The pandemic has caused so many problems for state and local governments…..the biggest problem is yet to come.
The budgets and and revenues will be a insurmountable problem that needs a solution that will benefit everyone and crap on none.
US local and state governments are reopening the economy as the pandemic continues to spread, although mass testing for COVID-19 and contact tracing programs are absent. At the same time, new state and local budget projections for the coming fiscal year paint an even grimmer picture than what was expected at the beginning of the month.
The Center on Budget Policy and Priorities (CBPP) has reported a 25 percent decline in revenues for some states in April alone. The CBPP now predicts that US state budget shortfalls will reach $765 billion over the next three years due to the economic impact of the COVID-19 pandemic. The report points out the strong relationship between unemployment rates and shortfalls in state budgets, which are critical for providing health care, housing, education, infrastructure and social welfare programs.
According to CBPP, several states have already predicted major reductions in revenue for 2020, including Massachusetts ($4.5 billion, or 15 percent of the state budget); Michigan ($3.2 billion, or 13 percent); and Utah ($1.4 billion, or 18 percent). For the next two years, some states are projecting even steeper drops, such as California ($32 billion in 2021, or 21 percent of its state budget); New York state ($12 billion in 2021 and $16 billion in 2022, or 14 and 17 percent of its annual budget); and Colorado ($3.2 billion in 2021 and $4 billion in 2022, 24 and 17 percent of its annual budgets, respectively).
There is a solution that has been around for over 100 years…..it is called Land Value Tax….
Land Value Taxation is a method of raising public revenue by means of an annual charge on the rental value of land. If you do not want to read through this text, you can watch this ten minute video by Dominic Frisby.
The below advantages are from http://www.landvaluetax.org/
- A NATURAL SOURCE OF PUBLIC REVENUE. All land makes its full contribution to the Exchequer, allowing reductions in existing taxes on labour and enterprise.
- A STRONGER ECONOMY. If we tax labour, buildings or machinery and plant, we discourage people from constructive and beneficial activities and penalise enterprise and efficiency. The reverse is the case with a tax on land values, which is payable regardless of whether or how well the land is actually used. It is a payment, based on current market value, for the exclusive occupation of a piece of land. In the longer term, this fundamentally new and different approach to revenue raising will stimulate new business and new employment, reducing the need for costly government welfare.
- MARGINAL AREAS REVITALISED. Economic actitivities are handicapped by distance from the major centres of population. Conventional taxes such as VAT and those on transport fuels cause particular damage to the remoter areas of the country. Land Value Tax, by definition, bears lightly or not at all where land has little or no value, thereby stimulating economic activity away from the centre – it creates what are in effect tax havens exactly where they are most needed.
- A MORE EFFICIENT LAND MARKET. The necessity to pay the tax obliges landowners to develop vacant and under-used land properly or to make way for others who will.
- LESS URBAN SPRAWL. Land Value Taxation deters speculative land holding. Thus dilapidated inner-city areas are returned to good use, reducing the pressure for building on green-field sites.
- LESS BUREAUCRACY. The complexities of Income Tax, Inheritance Tax, Capital Gains Tax and VAT are well known. By contrast, Land Value Tax is straightforward. Once the system has settled down, landholders will not be faced with complicated forms and demands for information. Revaluation will become relatively simple.
- NO AVOIDANCE OR EVASION. Land cannot be hidden, removed to a tax haven or concealed in an electronic data system.
- AN END TO BOOM-SLUMP CYCLES. Speculation in land value – frequently misrepresented and disguised as “property” or “asset” speculation – is the root cause of unsustainable booms which result periodically in damaging corrective slumps. Land Value Taxation, fully and properly applied, knocks the speculative element out of land pricing.
- IMPOSSIBLE TO PASS ON IN HIGHER PRICES, LOWER WAGES OR HIGHER RENTS. Competition makes it impossible for a business producing goods on a valuable site to charge more per item than one producing similar goods on less valuable land – after all, producers and traders at different locations are paying different rents to landlords now, yet like goods generally sell for much the same price and employers pay their workers comparable wages. The tax cannot be passed on to a tenant who is already paying the full market rent.
