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Fun Fact: TABOR uses the Consumer Price Index to limit tax and spending increases

by: Gerald Weinand

Mon Oct 19, 2009 at 10:30:09 AM EDT


TABOR, or the Tax Payer Bill of Rights, is an attempt to limit the tax and spending authority of the State government. Mainers will be asked to adopt TABOR in the upcoming election, 3 November. It is Question 4 on the ballot.

TABOR would limit any increase in spending or taxation (not requiring a special plebiscite) to an "inflation adjustment factor" combined with a "population adjustment index." The "inflation adjustment factor" is defined as:

3.  Inflation adjustment factor. "Inflation adjustment factor" means the increase in the Consumer Price Index for the most recently available calendar year as calculated by the United States Department of Labor, Bureau of Labor Statistics. The inflation adjustment factor may not be less than zero.

The Consumer Price Index (CPI) uses a variety of goods and services to determine the increase (or decrease) in the cost of living for an average American household. It covers eight basic areas:

* FOOD AND BEVERAGES (breakfast cereal, milk, coffee, chicken, wine, full service meals, snacks)
* HOUSING (rent of primary residence, owners' equivalent rent, fuel oil, bedroom furniture)
* APPAREL (men's shirts and sweaters, women's dresses, jewelry)
* TRANSPORTATION (new vehicles, airline fares, gasoline, motor vehicle insurance)
* MEDICAL CARE (prescription drugs and medical supplies, physicians' services, eyeglasses and eye care, hospital services)
* RECREATION (televisions, toys, pets and pet products, sports equipment, admissions);
* EDUCATION AND COMMUNICATION (college tuition, postage, telephone services, computer software and accessories);
* OTHER GOODS AND SERVICES (tobacco and smoking products, haircuts and other personal services, funeral expenses).

Glancing over the list, it's easy to see the categories which do not apply, or do so only in a very small way, to our State government. In fact, the much of the State's budget is composed of items that the average household does not pay for: teachers' salaries and contributions to local public schools, road construction and maintenance, State troopers, environmental monitoring, social services, etc.

Much of the State budget is composed of very expensive goods and services, and this makes sense - we as a people, unable to afford to provide these individually, have combined a small portion of our collective money (through taxes) to provide for these goods and services.

A Government Price Index , compared to the CPI, would look considerably different, since the normal costs to government are considerably higher than the normal costs to the average household.

And this is the problem with TABOR, one which the citizens of Colorado discovered several years into it. When first enacted as part of that state's constitution, people were moving to Colorado in droves, and so the allowable increases were able to keep pace.

But when the population increases slowed to a trickle, the demand for services remained the same, but TABOR would not allow for increased spending without special elections.

And it could be worse - should the CPI or population decrease, so spending would have to be reduced. TABOR does not allow for a decrease, based upon deflation or a net loss in population.

TABOR is conceived to, in the words of Grover Norquist, "...to cut government in half in twenty-five years, to get it down to the size where we can drown it in the bathtub." Many of those that support it do not share this ideology, but just want their taxes reduced, not having realized the breadth of government services the take for granted.

It is an idea that has had a chance to prove its efficacy, and it has failed. TABOR needs to killed and buried, before it does the same to our state.

Gerald Weinand :: Fun Fact: TABOR uses the Consumer Price Index to limit tax and spending increases
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Oops (0.00 / 0)
You say that


should the CPI or population decrease, so spending would have to be reduced.

But previously you quote


The inflation adjustment factor may not be less than zero.

Is there a similar provision for population, or would the adjustment in fact be allowed to go negative as you state?


My bad - I was confusing (0.00 / 0)
the TABOR in Colorado. And to answer your question, TABOR II also does not allow for a decrease should Maine's overall population fall.

Thanks for pointing out my error.


[ Parent ]
Good analysis.... (0.00 / 0)

...of the uselessness of using the CPI as a reference for state spending levels.

But the real problem with TABOR is not solely it's arbitrary and unrealistic use of the CPI to regulate state spending levels. It's main problem is that it's a system designed to work in a stable economic framework, and suffers from the usual human lack of both foresight and hindsight. The kind that tells us that expecting such a stable framework to remain relatively constant is unrealistic to the point of lunacy - in a sad kind of way, the vote couldn't happen at a better time to illustrate this truth.

TABOR's main problem is it's inflexibility. When the framework inevitably skews, and TABOR breaks, it stays broken - year after year after year, and the law allows no way to break the trend once it's started - the Colorado video makes this very clear.

Economists need to have a talk with evolutionary biologists and particle physicists, and try to learn something about designing systems that are inherently self-correcting, and that are adaptable not matter what anomalies might be thrown at it. The TABOR system can't even assimilate routine building maintenance, never mind a bad recession or the ability to adapt infrastructure to changing technologies.

When asked what he thought of western civilization, Gandhi replied, "I think it would be a good idea."




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