Monday, October 11, 2004

Robin Hood Fails Texas Schools

Virginia Postrel, whose Dynamist blog is a daily must read, outlines the deeply flawed property tax redistribution scheme that Texas has been employing here, including the delicious phrase "confiscation threshold". (how's THAT for telling it like it is?) I knew nothing about this prior to reading this article, but Virginia does a great job of explaining the unintended consequences that so frequently accompany these redistributionist programs. As property values rise above a given level, the excess property tax is siphoned off and "redistributed" to poorer districts. Shockingly (or not) people are less likely to pay premium dollars to move into better districts with their money being carted off elsewhere, and therefore those richer districts are seeing downward pressures on home values - which means less tax revenue to redistribute - which means raising taxes and lowering the "confiscation threshold" - which means downward pressures on home values, etc. etc.

Meanwhile, the money promised by the program based on a staticly modeled housing market (don't the redistributionists EVER realize nothing takes place in a vacuum?) have not materialized. Gee... who'da thunk it?

Well, Virginia does a great job outlining all of this so that even your run of the mill pinko NYTimes reader can understand it. The capstone of the article is the brilliant piece of insight from the Harvard economists who commissioned this study. Knowingly or not Caroline M. Hoxby and Ilyana Kuziemko reach a conclusion which transcends the issue of school funding and gets right at the heart of all that is wrong with our society:

What was the fundamental reason for the failure, according to Professor Hoxby and Ms. Kuziemko? "Lawyers, not economists, designed the system.''


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