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Posts Tagged ‘New Jersey’

A couple of decades can make a huge difference in the political and economic life of a jurisdiction.

And here’s something especially amazing from a bit more than five decades in the past. New Jersey used to have no state income tax and no state sales tax.

Yes, your eyes are not deceiving you. The basket case of New Jersey used to be a mid-Atlantic version of New Hampshire. But once the sales tax was imposed in 1966 and the income tax was imposed in 1976, it’s been all downhill ever since.

An article in the City Journal helps to explain the state’s fiscal decay.

Brendan Byrne, a Democratic former governor of the Garden State, …told mayors that the state would need a “large revenue package”… The heart of the package would be a new statewide income tax, which went into permanent effect in 1977. Byrne promised that the additional money would help relieve the high property-tax burden on New Jersey’s citizens… Four decades later, the plan has failed. …politicians and special interests don’t see new streams of tax revenue as a means to replace or eliminate an existing stream, but rather as a way of adding to the public coffers. (For those who entertain fantasies of a value-added tax replacing the federal income tax, take heed.) New Jersey’s income tax started with a top rate of about 2.5 percent; it’s now around 9 percent.

Needless to say, nothing politicians promised has happened.

Property taxes haven’t been reduced. They’ve gone up. The government schools haven’t improved. Instead, the test scores in the state are embarrassing. And debt hasn’t gone down. Red ink instead has skyrocketed.

And what’s amazing – and depressing – is that New Jersey politicians continue to make a bad situation worse. Here are some excerpts from a Bloomberg report.

New Jersey Governor Phil Murphy proposed taxing online-room booking, ride-sharing, marijuana, e-cigarettes and Internet transactions along with raising taxes on millionaires and retail sales to fund a record $37.4 billion budget that would boost spending on schools, pensions and mass transit. …Murphy, a Democrat…has promised additional spending on underfunded schools and transportation in a credit-battered state with an estimated $8.7 billion structural deficit for the fiscal year that starts July 1. …Murphy said Tuesday in his budget address to lawmakers. “A millionaire’s tax is the right thing to do –- and now is the time to do it.” …The budget…would…restore the state’s sales tax to 7 percent from 6.625 percent… Murphy’s proposal would almost triple the direct state subsidy for New Jersey Transit, which has been plagued by safety and financial issues.

More taxes, more spending, followed by even more taxes and more spending.

I wonder if Greek taxpayers would want to tell their counterparts in New Jersey how that story ends.

Assuming, of course, there are any taxpayers left in the Garden State. There’s already been a big exodus of productive people who are tired of being treated like fatted calves.

And don’t forget that New Jersey taxpayers no longer have unlimited ability to deduct their state and local taxes on their federal tax return. So these tax hikes will hurt much more than past increases.

In any event, taxpayers better escape before the die.

Though I know one guy who won’t be leaving.

P.S. Anybody want to guess whether New Jersey collapses before California, Illinois, or Connecticut? They’re all in the process of committing slow-motion suicide.

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States such as Illinois, California, New York, Connecticut, and New Jersey have very serious structural problems because of high tax burdens and unsustainable spending levels (often associated with excessive pay and benefits for bureaucrats).

I frequently write about those big issues, but I also like to periodically share examples of other bone-headed policies at the state level. These are not the types of policies that threaten bankruptcy, but they illustrate why it’s not a good idea to give power to politicians and bureaucrats.

Here are some new examples.

We have a column in Forbes about the dangerous plague of unlicensed and unregulated (gasp!) cakes in New Jersey.

At first, she sold her baked goods to support her son’s school fundraisers. …Soon Heather started receiving requests from family, friends, sports fundraisers, and even a wedding venue. …With this business, Heather hoped she could pay for her son’s college education and one day open her own brick-and-mortar cake pop shop. Unfortunately, her dreams were dashed thanks to a law that exists only in New Jersey. Unlike 49 other states, selling baked goods made at home is illegal in the Garden State. Baking and selling just one cake, cookie or muffin risks fines as high as $1,000. When Heather learned she had to shut down her cake pop sideline, the news was “crushing,” she said.

As is so often the case when governments are suppressing liberty, “health and safety” is the excuse.

