By Peter Galuszka

Pick a number. Any number.

Could 49,000 jobs be created? How about 44.000 jobs? It could be 77,000 jobs, or maybe as few as 900 jobs. These are the all-over-the-board possibilities suggested by the grandly-named Thomas Jefferson Institute for Public Policy in Springfield, which touts itself as a non-partisan think tank, when, in fact, it is a conservative business lobby.

They have a new study, praised by fellow blogger Jim Bacon, that supposedly would restructure taxes in Virginia in ways to warm the hearts of Gov. Robert F. McDonnell and Lt. Gob. Bill “The Jobs Guy” Bolling. The study suggests somehow changing the states sales tax, while expanding it or not expanding it to ”exempt” sectors. The nut of the study is the elimination of three state business taxes that have been around for years – the Business Professional Occupation Licensing tax, the Machine and Tool tax and the Merchants Capital Tax.

Getting rid of these nettlesome taxes has long been a mission of the state’s business lobby. “There is no net tax increase suggested in this study,” writes TJ Institute president Michael Thompson. The study, however,  seems to suggest that eliminating the three business taxes would cost localities $834.1 million that somehow would come from somewhere else.

I gather the make-up money would come by sticking the poor and middle class with extra sales taxes in areas now “exempt from sales taxes.” The states sales tax is now 5 percent but for some exempt foodstuffs, it is only 2.5 percent. The Thompson study doesn’t say exactly which “exempt” sales taxes would be eliminating (although it presumably would be enough to make up $834 million). It does suggest lowering the sales tax overall, but its target numbers vary and there’s little discussion about which and what exactly.

The more bizarre points of the report are the “nine” scenarios that offer a gobble-dee-gook of combinations. Most of the report makes little sense, but it makes bold jobs growth predictions. “Jobs created” range from 900 to 77,000. There is no clear cut analysis of how these out-of-the-dark jobs numbers come from.

Thompson claims he worked with two outside groups to come at his analysis. One is from Chmura Economics and Analytics, a Richmond-based forecasting firm, hired by the TJ Institute  to study various sales tax exemptions. Its head, Chris Chmura is a reputable, former Fed economist, but if her analysis is solid, there is no way of telling in Thompson’s report.

The voodoo economics seems to come from the so-called Beacon Hill Institute of Suffolk University in the Boston area. The fiscally conservative and politically-charged think tank apparently did the “pick a number” jobs creation numbers crunching. The institute itself is suspect. It gets funding from the arch-conservative Coors beer empire that is famous for finding ways to diminish the rights of gay people. Its findings are under constant attack by Massachusetts labor unions and the Massachusetts Taxpayers Foundation, a watchdog group.

The Thomas Jefferson Institute, in my book, is likewise suspect. It is populated by right-wing lobbyists and not respected economists. In the past, it has touted the supposed benefits of offshore oil drilling in Virginia and cited the projections of an Old Dominion University professor who later told The Wall Street Journal that his estimates were informal and not to be taken seriously.

It is too bad that Bacon’s Rebellion has been hooked by this TJ report without thinking it through.


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  1. Well.. this is one way to stick Bacon’s nose in it ! Serves him write for being a blogging lackey for the TJ folks who then let him swing in the wind on the job creation claims. You SWING JIM B!

    it’s basically a “tax the guy behind the tree” scheme with a job-creation kicker.

    I’d be okay with the Conservatives continued mantra about job creation but much of it is basically, as Peter says, Voodoo economics.. Even when folks want it “scored” by a legitimate organization, the proponents say that it cannot be easily scored.

    So.. there clearly is job creation proof but they can’t tell us because it might kill us.

    The GOP seems to want to run the country on an experimental basis ….supply-side economics, job-creation voodoo, free-market health care… you name it. Nevermind there are no real-world analogs of any of it and never mind that they are staunchly opposed to real analysis of their assertions… they just believe and non-believers are liberal cretins.

  2. In PeterWorld, all you have to do to discredit someone else’s argument is to call them names. They’re “arch conservative.” And use guilt by association. So-and-so gets funding from a third party that works to “diminish the rights of gay people.” Its findings are under attack by some famously disinterested groups like Massachusetts labor unions and a “watchdog” group. In PeterWorld, you don’t have to actually engage in a battle of ideas. You just cast your foes into the outer darkness.

