Fwd: November RSF Digest

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Frank de Jong

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Nov 12, 2020, 9:51:42 AM11/12/20
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The Robert Schalkenbach Foundation (RSF) is a private operating foundation, founded in 1925, to promote public awareness of the social philosophy and economic reforms advocated by famed 19th century thinker and activist, Henry George.

Today, RSF remains true to its founding doctrine, and through efforts focused on education, communities, outreach, and publishing, works to create a world in which all people are afforded the basic necessities of life and the natural world is protected for generations to come.
 
Lagging Indicator
 
(noun) A indication of fiscal change that reflects past trends rather than predicting future ones, for example, property tax revenues.
 
The Presidential Election is Over. It’s Time to Think Local.

A message from RSF Executive Director Josie Faass
 
In the last weeks, our attention has (rightly) been focused at the national level, and in a time when the word “unprecedented” has been used so often it barely registers, it was hardly surprising that the 2020 Presidential election was one for the record books.
 
But while what happens in Washington clearly affects each of us, the local politics and the fiscal health of our hometowns and cities have an arguably greater effect on our lived experiences.  
 
Think about your daily choices and environment. This morning, did you make your coffee with water from the sink, or do you use bottled water because it’s safer? Do you send your kids to public school, confident that they’re getting a quality education, or do you pay for private school or tutors to ensure they get what they need? Is your neighborhood walkable? Is there trash on the sides of the roads? Do you have easy access to fresh groceries? Can you take public transit or do you have to own a car to get around? The questions could go on and on, but the point is this: what happens at the local level matters to virtually every aspect of our daily lives; and everywhere we look, COVID-19 has cities and towns across the United States struggling to make ends meet, and that means a diminished quality of life for many of us.
 
So, how bad is it? According to the National League of Cities 35th Annual City Fiscal Conditions survey, just shy of 90% of cities will be less able to meet their fiscal needs this year than they were last year. Why? The COVID-19 driven decline in tax revenues. The general outlook is bleak, but not all tax bases are created equal, and that’s where the Robert Schalkenbach Foundation, and specifically the Center for Property Tax Reform (CPTR), come in.
 
Sales and property taxes are the two most commonly relied on revenue sources for U.S. cities, with a smaller number (only about 10%) looking to wages as their major tax base. Sales tax is highly elastic, showing the nearly immediate effects of trends in consumer spending, which as we all know, contracts in periods of economic stress. A quick scan of the U.S. Census’ quarterly summary of state and local tax revenue data shows a more than 13% decline in seasonally adjusted sales tax revenue in the second quarter of 2020, as compared to the same time period in 2019. Given the nation’s high rates of unemployment, it’s not surprising that income taxes (corporate and individual) have fared even worse, dropping nearly 39% in the same time period. Property tax, in contrast, is far less reactive to short term economic stress, and although many residents are struggling to afford their mortgages in these trying times, the U.S. as a whole saw an increase of just over 1% in property tax revenues from Q2 2019 to Q2 2020.
 
That’s where CPTR comes in. With the Center’s expertise in working with municipalities to explore how this highly stable revenue source can be designed to enhance equity and incentivize investment and desirable land uses, we are poised to offer an economic policy lifeline to cities and towns nationwide, right when they need it the most. And with that in mind, I’m very excited to announce that we’ll soon be growing the Center to include a full-time Community Outreach and Engagement Coordinator. This Coordinator will help facilitate the Center’s existing efforts and work to grow its impact and reach to include new locales across the U.S. and beyond.
 
In next month’s newsletter I look forward to introducing our new staff person. Until then, if you are interested in learning how CPTR can help your hometown thrive, even in a pandemic economy, check out the Center’s website, or contact info@schalkenbach.org.
 