New Jersey’s main justification for the ban is to protect the public’s health and safety—a claim that’s belied by the fact that nearly every other state has a “cottage food” law on the books, which legalizes the sale of homemade cakes, cookies, jams and other food deemed “not potentially hazardous.” …In order to sell cake pops, cookies or other shelf-stable treats in New Jersey, Heather must either build a licensed “retail food establishment” separate from her home kitchen or she can rent a commercial kitchen, which can easily cost $35 an hour.

Fortunately, the Institute for Justice is fighting to overturn the law.

Heather and two other home bakers joined with the Institute for Justice and filed a lawsuit against the state earlier this month. …A similar IJ lawsuit has already defeated a pastry prohibition in Wisconsin. Over the summer, a Wisconsin judge struck down the state’s ban on selling home-baked goods because there was “no real or substantial connection” between the law and public safety. …In his ruling, Lafayette Circuit Court Judge Duane Jorgenson noted that the ban protected established businesses from greater competition, which is why groups like the Wisconsin Bakers Association heavily backed the law. …Those rulings followed a 2015 IJ court victory on behalf of home bakers in Minnesota, which galvanized the state to expand its cottage food laws. Now the state boasts over 3,000 cottage food producers.

Notice, by the way, that protecting an established interest group was the real purpose of the law. In other words, the law was basically similar to schemes for occupational licensing.

This next item is so strange that I wonder whether it is somehow fake. But I also suspect it’s too bizarre to be fake. In any event, I wonder about the reason for this government-mandated notice?!? And if you find a (gasp!) vending machine without the notice, what purpose is served by calling the number? And do the bureaucrats expect people to memorize the number in case they stumble upon a rogue vending machine?!?

Oh, and how long before some people figure out how to remove the notice and then call the government in hopes of getting the “cash reward”?

If anybody knows the answer to any of these questions, feel free to share your thoughts. In the meantime, I’ll simply assume that the notice presumably isn’t as pointless and stupid at this pedestrian sign and definitely not as creepy and malevolent as this “public service” notice.

Next, we have a story from ABC News about taxpayer-funded generosity to pets in Michigan.

A dog in western Michigan has been approved for unemployment benefits — and he’d be bringing in a cool $360 a week. Michael Haddock, of Saugatuck, Michigan, says he received a letter on Saturday from the State of Michigan Unemployment Insurance Agency (UIA) addressed to Michael Ryder, according to Grand Rapids ABC affiliate WZZM. Michael is his name. Ryder is his dog’s name. …Haddock says the employer listed on the letter was a restaurant chain in Metro Detroit. After receiving the letter, Haddock contacted the restaurant chain and the state unemployment office. …The Michigan UIA announced Tuesday it was creating a special investigative unit to handle the recent increase in fake unemployment claims. The agency attributes many of the claims to recent data breaches. Haddock isn’t sure how scammers got his dog’s name.

I’m clearly behind the times. I have some cats that need to sign up for handouts!

On a more serious note, I confess that I’m not aware of the degree to which unemployment benefits are fraudulent. Hopefully it’s not as bad as the EITC, though I’m confident that problem is bigger than politicians and bureaucrats would ever admit.

And why would folks in the government even care? After all, it’s our money they’re squandering rather than their own. And Milton Friedman educated us on what that means.

From the perspective of good public policy, though, the real problem with such benefits (as personalized here and here) is that they lure people into extended periods of joblessness.

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When companies want to boost sales, they sometimes tinker with products and then advertise them as “new and improved.”

In the case of governments, though, I suspect “new” is not “improved.”

The British territory of Jersey, for instance, has a very good tax system. It has a low-rate flat tax and it overtly brags about how its system is much better than the one imposed by London.

In the United States, by contrast, the state of New Jersey has a well-deserved reputation for bad fiscal policy. To be blunt, it’s not a good place to live and it’s even a bad place to die.

And it’s about to get worse. A column in the Wall Street Journal warns that New Jersey is poised to take a big step in the wrong direction. The authors start by observing that the state is already in bad shape.

…painless solutions to New Jersey’s fiscal challenges don’t exist. …a massive structural deficit lurks… New Jersey’s property taxes, already the highest in the nation, are being driven up further by the state’s pension burden and escalating health-care costs for government workers.

In other words, interest groups (especially overpaid bureaucrats) control the political process and they are pressuring politicians to divert even more money from the state’s beleaguered private sector.

