Monday, July 25, 2011

Where is my money going?

Even for a numbers geek, such as myself, U.S. spending is a hard thing to wrap my head around. Realizing I indebted myself hundreds of thousands of dollars to buy a house was hard enough.

Reviewing state budgets that throw the word 'billion' around is hard to envision, but possible. ie The state spent more then 5,831 of my houses on Debt Service in 2010. (This is harder to envision when the state does not label, or mislabels data. $1,948 billion, really?)

That is why I love what alot of people are doing with graphical representation of information

Does just that, allowing me to see, on average, where my federal tax dollars are going.

A state level one could be very interesting...

Friday, July 22, 2011

A 25% Massachusetts gas tax hike would mean loss of 1,000 private sector jobs

With gas prices falling in Massachusetts, state leaders are thinking about increasing the gas tax. Just how much the Governor and legislature are willing to raise the tax is unclear.

But assume that the legislature approves a new 29 cents per gallon tax (up from 23.5 cents) representing a 25 percent increase (not unlike the last hike to the state sales tax). What would that mean for the state's economy?

Using its State Tax Analysis Modeling Program, the Beacon Hill Institute estimated that a 25 percent increase would not help the Commonwealth's economy as it tries to add jobs.

Compared to a baseline of no gas tax increase, the state would have 1,170 less private sector jobs, while adding 600 public jobs in the first year. Riding the brakes would have consequences. At the margin, less employment means consumers will have less money to spend, so while gas tax revenues increase by $152 million, the state would collect $5 million less in sales tax, not to mention that companies will be selling less. Similarly, with 570 total less full time equivalent jobs, state personal income tax collections would decrease by $8 million.

In total , instead of collecting $152 million more in gas taxes, the state would see a total revenue increase of only $116 million, due to dynamic effects. At the cost of lower employment, income, disposable income and investment, raising the state's gas tax is a bad policy at a bad time.

Tuerck: Support "Cut, Cap and Balance"

Having reviewed the House-passed Cut Cap and Balance Act of 2011, I have reached the conclusion that the Senate should adopt this legislation and send it on to the President. The Act provides the only effective solution to the country’s budget crisis, which is to cap federal spending well below current levels. The provision to cap spending at 19.9% of GDP by 2021 would bring spending back toward its historical norm and prevent the kind of binge spending that we have witnessed over the past two years. This is the only way to prevent a repeat of the misspending that has brought us to this point. I urge Senators Brown and Kerry to vote yes.

David G. Tuerck
Executive Director, The Beacon Hill Institute
Professor and Chairman, Department of Economics
Suffolk University

Thursday, July 21, 2011

BHI on the Sales Tax Holiday proposal

CBS-Boston's Jim Armstrong interviews Paul Bachman on the proposed sales tax holiday for August 2011.

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