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Welcome to this episode of the Let People Prosper Show, where we discuss critical issues in public policy, economics, and the future of prosperity. Today’s guest is Joe Grogan, founder of Fire Arrow Consulting and a leading healthcare policy expert with decades of private and government experience. Joe served as the Director of the Domestic Policy Council under President Trump, where he played a pivotal role in shaping healthcare policy, including efforts to improve transparency and market competition. He is also the co-host of the DC EKG podcast, where I was recently on his show to dive into healthcare reform, economic policy, and the power of state-level innovation.
For more insights, visit vanceginn.com and get even greater value with a subscription to my Substack newsletter at vanceginn.substack.com. (0:00) – Introduction to Healthcare Policy and Joe Grogan’s Background Joe shares how his experience in both the private and public sectors shaped his views on healthcare reform. (3:09) – The Evolution of U.S. Healthcare Policy Exploring how the Affordable Care Act and past reforms have altered the healthcare landscape. (6:01) – Challenges in Reforming Healthcare Joe delves into the bureaucratic barriers and inefficiencies that complicate meaningful reform. (14:57) – Price Transparency and the Marketplace of Healthcare Discussing the critical need for transparency and how it can transform healthcare into a functioning marketplace. (28:40) – Federal Block Grants for State Flexibility Examining how block grants could simplify and improve Medicaid while empowering states to innovate. (34:55) – Data Transparency and Government Accountability How improving data availability can drive innovation and ensure better healthcare outcomes. (42:52) – Future Opportunities in Healthcare Reform Joe shares his optimism for bipartisan solutions and what needs to happen next to empower patients and improve efficiency. Originally posted to DC Journal at InsideSources. Artificial intelligence is reshaping our lives at breakneck speed. From chatbots to self-driving cars, companies like Microsoft, Google, IBM and OpenAI are racing to define the future. Yet, as AI advances, so does the race to patent every corner of this emerging frontier. The stakes are enormous, and how America handles intellectual property rights could make or break innovation in AI. Unfortunately, the U.S. patent system is rife with inefficiencies threatening to stifle the innovation it’s meant to encourage. Without reform, outdated and inconsistent processes could allow opportunists to gum up the works, leaving innovators tangled in legal disputes instead of building the tools of tomorrow. The result? Higher consumer costs, fewer breakthroughs, and a dangerous edge for global competitors. The U.S. Patent and Trademark Office has taken a step in the right direction by updating its guidance on AI-related patents. The agency’s deliberate approach aims to ensure patents are carefully considered, but even the best intentions can falter under a bloated system. In 2020, the USPTO received 650,000 patent applications — six times the number from 1965. That volume invites mistakes, which bad actors exploit to stifle competition. Almost half of all disputed patents end up being declared invalid. Clearly, the system isn’t working as it should. When disputes arise, they land in one of three venues: the U.S. International Trade Commission (ITC), federal courts, or the Patent Trial and Appeal Board (PTAB). Each venue plays a different role, but the ITC has become a magnet for “patent trolls” — companies that buy up patents not to innovate but to weaponize them against productive businesses. Unlike the PTAB, which uses strict criteria to weed out weak claims, the ITC rarely denies a case. Worse, its decisions often result in exclusion orders — bans on importing products that allegedly infringe patents — even if the claims are dubious. This heavy-handed approach makes it easier for trolls to use litigation as a blunt tool to extort settlements from actual innovators. The PTAB, by contrast, offers a more balanced solution. Its stringent review process focuses on merit, reducing frivolous claims while maintaining an accurate, science-based dispute approach. On average, PTAB cases are less expensive and time-consuming than ITC investigations or federal court battles. Why does this matter for AI? Because innovation thrives on competition and freedom. When innovators face barriers like high litigation costs or the threat of exclusion orders, resources that could go toward research and development instead fund legal defenses. Worse, the uncertainty around patents creates a chilling effect, deterring entrepreneurs from entering the field. In a global economy where nations like China aggressively advance their AI capabilities, America can’t afford to let bureaucratic inefficiencies shackle its innovators. The solution is clear: streamline the patent system to protect property rights while minimizing potential abuse. This means limiting the ITC’s authority to handle patent disputes and bolstering the PTAB’s capacity to review questionable patents. We can reduce unnecessary burdens on businesses and consumers by ensuring disputes are resolved quickly and fairly by promoting competition. AI is too important to let regulatory dysfunction stand in the way. If we want America to remain the global leader in technology, we need to prioritize innovation over litigation. The patent system should be a springboard for progress, not a roadblock. Let’s get government out of the way and let entrepreneurs do what they do best: solve problems, create value, and make the future brighter for everyone. Originally published at The Daily Economy.
