Capitalism

In Wichita, benefitting from your sales taxes, but not paying their own

In Wichita, benefitting from your sales taxes, but not paying their own

A Wichita real estate development benefits from the sales taxes you pay, but doesn't want to pay themselves. In Kansas, the STAR bond program allows cities to issue bonds (that is, to borrow money), give the proceeds (that is, cash) to a private business firm, and then pay off the bonds with the sales taxes paid by the business firm's customers. But sometimes this gift by taxpayers isn't sufficient. In Wichita, despite benefitting from STAR bonds, a company wishes to skip paying sales taxes itself. This is what the Wichita City Council will consider tomorrow. The Wichita Sports Forum (WSF)…
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The real free lunch: Markets and private property

The real free lunch: Markets and private property

As we approach another birthday of Milton Friedman, here's his article where he clears up the authorship of a famous aphorism, and explains how to really get a free lunch. Based on remarks at the banquet celebrating the opening of the Cato Institute’s new building, Washington, May 1993. I am delighted to be here on the occasion of the opening of the Cato headquarters. It is a beautiful building and a real tribute to the intellectual influence of Ed Crane and his associates. I have sometimes been associated with the aphorism “There’s no such thing as a free lunch,” which…
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Friedman: Laws that do harm

Friedman: Laws that do harm

As we approach another birthday of Milton Friedman, here's his column from Newsweek in 1982 that explains that despite good intentions, the result of government intervention often harms those it is intended to help. There is a sure-fire way to predict the consequences of a government social program adopted to achieve worthy ends. Find out what the well-meaning, public-interested persons who advocated its adoption expected it to accomplish. Then reverse those expectations. You will have an accurate prediction of actual results. To illustrate on the broadest level, idealists from Marx to Lenin and the subsequent fellow travelers claimed that communism…
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Are you in the top 1%?

Most Americans would be surprised to learn that they are, in fact, in the top one percent of income -- when the entire world is considered. It is economic freedom in America that has been responsible for this high standard of living. But America's ranking among the countries in economic freedom has declined, and may fall further. View the 60-second video at Economic Freedom in 60 Seconds, or click below.
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More government spending is not a source of prosperity

More government spending is not a source of prosperity

Kansas needs to trim state government spending so that its economy may grow by harnessing the benefits of the private sector over government. In the debate over how to balance the Kansas budget, those who oppose low state taxes say the burden of taxation is simply transferred to other sources, usually in the form of sales and property taxes. Cutting spending is the other possibility, but it is argued that state spending is a good thing, a source of prosperity that Kansas should exploit. The idea that government spending is a generator of wealth and prosperity is true for only…
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No-bid contracts still passed by Wichita city council

No-bid contracts still passed by Wichita city council

Despite a policy change, the Wichita city council still votes for no-bid contracts paid for with taxpayer funds. In the current campaign for Wichita mayor, one candidates says he never has voted for no-bid contracts: "[Longwell] also takes issue with the claim he has ever voted for any no-bid contract, something he says his voting record will back up. 'That's the beauty of having a voting record,' he says." Mayoral candidate Williams decries ‘crony capitalism’ of critics, Wichita Business Journal, March 12, 2015 We don't have to look very hard to find an example that contradicts Longwell's claim of never…
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A Wichita Shocker, redux

A Wichita Shocker, redux

Based on events in Wichita, the Wall Street Journal wrote "What Americans seem to want most from government these days is equal treatment. They increasingly realize that powerful government nearly always helps the powerful ..." But Wichita's elites don't seem to understand this. Three years ago from today the Wall Street Journal noted something it thought remarkable: a "voter revolt" in Wichita. Citizens overturned a decision by the Wichita City Council regarding an economic development incentive awarded to a downtown hotel. It was the ninth layer of subsidy for the hotel, and because of our laws, it was the only…
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STAR bonds in Kansas

STAR bonds in Kansas

The Kansas STAR bonds program provides a mechanism for spending by autopilot, without specific appropriation by the legislature. Under the State of Kansas STAR bonds program, cities sell bonds and turn over the proceeds to a developer of a project. As bond payments become due, incremental sales tax revenue make the payments. It's only the increment in sales tax that is eligible to be diverted to bond payments. This increment is calculated by first determining a base level of sales for the district. Then, as new development comes online -- or as sales rise at existing merchants -- the increased…
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What we can learn from the piano

What we can learn from the piano

The purchase of a piano by a Kansas school district teaches us a lesson. Instead of a system in which schools raise money voluntarily -- a system in which customers are happy to buy, donors are happy to give, and schools are grateful to receive -- we have strife. A Kansas City, Kansas school has spent $48,000 to purchase a new piano, replacing one in use for many years. Critics of school spending, even Governor Brownback, point to this as an example of school spending out of control. How can schools want more money, they say, if one school can…
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Tax increment financing (TIF) resources

Tax increment financing (TIF) resources

Resources on tax increment financing (TIF) districts. Tax Increment Financing: A Tool for Local Economic Development. Richard F. Dye and David F. Merriman. Tax increment financing (TIF) is an alluring tool that allows municipalities to promote economic development by earmarking property tax revenue from increases in assessed values within a designated TIF district. Proponents point to evidence that assessed property value within TIF districts generally grows much faster than in the rest of the municipality and infer that TIF benefits the entire municipality. Our own empirical analysis, using data from Illinois, suggests to the contrary that the non-TIF areas of…
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