…politicians seem to think New Jersey can tax its way to budgetary stability. At a debate this week in Newark, the Democratic gubernatorial nominee, Phil Murphy, pledged to spend more on education and to “fully fund our pension obligations.” …But just taxing more would risk making New Jersey’s fiscal woes even worse. …New Jersey is grasping at the same straws. During the current fiscal year, the state’s pension contribution is $2.5 billion, only about half the amount actuarially recommended. The so-called millionaire’s tax, a proposal Gov. Chris Christie has vetoed several times since taking office in 2010, will no doubt make a comeback if Mr. Murphy is elected. Yet it would bring in only an estimated $600 million a year.

The column warns that New Jersey may wind up repeating Connecticut’s mistakes.

Going down that path, however, is a recipe for a loss of high-value taxpayers and businesses.

Let’s look at a remarkable story from the New York Times. Published last year, it offers a very tangible example of how the state’s budgetary status will further deteriorate if big tax hikes drive away more successful taxpayers.

One man can move out of New Jersey and put the entire state budget at risk. Other states are facing similar situations…during a routine review of New Jersey’s finances, one could sense the alarm. The state’s wealthiest resident had reportedly “shifted his personal and business domicile to another state,” Frank W. Haines III, New Jersey’s legislative budget and finance officer, told a State Senate committee. If the news were true, New Jersey would lose so much in tax revenue that “we may be facing an unusual degree of income tax forecast risk,” Mr. Haines said.

Here are some of the details.

…hedge-fund billionaire David Tepper…declared himself a resident of Florida after living for over 20 years in New Jersey. He later moved the official headquarters of his hedge fund, Appaloosa Management, to Miami. New Jersey won’t say exactly how much Mr. Tepper paid in taxes. …Tax experts say his move to Florida could cost New Jersey — which has a top tax rate of 8.97 percent — hundreds of millions of dollars in lost payments. …several New Jersey lawmakers cited his relocation as proof that the state’s tax rates, up from 6.37 percent in 1996, are chasing away the rich. Florida has no personal income tax.

By the way, Tepper isn’t alone. Billions of dollars of wealth have already left New Jersey because of bad tax policy. Yet politicians in Trenton blindly want to make the state even less attractive.

At the risk of asking an obvious question, how can they not realize that this will accelerate the migration of high-value taxpayers to states with better policy?

New Jersey isn’t alone in committing slow-motion suicide. I already mentioned Connecticut and you can add states such as California and Illinois to the list.

What’s remarkable is that these states are punishing the very taxpayers that are critical to state finances.

…states with the highest tax rates on the rich are growing increasingly dependent on a smaller group of superearners for tax revenue. In New York, California, Connecticut, Maryland and New Jersey, the top 1 percent pay a third or more of total income taxes. Now a handful of billionaires or even a single individual like Mr. Tepper can have a noticeable impact on state revenues and budgets. …Some academic research shows that high taxes are chasing the rich to lower-tax states, and anecdotes of tax-fleeing billionaires abound. …In California, 5,745 taxpayers earning $5 million or more generated more than $10 billion of income taxes in 2013, or about 19 percent of the state’s total, according to state officials. “Any state that depends on income taxes is going to get sick whenever one of these guys gets a cold,” Mr. Sullivan said.

The federal government does the same thing, of course, but it has more leeway to impose bad policy because it’s more challenging to move out of the country than to move across state borders.

New Jersey, however, can’t set up guard towers and barbed wire fences at the border, so it will feel the effect of bad policy at a faster rate.

P.S. I used to think that Governor Christie might be the Ronald Reagan of New Jersey. I was naive. Yes, he did have some success in vetoing legislation that would have exacerbated fiscal problems in the Garden State, but he was unable to change the state’s bad fiscal trajectory.

P.P.S. Remarkably, New Jersey was like New Hampshire back in the 1960s, with no income tax and no sales tax. What a tragic story of fiscal decline!

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I recently wrote about gun control, noting how there’s less murder in demographically similar U.S. states than there is in matching Canadian provinces.

This is one of the reasons why I’m optimistic about protecting the Second Amendment. The empirical evidence is so strong that law-abiding people are safer in well-armed societies.

But let’s see how the rest of the world is faring on this issue.

Let’s start with a story from Switzerland, a nation that has a very strong tradition of gun rights.

Switzerland is becoming safer. Police recently flagged up that crime rates fell by 7% in 2015, reaching a seven-year low. In 2014, homicide was actually at its lowest level in 30 years. …A survey by swissinfo.ch shows gun permit applications were up almost everywhere in Switzerland in 2015.