Driven by progressive policies that stifled growth and burdened Americans with skyrocketing debt, elevated inflation, and economic malaise, has President Biden’s administration cemented its economic legacy as a failure? Despite promises of a “build back better” economy, the results are troubling, with policies rooted in overspending, overtaxing, and overregulating, pushing many Americans further from prosperity. Under President Biden, the national debt grew substantially, especially without a war or pandemic, surging past $36 trillion — a staggering $10 trillion increase since 2020. This debt explosion stemmed from massive spending initiatives, including the American Rescue Plan Act, the so-called Inflation Reduction Act, and many other reckless spending packages. Far from stimulating growth, this spending fueled inflation and undermined economic stability. The Federal Reserve, charged with combating inflation, was forced to hike interest rates at a record pace, raising the federal funds rate from near zero to over five percent in just two years. These hikes directly responded to the monetary inflation crisis created by the Federal Reserve and exacerbated by Biden’s profligate fiscal policies. While interest rates have come down some over the last year, Americans face higher borrowing costs for homes, cars, and businesses, squeezing family budgets and discouraging investment. Though there are signs of an economic recovery, real weekly earnings have declined by two percent since Biden took office as inflation outpaced wage growth for most of his presidency. This decline in purchasing power disproportionately hurts low- and middle-income households, the very groups progressive policies claim to champion. Adding to the economic woes is a labor market hampered by a declining labor force participation rate. While the unemployment rate appears low at around four percent, this masks the reality that millions of Americans remain out of the workforce. Policies that disincentivize work — such as enhanced unemployment benefits, expanded welfare programs, and increased regulatory burdens on businesses — have created a perfect storm of lower productivity and higher dependency on government programs. Regulatory overreach has further compounded economic challenges. According to the American Action Forum, the Biden administration issued $1.8 trillion in costly final rules, making it one of the most regulatory-heavy administrations in US history. These rules, which include onerous environmental regulations, expansive labor mandates, and restrictions on energy production, acted as a hidden tax on us. They drove driven up costs for businesses and consumers. The administration’s war on artificial intelligence (AI) and corporate mergers were among the most damaging regulatory efforts. The Federal Trade Commission (FTC) and Department of Justice (DOJ) aggressively sought to stifle innovation and business growth under the guise of protecting competition through antitrust action. Instead of fostering a dynamic economy, these agencies created a climate of uncertainty that discourages investment in new technologies and impedes market efficiency. AI, which holds transformative potential for economic growth, was targeted with heavy-handed oversight that risks driving innovation overseas. One of the most glaring examples of regulatory overreach was the Biden administration’s stance on mergers and acquisitions (M&A). The FTC and DOJ adopted a hostile posture toward M&A activity, essential for fostering business growth and increasing efficiency. By blocking mergers without sound economic justification, these agencies undermined businesses and sent a chilling message to investors. Such interference in private-sector decisions contradicted free-market capitalism and harmed the economy by stifling growth opportunities. Similarly, the administration’s push for sweeping regulations on artificial intelligence threatened to derail a promising industry. Instead of embracing AI as a tool for economic advancement, the administration appeared intent on imposing burdensome compliance requirements that would discourage innovation and reduce America’s competitiveness on the global stage. The path to reversing this economic malaise lies in rejecting the overspending, overtaxing, and overregulating policies that define Bidenomics. President Trump and Congress must prioritize fiscal discipline by cutting government spending to at least pre-pandemic levels and limiting it to sustainable levels. This should be done through a strict fiscal rule that caps expenditure growth at a maximum rate of population growth plus inflation. Spending less can alleviate the debt burden that threatens future generations. Second, tax reform should focus on lowering tax rates, broadening the base, and simplifying the tax code to incentivize work, investment, and innovation. High taxes discourage productivity and entrepreneurship, while a pro-growth tax system can unlock the potential of American workers and businesses. Third, regulatory reform is essential to restoring economic freedom and unleashing the full potential of the private sector. This includes reining in agencies like the FTC and DOJ, which have overstepped their bounds in pursuing ideological goals at the expense of economic progress. It also means adopting a balanced approach to AI governance that promotes innovation while addressing legitimate concerns without stifling progress. The economic legacy of