I wrote about this here on GSFP……https://gulfsouthfreepress.wordpress.com/land-value-taxation/
This will be hard to convince the politicians of this….but as they struggle to balance the budgets this will be a good solution ….but will legal bribes prevent a solution?
I Read, I Write, You Know
“lego ergo scribo”
Back in the day when casinos were coming to the Mississippi Coast I wrote a piece about the Law of Diminishing Returns to argue against an unlimited amount of casinos….it seems that they were building casinos to have something to do……..
Law of Diminishing Returns simply put is if there is a finite amount of casino revenue, say $10 million, then the more casinos there are the more diluted the revenue will be…..now with the slowdown of the economy the casinos have suffered the same fate……when the bill passed the state legislature the deal was that the tax revenue would be used to sure up the sagging education system……well we stilkl have one of the worse systems around and the funds found there way into the “general fund”…….
But could the casino become a burden on the state? Under normal conditions they should not……but there is nothing usual about the Mississippi gaming system……what could be a possible result of a casino failure?
Well, let’s look at Delaware, shall we………
Lawmakers appear ready to support Gov. Jack Markell’s plan to use $8 million from higher-than-expected state tax collections to bail out the state’s casino industry. But it’s not clear if the state aid will forestall layoffs threatened by casinos that have seen revenues plummet from intense regional competition.Sen. Robert Venables, who chairs the General Assembly’s join Bond Bill committee, said Tuesday $8 million is “better than nothing” for the industry, which has pleaded with lawmakers and the governor in recent weeks for help to reduce its tax burden.
If the proposal makes it into the final draft of the Bond Bill, tied in with hundreds of millions in school and infrastructure spending, it’s likely to pass the General Assembly without debate.
Now how is that? An industry that makes obscene profits could get a government bailout…….could this be the future of the failing casinos of the Gulf Coast?
During the regular legislative session, lawmakers did not reauthorize Medicaid funding. Thus, on July 1, Mississippi’s Medicaid program will no longer be funded. This will not only affect individuals covered by Medicaid, but all who are employed in jobs that are funded in full or in part by Medicaid dollars. The defunding of Medicaid will result in thousands of layoffs and firings in the health care field.
That’s why I started a petition to Governor Phil Bryant, which says:
As July 1, 2013 ticks ever closer, we understand the tremendous impact not funding Medicaid will have on our state. Not only will thousands of children, pregnant women, and the disabled not have the health care they desperately need, but money for sliding fee scale clinics, STD testing, pregnancy prevention, and mental health services will be cut off from the community. This lack of funding will lead to massive layoffs and firings within the Mississippi health care and social services sector.
The health and well-being of Mississippi is not a partisan issue. Call the special session immediately!
Time to step up and help the people of Mississippi….we have had enough vague promises and political games……time to get serious about the state’s residents……
I got this email recently from the Progressive States Network and thought I would pass it along to the readers….some of the ideas are pretty good and innovative and some are just dumb….
Job Creation Opportunities During a Recession
Kauffman Foundation – The Economic Future Just Happened
Information Technology and Innovation Foundation – 2008 State New Economy Index
Kauffman Foundation – Better, Faster, Cheaper: The New Bootstrap Job Creator”
State Venture Capital Funds
National Governors Association – State Strategies to Promote Angel Investment for Economic Growth
NASVF – U.S. State-Supported Venture Capital Funds
Encourage Technology Transfer and Commercialization
Pennsylvania Economy League – A Continuing Record of Achievement: The Economic Impact of Ben Franklin Technology Partners 2002-2006
U.S. Department of Commerce, Economic Development Administration – Construction Grants Program Impact Assessment Report
Information Technology and Innovation Foundation – 2008 State New Economy Index
Batelle and the Association of University Research Parks – Characteristics and Trends in North American Research Parks
Strengthen Industry Partnerships & Clusters
Keystone Research Center – Pennsylvania’s Industry Partnership Strategy
Steel Valley Authority (SVA) – Early Warning and Layoff Aversio
Seattle Foundation and SkillUp Washington – Creating Stronger Workforce Partnerships In Manufacturing
National Fund for Workforce Solutions – The Principles of the National Fund for Workforce Solutions and Their Implications for Public Policy
National Governors Association – Cluster-Based Strategies for Growing State Economies
State government needs all the help it can get….but unfortunately politics is NOT always the best for the state…just the individuals that play the game……
There are times when the state legislature does something that is a blatant disregard of the people it represents and SB2288 is such bill….which states:
AN ACT TO AUTHORIZE THE BOARD OF SUPERVISORS OF A COUNTY AND/OR THE GOVERNING AUTHORITIES OF A MUNICIPALITY TO GRANT A PARTIAL AD VALOREM TAX EXEMPTION FOR AGRICULTURAL PROPERTY THAT IS BEING CONVERTED TO A RESIDENTIAL USE IN AN AMOUNT EQUAL TO THE DIFFERENCE IN THE ASSESSED VALUE OF THE PROPERTY FOR AGRICULTURAL USE AND THE ASSESSED VALUE OF THE PROPERTY FOR RESIDENTIAL USE; TO PROVIDE THAT THE EXEMPTION SHALL END WHEN THE PROPERTY IS OCCUPIED BY A HOMEOWNER; TO PROVIDE THE MANNER IN WHICH A REQUEST FOR SUCH EXEMPTION MUST BE MADE; AND FOR RELATED PURPOSES.
