​Americans are facing a housing affordability crisis—and Texans are no exception.

Texas families struggle to make ends meet with high inflation, stagnating wages, and rising mortgage rates. Add high property taxes to the equation, and it is not difficult to see why 1-in-2 Texans reported that they were behind on rent or mortgage payments and that eviction or foreclosure in the next two months is likely.

Property tax relief is needed more than ever to help homeowners, renters, and businesses during these challenging times. For this purpose, the Foundation proposes a way to cut local property taxes substantially next year, and cut them nearly in half over the next decade.

In Texas, the housing market is cooling as there were three months of supply of homes for sale relative to demand in September 2022, which is the highest since May 2020 after a couple of years of a very tight housing market. This cooling of the housing market resulted from mortgage rates topping 7%, a 20-year high that dramatically raises borrowing costs and monthly payments.

Another contributing factor to the affordability crisis in Texas is high and rising local property taxes.

Texas is blessed to have constitutional bans against a personal income tax and a statewide property tax. But while Texas has a costly gross receipts-style tax called a franchise tax, which should be eliminated, the most burdensome taxes discussed during soccer practices or business events are local property taxes.

These taxes have nearly tripled over the past 20 years. And it’s wrong to think that property taxes are high because there is no personal income tax, as other states like Florida and Tennessee have much lower property tax burdens. The problem is excessive local government spending that requires more taxes.

Property taxes are regressive. The Texas Comptroller’s office estimates that the lowest 20% of income earners will pay 6.9% of their total income in property taxes compared with 1.9% for the highest income quintile in 2023.

Moreover, the Tax Foundation ranks Texas 11th in property tax collections per capita, 6th for its burden on homeowners, and 13th most burdensome to businesses, which is ultimately passed to consumers.

Consequently, property tax relief is a top priority to help relieve some of the housing affordability issues. Reducing property taxes for Texans would keep more money in their pockets to satisfy their desires during a rising affordability crisis.

To do so, the Foundation proposes eliminating nearly half of total property taxes. The proposal uses state general revenue-related funds to replace the maintenance and operations (M&O) property taxes partially funding independent school districts (ISD), which is about $60 billion per biennium.

Specifically, most, if not all, surplus general revenue-related funds, which the Legislature has the most control over, above the state’s new state spending limit based on the rate of population growth plus inflation would be used to replace the ISD M&O property taxes each period until they’re eliminated.

We calculate that this could happen in a decade. We use the average two-year growth rates over the last decade from 2012 to 2021, given that the state has a biennial budget for general revenue-related funds of 9.3% and a rate of population growth and inflation of 6.7%. We then use a reasonable 90% of this 2.6-percentage points surplus each biennium and half of the latest 2022-23 surplus of $27 billion to find this is achievable while fully funding public schools based on the current state-determined school finance formulas.

With a record $27 billion expected surplus and another $14 billion likely in the state’s rainy day fund, the state has plenty of taxpayer money to fund limited government provisions within the normal taxes collected while returning surplus money to Texans.

This is a historic opportunity to provide substantial property tax relief and more opportunities for businesses to move to Texas without costly incentive deals. The result would be Texas having a more robust economy, more job creation, more investments, and more opportunities to prosper so that Texans can be more able to afford their desired livelihood.

Originally posted at TPPF

​Susan, a suburban married mother working one job, peacefully drops her son off at his private school and drives back to her gated community in a Range Rover. Because in addition to her cushy home and vehicle, another thing money can buy is any education for her son. She was able to assess each schooling opportunity to choose the one that best met his unique needs, settling on a private school. He’s thriving and on track to be admitted into a prestigious college that will propel him into his dream career.

Meanwhile, Rachel, an inner-city single mother working two jobs, anxiously drops her daughter off at the bus stop to her district-locked public school. Her daughter has special learning needs that aren’t best suited for a big public school environment, and her falling grades and reading scores make her daughter feel like a failure. Rachel reassures her daughter but knows she’s ultimately being let down by a system that doesn’t suit her. She wishes she could find a better schooling option, but that’s a choice she can’t afford, and it’s her daughter who suffers.