Bidenomics will be remembered as a cautionary tale of how progressive policies undermine prosperity. The administration’s decisions imposed significant costs on the American people, from an explosion in national debt to inflation, higher interest rates, regulatory overreach, and declining real wages. Voters chose a different direction with Trump. The better approach is returning to the principles that have historically driven American prosperity: limited government, fiscal responsibility, and economic freedom. By embracing these principles, we can chart a path toward sustainable growth, higher living standards, and greater opportunities for all Americans. Following President Trump’s inauguration, numerous updates and Executive Orders have been issued. All eyes are on the White House for the policy reforms ahead. I’m incredibly excited about opportunities for the new administration to restore American leadership in technology and reverse the damage of Biden’s antitrust efforts. At the same time, we can’t overlook the state and local actions, especially the growing movement to reform property taxes. These are critical policy shifts that could help people prosper in 2025.
Thanks for joining me in this episode of "This Week's Economy." For more insights, visit vanceginn.com and get even greater value with a paid subscription to my Substack newsletter at vanceginn.substack.com. Don't miss my interview today on NTD News about Nvidia's $600 billion decline in market cap due to increased competition from DeepSeek.
We need more market competition, which will help advance the AI revolution and improve prosperity. Originally published on X.
President Biden’s tenure left a legacy of regulatory overreach and heavy-handed policies that stifled economic growth, distorted markets, and limited opportunities for individuals and businesses. From blocking domestic energy production to expanding government control over financial markets, these actions prioritized central planning over innovation and prosperity. Now, the Trump administration and a Republican-led Congress have an opportunity to reverse these harmful policies and unleash Americans’ full potential. A glaring example of Biden’s missteps was the Consumer Financial Protection Bureau’s (CFPB) regulation barring medical debt from factoring into credit scores. While framed as consumer protection, the policy undermined the reliability of credit scores, making it harder for lenders to assess risk and potentially restricting access to credit for those who need it most. This approach mirrored the broader pattern of fiscal irresponsibility under Biden, including costly handouts like student loan forgiveness and expanded Social Security payments for many government workers. These measures exacerbated the nation’s debt crisis while failing to address systemic challenges, creating moral hazards and rewarding select groups at taxpayers’ expense. Could Washington help chart a different course by prioritizing free enterprise and limited government? A key starting point is repealing or revising harmful regulations, particularly those enacted under Dodd-Frank. While intended to stabilize the financial system after the 2008 Great Financial Crisis (GFC), Dodd-Frank entrenched “too big to fail” institutions, burdened small banks and credit unions with costly compliance requirements, and reduced competition. Tailoring regulations to reflect financial institutions' size and risk profiles would empower community banks to serve local businesses and families better. Revisiting restrictive provisions like the Volcker Rule could also enhance liquidity and investment without compromising stability. Reforms to monetary policy are equally urgent. During the pandemic, the Federal Reserve’s unprecedented balance sheet expansion injected uncertainty into markets and raised questions about its role in the economy. Adopting a rules-based monetary policy, such as limiting the Fed’s balance sheet to no more than 6% of GDP as before the GFC, would restore transparency and market confidence. Congress should also limit the Fed’s emergency powers, ensure it remains a true lender of last resort, and conduct a full audit to promote accountability. Such steps would provide a stable foundation for less malinvestments until we can end the Fed. The financial technology (fintech) sector offers tremendous promise for expanding access to financial services, reducing costs, and driving innovation. Yet regulatory uncertainty surrounding blockchain and digital assets continues to stifle progress. Congress should take a hands-off approach to fintech and focus regulation on fraud prevention rather than impeding innovation. Removing barriers to peer-to-peer lending, digital payments, and crowdfunding platforms will empower consumers, foster competition, and unlock economic opportunities. Housing finance reform is another critical priority. More than a decade after the GFC, Fannie Mae and Freddie Mac remain under government conservatorship, perpetuating a system of implicit taxpayer guarantees incentivizing risky lending. Privatizing these entities would reduce taxpayer exposure and restore discipline to housing markets. Additionally, federal housing programs through the Housing and Urban Development program that encourage over-leveraged homeownership must be reevaluated to prevent future instability and ensure a sustainable market driven by supply and demand, not government distortions. The Trump administration must also