This appears to be a boon for the purpose of land speculation….
A case could be made that land speculation is the cause of almost every major recession/depression that has occurred whether nationwide or statewide…..The 19th century economist Henry George describes it:
That land speculation is the true cause of industrial depression is, in the United States, clearly evident. In each period of industrial activity land values have steadily risen, culminating in speculation which carried them up in great jumps. This has been invariably followed by a partial cessation of production, and its correlative, a cessation of effective demand (dull trade), generally accompanied by a commercial crash; and then has succeeded a period of comparative stagnation, during which the equilibrium has been again slowly established, and the same round been run again. This relation is observable throughout the civilized world. Periods of industrial activity always culminate in a speculative advance of land values, followed by symptoms of checked production, generally shown at first by cessation of demand from the newer countries, where the advance in land values has been greatest.
This bill is just another attempt to help the land speculators while depriving the state of much needed tax revenue…in these days any reduction in revenue can only lead to a cut in needed services….
Once again, the state legislation is dealing the people of the state a bad hand, just as they do every session…the people need to stop sleeping through the day and wake up politically…they are paying these people to do nothing but screw them at every session….
Recently at an economic forum some interesting points were made:
The governor also talked about the state’s graduation rates and the need for more work-force training. High school graduation rates, Barbour said, might improve if students were directed to career paths early in high school.More education, generally, translates into people with better paying jobs with more disposable income that would translate into increased tax collections.
You would think that if that was the attitude that the governor and the legislature would be gung-ho on educational bills, right?
I will bet that you are about to read me the riot act over the title, right?
I am referring to a bill before the state legislature, HB 148—which states:
AN ACT TO CREATE THE “MISSISSIPPI COMPREHENSIVE COMMUNITIES OF COLOR TEEN PREGNANCY PREVENTION ACT OF 2010”; TO REQUIRE THE DEPARTMENT OF HUMAN SERVICES AND THE DEPARTMENT OF HEALTH TO DEVELOP CERTAIN PROGRAMS AND STRATEGIES PROMOTING PREGNANCY PREVENTION AND PROVIDING INFORMATION ON THE CONSEQUENCES OF UNPROTECTED, UNINFORMED AND UNDERAGE SEXUAL ACTIVITY; TO AMEND SECTION 41-79-5, MISSISSIPPI CODE OF 1972, IN CONFORMITY WITH THE PROVISIONS OF THIS ACT; AND FOR RELATED PURPOSES.
Don’t you just love these guys and gals?
It seems that the state is worried about teen pregnancies in the “Communities of Color”….not this is a total racist thing…they seem to be implying that only teens of color are getting pregnant….why do we not go visit a trailer park and count for ourselves…..
You know a lot of this BS could be solved by actually teaching sex ed in the classroom….but that collapses every session and every session they try it again…it has turned into this perverted little game…..
But to put the term, “communities of color” is just plain and outright moronic….if this is truly non-racial then I suggest a better title for this Act…..
State after state after state is reeling from the results of the recession……mostly because they have cut taxes to the bone….a promise to get elected……and now the revenues are NOT there……almost all are scrambling to find money for the few services left in the state’s budget….