    The one kernel of an actual argument in Peter’s rant is the fact that the TJI Institute did not provide a full-blown description of its methodology in the materials it released to the public. It did make some of that information available during an audio press conference. I would urge Mike Thompson to make available all pertinent information that might not have been included in the published study — thus hewing to a far higher standard than that which Peter demands of studies by his progressive colleagues.

    As for the substance of the study, while Peter found it mystifying, I found it very clear. Readers should not let Peter’s remarks discourage them from taking a look.

    Like any study, the TJI report should be subjected to close scrutiny to see how well it holds up. But it should not be dismissed out-of-hand simply because it fails to conform to Peter’s ideological presuppositions.

  3. Peter Galuszka Avatar
    Peter Galuszka

    Where did I use the word “arch-conservative” in this post?

  4. Conservatives continued mantra about job creation …


    The only real job creators are middle class consumers with jobs.

  5. Peter Galuszka Avatar
    Peter Galuszka

    Oh, I see where I did say the Coors folks were “arch conservative.” That is sort of like calling Obama a Democrat.

    BTW, Jim, I seem to have a touched a nerve. I might have had a different approach had you not pitched the “report” in such a positive way, headlinewise and otherwise. You might have chosen a more neutral and less gushy approach.

    Since the report you are flacking insults our intelligence, you really have no basis for outrage.

  6. It strikes me that the replacement of a business tax should be another business tax and the replacement of a consumer/individual tax should be a another tax on consumers/individuals. I don’t think it makes good sense to transfer part of the burden on businesses to individuals and vice versa. I do have an exception for those seeking tax increases that fall on others. Screw them.

  7. I’d rather see a value added tax in lieu of tax on business. In a globalized world, business taxes just push companies offshore.

  8. the other thing I do not understand is that even Conservative types say that if you increase taxes on products and services, it will decrease demand for them, ego do the opposite of job-creation.

    so if you take taxes off of businesses (that just pass it on to buyers anyhow) and possibly gain jobs by doing that but you move that tax to service, why won’t it decrease demand for services in the same way it supposedly affects products.

    Surely the TJ folks would want to address this..right?

  9. Peter Galuszka Avatar
    Peter Galuszka

    Another thing not mentioned directly in the report, it seems that one option is to hike or non-exempt state sales taxes on higher ed. This is incredible since McDonnell, who has cut funding to colleges and then claims to have raised, is lecturing schools to not hike tuition.

    This is why I am so suspect of the Thomas Jefferson Institute report. It is not tax reform — it is tax transfer just to help out some businesses. Then, rather than actually offer firm, understandable proposals, it tries to cover all bases. It tries to be all things to all people, when it’s just switching who pays taxes, dumps taxes on the people less able to afford them in favor of business and then promises anywhere from 900 to 77,000 new jobs. That is a huge parameter and hardly credible.
    The director of that Institute then has the nerve to lecture a Post writer that the journalist’s job is to “ask questions.”
    I don’t know why anyone pays attention to this institute, but we are told in a headline that the hilarious proposal is somehow a “win-win.”

  10. Conservatives refuse to reconcile with the realities and they are suckers for cockamamie tax and economic schemes that more experiment than anything else and when they get called out they either hide or they just keep repeating their beliefs like it will make the evil tax&spenders go away.

    Both the UK and Spain did exactly what Conservatives are calling for in this country and that is to go to an austerity budget at the same time we are barely out of recession.

    And what happened? Pretty much what you’d think – they slid back into recession. You can’t easily cut the deficit if the economy is weak but that don’t stop the folks who believe.

    the TJ folks appear to be hiding on this issue. Are they totally unaware of Bacon’s Rebellion when I’m sure that Jim keyed them he was writing on their proposal?

  11. larryg Avatar

    One of the issues I have with the way that TJ does their studies is that they are often basically the germ of an idea as opposed to a comprehensive approach.

    For instance, is Va out of touch with other states tax policy on this or are they in the mainstream?

    I would find that a more persuasive approach…. myself.

  12. larryg Avatar

    BRUCE BARTLETT in the NYT Economic has an interesting article on taxes
    and job creation that (I think) are relevant to the TJ proposal.

    ” Since the beginning of the economic crisis, Republicans have insisted that tax cuts and only tax cuts are the appropriate medicine. They almost never explain how, exactly, this would reduce unemployment other than to say it worked for Ronald Reagan in the 1980s.”

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