end the harmful practice of government bailouts. Propping up failing institutions creates a moral hazard, signaling to firms that they can take excessive risks without facing the consequences. Instead, Congress should establish clear, market-oriented bankruptcy procedures that ensure no institution is “too big to fail.” This approach would protect taxpayers, promote accountability, and maintain financial stability. Washington could help restore financial freedom and create a dynamic, inclusive economy by reversing Biden's interventionist agenda and implementing these reforms. Rolling back harmful regulations, adopting a rules-based monetary policy, fostering fintech innovation, privatizing housing finance, and ending bailouts will empower individuals and businesses to innovate, compete, and prosper. The Competitive Enterprise Institute’s report, Free to Prosper: A Pro-Growth Agenda for the 119th Congress, provides actionable strategies for achieving these goals. America’s financial system thrives when markets are free, incentives are aligned, and individuals have the opportunity to prosper. It’s time to embrace these principles and put the U.S. back on a path to lasting economic success. Originally published at National Review's Capital Matters.
As President Trump prepares to deal with a fiscal crisis and states begin their legislative sessions to write budgets, fiscal responsibility should be a top priority. Just as in a family, crafting a budget sets priorities, but politicians should have a bias toward conservative budgeting. It is not, after all, their money. With deficits and debt soaring at the federal level and spending pressures rising at the state level, how should they best restrain government growth? Different approaches address this challenge. Structural balance frameworks aim to stabilize budgets over the economic cycle but often fail due to their flawed design. By focusing on stabilizing spending rather than limiting it, structural balance encourages government growth and increases the risk of deficits and tax hikes. However, a better alternative is passing sustainable budgets with a spending limit, such as Colorado’s Taxpayer’s Bill of Rights (TABOR), which caps government spending growth to a maximum rate of population growth plus inflation and returns surpluses to taxpayers. Moreover, spending limits provide a more transparent and predictable cap on spending. They better align spending with the average taxpayer’s ability to pay for it and ensure the government grows slower than the private economy. Colorado’s TABOR is an example of how spending restraint can work effectively. Created in 1992, TABOR limits the growth of state and local government spending to the combined rates of population growth and inflation. When revenues exceed these limits, the surplus is returned to taxpayers, ensuring government growth is kept in check. This model has proven effective even as Colorado shifted politically from a red to a purple to a blue state. For example, Colorado recently refunded taxpayers over $1.7 billion because of TABOR’s limits. However, the policy should be improved by capping all state funds and using surpluses to lower tax rates. Lower tax rates leave more money in people’s pockets rather than possibly returning it later through refunds, providing better economic gains in increased productivity and investment. Structural balance frameworks attempt to balance budgets over the economic cycle by allowing for deficits during downturns and requiring surpluses during booms. While this may sound reasonable, the approach often fails in execution. Are lawmakers likely to be willing to maintain spending discipline (including, where necessary, cuts needed to ensure or maintain surpluses during good times)? The questions all too easily answer themselves. Structural balance frameworks tend to stabilize spending at higher levels, creating a ratchet effect that permanently expands government. Appropriators and bureaucrats often promote structural balance approaches that prioritize spending flexibility over fiscal discipline. The framework also relies heavily on Keynesian economics, encouraging deficit spending during recessions to boost aggregate demand. It shifts resources from the productive private sector to the government, creating inefficiencies and long-term economic drags. Tax hikes to fund these deficits could further harm growth, as shown by studies such as Austerity by the late Italian economist Alberto Alesina, which found that raising taxes slows economic recovery and grows deficits while spending cuts promote growth and balanced budgets. Limiting spending growth to a maximum rate of population growth plus inflation is a superior approach because it aligns government growth with the average taxpayers’ ability to pay for it. Personal income growth forms the basis of tax revenues and comprises population growth, inflation, and private productivity growth. By capping spending at population growth and inflation, governments ensure fiscal sustainability while leaving private productivity untaxed, fostering innovation and economic expansion. This metric also connects directly with taxpayers, as it reflects real-world constraints. Population growth adds new taxpayers, while inflation captures rising wages. Together, they create a fair and predictable cap on government spending, preventing runaway budgets and ensuring the burden of government remains manageable for families and business owners. Spending