This disparity shows the reality of the current privilege-centered schooling system where wealthier parents have schooling options while budget-strapped parents are trapped at a government-run school in the district. A public school system run by educational bureaucrats with a schooling monopoly does not put students first. And it ultimately disempowers parents and teachers.

The solution to these issues already active in Arizona that Texas and many other states should adopt is school choice.
Despite being known for its business-friendly economy and family-loving culture, Texas lags in educational freedom. Meanwhile, Arizona, since implementing the most expansive school choice policy in the nation this year, received nearly 8,000 more new Empowerment Scholarship Account (ESA) applications as parents jumped on the opportunity to explore educational opportunities for their children.

Rather than funneling taxpayer money for education into government-run schools, school choice redirects those funds to families. Arizona has reimagined school choice in the form of ESAs that supply about $7,000 per student per year. Parents can use the money to fund any school-related expenses, such as private school tuition, homeschool curriculum, tutors, etc.
This approach empowers parents to pursue a more holistic approach to their children’s education rather than being forced to place them in a one-size-fits-all system that varies immensely in quality depending on location, mainly.

Not only are parents empowered with the ability to choose what’s best for their kids, but studies show that school choice positively affects academic outcomes. Students test better and experience overall improvement from a school that fits their unique needs. At the same time, new data on educational progress shows that public school performance has fallen behind even more since the pandemic.

School choice also increases competition, as public schools are more incentivized to improve education for their students by breaking down the monopoly situation (one dominant supplier). And this tends to provide better compensation for teachers who have little negotiating power in states where public schools have a monopsony (one dominant consumer).

So what’s the holdup? Well, for Texas and many other states, politicians in rural communities have pushed back against school choice.

This results from misconception and, in some cases, fear-mongering that school choice somehow defunds public schools, which would be a concern for rural areas where public school is the primary option. But school choice doesn’t take money away - it gives it back to parents and allows them to choose which education services receive it.

High-quality public schools will attract more students and, thereby, more funding. Public schools spend more than $14,000 per student per year in Texas, and outcomes for students and teachers are lacking, so more funding isn’t the answer. If the question is about funding for public schools, then those against school choice are conceding that public schools aren’t able to compete. So, it seems school choice opposition is more about politics and winning votes than what’s best for students, whether a parent is like Rachel or Susan.

The U.S. system of federalism allows for a laboratory of competition in which states can implement new ideas. Arizona is taking full advantage of this liberty and using it to empower its parents, students and teachers with educational freedom.
To remain competitive and among the freest states, the time is now for Texas to enact school choice. Our vote matters this November, so the next session will be when we can say, “It’s for the kids.”

Originally posted at The Center Square

​Today, the Tax Foundation released the 2023 State Business Tax Climate Index. The report ranks all fifty states based on the collective burdens of each state’s corporate income tax, individual income tax, sales tax, unemployment insurance, and property tax.

The results show that spending restraint funded with low rate, broad-based taxes provide the best climate for business activity, which supports more jobs; and we all know that work helps provide people with dignity, purpose, and hope, along with the long-term self-sufficiency that is essential for families to flourish.

The Tax Foundation’s report notes what many entrepreneurs in Louisiana already know: the state’s business tax climate needs improving.

Figure 1 shows that this year the state ranks as the 12th worst among the 50 states, which is an improvement from the 8th worst ranking in the prior year, but still well below where it needs to be to support more in-migration, economic growth, and well-paying jobs. This year’s ranking is influenced by the corporate tax rank of 32nd, individual income tax rank of 25th, sales tax rank of 48th, property tax rank of 23rd, and unemployment insurance tax rank of 6th in the nation.

Compared with nearby states, Louisiana ranked ahead of Arkansas (40th), behind Mississippi (30th), and remained well-below neighboring Texas which improved from the previous report to 13th best in the nation.

