Weldon Cooper Revisited

 

In a recent post of Steve’s, members of this blog got into an extended discussion of the methodology used by the Weldon Cooper Center at UVa. to evaluate the effect of tax incentives, specifically its projecting the “impact of raising income taxes by the amount exempted.”  As promised, I contacted a senior executive at Weldon Cooper whom I know and asked for some clarification.

His answer was fairly lengthy, so I will quote key portions and try to summarize his position:

“The answer to your question is that every dollar spent has an opportunity cost.  As you point out, one way the opportunity cost can be measured is the value of the best alternative way you could have spent the money.  Another way is the cost to the economy of extracting a marginal dollar from the economy with a tax instrument….Every tax has some cost in terms of consumption foregone.”

“One cost of a tax is that it might cause some firm or some person to choose to be elsewhere.  This is not a ‘conservative’ idea.  It is just a standard result of microeconomics.  But we must not lose sight of the fact that how the money is spent is important as well.  People and firms value public safety, education services, infrastructure, clean environment, good administration and all the rest.  These things are not free.”

He objected to the characterization in BR of the Weldon Cooper method as “dynamic scoring”, saying, “this is incorrect and is a politically charged assertion.  It doesn’t make us ‘conservative’ to account for opportunity cost and [the effect on the economy of extracting a marginal dollar with a tax instrument].”

In summary, he asserts that any fair analysis must take account of all the effects of government spending.  On the one hand, “every tax has some cost in terms of consumption forgone.”  On the other hand, taxes are used to provide services to citizens that can be best provided by government, rather than the market.

Hall-Sizemore take:  I was off-base in my earlier characterization of the Weldon Cooper approach  as being an “assumption that, were it not for the incentives, those revenues would not have been needed. Thus, there was a ‘tax increase’ needed to produce the revenues.”  It is, in reality, a way of measuring the opportunity cost in terms of the effect of the marginal cost of raising the funds.  It also is a way of consistently comparing different types of economic development incentives.

Actually, balancing of opportunity costs occurs annually in the budget process.  Both the Governor and the legislature do it.  Either the legislature or the executive could determine that the projected revenue was in excess of what was needed to provide a good mix of services in an efficient way and therefore propose reducing the tax rate, rather than expand services.  (Those issues dominated the discussion in last year’s session.)  More often, the opposite is the case—the “needs” and the “wants” of the agencies exceed the amount of projected revenue and the executive and legislature decide that the opportunity cost should be borne by the government.  Thus, the marginal cost to the economy of raising taxes takes precedence over the cost of foregoing expansion of existing services or initiating new ones.

Teen Births and Violent Crime — a Weak Connection

I’ll be the first to admit, giving me an Excel spreadsheet is the intellectual equivalent of handing a chimp a machine gun. What I don’t know about statistics would, well… it would fill a statistics textbook. But I abuse statistics less than most journalists, commentators, and politicians, who, to paraphrase renowned economist Ronald H. Coase, routinely torture the data until it confesses. I count on readers to call B.S. when they see it and modify my findings accordingly. In the spirit of exploration and with all due humility, I present the following:

In a previous post, I disputed the conventional wisdom that “poverty” is a “root cause” of violent crime. The lack of income and material resources is undoubtedly a contributing factor, playing into feedback loops of tremendous complexity, but overall the correlation between the poverty rate and the crime rate across Virginia’s 100+ localities is weak — an R² of .1802, which is considered a small effect size. There is a much stronger correlation — an R² of .4007 across Virginia localities, a moderate effect size — between the percentage of single-parent households and violent crime.

If the percentage of single-family households in a population has a moderate influence on crime, I wondered about the percentage of teen births. Continue reading

Happy 4th! Enjoy Liberty and Prosperity While It Lasts

I love this country. I choke up when I sing the Star Spangled Banner and recite the Pledge of Allegiance. I honor those who gave their lives to preserve and protect our freedoms. I revere this country as the greatest engine of wealth creation and prosperity in history. While other, smaller countries may have a higher GDP per capita or rank higher in surveys of happiness, they never fought a war to extinguish slavery, a war to liberate Spanish colonies, a war to end European monarchies, a war to demolish fascism, or a cold war to contain and defeat communism. For all our our flaws, America has been the greatest force for good the world has ever seen.

