Chamber for Communism

The Gazette has an article documenting support for the KRESA tax hike. Supporters make some very interesting arguments that deserve examination.

"It would be economic suicide to take that $11 million out of the schools right now,'' said Ron Kitchens, chief executive officer of Southwest Michigan First, the county's economic-development agency.

"The amount it would take off tax bills is not enough to have a real impact on citizens or the cost of doing business, but it is enough that the impact would be pretty immediate for school districts. It would devalue homes. We would immediately lose jobs and lower the quality of children's educational experience. It would devalue the long-term economic structure of our economy.''

Kitchens said failure to renew the millage would undermine attempts to brand the Kalamazoo area as the Education Community. "You can't be the Education Community if you don't invest in education,'' he said.

Perhaps "Southwest Michigan First" stands for "Southwest Michigan government employees First, and the rest of you can go to hell". Where is the evidence that more education spending will improve education results?

George Erickcek, a senior analyst with the local W.E. Upjohn Institute for Employment Research, takes issue with the notion that government spending automatically depresses the economy.

Erickcek said renewing the education tax likely would help the local economy more than decreasing local taxes by the 1.5 mills.

If the $11 million is given back to taxpayers, not all that money would be recycled into the local economy, Erickcek said.

Individuals might put some of their $90 in the bank, spend it on Internet purchases or otherwise withdraw it from the local economy. Businesses also may take that money elsewhere. For instance, Pfizer Inc., the county's largest taxpayer, would save almost $700,000 in taxes if the school levy is not renewed, but it's unlikely those savings would be spent locally.

"If instead you give that money to schools, it goes into salaries. And right there you've already made a difference'' in the local economy, Erickcek said. "That's a job and a worker with income, and he or she is spending that money.''

"The idea that the tax decreases economic activity, that's not true,'' Erickcek said. "If you raise taxes and spend the money on government services, then you do get a small increase in economic activity. In economic terms, it's known as the balanced-budget-multiplier effect.''

However, Erickcek said the $11 million represents a small fraction of the local economy. The bigger issue, he said, is the need to invest in education at a time when the county needs highly skilled workers to compete in a global economy.

"It's the old adage of putting your money where your mouth is,'' Erickcek said. "If the community is convinced that education is important and that we're living in a world where talent and knowledge are gaining more power, then you should be putting more money toward schools.''

None of those government employees will save money or spend it outside the county, right? Maybe Erickcek should go back to school. If government takes money from taxpayers, then they can't spend money and create a multiplier effect. You can't buy locally if you don't produce locally. If you do, it will be consumed, locally or not. But higher taxes discourage real investment and production. And where is the evidence that more education spending will improve education results?

But Chamber President Steward Sandstrom said Dodge is referring to challenges throughout Michigan. Locally, however, Sandstrom pointed out that the local economy is finally getting some positive momentum, citing recent announcements about job expansions here.

Voting down the education tax could stymie future growth, he said.

In fact, Sandstrom said, he's not sure "if $11 million is enough'' for the schools. He said local leaders need to be thinking about preschool and other programs that will boost academic outcomes.

"On the face of it, cutting school funds is not a good idea,'' Sandstrom said. "We need to take the long view of growing our economy through a better education system.''

Where is the evidence that more education spending will improve education results? Michigan teacher compensation is near the highest of the states, but results remain mediocre compared to other states, much less other countries. How will spending more money on higher benefits for the same teachers help?

Cutting taxpayer budgets isn't good for the economy.