The Texas model of relatively less government spending, no personal income tax, relatively low tax burden, and a sensible regulatory system have propelled it to substantial prosperity over time. This helped Texas diversify its economy from being as dependent on oil and gas activity as it was in the 1970’s and 1980’s. Still, Texas ranked behind the more fiscally conservative Florida (4th), who can provide an even better direction for where Louisiana should head if it wants more businesses to thrive in Louisiana.

The Tax Foundation’s report also provides caution of what not to do: don’t be like California (48th), New York (49th), or New Jersey (50th). These states have high government spending, high personal income taxes combined with other tax burdens, and a costly regulatory climate.

Given the upcoming 2023 session in Louisiana, the state legislature has an extraordinary opportunity to learn from the Tax Foundation’s report on how to improve. For Louisiana to provide greater opportunity for entrepreneurs and families to prosper, the business tax climate must improve by limiting spending, reforming and cutting taxes, and reducing regulatory burdens. Doing so will help more Louisianans live the American Dream.

Originally posted at Pelican Institute

​Economics is the new American religion. Disagree with the mainstream narrative surrounding it, and you’re a heathen needing quick conversion. No longer is it seen as a social science requiring unbiased scrutiny: it’s about giving people what they think they want, no matter the cost.

And the cost they take in doing so is a big one: people’s prosperity.

I recently sat down with Dr. Peter Boettke, professor of economics and philosophy at George Mason University, to discuss what needs to happen to reverse the problem of people turning “to politics for a sense of truth,” as he puts it. He explains the problem this way: “When my truth is not being listened to, my only recourse is to impose truth on others who are peddling in falsehood.”

He’s correct. This desperate need to control is what leads to the government being placed on a pedestal as the Almighty solution rather than being viewed as a tool to preserve liberty. And there’s a need to use economics to tradeoffs of proposed solutions. When people aren’t allowed to disagree concerning economics and more policies are pushed on them as gospel, Americans are left with less opportunity for accomplishing extraordinary things.

Instead of getting caught up by culture concerning economics, we need to return to the four pillars as defined by Boettke that substantiate this social science and contain the basis to achieve prosperity.

Pillar One: Truth and Light

The truth is that we live in a world of scarcity. This reality sheds light on the truth that because of scarcity, we must make tradeoffs to attain our goals. For most, this looks like trading your scarce time to work and earn money for scarce goods. Many today argue that not everyone can work or should be required to do so, which leads to petitioning Capitol Hill to pass policies that reduce the need to work.

Lawmakers can pass one policy after another, but that will never change the inherent “dignity of work” as Boettke puts it. And respecting people’s agency gives them dignity.

Pillar Two: Beauty and Awe

We live in a world of spontaneous order. In every century, it’s beautiful and awe-inspiring to see how voluntary activity results in the spontaneous order that leads the way to the formation of global markets through which we thrive today.

To achieve this phenomenon, it’s essential that individuals are empowered to work and contribute to society. Governmental policies that impose economic barriers cannot produce the same orderly result that emerge when people are permitted to achieve their hopes and dreams through a system of free markets and limited government.

By latching onto the cultural ideology that the government and not the individual must work to solve all economic woes, we move further away from personal responsibility and deeper into the crippling dependency mindset. A mindset that convinces people they are powerless instead of possessing the tools required to flourish.

Pillar Three: Hope

Economics gives us hope of changing our circumstances. Through capitalism and entrepreneurship, we can have hope in civil society as the first resort while the government is the last resort in reducing poverty by encouraging long-term self-sufficiency.

This was one of the major downfalls of governments across the country in 2020.

By shutting down the economy and deciding which businesses were essential, small business owners and entrepreneurs were sidelined, leaving them fewer opportunities and less hope of climbing out of the government-imposed economic crisis. And less hope for those locked into their road to serfdom.

Pillar Four: Compassion

Economics at its core takes compassion on the impoverished and disadvantaged, seeking to lift them up. “It’s not about making the wealthy better off but about how we can lift up the poor [so that] the poor get richer even faster than the rich get richer,” Boettke explains.

If people understood economics under these four pillars, rather than viewing it as a list of technicalities with which to police people, more progress would prevail.

