The Range: The Tucson Weekly's Daily Dispatch
Blog Categories: Politics | News | Music | Chow | Do This! | Media | TV | Arts and Culture | Snapshot | Cinema | Fun in General | Just Plain Dumb | more categories»
Monday, May 10, 2010
Politics Sales-Tax Hike: UA Economists Vs. Goldwater, Again
Posted by Jim Nintzel on Mon, May 10, 2010 at 4:57 PM
A hat tip to David Safier of Blog for Arizona, who notes that UA economist Alberta Charney has responded to the nonsense that the Goldwater Institute is passing off as an economic analysis of the impact of proposed one-cent-per-dollar sales tax hike that voters will decide next Tuesday, May 18.
To summarize: Charney, a senior research economist in the UA Eller School of Management, ran the sales-tax numbers through a couple of standard economic models. She could not get the results to match up anywhere near the numbers produced by the Beacon Hill Institute of Massachusetts, which created its own economic model to come up with numbers showing that the state would lose jobs.
One major problem: Beacon Hill's model is rigged to always deliver negative economic results, says Charney:
The STAMP model incorporates every conceivable negative consequence of taxes that can be built into a model, regardless of the level of taxes in the state. It is built to compute negative tax effects.
One of Charney's key (if wonky) points:
BHIR implies that since our findings indicates a positive job impact of raising taxes to prevent major cuts in state services, then why doesn't Arizona just keep increasing taxes indefinitely thereby increasing net jobs. They should know that models can only be used for modest changes from existing economic conditions and that results from modest changes cannot be used to predict what would happen with large, never before seen, changes in policies.
Further, I want to say clearly and without reservation that no one, particularly me, is arguing that Arizona should raise taxes indefinitely because government spending creates more net jobs. Nor would I argue that Arizona should allocate more on spending categories that would result in inflows from the federal government, just for the sake of having more money flow into the state. What I have argued for a long time, and will continue to argue, is that Arizonans need to decide what level of public services they want and create a tax structure that raises the necessary funds to pay for them that is as efficient and fair as possible.
If they are going to make that accusation, however, isn't the reverse question applicable? Since the BHI STAMP model always results in negative economic consequences
of a tax increase then, for the benefit of Arizona's economy, shouldn't all taxes be immediately repealed? If tax cuts always create growth, then Arizona should be flying high. Arizona has had 42 cuts to the individual income tax, sales tax and corporate income taxes since the early 1990s. Does anyone really believe that the march to the bottom in terms of taxes and government services has really increased state growth? Have all these tax cuts immunized the state against downturns? (More about this taxation and growth will be discussed below.)
Arizona is a state that has benefited enormously from government investments throughout its history, yet there are those who would deny that government activities are important to the well-being and continued development of the state. A major portion of the land we currently call Arizona was purchased from Mexico by the federal government. And where would Arizona be without the Roosevelt Dam, the interstate highway system, the Central Arizona Project, our regional highways, or the universities, community colleges, and the entire educational structure in the state?
Comments (4)
Showing 1-4 of 4
Alas, Professor Charney once again demonstrates that it is better to check your facts than to criticize, just blindly, someone whose views you dislike. Contrary to what she supposes, the Beacon Hill Institute STAMP model does not show that tax cuts unambiguously expand economic activity. That's because we allow, as she would want us to, for the negative effect that a reduction in infrastructure spending would have on production. But I have to wonder, more fundamentally, if she has read any of the textbooks in public finance that have been published over the last fifty years or so. That's because they all show how tax increases exert negative effects on the economy, which, as in our model, have to be balanced against the positive effects of government spending on such activities as building roads and bridges. Finally, I am sorry that she can't reconcile her models with ours. But I have a suggestion: For a modest fee, we will provide her with our model, which she can then use to ascertain the actual effects of tax changes on the state economy.
David G. Tuerck
Beacon Hill Institute
like
dislike
"My model is better than your model." Why because my model give the right answer. Really, a discussion between opposing economists is like a discussion between opposing clerics. Its all theory that like the stopped clock is sometimes correct.
Tuerck, you are a total disgrace and a joke in professional circles. Your cottage business at the Beacon Hill Institute is known to be well-funded, myopic "research" for any right-wing cause with a checkbook. You are "bought and paid for" and have lost any academic credibility you may have enjoyed. You've taken money from so many Republican special interests and produced so many bogus and one-sided "studies" that you've become a puchline. Check out BHIExposed.org for the real David Tuerck, one whose opinion is for sale to highest bidder.
Arizona readers who might wonder how a disagreement about macroeconomic modeling could have provoked the rant by "2ndPressure" should know the background here. His comments are part of a campaign launched by Boston Local 103 of the International Brotherhood of Electrical Workers to besmirch the Beacon Hill Institute and me in retaliation for our work on labor issues. We have shown how the prevailing wage laws, project labor agreements and wind power projects, all dear to the hearts of big labor, are wasting billions of taxpayer dollars. The website “BHIExposed.org,” which was created by Local 103, is an attempt on the union's part to muzzle us through intimidation. Readers who visit this website will find that its semi-literate creators imply, among other things, that I have “endorsed” the perpetration of “tax fraud” and the teaching of “creationism” in the schools. The character who calls himself "2ndPressure" is popping up on Boston websites as well and is apparently an IBEW operative tasked to spread the union's calumnious attack. I urge readers to consult our own website (www.beaconhill.org) for examples of the work that has provoked this attack and for forthcoming commentary on the IBEW website.
David G. Tuerck
Executive Director
Beacon Hill Institute
Previously in the Range
More by Author
-
The Skinny
A dispatch from the Arizona front of the GOP’s War on Women … The Arizona Supreme Court explains why Gov. Jan Brewer can’t rule over her own kangaroo court … Meet your new state lawmaker … and more!
- Apr 26, 2012
-
The Fighter Pilot
A chat with Martha McSally, GOP candidate in the CD 8 special election
- Feb 23, 2012
- More »
Popular Content
- Shameless Self-Promotion: 'Weekly' Scribes Nab Five Awards in Arizona Press Club Contest (The Range: The Tucson Weekly's Daily Dispatch)
- Political Roundtable: The Kelly-Barber Debate, The CD8 Campaign Ads & a Bit More (The Range: The Tucson Weekly's Daily Dispatch)
- TUSD Responds to Urrea, Urrea Responds (The Range: The Tucson Weekly's Daily Dispatch)
- Beer + Crepes = Awesomeness (The Range: The Tucson Weekly's Daily Dispatch)
- Idiot Boksen - The First Great Bit of Millenial Television (The Range: The Tucson Weekly's Daily Dispatch)