But I wonder if we are governable anymore. Can any society as big, sprawling, populous and diverse as the U.S., reflecting such widely divergent values, long stand as a single nation? Continue reading

Now Private-School Tax Credits Are Racist

Chris Duncombe

The Left continues to racialize everything, absolutely everything. It makes me sick to the stomach to write about race on this blog so often, but the “progressive” assault on a post-racial society in Virginia is an unrelenting, 24/7 activity, and if I don’t call the Left to account, it appears that no one else will.

Chris Duncombe, policy director of the center-left Commonwealth Institute think tank, opines favorably upon a new Internal Revenue Service rule that prevents people from “double dipping” when making charitable donations to scholarships provided by private or religious schools. My concern here is not the merits of the IRS ruling, which may be valid, but the reasons Duncombe expresses for disliking the special tax credit crafted to encourage donations to private-school scholarships:

People claiming these credits are more likely to be white than Black or Latinx, due to Virginia’s long history of racial discrimination and the under-representation of Black and Latinx filers in the state’s highest income brackets.

So… it’s now a bad thing for wealthy white people to make donations to provide scholarships that overwhelmingly benefit poor minorities. Continue reading

Thousands of Virginians Getting their Licenses Reinstated

Angela Battle: one of thousands of Virginians to have their license restored. Photo credit: Richmond Times-Dispatch.

Some 37,700 Virginians who couldn’t drive yesterday can drive today, thanks to a budget amendment to Virginia’s Fiscal 2020 budget, reports the Richmond Times-Dispatch. More than 600,000 drivers have suspended licenses because a failure to pay court fines and costs, creating a Catch 22 situation for thousands: People can’t repay their fines if they can’t drive to work, and they can’t drive to work if they can’t repay their fines. The Department of Motor Vehicles will contact other Virginians with suspended licenses to inform them how to get their licenses back.

Randy Rollins, president of the Drive-to-Work nonprofit that helps people get their drivers licenses reinstated, has tried unsuccessfully for the past 10 years to get the law changed, but Governor Ralph Northam was able to enact the new policy, for a year at least, by means of a budget amendment. Continue reading

P.R.C. Scraps Jefferson Birthday Celebration

“We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable rights, that among these are Life, Liberty and the pursuit of Happiness.”

With those immortal words in the Declaration of Independence, Thomas Jefferson declared the freedoms and liberties of Englishmen to be universal, applying to all people. As a slave holder, he failed to live up to the ideals he espoused. But his words inspired his generation to fight for independence, and inspired subsequent generations, who nearly succeeded in abolishing slavery in Virginia in 1831-82, fought a Civil War to end slavery, and fought and won Civil Rights for all. Without Jefferson’s words, without the principles he articulated and defended, those who now revile him would not enjoy the liberties they have today.

Showing an astonishing lack of historical perspective, the People’s Republic of Charlottesville (P.R.C.) City Council voted 4-1 Monday to scrap the decades-old April 13 holiday honoring the city’s most famous resident and, instead, will recognize Liberation and Freedom Day on March 3, the day Union army arrived in the city in 1865.

Speakers at the session denounced Jefferson as a racist and a rapist, reports the Daily Progress: Continue reading

Racial Disparities in Maternal Deaths: Another SJW Fraud

Dr. Jennifer Lee, director of the Virginia Department of Medical Assistance Services.

Virginia’s Medicaid program is targeting an alleged racial disparity in maternal deaths. African-American mothers have “consistently” died at more than twice the rate of white mothers during and after pregnancy, and they are more likely to die of natural causes, the Richmond Times-Dispatch informs us. (Black women are three times more likely to suffer a pregnancy-related death, according to The Virginia Mercury.)

“Maternal and infant deaths remain a troubling reality in our commonwealth and our nation,” said Dr. Jennifer Lee, director of the Department of Medical Assistance Services. “There remain stark racial disparities for African American mothers and their babies rooted in generations of racism and historical barriers to quality health care for people of color.”