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Assessing Election Results:
Diversity vs. Disparity

By: Bill Batt
 
The 2020 presidential election will inspire more commentary than any prior American election story. Because, among other reasons, the opinion polls both anticipating and following November 3, were so often wide of the mark. Blame is now being assessed (see, for example, the New York Times column by Spencer Bokat-Lindell of November 5, 2020) suggesting that the polling profession missed the mark more often than it did with its poor record in 2016. There was widespread acknowledgement of that year’s failures, and of the pollsters’ failures, who have now laid claim to be the “profession” of “psephology,” invoking a level of science and sophistication that in hindsight reveals itself to be the ultimate in hubris.
 
 Throughout the campaign and even more so after the election, the polls statistically described the electorate across a multitude of categories. Among the most widely analyzed, beyond the conventional measures of age, gender, party affiliation and locality were, of course, the detailed breakdowns by race and ethnicity. The latter included not just Blacks, Hispanic/Latino, White, and Native-American, but further sub-categories within each of these identities. With all the identity politics at work in this election and in recent past years, it is no wonder that the Democratic Party should also have appealed for inclusion in the face of this kind of difference and division. It is no wonder too that in the post-election analysis each separate Democrat polling category has argued that it was singularly the segment of Democrat voters that put Biden/Harris over the top. Women’s groups argued that they are firstly responsible for this victory. And the same with Black voters, especially Black women. And even more so in this regard with the Hispanic/Latino community who, ironically, are struggling still to settle on a name to call themselves. 
 
It is also not difficult to conclude that more analysis of personal financial affairs could have altered a good part of both the discourse and ultimate outcomes of the 2020 election. Underlying economic issues and questions need to be posed to both social scientists and “psephologists,” if they are to remain relevant to the post-election analysis and discussion.
 
Read Entire Article
 
Platform Capitalism is Eating Your Town
By: Frank de Jong
 
Major internet-based platforms like Facebook, Amazon, Apple, Netflix, and Google (FAANG) command monopolies allowing them to charge well beyond their costs. (The House Antitrust Subcommittee determined in October 2020 that Facebook wields monopoly powers in social network and has maintained its position by acquiring, copying or killing its competitors.) The portion of FAANG’s profits that lie above the cost of production are unearned, are economic rent, and should rightfully accrue to the greater community.
 
In the business world there are two distinct revenue streams: earned profit and windfall profits. Most businesses collect some of both. Earned revenue is generated by making a product or providing a service while unearned income results from a land, location, resource or market monopoly.
Oil companies, for example, generate revenue by pumping fossil energy out of the ground and distributing it to consumers. They add greatly to their profits by holding long term leases on oil and gas fields, often keeping oil out of production to force prices to rise. Oil field speculation revenue has no cost of production.
 
 A clear sign that the FAANGs are capturing significant amounts of economic rent is their ability to vacuum up competition. Google acquired YouTube in 2006 for $1.65 billion. Microsoft bought Skype in May 2011 for $8.5 billion. Companies dependent on producing goods or services rarely realize profits above 5%, not the kind of cash needed to buy up competing businesses.
 
 Rent capture would deliver a level playing field between large and smaller platforms by reducing the capacity for leveraged buyouts by the giants. Internet-based businesses are slippery, they can operate in remote markets without local infrastructure, so rent capture should be global, supported by all OEDC countries.
 
 It is unjust that wealthy people and businesses are allowed to loot the internet commons without creating value. It is past time that global governments break internet monopolies and properly reward innovation, new market development, and wealth creation.
 
Read Entire Article
 
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A Green New Deal Tax Shift
By: Fred Foldvary
 

The “Green New Deal” is a set of proposed laws that are intended to reduce the pollution that contributes to climate change. The term is, of course, adapted from the “New Deal” policies of the Roosevelt administration during the Great Depression. New Deal policies included the destruction of crops, the creation of monopoly business cartels, and public employment projects. The New Deal did not end the Depression. Both the New Deal and the Depression ended with the entry of the USA into World War II. The Green New Deal name invokes the major interventions of the FDR New Deal.

