Bacon Bits: Weekend Catch-up

Wait… what? Cut Richmond schools some slack? John Butcher, author of Cranky’s Blog, normally doesn’t have much sympathy for the City of Richmond public school system. But he notes in a recent post that the Virginia Department of Education (VDOE) methodology for assessing schools is stacked against those with a higher percentage of economically disadvantaged kids. Comparing majority-white Mary Munford and William Fox elementary schools with majority-black Barack Obama and John B. Cary elementary schools, he notes that affluent Munford and Fox have significantly higher SOL pass rates. But economically disadvantaged kids at Obama and Cary out-perform economically disadvantaged kids at Munford and Fox. The Board of Education abandoned a system, the SGP, that was uncorrelated with economic status. Says he: “We are left with a reporting system that punishes schools and divisions that serve larger populations of poor students. If that is fair, I am Santa Claus.”

I wish Mike Thompson were still around to see this. Back in April, in one of his last publications, Mike Thompson, then-president of the Thomas Jefferson Institute for Public Policy, issued a study concluding that hiking the tax on cigarettes rarely yielded the revenues predicted by static analysis. Now comes this story from the Richmond Free-Press: “Profits up in smoke as city merchants report hefty sales slumps since start of city cigarette taxes.” Richmond Mayor Levar Stoney expected a 50-cent-per-pack increase in cigarette taxes to yield $3.5 million in added revenue. The first month, July, collected a nifty $770,000 in taxes. After smokers got wind of the new tax, however, August collections declined 60% to $307,000. Owners are driving past Richmond convenience stores to buy cigarettes in Chesterfield County. No report on how much Richmond stores are losing in non-cigarette sales as a result. Somewhere up in heaven, Mike is smiling.

Who are you calling “inequitable,” dude? On the issue of “inequitable” school funding, I argued recently that high-poverty  rural/small town localities in Virginia were taxing less than their fiscal capacity would enable them to, while more affluent school districts were taxing more, although differences in the Cost of Living between Northern Virginia localities and Rest of Virginia localities made statewide school-spending comparisons tricky. Jim Weigand, of Lynchburg, drove home the point with the following numbers:

Average teacher salary (nominal):
Alexandria — $74,664
Lynchburg — $47,476

Average teacher salary (adjusted for Cost of Living):
Alexandria — $52,361
Lynchburg — $54,073

Says Weigand: “Stop badmouthing those divisions that don’t spend as much as NOVA.”

Racism, racism, everywhere you look. The Commonwealth Institute for Fiscal Analysis is at it again, using statistics to raise alarms about institutional racism. A recent blog post observes that nationally black women are about 2 to 3 times more likely to die during pregnancy or within a year after birth. “A major factor in the differences in outcomes for mothers,” states CI with no supporting evidence, “is the racial discrimination that Black women experience in everyday life and in medical settings.” I debunked those numbers back in July: The most recent Virginia data, going back to 2010, did show that black mothers were more likely to die than white mothers by a ratio of two or three to one. But (a) the number was vanishingly small — 99,957.4 of every 100,000 women — did not die, (b) 44% died from causes that had nothing to do with access to he healthcare system, (c) and that study did not adjust for risk factors such as smoking, drinking, and drugs. Is it unreasonable to ask pundits and politicians who throw around charges of racism to show how something is racist rather than inferring racism as the default explanation?

A hidden driver of K-12 spending. I’m pretty tough on Virginia’s public school system — someone needs to call B.S. on educational leadership — but schools do have real and growing challenges. One of those is the increased incidence of autism, ADHD, and mental illness among today’s youth. The schools are not making this up. Along this line, the Virginia Department of Education recently announced a five-year, $2.5 million federal grant to improve mental health services for students in six high-need school divisions: Buckingham County and the cities of Charlottesville, Hampton, Roanoke, Staunton, and Waynesboro. “The grant,” said Superintendent of Public Instruction James Lane, “will support the commonwealth’s effort to create a pipeline of high-quality mental health professionals for school divisions with the greatest needs.” As much as I hate new spending, this is probably justified.