This is the kind of rhetoric fostered by Governor Ralph Northam as he seeks atonement for dressing in blackface as Michael Jackson 35 years ago. “We have really tried to refocus our administration on a lot of inequities that exist in our society today,” he said yesterday. “One of the inequities that I really believe is quite glaring is the inequities of mothers of color and the mortality rate that not only they face but also that their children face. … This is unacceptable.”

So, how, precisely, will the Northam administration address inequities stemming from generations of racism? Aside from administrative changes designed to generate better data and enroll more women into the program, news accounts allude to two health-related initiatives: curbing tobacco use and connecting pregnant women with substance abuse treatment. If you are having trouble connecting the dots between “historical barriers to quality health care” and the decision of pregnant women to smoke, drink and take drugs, you’re not alone.

The data supporting the “generations of racism” argument are shockingly thin. Continue reading

Pious Platitudes about Poverty and Crime

The City of Petersburg has the highest homicide rate in Virginia, with 53.5 killings per 100,000 residents since 2013 — exceeding Virginia’s other homicide hot spots of Danville, Hopewell, Richmond, and Portsmouth. So reported the Richmond Times-Dispatch in a recent article.

In talking to the RTD, Petersburg Police Chief Kenneth Miller was reluctant to blame the violence on the city’s socioeconomic challenges. “I was raised poor and I’m police chief now,” he said. “I can’t give in and say, well, because we’re poor we can’t [behave in a more acceptable way]. I think poor people want good policing and they want [public safety] just as much as anybody does.”

Nevertheless, states the RTD, Petersburg police must contend with a litany of social ills. Twenty-seven percent of the population is in poverty, and more than half the population is enrolled in Medicaid. Median household income was less than half the state average. The graduation rate was the ninth worse in the state last year.

It is the conventional wisdom in the United States today — a belief that permeates the political establishment, journalists, and the pundit class — that poverty is a “root cause” of violence. The correlation between poverty and violent crime is so widely accepted that it needs no justification or empirical support. But is the connection as strong as the chattering class thinks it is? Continue reading

Make This Check To: Southwest Virginia

Source: Dominion Power website. Click for larger view.

Here is what I had to say in today’s The Roanoke Times about Dominion Energy Virginia’s proposed pumped storage facility in Tazewell County, addressed to the people so excited about the revenue it will generate. This posting is for the people here in the other part of Virginia who pay the bills for the utility.

Read here how Dominion is selling this to the Southwest Virginians who are not its customers, promising hundreds of millions of dollars in this propaganda. That all would come from our future bills. The $320 million in estimated benefits to them is just a start on what it will cost us because we will also be paying over decades for:

  • The profits to the stockholders,
  • The interest on any bonds or loans,
  • The massive construction project itself, and
  • No additional electricity generation, just a storage system for electricity generated elsewhere, much of it lost over the hundreds of miles of transmission lines.

Continue reading

The (GOP) Chaos and Dysfunction Must End

GOP Nominee Scott Wyatt

For years my daily routine during the General Assembly included time in Delegate Riley Ingram’s office, in fact pretty much as long as the Hopewell Republican was there. I’d worked on several of his campaigns. Trust me, he left the best stories out of his hilarious farewell floor speech.

In 2018 I was present when a local party unit chairman came in to give Riley hell for his expected vote in favor of expanding Medicaid. It was a very ugly conversation. At the end I concluded, yep, this really is Riley’s last term.  The Republican activists who saw that as “Obamacare” were going to be unforgiving.  Continue reading

Volvo: A Big Win for Western Virginia

The Volvo Group has announced that it will invest nearly $400 million to expand its Volvo Trucks North American New River Valley assembly operation in Pulaski County. The project is expected to create 777 new jobs within six years.

Plans call for a new 350,000-square-foot building that will house truck cab welding operations; expansion of the existing plant to upgrade plant operations and production flow; and equipment upgrades such as installation of state-of-the-art dynamometers for vehicle testing. Volvo, which manufactured 127,000 trucks worldwide last year, considered sites in multiple other states.

This is a huge win for Western Virginia, which has seen its manufacturing sector devastated by globalization and automation over the past three decades. The investment comes with a price for Virginia taxpayers, of course, but the subsidy seems modest compared to the magnitude of the project. Volvo will be eligible to receive $16.5 million over 10 years, contingent upon meeting investment and job-creation benefits. The subsidy amounts to only 4% of the capital investment, although, seen another way, it represents $21,200 per job.