Governmental barriers imposed in our lives may be in popular demand but they are not the proposed solution among the American entrepreneurs fueling the economy. As Matt Ridley writes, “Innovation is the child of freedom and the parent of prosperity.”

When seeking economic solutions for the nation, the path forward should be about how best to provide opportunities to let people prosper by removing barriers, respecting individual agency, and allowing hope and compassion to be cultivated in communities. That’s achieved by enhancing and preserving liberty through limited government and a flourishing civil society. Otherwise, we’re destined to fail the lessons of economics.

Originally posted by Econlib

​The latest U.S. Jobs Report for September 2022 may look good, but a peek under the hood shows major weakness in a fragile economy. Things will get worse before they get better. And those most affected by the worsening economy are everyday Americans, small business owners, and entrepreneurs, without whom capitalism’s prosperity crumbles.

Of course, Democrats fearing upcoming election loss are hiding behind the record-low 3.5 percent unemployment rate to ignore the reality that inflation-adjusted average hourly earnings fell by 3 percent over the last year, the 18th consecutive monthly decline. These earnings have risen slower than inflation, essentially after the $1.9 trillion, March 2021 American Rescue Plan that was supposed to “stimulate” the economy. 

Unfortunately, trillions more taxpayer dollars have been appropriated since then, further fueling the fire of money-printing by the Federal Reserve, which is a major cause of 40-year high inflation that won’t soon moderate without a more aggressive tightening policy.

The trickle-down effects of high inflation from money-printing funding excessive deficit-spending are keenly felt by American families, who have experienced an estimated loss in real income per capita of $4,200 since January 2021. And 40 percent more say they may not be able to pay their bills, compared to a year ago. 

Americans are forced to make tradeoffs they should never face.

But with prices for food at home up 13.5 percent, shoppers must choose between eating healthy or paying the bills. Many are choosing less-healthy eating habits, creating health concerns in an already fragile healthcare system dominated by failures from government intervention. Reduced purchasing power has forced other tradeoffs, such as 93 percent of working Americans having a side hustle. 

The dismal state of the nation is squashing people’s potential to prosper. 

In addition to the average working American, businesses are hit hard. GAP, Peloton, Tesla, Microsoft, J.P. Morgan, and countless others have laid off hundreds to thousands of workers as they grapple with the effects of this recession. More importantly, 75 percent of small business owners say inflation is hitting their profit margin and 56 percent don’t see inflation abating until at least summer 2023, forcing them to raise prices, cut overhead costs, and minimize labor hours. 

Unable to compete with big corporations that can keep costs lower, small businesses and entrepreneurs are seriously threatened. If the Fed doesn’t act more aggressively to substantially reduce its bloated $8.8 trillion balance sheet, lowering the high inflation it largely created, Americans will continue to suffer. This economy especially hurts the poor, who are stripped of their dignity without a well-paid job and the ability to afford necessities for their family.

There must be a liberty-friendly, pro-growth approach moving forward, removing government barriers that have crippled the success of capitalism. 

This should include cutting government spending, taxes, and regulations to help quickly balance the budget, to stop fueling the Fed’s destructive policies. Congress should pass rules-based policies of a spending limit with a maximum growth rate of population growth plus inflation to cut bloated government spending, and a monetary policy rule, short of eliminating the Fed. 

At the very least, Republicans should help undo the damage from a reckless government that has added nearly $7 trillion in deficit spending over the last couple of years. Of course, this violates the Statutory Pay-As-You-Go Act of 2010. Last year, the Biden administration waived PAYGO, like the Trump administration inappropriately did in prior years, in pursuance of the American Rescue Plan Act. But with a now evenly divided Senate, Republicans have the power to oppose similar proposals that would drive the nation into deeper debt. 

To pull America away from the grips of a recession and the shackles of inflation, the government must get out of the way of the productive private sector. So long as the government continues egregious progressive policies, the hardworking Americans fueling the economy will be unable to do so, making for a government-dependent and economically unfree status that capitalism, with limited government, once helped them escape.

Originally posted by AIER