limits also generate surpluses during periods of economic growth, which can be used to reduce tax rates. For example, President Trump’s last federal budget included a spending cap, recognizing its potential to align government incentives with taxpayers’ interests: “In addition to the Administration’s policies, a fiscal rule, or benchmark, that limits total Federal spending to an amount representing affordability would embody fiscal responsibility and bring transparency to reasonable limits on the growth of spending. Such a fiscal rule would provide a benchmark to evaluate future federal spending paths and is a helpful tool to limit spending growth to a more reasonable and sustainable level.” Lowering tax rates by spending less helps return money to taxpayers and supports faster economic growth by encouraging investment, productivity, and entrepreneurship. Colorado’s TABOR demonstrates how spending limits foster fiscal responsibility, even in politically diverse environments. In fact, Coloradans have voted down recent changes that would have weakened TABOR. Expanding this model to other states and the federal government would create a framework for sustainable budgeting that prioritizes taxpayers, reduces deficits, and incentivizes economic growth. As states and the federal government grapple with budgeting challenges, structural balance frameworks are insufficient for achieving fiscal responsibility as they are weaker than the balanced budget requirements in nearly all states. They prioritize government interests over taxpayers by stabilizing high spending levels and encouraging deficits. Spending limits offer a proven alternative that ties government growth to sustainable metrics, returns surpluses to taxpayers, and limits the government’s economic burden. Adopting spending limits at all levels of government would empower taxpayers, incentivize growth, and create a stable fiscal environment. Let’s avoid flawed Keynesian frameworks and embrace pro-growth policies prioritizing budgetary discipline and economic freedom. What if freedom wasn’t just about opportunity—but also the ability to fail? In this episode of the Let People Prosper Show, Thomas Savidge, a research fellow at the American Institute for Economic Research, joins me to discuss the nuances of economic responsibility. From federal spending’s grip on state budgets to the long-term impact of public debt, this episode dives into the trade-offs shaping our economy.
For more insights, visit vanceginn.com and get even greater value with a subscription to my Substack newsletter at vanceginn.substack.com. (0:00): Introduction – Meet Thomas Savidge and explore his journey into economic research. (5:58): Federal Influence on State Budgets – Why 35% of state budgets come from federal dollars and what that means for state policies. (12:01): Freedom and Responsibility – The philosophical foundation of economic thought and the role of individual responsibility. (17:59): Public Debt Trade-offs – Examining the long-term consequences of borrowing on future economic growth. (24:06): Optimism in Government Reforms – How we can improve efficiency without compromising freedom. (29:52): Fiscal Rules and Stability – The importance of rules to limit spending and encourage sound monetary policy. (39:04): Policy Pitfalls – The dangers of capping interest rates and over regulating emerging technologies like AI. Originally published at Club for Growth Foundation. Conclusion Sustainable budgeting is more than a fiscal policy—it is a pro-growth commitment to economic freedom, responsibility, and efficiency. By controlling government spending through strong spending limits in their constitutions and statutes, states can support an economic environment in which individuals and businesses can thrive. The successes and challenges highlighted in this report provide a roadmap for other states to follow, demonstrating that fiscal discipline leads to economic prosperity. The examples of Colorado, North Carolina, Wyoming, and others demonstrate the benefits of adhering to sustainable budgeting principles, while the challenges faced by California, Illinois, and New York serve as cautionary tales of what happens when these principles are ignored. As more states and governments at all levels consider adopting these principles, the potential for significant improvements in fiscal health becomes clear. By viewing population growth plus inflation as a maximum limit, not a target, governments can ensure that they live within their means and provide the best possible environment in which their citizens to prosper. Your browser does not support viewing this document. Click here to download the document. Overview The Trump administration, supported by a Republican-led Congress, has a pivotal chance to reverse the damage inflicted by the Biden administration's misguided antitrust policies. This report outlines the path to unleashing America’s tech potential through innovation, competition, and free-market principles. Key Points
Conclusion The report highlights a roadmap for the Trump administration and Congress to promote free-market policies, secure America’s technological leadership, and prioritize innovation and economic growth. Confirming regulatory leaders who support these principles is vital to achieving these goals. Your browser does not support viewing this document. Click here to download the document. Originally published with Deane Waldman, M.D., MBA at The Center Square.