Green policy can take three forms. First is command-and-control legislation that mandates or prohibits particular actions. An example is limits on the production of gasoline-powered vehicles, or requiring additives to gasoline. Second is subsidies for favored actions, such as the production of solar panels. Third is taxes on emissions.

The opposition to a Green New Deal comes from those who fear that the economy will be destroyed by regulations and subsidies. This opposition will disappear when the advocates promote the use of the price system instead. We can point out that if there is no levy on pollution, then in effect, polluters are subsidized, not paying the full social cost of production. Surely free-marketeers are opposed to government subsidies!
 
Read Entire Article
 
A Surprising Vaccine for Cities Hit Hard By Covid:  Property Taxes 
 
Property taxes are ubiquitous around the world, and in the United States, they’re a tax most people love to hate. Unlike sales and income taxes, which are baked into every purchase and paycheck, property taxes are added onto mortgage bills or mailed in as lump sum payments, making them a conspicuous irritant to the person cutting the checks.
 
 By embracing our disdain for the property tax, we’re missing out on the very real benefits this tax can produce when correctly conceived and administered. This is where the Center for Property Tax Reform (CPTR) comes in. A joint effort of the Robert Schalkenbach Foundation and the Center for the Study of Economics, CPTR works directly with municipalities, elected officials, local civic groups, and members of the public, to explore how their property taxes can be reimagined to reduce blight and sprawl, and enhance economic equity at the community level.
 
Land is valuable because it gives its owners access to community-provided benefits. but improvements are the result of individual efforts and investments. So…tax the land to reinvest that value in the community amenities that made it valuable to begin with, but untax buildings to encourage more of what you want to see.This approach goes by a few names, but “two rate tax” and “land value tax” are the most familiar. The concept and approach are already being used successfully in a number of places from Allentown, Pennsylvania, to Canberra, Australia, to Hong Kong.
 
To explore what a land value tax would look like in a sampling of U.S. cities, check out CPTR’s Tax Shift Explorer. To learn more about the Center’s work in cities and towns nationwide, visit the website.
 
 
Read Entire Article
 
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PROPERTY TAX: THE LAST ONE STANDING
By: Joshua Vincent
 
As the first punches from Covid 19 landed on state and local government revenues in spring 2020, it was clear that the virus’s impact, compounded by mandated shutdowns, blew big holes in budgets. Public health and the economy both slumped quickly, draining revenue for essential services. Tax holidays gave the illusion over the early summer that the nation could bounce back soon. Well, no.
 
It all depended on perspective. Think tanks such as The Tax Foundation, which pulls in the direction of broader-based sales and use taxes, looked at the rosy April to June receipts, barely considering that panic buying had a lot to do with it (How much toilet paper do you have?). The American Enterprise Institute predicted a several years-long depression in income tax receipts (notwithstanding the reality that low-income workers have borne the brunt of unemployment). Brookings observed that while sales taxes were cratering (along with levies on hotels, air travel, and amusement), the property tax was still holding the fort, observed by dozens of local to national studies. The Tax Foundation grudgingly acknowledged that the few states with a real property tax had maintained robust tax collections. In the narrow spectrum of center-left/-right perception, all would be well, but lousy, into 2022.
 
All have elided the stability of the property tax in this crisis. The few states that do have a real property tax are doing just fine, thank you. Municipalities with higher than average tax levies on wages and sales are suffering more than cities that kept property taxes front and center as revenue sources, like Boston.
 
There are still narrow interests in the middle of all this evidence trying to roll back this crucial revenue source. But hey, self-regarding tax protesters of Pennsylvania haven’t given up!
 
Read Entire Article
 
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More Education Will Not Reduce Poverty
BY: Mike Curtis
 
Henry George places 100 shipwrecked men on an island from which there is no escape. He draws attention to the fact that whether one of them has the weapons to make the other 99 his chattel slaves, or one of them has title to the island and the means to enforce it: it makes no difference to the one or the 99, they are his slaves. That is to say, because of the one’s ownership of the island, the other 99 would have to work for a bare subsistence, just enough to keep them healthy enough to work at maximum efficiency, which is the wage of a slave.
 