A report in the Clarion-Ledger:
With the economy continuing to deplete tax revenues, Gov. Haley Barbour said the state is considering some kind of credit assistance that would help small businesses without duplicating programs offered by banks and other agencies.
As the governor and others talked about how the lack of credit is forcing some businesses to close, Jerry Host, president and chief operating officer of Trustmark National Bank, reminded those gathered that the country’s economic problem is complex and needs a multi-faceted solution. Just as other businesses have not gotten expected contracts, Host said banks also are missing anticipated income because businesses have canceled expansions that would have required loans.”The return of a healthy economy is not just dependent on bank lending, it requires the recovery of consumer spending, which in turn increases revenues and leads to healthier businesses – large and small,” Host said in an e-mailed statement sent after the meeting.
The governor repeated his commitment to attracting new jobs as another method of replenishing lost taxes.
Okay there is just so much wrong with this whole approach……first, cutting taxes to be elected is why the state is suffering with low income….second, the state is notoriously always the worst state for employment….none of these “job creation” schemes has panned out in the past…..why would it in the middle of a recession?…….third, “replenishing taxes” cannot be done by cutting more taxes or giving more tax breaks….I have said the demand is the answer liquidity means NOTHING to anyone…..
One question….why are churches tax exempt? Sorry…I digress…..may I suggest that a new way of thinking about taxes should be considered……why not try Land Value Taxation (LVT)?…….this would be a good way to generate new taxes and if done corrctly all other taxes could possibly be eliminated……
But sadly….NO one in Jackson has the guts let alone the cajones to even consider this…their longevity in the legislature could be in jeopardy…God knows we cannot live without their worthless, do nothing butts…..(in case you missed it..it was sarcasm)…..
We all have heard the stories of how the state is suffering from this recession….that the revenues of the state are reaching record lows….sad to say we are not alone…..all states are suffering from the same problems in their budgets….but I will focus on Mississippi…..
I keep bring up that fact that the state’s revenue comes from the imposition of taxes….without taxes there is NO services that the state is required to offer the people…..and yet every time the legislature meets there is some that want, including the governor, to cut taxes, almost ALL taxes…..do they NOT see what that does for their budgets…..or is it they do not care and need the cuts to pad their political resumes for their next campaign? IMO, it is the latter!
Property taxes? And sales taxes? You do realize that this is the most important tax? Why? The collection of property taxes is one of the chief sources of revenue for state and local government and then the collection of state sales tax……and now the new legislative session has a couple of bills before it:
First there is SB 2288 which states:
AN ACT TO AUTHORIZE THE BOARD OF SUPERVISORS OF A COUNTY AND/OR THE GOVERNING AUTHORITIES OF A MUNICIPALITY TO GRANT A PARTIAL AD VALOREM TAX EXEMPTION FOR AGRICULTURAL PROPERTY THAT IS BEING CONVERTED TO A RESIDENTIAL USE
And then there is HB 4 which states:
AN ACT TO AMEND SECTION 27-65-17, MISSISSIPPI CODE OF 1972, TO REDUCE THE SALES TAX RATE ON RETAIL SALES OF MOTORCYCLES FROM SEVEN PERCENT TO FIVE PERCENT;
Just those two bills would decrease the amount of revenue that is coming in…,…state legislators will have to deal with the budget shortfalls by cutting the services and programs that it funds….you have that right?……first, programs for the poor and disadvantage will suffer, i.e. Medicaid and then once that sector is officially killed they will move to such other programs as educational and so forth……all that is just fine for some but they have NOT looked at it realistic……once all the other programs have been cut to the bone and there is still a shortfall then cuts will be made to programs that effect the white people the most….like fire and police….and then the voice of the people will be heard at least if the politicians want to be re-elected……
But will the people finally realize that to keep cutting taxes is NOT the way to fund programs that benefit ALL Mississippians?
To answer my own question….maybe finally the people of Mississippi will be open to the idea of land value taxation (LVT)…….this could go a long way to solving ALL of Mississippi’s financial problems….it is worth a look…so why waste time BS-ing the people and find the cure…it is there just grow a set of cajones and try it…..it could not be as bad as the crap you put us through yearly…..Just a thought…..