President Donald Trump faces many problems left by the outgoing Biden administration. One of them is the world’s most expensive health-care system, as millions of Americans struggle to access timely, quality care. In 2024, the nation spent an astonishing $4.9 trillion on health care – more than the entire GDP of Japan. Much of this money never reached doctors or hospitals. Instead, it was consumed by bureaucracy, unnecessary regulations, and compliance activities. We must fundamentally rethink how to allocate resources to save money and improve care. The solution isn’t more funding; it’s defunding the bloated system and empowering patients, something that Trump should consider to empower patients with better, affordable care. The problem lies in inefficiency. The U.S. spends far more on health care per capita than other developed nations. In 2023, Americans spent an average of $12,742 per person on health care. Compare that to Israel ($3,469), the United Kingdom ($5,867), or even Switzerland ($9,044). The difference isn’t due to better outcomes or superior care – it’s because American health-care dollars are being diverted into an inefficient system. A large portion of U.S. health-care spending goes to what can be described as BURRDEN: bureaucracy, unnecessary rules and regulations, directives, enforcement, and noncompliance activities. Research suggests that these non-clinical activities consume 31% to 50% of U.S. health-care spending. That means between $1.52 trillion and $2.45 trillion annually could be saved or redirected toward actual care. Envision a scenario where patients – not bureaucracies – control these resources. If employees receive the $23,968 as part of the compensation their employers currently spend on health insurance, they can make their health-care decisions. These funds are currently directed toward insurance companies but could be returned to workers, empowering them to shop for care directly. Giving consumers control over their health-care dollars could restore market forces to the system, driving down prices and improving service quality. The evidence supporting patient empowerment is compelling. When patients pay directly for care, providers must compete for their business by offering better prices and higher-quality services. This dynamic can already be seen in direct-pay surgery centers and cash-only primary care practices. At the Surgery Center of Oklahoma, for instance, patients can see the total cost of procedures upfront. This is generally a fraction of what traditional, insurance-based hospitals charge. Transparency and competition create savings while simultaneously improving quality. Critics argue that patients lack the knowledge to make complex medical decisions. However, the same could be said for hiring a lawyer or choosing a car mechanic, yet consumers navigate these markets daily. Empowering patients doesn’t mean abandoning them; it means providing tools like transparent pricing and quality data to help them make informed choices. For example, health savings accounts (HSAs) could be expanded and more flexible. This would allow families to save tax-free for medical expenses and spend those funds as they see fit, including on insurance policies they want, instead of being limited to what Washington allows. Defunding the health-care system doesn’t mean cutting care. It means cutting the inefficiencies that inflate costs and hinder access. We could achieve substantial savings by streamlining regulations and reducing administrative waste while improving the patient experience. Elon Musk’s Department of Government Efficiency, or DOGE, can make history by tackling health-care reform as its priority. Starting with health-care offers wins for finances and people. Without reform, health-care spending will continue to rise, draining public funds and household budgets. Meanwhile, millions of Americans will remain stuck in a system prioritizing paperwork over patients. By defunding the bloated bureaucracy and empowering individuals, we can create a system that delivers better outcomes at a fraction of the cost. It’s time to give Americans what they deserve: affordable, accessible health care that puts their needs first. Originally posted at Kansas Policy Institute. Rising property taxes are squeezing Kansas families and businesses, creating financial stress and threatening economic stability. While a local spending limit would provide the most effective approach to rein in tax growth, it is politically impractical today. In its absence, pairing a more effective property tax increase limit with a new valuation cap offers a sound approach. Kansas lawmakers must address this issue urgently and focus on crafting reforms that balance immediate relief with long-term sustainability while avoiding the pitfalls seen here and in other states. The Property Tax Problem in Kansas The table below shows that Kansas property taxes grew at a staggering rate between 1997 and 2023. Residential property taxes increased by 342%, far outpacing Kansas population growth of 12.8% and CPI for Midwest Cities inflation of 80%. Over the same period, the share of property taxes paid by residential properties rose from 39% to 55%, while the share paid by commercial and industrial properties dropped from 29% to 24%. These shifts have burdened many homeowners, particularly young families and first-time buyers, who are struggling to keep up with rising costs.