Interventions like the Minimum Wage, raise wages, but they do not create jobs. On the hypothetical island, there was a shortage of land. In the U.S., no shortage of land has ever existed. Our arable land area per person is 1/5 that of Great Britain. In our cities and suburbs, the infrastructure has been built at enormous expense; it enables great concentrations of people to live and work with phenomenal efficiency. Yet, there are many undeveloped parcels and many times that number that are under-developed. There are also empty and partly empty buildings in a state of decline. The primary objective of landowners is the increase in the selling value of the land. Any income they may get helps to pay the taxes and add to the overall profit that comes from the increase in the selling value of the land. These unused and underused parcels could provide more than enough land to employ and house the entire unemployed and homeless populations of the United States right now.

In the simplest terms, what is needed is to put all valuable land to its potential for employment or housing. The most jobs and units of housing would be created in the cities and suburbs where the infrastructure and public service supports it. As all the most potentially productive land is put to its full use, large areas of the least potentially productive land will have no demand and no value at all.
 
Read Entire Article
 
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Break ‘Em Up by Zephyr Teachout
 By:  Polly Cleveland
 
For over twelve years I backed up our three family computers to a cloud service called Mozy.com. Friendly interface, about $60 a year per computer. Then in February last year, Mozy vanished, replaced by something called Carbonite, at over double the price. Too busy to deal with it, I let it pass. But this May, Carbonite began sending urgent messages, “80% of capacity used. Add storage to avoid interruption.” What? That would have cost a few hundred more dollars. On checking, I found I had been moved into their “Safe Pro” service for small business up to 20 computers, instead of their “Safe Home” at half the price with unlimited storage. After a month of tough emails and phone calls, Carbonite relented and downgraded me to “Safe Home.”
 
Two takeaways: First, I realized that Carbonite probably switched me to “Pro” because they knew I could easily afford it. How? Because e-commerce knows everything about me. Well-heeled professionals live in fear of such sneaky rip-offs. Is Amazon showing me higher prices than it would to a shopper in Allentown? Is Uber adding a markup to my fare? How could I know? Second, I found that Carbonite is engaged in a “roll-up”, in which a private-equity financed niche company seeks to buy up or force out all the competition in order to create a monopoly. Roll-ups in the pharmaceutical business have sent prices of vital generic drugs so high that diabetics are dying for lack of insulin.
 
My little dustup with Carbonite hardly compares to the way powerful US monopolies and oligopolies screw less fortunate people. That’s the theme of Zephyr Teachout’s chilling and infuriating new book, Break ‘Em Up: Recovering Our Freedom from Big Ag, Big Tech, and Big Money.
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WHAT'S NEW 
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Our mission is to enhance liberty and equality of opportunity for all people through research, outreach, and community-level interventions that integrate concerns for economic, social, and environmental justice; poverty; and government-granted privileges.
 
We have many opportunities available to partner with us to further our mission. Email in...@schalkenbach.org for more information.
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Thank you to everyone who participated in our October survey on the Supreme Court Justices. Below are the results:
 
Q1: How did you feel when you learned of Ruth Bader Ginsburg's passing?
Very Concerned/Afraid 55.6%
Concerned/Afraid 33.3%
Not Sure 11.1%
 
Q2. Do you think a new Supreme Court Justice should be confirmed before the November Presidential election?
Yes 22.2%
No 66.7%
Unsure 11.1%
 
Q3. Do you think U.S. Supreme Court appointments should be lifetime appointments?
9 is the right number 44.4%
More than 9 would be better 44.4%
Fewer than 9 would be better 11.1%
Q4: If you could appoint a Justice to the U.S. Supreme Court, who would it be and why?
Anybody not like the last 3
Any Centrist
Representative Katie Porter
  
Take our November survey on Taxation
 
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