The governor’s press release says nothing about the average pay scale of new jobs created, as it did with the Amazon deal, so that remains a mystery. Nor does the announcement, which alludes only to cab welding, painting, and dynamometers (devices for measuring torque) provide any hint of any higher value-added activities that will take place at the Pulaski County plant. Continue reading

A Free Market Path to “Free” College Tuition

Would you buy a “free” college degree from this man?

Bernie Sanders, a leading Democratic Party candidate for president, has proposed making college “free” and erasing all $1.6 trillion in student debt. He calls the cost of higher education a “national disgrace,” which it is. But his proffered remedy is so wrong-headed that it’s all I can do to keep steam from shooting out of my ears.

Other commentators have opined on how free tuition would benefit mostly affluent Americans who qualify for college admissions, while debt forgiveness would reward students who recklessly piled on debt they couldn’t repay and penalize those who made sacrifices to make good on their loans. Less frequently noted, taxpayers should not be compelled to subsidize young wastrels who spend years partying or engaged in a search to “find themselves.”

But in this post, I focus on a question Sanders neglects to ask: Why are college costs are so high? His platform ignores administrative bloat. It ignores low faculty productivity. And it only partially addresses the gold-plating of buildings, grounds, and facilities. If we want to make college affordable without devastating taxpayers, we need to strip the costs out of the higher-ed sector.

What if… What if students could contract directly with accredited college professors to take a course rather than contract with a college or university? Continue reading

The Transgender Wars — Part V

This is the final part of a five-part series on the transgender wars in Virginia.

by Tom Pafford

Around the 5th Century BC, Sun Tzu wrote a book on War.  No one comes close to what this Chinese master of battle devised. Chapter 6 in his book is titled, Week Points and Strong. Here is Sun Tzu’s advice…

You may advance and be absolutely irresistible if you make for the enemy’s weak points… Though the enemy be stronger in number, we may prevent him from fighting… Force him to reveal himself, so as to find out his vulnerable spots.

In Part One, I mentioned that Virginia has become a battleground for all things Transgender. Here’s how this came to be and why Fairfax County is important…

As you know, Fairfax County, Richmond, and Hampton Roads are Democratic Leftist strongholds. The vote there moves all of Virginia left. The Left has big goals for Virginia. Since 2013, major news outlets have stated that, “As Virginia goes, so goes the nation. Why? Because Virginia is a state that increasingly resembles the United States as a whole. Millions of dollars are funneled into Virginia to gain National momentum for a 2020 Democrat win and force the Transgender Catechism upon parents, children and society. I do not know their Virginia strategy, but it appears that Virginia is a must-win state. Continue reading

Dominion’s IRP Approved, With High Costs Detailed

Source: SCC Staff summary.

The State Corporation Commission today approved Dominion Energy Virginia’s Integrated Resource Plan, laying out possible investment combinations to keep the power flowing in its territory over the next fifteen years.  It also laid out the costs, in excess of $18 billion of investments plus interest plus profit margin to be paid by future customers.

The Commission added the standard caveat that individual decisions to build new generation, energy storage or transmission still must come to the SCC for the regular review.  In some cases the judges will have full discretion to approve or reject proposals, but the General Assembly (at Dominion’s suggestion) has also dictated in state law outcomes for several expensive choices.  Continue reading

Did the State Reduce the Rigor of Math SOLs?

Last year the Virginia Board of Education (VBOE) approved new math tests for the Standards of Learning (SOLs) exams. Due to the change in content, educators had to evaluate how many questions students need to answer correctly in order to be counted as “pass proficient” or “pass advanced.”

This spring the school board voted to adopt math cut scores that were significantly lower than those initially recommended in the process. The VBOE in its March 2019 meeting led one board member to voice concern that the action would feed the public perception that the state was reducing the “rigor” of the test. 

Said board Vice President Diane T. Atkinson: “I have a concern. … The distance between what would maintain previous rigor and where we are going is significant from my perspective.” The board had endured criticism previously when it eliminated some tests required for accreditation in order to focus on “deeper learning,” she said. “I am concerned this will add fodder to that conversation.” Continue reading