Hmmm…, more guns and less crime. The person who slapped the headline on the story seems to think it’s a mystery why that relationship exists.

But anybody capable of passing my IQ test for criminals and liberals understands that the title should be changed to “Lower crime because Swiss have more guns” or something like that.

The article also includes a section on Switzerland’s gun culture.

Switzerland has one of the highest gun ownership rates in the world because of its militia army. The defence ministry estimates that some two million guns are in private hands in a population of 8.3 million. An estimated 750,000 of those guns have been recorded in a local register. Under the militia system soldiers keep their army-issue weapons at home. Voters in recent years have rejected tighter gun controls. In 2011, voters rejected a proposal to restrict access to guns by banning the purchase of automatic weapons and introducing a licensing system for the use of firearms.

Ah, those sensible Swiss voters. Not only are they against tax hikes and regulatory intervention, but they also reject licensing and support the right to purchase automatic weapons.

Now let’s travel Down Under and see what happens when a government takes the wrong approach to guns.

Hillary Clinton says “Australia is a good example”… The man Clinton wants to succeed, Barack Obama, noted, “Australia … imposed very severe, tough gun laws.  And they haven’t had a mass shooting since.” …Maybe it’s time to tell the president and his likely successor that the policies they so admire have been largely flouted… Clinton and Obama tout a 1996 “gun buyback” that was actually a compensated confiscation of self-loading rifles, self-loading shotguns, and pump-action shotguns in response to the Port Arthur mass shooting. The seizure took around 650,000 firearms out of civilian hands and tightened the rules on legal acquisition and ownership of weapons going forward. …What the law couldn’t do—what prohibitions can never accomplish—was eliminate demand for what was forbidden. …The Sporting Shooters’ Association of Australia estimates compliance with the “buyback” at 19 percent. Other researchers agree. In a white paper on the results of gun control efforts around the world, Franz Csaszar, a professor of criminology at the University of Vienna, Austria, gives examples of large-scale non-compliance with the ban. He points out, “In Australia it is estimated that only about 20% of all banned self-loading rifles have been given up to the authorities.”

There is one group benefiting from the attempted gun ban. Criminal gangs are big winners.

“Australians may be more at risk from gun crime than ever before with the country’s underground market for firearms ballooning in the past decade,” the report added. “[T]he national ban on semi-automatic weapons following the Port Arthur massacre had spawned criminal demand for handguns.” …Once you enable organized crime, there are no boundaries. Australia’s criminal gangs supply not just pistols, but weapons up to and including rocket launchers—some of which may have ended up in terrorist hands. …like American bootleggers who supplemented smuggled booze with bathtub gin, Australia’s organized criminal outfits have learned the joy of DIY production. …Australia will have to live with the rise in organized crime for years to come.

Such a disappointment that Australia, which is a role model on some issues, is so anti-civil rights when it comes to guns.

Now let’s travel to France, where there are at least one person doesn’t think it’s a good idea to let terrorists be the only ones with guns.

The leader of the rock band playing the Bataclan in Paris the night ISIS terrorists killed 90 in the concert hall three months ago ripped French gun control laws and urged “everybody” to get a gun. “I can’t let the bad guys win,” said Jesse Hughes of Eagles of Death Metal. …Speaking in a sometimes tearful interview to iTele, Hughes added, “Did your French gun control stop a single fu—– person from dying at the Bataclan? And if anyone can answer yes, I’d like to hear it, because I don’t think so.”

Amen. It’s downright bizarre that European politicians think it’s a good idea for citizens to be disarmed while crazies get to stock up on weapons.

Now let’s turn to America, where New Jersey (again) is a national embarrassment.

A New Jersey actor faces 10 years in prison for firing a prop pellet gun while filming an independent film. Carlo Goias, who uses the stage name Carlo Bellario, was charged with firing the fake gun without a state gun permit as part of the Garden State’s insanely strict gun laws. In New Jersey, all guns require a state permit, even non-lethal airsoft guns like the one Goias was using. …just seeing Goias pretending to fire from a car window prompted neighborhood residents to call the police. “I pretended to shoot out the window; they were going to dub in the sound later,” Goias told the Associated Press. “We get back, and within a couple of minutes we’re surrounded by cop cars.” …being sent away for 10 years over a fake gun is a reminder of just how absurd New Jersey’s gun laws still are.

