It’s Not Working

I thought you might be amused by this. On the left is Illinois’s state tax revenues for 2016 and their sources. On the right is Illinois’s state tax revenues for 2017 and their sources. You can click on either image for a larger image.

Between 2016 and 2017 Illinois personal income tax rate increased by 25%. Despite that increase or, some would say, because of it, between 2016 and 2017 Illinois’s tax revenues decreased by about 3%.

From these data our state’s politicians conclude that Illinois needs to increase personal income tax rates. I think a more reasonable conclusion would be that strategy is not working.

Illinois is not paying its bills. It’s already paying more to borrow than any other state. It already has the highest property tax of any state in the union.

If you’re wondering what prompted this post, consider this op-ed from the State Journal-Register:

A decade ago, pension payments consumed about 8 percent of the state’s revenue. By 2017, they were consuming 18 percent, according to a Moody’s analysis of state financial reports.

Illinois can’t even keep up with what Moody’s refers to as a “tread water” level of payments. “Tread water” payments cover only new obligations, plus accrued interest for the pension plans. They don’t begin to address Illinois’ $133.5 billion in unfunded liabilities.

[…]

The Civic Committee is taking a sober look at the state’s politics and finances. Their decision to stand down for now on a structural fix to the state’s pension problems is a reflection of prior failed efforts to work around a state constitutional ban on diminishing or impairing employee pension rights.

Writing a decade ago, the committee foretold an Illinois that now exists. “The State then will be faced with two difficult choices: massive cutting of state expenditures and grants, or raising taxes to such a high level that some businesses and residents will flee Illinois. Or both,” the Civic Committee warned.

Spending has not been cut. But the Committee was right about the rest: Taxes are higher, and people are fleeing Illinois.

Solutions are limited and they amount to political hara-kiri. Either the state’s constitution must be amended to allow the state to reduce public employee pensions, the number of state employees must be cut, pay rates for state employees must decline, or some combination. We quite patently can’t increase revenues by increasing marginal rates. We must cut expenses.

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What’s Wrong With This Picture?

It’s hard to know where to start in criticizing John Tamny’s most recent offering, this one in support of Amazon. It resembles nothing so much to me as one of those “how many things can you find wrong with this picture?” features that used to run in the newspapers.

I’ll just limit it to a question and a statement. Would Amazon.com exist at all if Internet commerce had not been exempted from state and local sales taxes?

Here’s the statement. Amazon does not pay enormous taxes. It pays zero in federal income taxes. Its customers pay sales taxes. How much does it pay in property taxes? Probably not as much as Mr. Tamny thinks since it has received sweetheart deals from various jurisdictions to avoid them. Let’s see some facts.

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Battlespace Preparation

You might find this article at Boston Review by economists Suresh Naidu, Dani Rodrik, and Gabriel Zucman interesting as I did. Here’s a snippet:

The tools of economics are critical to developing a policy framework for what we call “inclusive prosperity.” While prosperity is the traditional concern of economists, the “inclusive” modifier demands both that we consider the whole distribution of outcomes, not simply the average (the “middle class”), and that we consider human prosperity broadly, including non-pecuniary sources of well-being, from health to climate change to political rights. To improve the quality of public discussion around inclusive prosperity, we have organized a group of economists—the Economics for Inclusive Prosperity (EfIP) network—to make policy recommendations across a wide range of topics, including labor markets, public finance, international trade, and finance. The purpose of this nascent collective effort is not simply to offer a list of prescriptions for different domains of policy, but to provide an overall vision for economic policy that stands as a genuine alternative to the market fundamentalism that is often—and wrongly—identified with economics.

My own view is that economics is not a predictive science like physics or chemistry but a descriptive one like anthropology or psychology to which it is closely related. Econometrics has been a 50 year distraction from the real role of economics which is describing economic behavior.

Economists who seek to make policy pronouncements should run for political office. Unless you also want to grant the civil engineers the authority to decide which bridges and roads should be built and improved as well.

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The Federal District

Speaking of dereliction of Congressional duty, there are few subjects in the U. S. Constitution that are more explicit than Article I, Section 8, Clause 17 which characterizes the status of the federal district, known now as the “District of Columbia”. Among the powers of the Congress is

To exercise exclusive Legislation in all Cases whatsoever, over such District (not exceeding ten Miles square) as may, by Cession of particular States, and the acceptance of Congress, become the Seat of the Government of the United States, and to exercise like Authority over all Places purchased by the Consent of the Legislature of the State in which the Same shall be, for the Erection of Forts, Magazines, Arsenals, dock-Yards, and other needful Buildings;

Get that? Congress has exclusive authority over the federal district. It does not have the authority to delegate that responsibility to the executive or anyone else. Doing that would require amending the Constitution. That has not been done.