As property valuations climb—sometimes by double digits annually—many taxpayers are being priced out of their homes. Meanwhile, local government spending grows unchecked, driving higher tax bills regardless of appraisal changes. These trends underscore the need for targeted reforms that protect taxpayers and promote fairness. The Role of Valuation Caps: A Step, But Just Part of the Solution A property valuation cap, which limits the annual increase in appraised property values, provides immediate relief to homeowners by stabilizing their tax bills. This improved predictability can help families budget more effectively and avoid sudden, unaffordable increases. However, valuation caps come with understandable concerns. California’s Proposition 13 highlights the risks. By capping annual valuation increases at 2% and tying assessments to 1% of appraised value, Prop 13 has created inequities in the tax system. Long-time property owners enjoy artificially low tax bills, while new buyers—including young families—shoulder a disproportionately high burden. This shift discourages mobility, often locking people into their homes, and distorts the housing market. On the other hand, too many people are being taxed out of their homes, so policymakers must consider these tradeoffs. While a valuation cap can improve the situation, it cannot address the root cause of tax increases: local government spending. Without broader reforms, valuation caps risk creating long-term distortions and providing only temporary relief. A More Comprehensive Approach A tax increase limit, which caps the total property tax revenue local governments can collect, offers a more balanced and effective solution when combined with a valuation limit. This helps protect taxpayers from runaway valuation changes and restricts local officials from unilaterally imposing large tax increases. Tax increase limits address the core issue of rising tax bills, but on their own, they don’t protect families against large valuation increases and the loss of their property. Texas offers lessons on both the potential and pitfalls of tax increase limits. Despite imposing rollback rates in 2019 that limit annual property tax revenue growth to 3.5% for cities and counties and 2.5% for school districts, Texas left loopholes for new property valuations, natural disasters, and other exemptions. As a result, local governments could increase revenues substantially despite the limits. In 2023, Texas allocated $12.7 billion over two years in state funds to reduce school district maintenance and operations property taxes, which are essentially a statewide property tax, resulting in a $4.5 billion decline in school district property taxes in 2023. But overall property tax collections still rose by $650 million (up 0.8%) that year because other local governments raised their property taxes by $5.1 billion. Kansas must learn from Texas’s experience by implementing a strict tax increase limit with no exemptions and requiring voter approval for all increases. The Ideal but Impractical: Local Spending Limits Local government spending is the ultimate driver of rising property taxes. Between 1997 and 2023, total property tax revenue in Kansas grew by 216%, driven largely by budget increases at the local level. Spending limits that tie changes in local government budgets to a maximum rate of population growth plus inflation are the most effective ways to control tax burdens. Colorado’s Taxpayer’s Bill of Rights (TABOR) provides a model for such limits, requiring voter approval for revenue increases and aligning government growth with economic realities. While spending limits face significant political resistance in Kansas, they represent the ideal solution for long-term sustainability. A Better Path Forward Given the current political landscape, Kansas should pursue a combination of valuation caps and tax increase limits to address the immediate burden on taxpayers. To be effective:
A Brighter Future for Kansas Property tax reform is essential to making Kansas a more affordable and attractive place to live and do business. By addressing the immediate burden with valuation and tax increase limits—and committing to long-term solutions like spending controls—lawmakers can protect taxpayers and foster economic growth. This legislative session offers a chance to take meaningful action. Thoughtful reforms, grounded in sound tax policy, can create a better future for all Kansans. With bold leadership, Kansas can become a national model for responsible, equitable property tax policy. Today, we mark the inauguration of Donald J. Trump as President of the United States. As he takes office, many are eager to see significant policy shifts to boost the economy, create jobs, and empower American businesses. The first 100 days will be crucial in shaping the path to prosperity through executive actions, strong leadership, and strategic pressure on Congress. This period could see bold moves to cut government spending, unleash energy potential, and create opportunities for workers and businesses.