Speaking of gun control, here’s radio shock jock Howard Stern making mostly sensible comments on the right to keep and bear arms.

It’s a bit disappointing that he supports a national gun registry, but I assume that’s because he doesn’t realize that the left supports registration primarily as a predicate for gun confiscation.

But he atones for that error by mocking leftists who have personal (and well-armed) security guards. Gee, I wonder if we might have an example of such a person.

And it’s also good that Howard mentions that most cops support gun rights, something that we see in the polling data.

P.S. Click here and here for some good gun control humor.

P.P.S. And click here for some entertaining videos mocking gun control.

P.P.P.S. Even some leftists have seen the light on gun rights, as you can see here, here, and here.

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Federalism is a great idea, and not just because America’s Founders wanted a small and limited central government.

It’s also a good idea because states are laboratories that teach us about the benefits of good policy and the costs of bad policy.

And when we specifically look at New Jersey, we can learn a lot about the negative consequences of excessive taxation.

Lesson Number 1: Don’t adopt new taxes.

Just fifty years ago, New Jersey was like New Hampshire with no income tax and no sales tax. It was a fast-growing and prosperous refuge for people escaping high tax burdens in New York and elsewhere.

But then a state sales tax was adopted in 1966, followed by the enactment of a state income tax in 1976. Not surprisingly, politicians used those revenue sources to finance an orgy of new spending, to such an extent that New Jersey is now in last place in a ranking of state fiscal conditions.

And ever since new taxes were adopted, politicians have routinely and repeatedly increased the rates, diverting ever-greater amounts of money from the state’s private sector.

The net result, as demonstrated by the Tax Foundation’s State Business Tax Climate Index, is that New Jersey now has the worst tax system in the entire nation.

A very high income tax burden is a major reason why New Jersey is so uncompetitive.

After thriving for centuries with no state income tax, it only took state politicians a few decades to create a very punitive system with the fifth-highest rate in the nation. Once again, the Tax Foundation has the data.

No wonder so many investors, entrepreneurs, and business owners are escaping New Jersey.

And this is exactly what’s been happening, with very negative effects on New Jersey’s economy. Here’s some of what I shared back in 2010.

More than $70 billion in wealth left New Jersey between 2004 and 2008 as affluent residents moved elsewhere, according to a report…Conducted by the Center on Wealth and Philanthropy at Boston College… The exodus of wealth, then, local experts and economists concluded, was a reaction to a series of changes in the state’s tax structure — including increases in the income, sales, property and “millionaire” taxes. “This study makes it crystal clear that New Jersey’s tax policies are resulting in a significant decline in the state’s wealth,” said Dennis Bone, chairman of the New Jersey Chamber of Commerce and president of Verizon New Jersey. …the report reinforces findings from a similar study he conducted in 2007 with fellow Rutgers professor Joseph Seneca, which found a sharp acceleration in residents leaving the state. That report, which focused on income rather than wealth, found the state lost nearly $8 billion in gross income in 2005.

Wow, that’s the Atlantic version of California.

By the way, politicians often impose taxes or increase tax rates using the excuse that they will lower other taxes.

And it hasn’t been uncommon for New Jersey politicians to tell voters that tax hikes will enable lower property taxes.

Yet if you look at this data from the Tax Foundation, the Garden State has the highest property tax burden in the nation.

The only “good news” is that New Jersey’s 6.97 percent state sales tax is only the 24th-highest in the United States.

Yet when you consider that there was no state sales tax until 1966, that’s hardly a sign of fiscal restraint.

Lesson Number 2: Get rid of taxes that are especially destructive.

New Jersey is one of only two states that impose both an inheritance tax and a death tax. The death tax is particularly pernicious since very successful taxpayers obviously have considerable ability to migrate to states with better policy.

But here’s where we might have a bit of good news. New Jersey may be about to eliminate its death tax.

A state Senate committee on Monday passed…bipartisan proposals to eliminate the estate tax… Proponents of the tax changes say people are leaving New Jersey to avoid its low thresholds on taxing inherited wealth and retirement income. More than 2 million people left New Jersey between 2005 and 2014, costing the state $18 billion in net adjusted income and $11.4 billion in economic activity, according to the New Jersey Business and Industry Association, which blames high taxes for the exodus. …State Sen. Steve Oroho (R-Sussex) said he expects the money New Jersey reaps from people who stay here will pay for the lost tax revenue. The bill (S1728) was approved 9-0 with four abstentions.

