limit on the amount of state and local taxes that can be deducted.

I’ve already explained why this is going to reverberate around the nation, putting pressure on governors and state legislators for better tax policy, and I augment that argument in this clip from a recent interview with Trish Regan.

The bottom line is that high-tax states no longer will be able to jack up taxes, using federal deductibility to spread some of the burden to low-tax states.

Let’s look at what this means, starting with a superb column in today’s Wall Street Journal by Alfredo Ortiz.

The great American migration out of high-tax states like New York and Illinois may be about to accelerate. The tax reform enacted last month caps the deduction for state and local taxes, known as SALT, at $10,000. …between July 1, 2016, and July 1, 2017, …high-tax states like New York, New Jersey, Connecticut, Illinois and Rhode Island either lost residents or stagnated. …When people move, they take their money with them. The five high-tax states listed above have lost more than $200 billion of combined adjusted gross income since 1992… In contrast, Nevada, Washington, Florida and Texas gained roughly the same amount. If politicians in high-tax states want to prevent this migration from becoming a stampede, they will have to deliver fiscal discipline.

Mr. Ortiz shows how some state politicians already seem to realize higher taxes won’t be an easy option anymore.

New Jersey’s Gov.-elect Phil Murphy campaigned on a promise to impose a “millionaires’ tax.” But the Democratic president of the state Senate, Steve Sweeney, said in November that New Jersey needs to “hit the pause button” because “we can’t afford to lose thousands of people.” His next words could have come from a Republican: “You know, 1% of the people in the state of New Jersey pay about 42% of its tax base. And you know, they can leave.” New York City Mayor Bill de Blasio may need to rethink his proposed millionaires’ tax. George Sweeting, deputy director of the city’s Independent Budget Office, told Politico in November that eliminating the SALT deduction would “make it a tougher challenge if the city or the state wanted to raise their taxes.” New York state Comptroller Thomas DiNapoli added: “If you lose that deductibility, I worry about more middle-class families leaving.” …the limit on the SALT deduction is a gift that will keep on giving. In the years to come it will spur additional tax cuts and forestall tax increases at the state and local level.

Though the politicians from high-tax states are definitely whining about the new system.

The Governor of New Jersey is even fantasizing about a lawsuit to reverse reform.

Murphy, a Democrat, said he has spoken with leadership in New York and California and with legal scholars about doing “whatever it takes”… Asked if that included a joint lawsuit with other states, Murphy said “emphatically, yes.” …Murphy said. “This is a complete and utter outrage. And I don’t know how else to say it. We ain’t gonna stand for it.”

Here’s a story from New York Times that warmed my heart last month.

…while Mr. Cuomo and his counterparts from California and New Jersey seemed dead-certain about the tax bill’s intent — Mr. Brown called it “evil in the extreme” — there were still an array of questions about how states would respond. None of the three Democrats offered concrete plans on what action their states might take.

They haven’t offered any concrete plans because the only sensible policy – lower tax rates and streamlined government – is anathema to politicians who like buying votes with other people’s money.

California will be hard-hit, but a columnist for the L.A. Times correctly observes tax reform will serve as a much-need wake-up call for state lawmakers.

…let’s be intellectually honest. There’s no credible justification for the federal government subsidizing California’s highest-in-the-nation state income tax — or, for that matter, any local levy like the property tax. Why should federal tax money from people in other states be spent on partially rebating Californians for their state and local tax payments? Some of those states don’t even have their own income tax, including Nevada and Washington. Neither do Texas and Florida. …federal subsidies just encourage the high-tax states to rake in more money and spend it. And they numb the states’ taxpayers. …Republican state Sen. Jeff Stone of Temecula put it this way after Trump unveiled his proposal last week: “For years, the Democrats who raise our taxes in California have said, ‘Don’t worry. The increase won’t matter all that much because tax increases are deductible.’” Trump’s plan, Stone continued, “seems to finally force states to be transparent about how much they actually tax their own residents.”

He also makes a very wise point about the built-in instability of California’s class-warfare system – similar to a point I made years ago.

Our archaic system is way too volatile. The nonpartisan Legislative Analyst’s Office reported last week that income tax revenue is five times as volatile as personal income itself. The “unpredictable revenue swings complicate budgetary planning and contributed to the state’s boom-and-bust budgeting of the 2000s,” the analyst wrote. During the recession in 2008, for example, a 3.7% dip in the California economy resulted in a 23% nosedive in state revenue. The revenue stream has become unreliable because it depends too heavily on high-income earners, especially their capital gains. During an economic downturn, capital gains go bust and revenue slows to a trickle. In 2015, the top 1% of California earners paid about 48% of the total state income tax while drawing 24% of the taxable income.

Let’s close with some sage analysis from Deroy Murdock.

“Taxes should hurt,” Ronald Reagan once said. He referred to withholding taxes, which empower politicians to siphon workers’ money stealthily, before it reaches their paychecks. Writing the IRS a check each month, like covering the rent, would help taxpayers feel the public sector’s true cost. This would boost demand for tax relief and fuel scrutiny of big government. Like withholding taxes, SALT keeps high state-and-local taxes from hurting. In that sense, SALT is the opiate of the overtaxed masses. The heavy levies that liberal Democrats (and, inexcusably, some statist Republicans) impose from New York’s city hall to statehouses in Albany, Trenton, and Sacramento lack their full sting, since SALT soothes their pain. Just wait: Once social-justice warriors from Malibu to Manhattan feel the entire weight of their Democrat overlords’ yokes around their necks, they will squeal. Some will join the stampede to income-tax-free states, including Texas and Florida. …A conservative, the saying goes, is a liberal who has been mugged by reality. Dumping SALT into the Potomac should inspire a similar epiphany among the Democratic coastal elite.

He’s right. This reform could cause a political shake-up in blue states.

P.S. Since I started this column with some observations about the political consequences of Obamacare, this is a good time to mention some recent academic research about the impact of that law on the 2016 race.

We combine administrative records from the federal health care exchange with aggregate- and individual-level data on vote choice in the 2016 election. We show that personal experiences with the Affordable Care Act informed voting behavior and that these effects could have altered the election outcome in pivotal states… We also offer evidence that consumers purchasing coverage through the exchange were sensitive to premium price hikes publicized shortly before the election… Placebo tests using survey responses collected before the premium information became public suggest that these relationships are indeed causal.

Wow. Obamacare there’s a strong case that Obamacare delivered the House to the GOP, the Senate to the GOP, and also the White House to the GOP. Hopefully the Democrats will be less likely to do something really bad or really crazy the next time they hold power.

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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.

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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.

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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.

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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.

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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.

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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.

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