Thanks for joining me in this episode of "This Week's Economy." For more insights, visit vanceginn.com and get even greater value with a paid subscription to my Substack newsletter at vanceginn.substack.com. Originally published with John Hendrickson at The Gazette.
Property taxes are crushing taxpayers nationwide, and Iowa is no exception. In the past two decades, Iowa’s property taxes have surged by more than 110%, with local governments collecting over $7 billion in Fiscal Year 2025 — a 7% increase from the previous year. This explosive growth far outpaces population growth and inflation, leaving taxpayers struggling to keep their homes and businesses, particularly those on fixed incomes. The root cause of these rising taxes isn’t increasing property values; it’s excessive government spending. Local governments have expanded their budgets without considering taxpayers’ ability to pay. This disconnect has created a scenario where property owners feel they are merely renting from the government, with the constant threat of being priced out of their homes. Gov. Kim Reynolds has set a high standard for fiscal discipline at the state level. Her leadership in cutting income taxes and tying state spending growth to population and inflation has strengthened Iowa’s economy and provided much-needed tax relief. But local governments aren’t following the same playbook. Without similar spending restraints, they continue to shift the tax burden onto property owners. The situation in Texas offers a cautionary example. The state allocated $12.7 billion in surplus funds to reduce school district maintenance and operations (M & O) property taxes. While this provided some relief, the benefits were undermined by excessive local government spending, loopholes in levy limits, and a reliance on raising the homestead exemption to $100,000 rather than reducing tax rates. Texans are still among the country's most heavily taxed property owners because structural spending issues remain unresolved. The lesson is clear: Temporary fixes like exemptions or one-time infusions of surplus funds will not solve the property tax crisis unless paired with strict spending controls. States like Utah and Colorado have shown that lasting relief is possible by focusing on spending discipline. Utah’s Truth-in-Taxation law requires local governments to hold public hearings and justify proposed tax increases, ensuring transparency and accountability. Colorado’s Taxpayer Bill of Rights (TABOR) limits budget growth to the combined rate of population and inflation, creating a sustainable framework for fiscal responsibility. Iowa needs bold reforms that address the spending side of the equation. Levy limits, such as a maximum of a 2% increase per year, must be imposed without loopholes or exemptions. More importantly, local government spending should reflect the successful approach taken at the state level under Reynolds. This ensures that taxpayers are not continually squeezed to fund bloated budgets. The rise in property taxes represents a fundamental failure to adhere to sound economic principles. Taxes should not outpace the private sector that funds them, and government spending should reflect taxpayers’ ability to pay. High property taxes discourage investment, suppress economic growth, and impose a recurring financial burden on property owners that functions as an unrealized capital gains tax. Iowa must prioritize spending limitations, transparency, and rate reductions to address this crisis. Aligning local government practices with the principles championed by Gov. Reynolds at the state level will ensure that property ownership is a source of stability and pride, not financial anxiety. Tax and spending are two sides of the same coin. If Iowa’s local governments continue their current trajectory, taxpayers will remain trapped in a cycle of rising property taxes. It’s time for local leaders to follow Gov. Reynolds’ example and embrace fiscal discipline to create a fairer, more prosperous future for all Iowans. |
Vance Ginn, Ph.D.
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