This is amazing evidence of the liberalizing impact of tax competition. New Jersey’s state legislature is dominated by leftists, yet even they realize that they won’t get any loot if their intended victims can move across states lines (a lesson that French politicians have a very hard time understanding).

Lesson Number 3: Politicians waste much of the revenue they collect.

Politicians generally like higher taxes because they can buy support and votes by redistributing other people’s money (though some leftists like higher taxes solely for reasons of spite).

So it’s also important to look at what’s happening on the spending side of the budget. And it turns out that New Jersey wastes a lot of money.

I’ve already written about state bureaucrats being grossly overpaid (see here and here for some jaw-dropping examples).

But now let’s look at New Jersey’s “rate of return” or “efficiency” on transportation spending. This great video from Reason tells you everything you need to know.

And one of the reasons I shared this video is because New Jersey politicians want to boost the gas tax so they can spend even more money. Indeed, they may even hold the death tax hostage to get what they want.

Democrats have said they hope to leverage these tax cuts into a deal with Gov. Chris Christie to raise the gas tax.

I rhetorically asked back in 2010 whether Chris Christie could save New Jersey. We now know the answer is no, but maybe he can partially redeem himself by winning the death tax fight without surrendering on the gas tax.

P.S. Another formerly low-tax state, Connecticut, decided to copy New Jersey and the results are similarly dismal. Let’s hope other states, especially Alaska and Washington, are paying attention.

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I’ve periodically cited the great 19th-century French economist, Frederic Bastiat, for his very wise words about the importance of looking at both the seen and the unseen when analyzing public policy.

Those that fail to consider secondary or indirect effects of government, such as Paul Krugman, are guilty of the “broken window” fallacy.

There are several examples we can cite.

A sloppy person, for instance, will think a higher minimum wage is good because workers will have more income. But a thoughtful analyst will think of the unintended consequence of lost jobs for low-skilled workers.

An unthinking person will conclude that government spending is good for growth because the recipients of redistribution have money to spend. But a wiser analyst will understand that such outlays divert money from the economy’s productive sector.

A careless person will applaud when government “creates” jobs. Sober-minded analysts, though, will wonder about the private jobs destroyed by such policies.

It’s time, though, to give some attention to another important contribution from Bastiat.

He also deserves credit for the pithy and accurate observation about government basically being a racket or a scam.

And what’s really amazing is that he reached that conclusion in the mid-1800s when the burden of government spending – even in France – was only about 10 percent of economic output. So Bastiat was largely limited to examples of corrupt regulatory arrangements and protectionist trade policy.

One can only imagine what he would think if he could see today’s bloated welfare states and the various ingenious ways politicians and interest groups have concocted to line their pockets with other people’s money!

Which brings us to today’s topic. We’re going to look at venal, corrupt, wasteful, incompetent, and bullying government at the federal, state, and local level in America.

We’ll start with the clowns in Washington, DC.

Remember when the unveiling of the Obamacare turned into a cluster-you-know-what of historic proportions?

Well, the Daily Caller reports that the IRS has just signed an Obamacare-related contract with an insider company that recently became famous for completely botching its previous Obamacare-related contract.

Seven months after federal officials fired CGI Federal for its botched work on Obamacare website Healthcare.gov, the IRS awarded the same company a $4.5 million IT contract for its new Obamacare tax program. …IRS officials signed a new contract with CGI to provide “critical functions” and “management support” for its Obamacare tax program, according to the Federal Procurement Data System, a federal government procurement database. The IRS contract is worth $4.46 million, according to the FPDS data.

Just one more piece of evidence that Washington is a town where failure gets rewarded.

And CGI is an expert on failure.

A joint Senate Finance and Judiciary Committee staff report in June 2014 found that Turning Point Global Solutions, hired by HHS to review CGI’s performance on Healthcare.gov, reported they found 21,000 lines of defective software code inserted by CGI. Scott Amey, the general counsel for the non-profit Project on Government Oversight, which reviews government contracting, examined the IRS contract with CGI. “CGI was the poster child for government failure,” he told The Daily Caller. “I am shocked that the IRS has turned around and is using them for Obamacare IT work.” Washington was not the only city that has been fed up with CGI on healthcare. Last year, CGI was fired by the liberal states of Vermont and Massachusetts for failing to deliver on their Obamacare websites. The Obamacare health website in Massachusetts never worked, despite the state paying $170 million to CGI.

