Another Tuesday Closer to Elections . . . A BIG PRETTY PIG CONTEST? A friend of mine invited me to a discussion held at Butler University between some Economists last fall. Something Michael Munger a Duke University Professor talked about resonated with me. He called it the BIG PRETTY PIG CONTEST and recapped it for me in an email as follows: “In North Carolina at the state fair we have what in effect are beauty contests for pigs. You might imagine that in one category, BIG PRETTY PIG, there are but two entrants. Its not easy to find entrants. There are big pigs. And there are pretty pigs. But there arent many big pretty pigs. The first big pretty pig waddles out, and the judge gasps: “That pig is ugly! Give the prize to the other pig!” But of course there’s no guarantee the second big pig is going to be pretty, either. They are both ugly. They are, after all, big pigs. But this is precisely what public sector fundamentalists do when they reject market solutions because they are ugly. Sure they are; the world is imperfect, and our knowledge is limited. The problem is that advocates of state intervention want to award the prize to the invisible pig. But when you actually take a look, under the bright lights, government failures are just as ugly, just as prevalent, and in some ways harder to control, than market failures.” So what brought back this memory to mind you ask? It was a recent column by our own Matthew Tully telling us what to think about the proposal to increase local option income tax. indystar/story/opinion/columnists/matthew-tully/2014/07/24/tully-commuter-tax-fair-like/13090375/ The ugly pig we must not choose is the continuation of the “unfair” fact that “so many” people come into the metropolitan area for jobs, recreation and other benefits and like locusts they leave nothing but crime, potholes and squalor in our fair city. This is an excerpt from the column: “• Is it fair that Indianapolis subsidizes jobs but then often fails to enjoy the income taxes generated by them? If you work at the Statehouse or a local hospital, you benefit by working on tax-exempt property in Indianapolis. And the large amount of tax-exempt property in Indianapolis has a significant impact on its bottom line. If you work at a stadium, convention center or one of many other buildings and work sites in the city, or if your job is tied to them, you benefit from the tax breaks Indianapolis provided to create your job. Quite often, Indianapolis provides property tax breaks that allow companies to locate, expand and create new jobs, but then the city loses the income taxes generated by those jobs when employees settle in the suburbs. Here’s one outsized example: Indianapolis has spent hundreds of millions building and upgrading the basketball arena that houses the Indiana Pacers. But if team executives or players live in Hamilton County, all of the local income taxes they pay on their seven-figure incomes stay in the suburban county. That is clearly unfair, and past studies have shown that roughly 200,000 workers commute into Marion County each week from surrounding counties.” Here I thought we had made a conscious rational decision decades ago to promote tourism as a sure fire economic development business model. Pursuing events like the Super Bowl, Final 4, Pan Am Games etc. where visitors bought tickets, paid parking, bought all manner of food and things and paid a special sales tax on food and lodging to help foot the bill on sports complexes and related regalia so that regular folks could watch Millionaires working for Billionaires. And Indy would prosper as the place to live and work as a “Sports Capital”. If the economics weren’t going to work shouldn’t we have been told that before we built and demolished basketball stadiums and football stadiums and baseball stadiums? How about before we spent $15 Million on a cricket facility on the eastside that Warren Dad’s club needed to nurture it’s little league football programs. Clearly I have a couple of differing views on his big pretty pig. That said, if we could have the meaningful dialog called for in the column I do think there could be a win-win outcome. First I would try to find a business solution for as much of it as possible, but if nothing else if we find a government one that is completely loophole and exemption free where everyone is funding their “fair share” of the cost without sending a bill to those who are not getting the benefit then lets find that third way. But first I would like to actually look it the “invisible” BIG Pretty Pig. It may be that I have not yet found or understood the proposal that is mentioned in this column but am pretty sure it refers to the .25% Local Option Income Tax enabled by state lawmakers last session. Enabling it was one thing but now it has to be approved and the level set at by each eligible county. When it passed I thought it was to fund mass transit but in this column it seems to indicate it is to right all the financial inequities heaped on Indy Metro by the uncompensated use of the area by outsiders. This local option income tax is only assessed on living breathing people. So it is little wonder the president of the local chamber thinks it is a step in the right direction. The largest if not all of the members of his organization as well as the organization itself will never see a bill. I find almost everyone is in favor of buying something when someone else will get the bill. Meanwhile approximately 800,000 of what looks like the 1.4 million of the Indy MSA live and are already paying local option income tax in Marion County. So it is difficult for me to see how raising the Marion County tax burden does anything but keep the “unfairness” of the situation intact. Fairness would be to find a way to let those that benefit pay the freight. If it is employers and developers that require extensive infrastructure then don’t allow them tax exemption on the property taxes or developer fees needed to pay for that infrastructure. But then they may do the project elsewhere. If everything from the Federal Government to the Statehouse to the Hospitals, the Capital Improvements board, your employer Gannet Co., Inc. and Browning Investments to name a few were making a financial contribution commensurate with the benefit they receive then maybe we could enjoy the blessing of many hands making light this work. Yet all of these will be exempt from the tax you advocate. If the commuter is causing too much road damage then levy a parking spot tax so that those that come each day will make their needed contribution or go elsewhere. That idea will knock me off at least one Christmas card list I can think of. If the buses are culprit raise the fare. If commercial trucks are the villains then assess them. If visiting professional athletes pay income tax to The State of Indiana (as they do based on “duty days”) have the state share those revenues to support the infrastructure instead of pocketing it. But don’t send my friend that is a teacher in Hamilton County and rarely needs to come into the metro area the same bill as the office worker that commutes daily to downtown. You will be taking money away from her homesteading savings account. She wants to buy a place further away from the hustle and bustle not subsidize it. Don’t send my neighbors in Franklin Township another bill when many of them work and play close to home. And please don’t send me a bill for a system that let’s my competition ride to work subsidized by me while I have to find a way to pay both my own way and some of theirs. When I look up “fairness” in Webster online, ironically the first definition is one that might be summarized as “pretty” while the second was: Lack of favoritism toward one side or another My guess is that the second was what was intended in this article but I do find it amusing that the pretty pig contest metaphor seems relevant in questioning the fairness conclusion using the first definition as well. I do feel we need to always strive to improve our situation however, a local option income tax is like dropping a bomb on a crowd hoping there might be some legitimate targets. You create far more losers than winners. If government can’t help it should at least not hurt. This looks pretty much like a win-lose to me but let’s keep talking, it took Edison 1,000 tries to get the light bulb. But lets begin to find the Friendly third way where the math not only works today but for the foreseeable future. Creating lasting value in the social fabric and physical infrastructure needs to be the goal. Saying the same things over and over again is just badgering. Let’s upgrade our thinking and find a better way. Our problems have more to do with too few folks earning/deserving a Breadwinning much less American Dream wage, not too few Hoosiers paying taxes. If you want more tax revenue then design jobs where people can be worth more and then magically they will be paying more local option income tax because they made more money upon which you assess your tax. As for the “foreigners”. I still think if you are going to tax something tax parking spaces and bus tickets that are actually being used by these commuters if you think they don’t pay a fair share. We are already taxing beds, booze and food extra. Or wait maybe we should have a special newspaper tax. The star has a circulation area about the same as the local option income tax proposed. That seems “fair” to me. Just kidding.
Posted on: Tue, 29 Jul 2014 09:27:43 +0000
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