Who’s ripping off the poor — payday lenders or do-gooders? Virginia’s small-loan statutes have “unusually week consumer protections” compared to other states, finds a new Pew Trusts research report. Virginians pay annual percentage rates on average of 251% on payday loans, three times what they do in other states. One in eight title loan borrowers has a vehicle repossessed each year, also one of the nation’s highest rates. More than 90% of the state’s more than 650 payday and title-loan stores are owned by out-of-state companies. Virginia, says Pew, needs to modernize its small-loan laws. Maybe that’s true, but Pew needs to gather a lot more proof to make its case. Here’s what Pew and other anti-payday zealots never ask: If poor/working class people can’t get payday or car-title loans, where do they go for quick cash in emergencies? Pawn shops? Loan sharks? They certainly don’t go to banks. Are lower-income Virginians better or worse off having payday and title-loan options foreclosed to them? Being poor sucks. Does it suck any less in states with tight small-loan restrictions? Show me the proof.

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16 responses to “Bacon Bits: Weekend Catch-up

  1. Interesting article in WaPo:

    This trail-blazing suburb has tried for 60 years to tackle race. What if trying isn’t enough?
    (exerpts):
    But the story of Shaker Heights shows how moving kids of different races into the same building isn’t the same as producing equal outcomes. A persistent and yawning achievement gap has led the district to grapple with hard questions of implicit bias, family responsibility and the wisdom of tracking students by ability level. Last school year, 68 percent of white 11th-graders were enrolled in at least one AP or IB course, but just 12 percent of black students were.

    The report, finalized in March 1997, found that whites made up about half of all students but 93 percent of those in the top 20 percent. Black students made up 82 percent of those who failed at least one portion of a state proficiency exam. Of all grades earned in core high school classes by black students, about 40 percent were a D or an F.

    https://www.washingtonpost.com/education/2019/10/11/this-trail-blazing-suburb-has-tried-years-tackle-race-what-if-trying-isnt-enough/?arc404=true

  2. re: payday loans – I don’t think Pew is looking at the “conservative” philosophy about payday loans – they are comparing how the different states deal with it – and the verdict is already in – those other states disagree with Conservatives on payday loan protections – those states, unlike Virginia, feel that the poor are also entitled to some level of protection against bottom feeding scum.

  3. What the cigarette tax report doesn’t report is the health cost savings by discouraging people from smoking tobacco. Where’s that cost? Richmond pays some of the freight for doctor’s visits, cancer wards and other lung disease treatment. It’s just too easy to complain that the city tax isn’t meeting projections because people go to neighboring areas to buy smokes, The solution? Tax the hell out of them in those places, too.
    There is absolutely nothing wrong with using taxes or bans or other government intervention to discourage bad and harmful behavior. Take me. I used to smoke a lot and then quit. My job took me to Moscow where everyone smokes and I started up again. My next job transfer took me to a skyscraper in midtown Manhattan where The City of New York had banned smoking in offices. So, if I wanted to light up, I’d have to take two banks of elevators down dozens of floors to the street. That cured me for good.

  4. Didn’t the age to buy tobacco increase to 21 at the same time? In a college town, that could have a lot more to do with decreased sales than a tax. I was in the Carytown Tobacco store on Broad Street (VCU) in August. I asked if they were excited that the students were back. The answer was “no, they can’t come in here anymore”. Either way, it’s good to hear that sales are slumping.

  5. Payday lenders and pawn shops are NOT equivalent; it’s not all about whose interest rate is more rapacious. The payday lenders promote easy money relentlessly; they suck the gullible into a spiral of living beyond their means, then more loans to pay their loans. Don’t see pawn shops doing that. Title-collateral loans are somewhere in between. It’s all too easy to fault the consumer for being so gullible, but from all I’ve seen and read, the easy money message from payday lenders is a lot more seductive and does a lot more harm.

  6. The Richmond tobacco tax increase simply encouraged buyers to go to Henrico and Chesterfield, or some other low/no local tax jurisdiction. The retailer in the story on Broad Rock Road is probably very close to the county line at Chippenham. Speaking on behalf of the Thomas Jefferson Institute, since I can, the study was an exercise in “well, duh, of course that would be really stupid” and no surprise the numbers are bearing it out. Nobody quit smoking, and the people still paying the high local Richmond tax are mainly low income city residents without cars or bus transit to one of those counties. The people Hizzoner should not want to punish…..those least able to absorb the cost.

