Gates Echoes Shulmaven

Today's Wall Street Journal is running story saying that Bill Gates will charge public spending on healthcare and public employee pensions is crowding out needed spending on public education. This position is in keeping with the longstanding position of Shulmaven where we argue that curbing healthcare costs and public employee pension benefits is a "liberal issue." See the lede below.

"Billionaire philanthropist Bill Gates will step into the national debate over state budgets Thursday with a call for states to rethink their healthcare and pension sytems, which he says stifle funding for public schools."

Letter to The New York Times, December 31

To the Editor:

On the very week the census told us that over the past decade there was a mass migration of Americans out of high-tax states and into low-tax ones, you call for an increase in state taxation. The people you want to tax can and do vote with their feet, rendering higher taxation a far from optimal solution.

Nevertheless I will grant you that taxation should not be off the table when dealing with the fiscal crisis that is enveloping most of the states.

But unless the bottomless pit of public employee pension and post-retirement health benefits is dealt with, no amount of higher taxation will be able to solve the problem.

David Shulman

Full URL:

http://www.nytimes.com/2010/12/31/opinion/l31states.html?_r=1&ref=opinion

"Spending controls are key," Letter to the Star Ledger, July 6

I wish Paul Mulshine would get off his Proposition 13 fixation. (“California dreaming on property taxes,” July 4). To be sure, New Jersey’s property taxes are way too high, but a Proposition 13-like solution is not the answer. I lived in California in 1978, the year Proposition 13 passed, and authored two academic articles (National Tax Journal and Southern California Law Review) on the subject.

Mulshine neglects two fatal flaws in Proposition 13. First, two identical houses standing side-by-side can and are taxed at substantially different levels. For example, it is not unusual to have one house taxed at $3,000 and another at $10,000 depending on the initial purchase price. Second, with property taxes cut back, California over-relies on volatile income taxes to fund public services. That is why the state is subject to periodic budget crises as flush times bring with them runaway spending that has to be cut back when an economic downturn causes a collapse in income tax receipts. Sounds familiar, doesn’t it?

The real solution is spending control at all levels of government. The compromise agreement announced over the weekend is a good start, but no real reform is possible without significant reductions in pension and health care benefits for public employees.

Full URL:http://blog.nj.com/ledgerletters/2010/07/new_jersey_property_tax_cap_wo.html