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.