    Another example of government decisions making poverty worse…

    • If such a tax were statewide or nation-wide AND the tax went to MedicAid… would that be a win-win?

    • I think where there are adjacent jurisdictions – such taxes MAY affect SOME things but others are clearly not. A GOOD location to check/verify this would be along I-95 ramps to restaurants – some with meal tax and others without… another would be to check neighboring jurisdictions with different sales taxes but check the lottery sales on a per capita or per retail sales basis.

      There are quite a few ways to do studies to get to valid data but TJ and company prefer to NOT do such studies but to cherry-pick data that supports their “all taxes are evil” philosophy.

  7. Decades of studies have demonstrated that the economic incidence of sales taxes fall on landowners who operate stores selling products subject to the tax or their landlords. While there are public benefits associated with taxing cigarette sales, when taxes are substantially higher than neighboring jurisdictions, customers go elsewhere when they can. And expected revenues don’t occur.

    This is so rudimentary that even the MSM should be able to understand it. But they regularly ignore/don’t understand basic economics.

    • Not true TMT. Take a look at the meals tax especially along I-95 and in places with destination attractions! Caroline County is now thinking about a tax on admissions to the Va State Fair. What WOULD be interesting would be to do a study about such a tax – to see what the study would predict – THEN – actually do the tax – on a sundown basis so it would have to be reenacted to be permanent. If they did such a process, it would actually PROVE how taxes affect demand, no?

      • Larry, I even dug out one of my old text books to read up on the border effect and sales taxes. Here is a link to a more recent study of Washington State’s sales tax and the border effect. http://web.pdx.edu/~crkl/WISE/SEAUG/papers/Wooster_Lehner.pdf

        A couple of comments. First, most people don’t pay the use tax. And, of course, this was written before SCOTUS decided South Dakota v. Wayfair. Cigarette taxes, while a sales tax, tend to be much higher and seem to motivate cross-border purchases more than a 6% sales tax would. The higher the tax, the more the motivation to purchase cigarettes in a nearby location with a lower tax.

  8. Steve,
    How do you know that no one quit smoking because of the tax hike? If that was in the report, I missed it. Also, taxes don’t work on smoking cessation,w hat else would you suggest (assuming you think smoking is bad for people)?

  9. “There is absolutely nothing wrong with using taxes or bans or other government intervention to discourage bad and harmful behavior.”

    The above also answers the question. “taxes don’t work on smoking cessation,what else would you suggest (assuming you think smoking is bad for people)?”

    It doesn’t fill government coffers as well but other government intervention can include prison, early morning police raids with perp walks, and fines for making people do what the empowered think is good for them…for example, smoking marijuana is good for us so we want to be sure we get all those bad laws restricting it overturned which shows that…

    It’s important that only the right people have access to this “government intervention” to discourage “bad and harmful behavior”

    In the wrong hands we might have men and women’s rest rooms, locker rooms for men and women, restraints on abortion, even colorblind education and law enforcement to name a few outcomes of bad or undesirable behavior.

    Then there’s the problem of those people electing the wrong people. As we see now there are a variety of government interventions available to undo those mistakes of wrongful thinking.

    It’s a slow process, Peter, of forcing everyone to think and behave correctly but the country appears on the right path to that end. Look at the exciting Democrat candidates for President. One is now advocating using the IRS to force churches to recognize LGBTQ. You’ve got to like that.

  10. taxes on meals is a good example. They DO WORK even when one county has them and another does not and they WORK on places like I-95 where people stop , get food, then leave. Taxes on Motels also “work” for the same reason.

    There are other areas where they do not. The tax on hospitals WILL work also – whose going to go out of state for a hospital over the tax?

    Taxes on ammunition – “work” .. right? taxes on hunting – work, right?

  11. It’s fun to speculate what effects the tax increase has on sales, but without data suggesting that sales in the counties is up, it’s akin to reading tea leaves.

    Again, the biggest part missing from the article is that the age to purchase tobacco products was raised to 21 on July 1st. There has also been a sustained vaping health scare that started in late July which lead to national retailers removing products from the shelves and individuals opting not to vape.

  12. We’re not immune to the tax issue but the tax that makes the biggest difference is the Property/Real estate tax and even though we are retired, we’re NOT moving to a low tax county – even though it would save us a BUNDLE!

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