Why then is there DC self-rule at all and why, in particular, are there calls for statehood for the federal district? The answer is pure racial politics. The population of the district is mostly black. That’s the artifact of the reality that most servants in that part of the country were black (even after slavery) and needed to live near the places where they worked. The Congress, which had botched the governance of DC for nearly 150 years, recognized that the mostly white Congress ruling black people who had no say over that governance was unseemly to say the least.

People no longer need to live in the district the way they did a century ago. An actual limited federal district should be defined, the Congress should exercise exclusive authority over that district, residence within that district should be prohibited (other than by the president, vice president, or other officials in official residences), and the balance of the present district returned to Maryland.

The only way in which statehood for Washington, DC should be considered is in the context of granting statehood to every city larger than Mesa, Arizona.

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Rampell’s Modest Proposal

In her Washington Post column Catherine Rampell has a modest proposal for curing the nation’s ills—throw the bums out:

If lawmakers are not going to perform their most basic constitutional functions, then what are we paying them (at minimum) $174,000 a year to do? We might as well can them all and save the money.

To be clear, this is not the only duty our derelict lawmakers have abdicated. Declaring war when we’re, in fact, at war comes to mind. As does, say, exercising the authority to “regulate Commerce with foreign Nations” and lay import duties.

Over the past 80 years, Congress has voluntarily delegated much of this constitutional trade-regulating power away from itself and to the president, as trade historian Craig VanGrasstek lays out in his new book, “Trade and American Leadership.”

More recently, Congress turned a blind eye as Trump abused even that generously re-delegated authority. Here, too, Trump cited similarly bogus “national security” rationales to justify his overreach. Yet in response, Republican lawmakers — members of a party that once embraced free trade and sounded the alarm about an “imperial presidency” — have introduced legislation that would give the president even more discretion to levy tariffs without their interference.

To disabuse Ms. Rampell of any misconception that the problem is solely one of Republicans, let me remind her that the National Emergency Act, which people are suddenly discovering granted the president sweeping authority without meaningful constraint to declare national emergencies and act on them, was enacted into law by a Democratic House majority, a veto-proof Democratic Senate majority, and signed into law by a Democratic president.

The problems to which she points are not merely problems of the Congress. They are problems of partisan politics. Here in Chicago we have nearly 20 candidates vying to be Chicago’s next mayor. All are Democrats. They believe very nearly the same things, express the same aspirations, espouse tremendously similar programs, and make nearly identical but impossible to fulfill promises. How does one choose among them? Why does one choose among them?

The Constitution provides for a sort of permanent revolution, the opportunity to replace the Congress every two years. It did not envision the eventuality of leaving the same Congress in place permanently, merely changing the namecards.

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Drawing the Right Conclusion

The editors of the Chicago Tribune have absorbed the appropriate and correct lesson from the workplace homicide incident in Aurora last week:

There’s the starting point for Illinois after Aurora: an intensive examination of gun laws and enforcement practices to try to prevent another shooting of this type. Regulations and enforcement rules need to be tightened to give police the authority and resources to track down people who may possess weapons they no longer are allowed to have.

There may be other mismatches between statutes and enforcement. Last year, Illinois undertook a re-evaluation after a mass shooting in Tennessee allegedly carried out by Travis Reinking, a troubled native of Morton, Ill. Illinois lawmakers passed a “red flag” law that allows police or family members to seek a court order to confiscate guns from those who are deemed “an immediate and present danger” to themselves or others.

The emphasis of Illinois’s governor and other officials has been precisely wrong—that we need more laws. What enabled the incident in Aurora to take place was not too few laws but inadequate enforcement. There is no number of unenforced laws that will have any material effect on gun homicides.

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The Past Is a Foreign Country

I felt a certain resonance with Lance Morrow’s recent op-ed in the Wall Street Journal:

The ’30s are a vanished world. Much of the 20th century has become a sort of Atlantis, and analogies between the old time and our own are tenuous. A political archaeologist might find that the most reliable common denominator is what could be called the unchanging metaphysics of lying. As Francis Bacon wrote 400 years ago, human beings have a “natural though corrupt love of the lie itself.”

Mr. Trump works with huckster falsehoods—the flashy superlatives of a car salesman. The progressive left works with conceptual falsities. Voters in 2020 will decide which style of lies they prefer.

Mr. Trump composes his reality after the manner of a Renaissance painter’s pentimento, except that he works at the speed of Twitter , making adjustments as circumstances shift. He slaps new paint over old facts when they become inconvenient. Mr. Trump’s abuses, he and his followers believe, somehow come right by coalescing in a larger truth—the mythic America that radiated from my father’s old Saturday Evening Post and came to its apotheosis in the Neverland of Dwight Eisenhower’s 1950s.

