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Clarifying the Meaning of P3

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Reminder that Good Tax Reform Has Two Steps

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Borrowing Money to Make Housing More Expensive

One can have real debates about the wisdom of driving up housing prices.  If you’re trying to get started in the state, high housing prices are a huge burden.  On the other hand, if you own property in Rhode Island, making property more scarce should drive up its value… at least until the inability of people to move around easily strangles the economy even more and reduces the reasons for living here in the first place.

That said, it’s worth pointing out that this sort of thing certainly plays a role:

The Rhode Island Department of Environmental Management announced Friday that 17 projects will receive matching grants to protect 889 acres of open space and farmland. The funding stems from the Green Economy Bond program, which was voters passed in 2016.

The initiative aims to invest $35 million to preserve open space, improve recreational facilities and clean up land and waterways.

So, taxpayers committed to spending money (with interest) on initiatives that will reduce the amount of buildable land, leaving hundreds of acres that do little for anybody who doesn’t have a lot of free time.  Sure, it sounds like a nice thing to do, but it would be less of a concern if we could be confident that people understood the economics involved.  The value of land is mainly helpful when one makes the decision to sell (and buy in a less-inflated market elsewhere); in the meantime, it primarily means higher property tax bills and pressure for more debt and state-level taxes to subsidize housing for those who can’t afford it.

One thing we can say for Rhode Island government:  It’s great at creating tax traps that drag the economy down in ways that aren’t easily traceable back to them, while they buy votes from special interests.

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Tax Cuts and Extra Revenue

We’re still in the period of anecdote, when it comes to assessing the effects of the federal tax cut on the economy, but Investor’s Business Daily suggests that we’re seeing early indications of a tax cut’s ability to generate revenue that takes a bit off its projected cost:

The Congressional Budget Office says that federal revenues in January added up to $362 billion. That’s an increase of $18 billion— or 5.2% — from the year before. As a result, the government ran a surplus of $51 billion that month, which is equal to the previous January. …

Individual income and payroll taxes, it says, rose by $68 billion. “That change largely reflects increases in wages and salaries,” the CBO says. …

What’s more, the fact that employment gains continue to be strong means more people will be earning taxable wage income. It also means fewer people collecting government benefits, which will mean less government spending than would otherwise be the case.

The most shocking thing is that we’re debating the cost of the legislation.  Here, we see more people finding work and getting off of welfare.  Those sorts of positive outcomes are supposed to be what welfare programs are about, and it turns out that economic growth accomplishes them.

So to accurately assess pro-growth policy, one must first adjust the static “cost” to account for increased revenue and then assess the benefits to individuals and our society against the remaining reduction in government revenue.  Naturally, I’m biased, but it seems to me that a fair assessment will show that the U.S. and most of the states (especially high-tax ones, like Rhode Island) have a long, long way to go before cutting taxes is anything less than a no-brainer.

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Fake Claims From The Progressive Land Of Make-Believe

The legislative onslaught from the left has begun. As the poster child of their desire for government-control over the lives of residents and businesses, Rhode Island’s progressive-Democrats announced they will introduce legislation this week to establish an estimated $13.2 billion single-payer health insurance system.

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Airport Pickups an Early Question of a Gig Economy

For the Providence Journal, Jim Hummel has an article and video report on T.F. Green’s minimum charge for short-term parking and requirement for ride-sharing drivers (from, e.g., Uber and Lyft) to pick up in that lot:

Taking the statements of everybody in the report at face value, there are certainly two sides to the story.  The airport has to operate on its own revenue, and ride-sharing is eating into that revenue, so the money has to come from somewhere.

That said, accommodations could surely be found so that ride-sharing drivers could pick up closer to the door and under shelter.  The fee for pickups is a matter of negotiation, but convenience is a matter of protectionism.

Moreover, these are questions that we’re going to have to figure out how to answer, because technology is going to keep disrupting old arrangements like exclusive access for a single taxi company.

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Incrementalism in Tax Increases

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