For a company like this to stay in business, you have to wonder how many bribes, pay-offs, and campaign contributions are involved.

Now let’s look at an example of state government in action.

Kim Strassel of the Wall Street Journal has a column about a blatantly corrupt deal between slip-and-fall lawyers and the second most powerful Democrat in the Empire State.

New York Assembly Speaker Sheldon Silver was last week arrested and accused by the feds of an elaborate kickback scheme. …Mr. Silver is alleged to have pocketed more than $5 million in a set-up in which he directed state funds to the clinic of an asbestos doctor, who in turn provided him with patients who could be turned into jackpot plaintiffs. Weitz & Luxenberg, a class-action titan, paid Mr. Silver huge referral fees for these names, off which the firm stands to make many millions. …when the Silver headlines broke, Weitz & Luxenberg founder Perry Weitz said he was “shocked”… The firm quickly put the Albany politician on “leave.”

A logical person might ask “on leave” from what? After all, he didn’t do anything.

But he did do something, even if it was corrupt and sleazy.

…here’s the revealing bit. Queried by prosecutors as to what exactly the firm did hire Mr. Silver to do—since he performed no legal work—Weitz & Luxenberg admitted that he was brought on “because of his official position and stature.” In other words, this was transactional. Weitz & Luxenberg gave Mr. Silver a plum job, and Mr. Silver looked out for the firm—namely by blocking any Albany bills that might interfere with its business model.

So workers, consumers, and businesses get screwed by a malfunctioning tort system, while insider lawyers and politicians get rich. Isn’t government wonderful!

Just one example among many of how state governments are a scam. Perhaps now folks will understand why I’m not very sympathetic to the notion of letting them take more of our money.

Last but not least, let’s look at a great moment in local government.

As we see from a report in USA Today, a village in New Jersey is dealing with the scourge of…gasp…unlicensed snow removal!

Matt Molinari and Eric Schnepf, both 18, also learned a valuable lesson about one of the costs of doing business: government regulations. The two friends were canvasing a neighborhood near this borough’s border with Bridgewater early Monday evening, handing out fliers promoting their service, when they were pulled over by police and told to stop. …Bound Brook, like many municipalities in the state and country, has a law against unlicensed solicitors and peddlers. … anyone selling goods and services door to door must apply for a license that can cost as much as $450 for permission that is valid for only 180 days. …Similar bans around the country have put the kibosh on other capitalist rites of passage, such as lemonade stands and selling Girl Scouts cookies.

Though, to be fair, it doesn’t seem like the cops were being complete jerks.

Despite the rule, however, Police Chief Michael Jannone said the two young businessmen were not arrested or issued a ticket, and that the police’s concern was about them being outside during dangerous conditions, not that they were unlicensed. “We don’t make the laws but we have to uphold them,” he said Tuesday after reading some of the online comments about the incident. “This was a state of emergency. Nobody was supposed to be out on the road.”

But the bottom line is that it says something bad about our society that we have rules that hinder teenagers from hustling for some money after a snowstorm.

Just like these other examples of local government in action also don’t reflect well on our nation.

Let’s close with my attempt to re-state Bastiat’s wise words. Here’s my “First Theorem of Government.”

And if you think what I wrote, or what Bastiat wrote, is too cynical, then I invite you to check out how politicians are bureaucrats are squandering money on Medicare, the Veterans Administration, the Agriculture Department, Medicaid, the Patent and Trademark Office, the so-called Consumer Financial Protection Bureau, the National Institutes of Health, Food Stamps, , the Government Services Administration, unemployment insurance, the Pentagon

Well, you get the idea.

Which is why this poster is a painfully accurate summary of government.

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I like to think that I occasionally put together interesting and persuasive charts on fiscal policy.

For instance, I think it’s virtually impossible to make a credible argument for tax hikes after looking at my chart showing how easy it is to balance the budget with modest spending restraint.

But I’ll freely confess that no chart of mine can compare to this powerful image created by my Cato colleague, Andrew Coulson, which shows how spending and staffing for the government school monopoly have exploded while enrollment and performance have been stagnant.