The progressive left embraces new visions of perfection—tamer in its methods than its 1930s predecessors, but sometimes outdistancing them in the fusion of dogmatic correctness with a fairly advanced decadence. Progressives are busy reinventing the Kingdom of God on Earth, trying to make their version as different as possible from his. They contrive elaborate new genders, for example—ones the deity didn’t think of. They invent vocabularies, terms ecstatic and bristling—“cisgendered,” “heteronormative,” “intersectionality”—designed to bully reality into compliance.

Their version of the kingdom mixes hopes of social justice with sexual nullifications and revenge fantasies. In my mother’s time, the far left in its dreams crushed capitalism and ushered the workers into paradise. Today they sweep white civilization and toxic males into the dustbin of history.

Affirmative action, now a permanent fixture of American society, remains out of step with the country’s basic idea of fairness.

“Diversity,” politicized and bureaucratically institutionalized, forms the basis for systems of un-American coercion.

Martin Luther King Jr.’s notion of valuing a man’s character over the color of his skin remains the gold standard, and yet even his greatest admirers claim it doesn’t really apply anymore—or never did.

The progressive notion of gender as a “social construct,” rather than sex as a fact of nature, contradicts ages worth of human experience about the biological roles of men and women in the drama of procreation and survival.

The rule of law is cast aside for a 13th-century dream of open borders and sanctuary cities.

The left disparages masculinity as evil and Western civilization as monstrous, hoping to extinguish the intellectual and moral legacy that created the U.S. in the first place. If we are not careful, the strategy might work.

His life’s trajectory is one that might well have been mine. Like his mother my father was a communist in the 1930s. By the 1960s he was a conservative. He had opportunities to follow politics as a career. Harry Truman asked him to be his campaign manager for his final senate campaign. He chose the law instead. My dad started out as a journalist; his dad was a journalist for most of his career until he became a speechwriter and advisor to Nelson Rockefeller.

We are conditioned to think of the present as a culmination but that’s an illusion. It’s just a way station and there is no straight line progression in human affairs. Bloodletting, phrenology, communism, and eugenics have all been mainstream views in their time, held by the very most forward-thinking and scientific minds.

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Losing Your Citizenship

In the United States although there are circumstances under which a naturalized American citizen may lose his or her U. S. citizenship, citizens at birth may not be deprived of their American citizenship.

There is presently a story being reported about a young woman with UK citizenship who had run off to join DAESH wishing to return to Britain. I know little about the details of the case but feel that it should be pointed out that British law is different from American law on the issue of citizenship. It is possible for British citizens, even those born in the UK, to lose their British citizenship and it doesn’t even require a court order for it to happen. The foreign minister, formally the Secretary of State for Foreign and Commonwealth Affairs, can order that solely on his or her own authority.

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Disappointed

I found the opinion offerings in the major outlets pretty disappointing this morning, not giving me much fodder for commentary. There is still some caviling over Trump’s national emergency for wall-building but nothing particularly new is being said.

Most seem satisfied to let the matter play out in the courts. So far none of the plaintiffs I’ve heard about bringing suit would have actual standing. The courts may rule differently which is an illustration of the point I’ve made before. Far too many Americns are only concerned about the rule of law so long as the law promotes their own policy preferences. In other words they want the courts to enforce their preferred policies regardless of the law.

I feel confident in predicting that is what will ultimately transpire.

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The Best Things

The very best thing about the Trump presidency is that it is causing Democrats to see the virtues of federalism and the separation of powers. When the National Emergency Act was enacted, for example, there was a Democratic president, Democrats held a majority of the seats in the House, and Democrats held a veto-proof majority of seats in the Senate. It seemed perfectly sensible to pass a law delegating sweeping and vague powers to the president.

Fast forward 42 years, give the Democrats a narrow majority in the House, a minority in the Senate, and a notionally Republican president whom they despise in the White House and the National Emergency Act starts to look as vile, unconstitutional, and lawless as it always has been.

The best reaction would be for the Congress to join together to repeal the National Emergency Act with enough votes to override the inevitable presidential veto. No one, most especially me, really believes that will happen. The second best reaction would be for the Supreme Court to declare the National Emergency Act unconstitutional. That isn’t likely, either. It is more likely for the ultimate decision to rest on narrower grounds which will be not a bit better in terms of rule of law and the separation of powers than the present situation. Judges should not be micromanaging policy. That isn’t the job of judges but if they rule on narrow grounds that’s just what they will be doing.

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