Grassroot Perspective: A Taxing Week, Rich(ish) State with a Poor Outlook, and More

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Scanning the week’s national news, views and clues with you and yours in mind

By Malia Hill


“For their happiness such a government willingly labors, but it chooses to be the sole agent and the only arbiter of that happiness; it provides for their security, foresees and supplies their necessities, facilitates their pleasures, manages their principal concerns, directs their industry, regulates the descent of property, and subdivides their inheritances: what remains, but to spare them all the care of thinking and all the trouble of living?”— Alexis de Tocqueville, Democracy in America [1835]

Each week, we’ll be monitoring the web to find the most interesting, challenging, or important items for those who are concerned about liberty, accountability, and big government.  Here are some of the highlights from the past week:

Backward to the Future! (Economically speaking)

It’s all very well to note that you’re “rich in other ways” when you’re an individual, or a family.  Something where measuring love or spiritual fulfillment has meaning.  If, on the other hand, you happen to be a state government whose main responsibilities are to uphold the rule of law and (at the minimum) not be a drag on economic progress, no one is particularly interested in your level of spiritual fulfillment.  Mostly they just want to know how much you are (or are not) screwing up the economy.  And that is something that people keep track of.  The American Legislative Exchange Council has released its most recent Rich States Poor States “economic competitive index” which compares the economic outlook of the states with an eye to state government actions that impact the local economy for good or for ill.  The good news is that Hawaii’s current economic performance rank is a relatively cheering 15, as negative trends in personal income per capita and non-farm payroll employment reversed in 2010, showing both growth and optimism.  An optimism that is quickly crushed by the dismal rank of 46 in “economic outlook,” where they consider 15 important state policy variables in forecasting the state’s economic future.  What’s bringing us down?  Things like the top marginal personal income tax rate (ranked #49), the sales tax burden (#49), estate/inheritance taxes (#50), whether it’s a right-to-work state (#50 again), and . . . most tellingly .  .  . recently legislated tax changes from 2010 and 2011 (#45).  Could there be a clearer way to indicate how elections can change your economic future?  Let’s just be grateful that the subtitle of the report isn’t “We Told You So”.

I’ll Reform that Tomorrow

Immigration reform is quickly becoming an interesting experiment in pragmatism versus vote-getting.  Pretty much everyone who examines the issue—regardless of their position on the issue or the reforms they want to see pursued—will agree that the current situation is untenable.  Even a “deport everyone” hard-liner and an advocate for amnesty can agree that the current “policy” (if you can call it such) of wishy-washy law and erratic enforcement is a bad one.  So why hasn’t anything been done?  Or even seriously attempted?  It’s that darned vote-getting thing.  If you’re a Democrat, you want the Latino vote but you don’t want to lose the other side or be seen as weak on immigration enforcement—especially not in certain key states.  And if you’re a Republican . . . you want pretty much the same thing.  And so, as the Washington Examiner points out, immigration reform has become a political football.  One that you punt on as often as possible and hope that no one notices.  And few have done so more often than President Obama, who (during the election) had made a great deal of noise about the need for reform, and after almost a full term, has managed to successfully evade any serious action on it.  It seems almost as though he and similar politicians are banking on the notion that Latinos (and Asians!) who care about immigration reform won’t jump to the Republican Party based on preconceptions about party image and loyalty.  It seems like a big risk to take and a big opportunity for Republicans—if they have the courage to take advantage of it.

The Burden of Taxes

With Tax Day having passed this week, I think most of us are a bit grumpy and on edge.  (If you’re not because you got a refund, allow me to rain on your parade by pointing out that your refund is merely the government returning money that they’ve been borrowing from you for months.  Did they ask you if they could have it?  Would that money have been more helpful to you in your own bank account last November rather than sitting in the hands of the State?  I rest my case.)  Claiming that higher tax rates hurt the economy is something that economists (and Libertarians) love to do, but rarely do they take the time to explain it.  Something that Charles Kadlec does to great effect this week in Forbes.  On a personal level, it’s fairly intuitive.  If you have to give money to the government, you don’t have it around to grow your business, buy a new car, or any number of things that would help the economy in a larger sense—especially when you consider it’s not just you making these decisions.  It’s millions of us.  And that’s why, no matter how emotionally satisfying it may be, it just doesn’t make economic sense to soak the rich come tax time.  It doesn’t matter that they can afford it.  They can afford a lot of things, like tax shelters and private chefs.  They can also afford to decide not to invest, not to expand their businesses, or to relocate their businesses (and jobs) somewhere with a lower tax rate.  And those all hurt us regular folks a lot more than the extra bill hurts the rich.

More Taxing Shenanigans

Still not annoyed enough about taxes?  Then you’re not paying attention (or have never attempted to read the instructions that accompany Form 1040A).  Antony Davies in US News & World Report helpfully describes even more of the gimmicks that the government uses and politicians exploit to keep you confused about taxes and tax rates (and presumably keep you from doing inconvenient things like sending irate letters or voting them out of office).  Seeing as we’re in an election year, I would call it required reading for the upcoming evasions about “marginal tax rates.”  Just make sure you take your blood pressure medicine first.

Locavores vs. Economics

Hawaii has, thankfully, seemed for the most part immune to some of the more pretentious “foodie” trends that occasionally grip the Mainland.  Maybe it’s the aloha spirit.  Maybe it’s just the fact that when you live on an island in the middle of the ocean, it’s not very realistic to become super-indignant about “locally-sourcing” all your ingredients.  Maybe it’s the fact that, deep-down, we still love our spam and teri burgers.  (I remember being amused when “fusion” was all the rage.  Hawaii has always been about fusion.  Spam musubi was fusion before fusion was cool.)  In the islands, you get locally the stuff that’s good locally, and you acknowledge that some stuff is going to have to be shipped-in.  But elsewhere, an argument rages about the purity of locally-sourcing your food versus having it shipped to you from thousands of miles away.  The subjective debate may be about which way tastes better, but the more interesting aspect of it is about the environment and economics.  And, contrary to your expectations, it seems that it may well be more economically efficient (and better for the environment) to get your grapes from Chile.  That’s just one of the arguments that Tyler Cowen, an economist from George Mason University, makes in his new book about how using economics can help people eat better, cheaper meals.  (Fortunately for me, spam musubi is both good and cheap.)

Views expressed in this column are intended to promote creative thought, educate, and, we hope, prompt comment. Accordingly, thoughts expressed do not necessarily reflect the official position of Grassroot Institute of Hawaii or the author.

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