As far as I’m concerned, no honest person can look at his chart and defend the current system.

But some folks may need some more evidence about the failure of government schools, so let’s look at stories from both ends of America.

We’ll start on the east coast. Writing for the Daily Caller, Eric Owens reports that bureaucrats in a New Jersey town are being handsomely rewarded for not educating students.

Only 19 students in the public school system in Paterson, N.J. who have taken the SAT scored high enough to be considered college ready, local Fox affiliate WWOR-TV reports. At the same time, 66 employees in the Paterson school district each soak taxpayers for salaries of at least $125,000 per year, the Paterson Press reports. …Paterson is no tiny town. It is, in fact, the third-largest city in New Jersey. The population is roughly 146,000 people. …The city boasts some 50 public schools altogether. There are over 24,000 total students in all grades.

But the folks in Paterson can be proud of their government schools. After all, they’re doing much better than Camden.

In December 2013, Camden’s then-new superintendent of public schools announced that only three — THREE! — students in the entire district who took the SAT during the 2011-12 academic year scored high enough to qualify as college-ready.

Last but not least, the story notes that the school district has concocted a clever strategy to avoid any more embarrassing stories.

You’re probably wondering whether this means school choice? Rigorous standards? Better discipline?

Nope, nope, and nope. Remember, we’re dealing with government bureaucracy.

Back in Paterson, school officials say they have cleverly dealt with their nearly complete failure to prepare students for college entrance exams by no longer using the SAT to assess student achievement.

I actually hope this is a joke, though there’s no indication in the story to suggest the reporter is being satirical.

So we have bureaucrats getting vastly overpaid in exchange for not educating kids.

Now let’s travel to the west coast, where Los Angeles schools also have overpaid officials who do a crummy job of educating students, but they have figured out very novel ways of squandering tax dollars.

As Robby Soave reports in Reason, the LA school district first tried a failed scheme to give every student an iPad, which led to predictable fraud and misuse with no accompanying educational benefit. Now they want to double down on failure with a new proposal that gives various schools the option of which bit of high-tech gadgetry to mis-utilize.

Who could be against choice? That’s the argument Los Angeles school district administrators are now employing to push their latest round of expensive technology upgrades. Schools will be given the choice to receive Chromebooks instead of iPads—and some schools will get laptops, the most expensive option of all.  …The idea is to eventually place such a device in the hands of every child in the district.

Needless to say, there’s no strategy for avoiding the mistakes that plagued the earlier scheme.

The problem administrators encountered when rolling out the iPad plan, however, was that kids kept losing or breaking the devices. What happens then? Do parents pay, or does the district? Do kids get a replacement? Teachers also struggled mightily to incorporate the technology into their lesson plans, and concerns about kids using iPads for unsanctioned purposes caused headaches. The initial iPad deal unravelled after allegations of an improper relationship between then District Superintendent John Deasy, Apple, and curriculum company Pearson.

The reporter is understandably skeptical about what will happen next.

I have little reason to believe that the individual schools will be more responsible stewards of the taxpayer’s money than the district was. Indeed, 21 schools decided to go with an even more expensive option: laptops. Steve Lopez of the LA Times argued persuasively in October that the iPad fiasco was a costly diversion from the district’s real problems. Schools can’t even find the money for math textbooks, but administrators want to force unneeded technology on them and impose computerized tests. The district should prioritize basic instruction before deciding to purchase thousands of fancy gadgets.

Gee, it’s almost enough to make you think that government schools don’t work very well and that we should instead allow parents to have real choice over how to best educate their children.

P.S. You won’t be surprised to learn that Obama’s silly common core proposal appears to be driving some of these bad results.

P.P.S. Though remember that Bush’s no-bureaucrat-left-behind scheme was also a flop.

P.P.P.S. School choice doesn’t automatically mean every child will be an educational success, but evidence from SwedenChile, and the Netherlands shows good results after breaking up state-run education monopolies.

And there’s growing evidence that it also works in the limited cases where it exists in the United States.

P.P.P.P.S. Or we can just stick with the status quo, which involves spending more money, per student, than any other nation while getting dismal results.

P.P.P.P.P.S. This is a depressing post, so let’s close with a bit of humor showing the evolution of math lessons in government schools.

P.P.P.P.P.P.S. If you want some unintentional humor, the New York Times thinks that education spending has been reduced.

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