Archive for April, 2018
More From the Democratic Bad Idea Factory
Posted by Joshua Sharf in Colorado Politics on April 10th, 2018
Back in the 1960s, Colorado lengthened its state legislative session from 120 calendar days to 160, reverting it back to 120 via a 1988 Constitutional Amendment. It’s still among the longest in the country, and two Democratic bills up in the State House of Representatives argue in favor of reducing it even further.
The first, HB18-1209, would prevent parents and grandparents from using 529 accounts to deduct the cost of K-12 private school tuition from their state income taxes. Under 529 accounts, parents and grandparents may pre-fund college tuition tax-free. The 2017 tax reform law extended that exemption to K-12 education under federal law, but it remained up to the individual states to decide whether 529 deposits would be tax-exempt under state taxes.
In this session, two competing an diametrically opposed bills were introduced in the House. HB18-1221 (sponsored by Republicans) would have explicitly allowed 529 funds to be used to K-12 tax free, but it was killed in committee. HB18-1209, which is still alive, would explicitly prevent 529s from being used that way under state law. It will probably pass the House, and it’ll be up to the Republican-controlled Senate to kill it in committee.
The objections to HB18-1221 were primarily from the teachers unions and their supporters. They argued that it was an attack on public education, but to be honest, you can’t really get there from here. The money would have been deductible from the general fund. It’s not a voucher, it’s not even a refundable tax credit. It would have reduced general fund monies, but wouldn’t have affected the school funding formula, and money wouldn’t “follow” the student from public to private schools, so on a per-pupil basis, anyone taking advantage of this would actually be increasing the per-student school funding in that district.
The other argument is that the public schools will suffer when the “better” students leave to go to private school. This claim is absurd on the face of it. If the better students are leaving, it’s because their parents think they can do better in a private school and are willing to pay for the privilege. Those parents are surely under no obligation to subject their children to an inferior education in addition to paying for it while they wait for their local school board to figure out what to do. The only way this claim makes any sense at all is if the mere existence of private schools poses a threat to public education.
This latter argument, by the way, was what swayed a majority of the local Jewish Community Relations Council not to support 1221, even though it would have made a substantial difference to many families struggling to pay day school tuition. Because apparently education is a Jewish value, unless it’s Jewish education.
The other product of the Bad Idea Factory is a government-run 401(k) for everyone in the state, known as HB18-1298. The bill reprises last year’s similar effort. Every business in the state with more than a certain number of employees, who doesn’t offer a retirement plan, would be required to participate in the state’s plan, and employees would be automatically opted in to participation, with the ability to opt out. That number of employees would ratchet down, going from 100 to 5 over a period of three years.
The real effect here – perhaps even the goal – is to force out privately-run 401(k) plans. It would have the effect of concentrating investment power in the hands of the government, and eventually forcing us all into the same, government-run retirement system. And they call me ideological.
More subtly, the authors of the bill accept at least two premises that those of us pushing for reform of the state’s catastrophically underfunded public pensions have been making for years. First, the bill explains that the DC plan won’t add to the state’s liabilities. Second, by making the plan opt-out rather than opt-in, they admit that default choices are sticky, that people tend to stick with them even if the effort required to switch is low. Which is why they want PERA to continue to default to the DB plan.
Third, and most critically, they admit that a DC plan can help people save for retirement in a constructive way that helps ensure security. And it raises the question – if a DC plan isn’t good enough for teachers and state employees, why is it good enough for the rest of us?
Most factories, if they continued to turn out products like these at such a rate, would go bankrupt and close up shop. The Democrats and the Left went intellectually bankrupt at least a decade ago, but unfortunately, don’t show any signs of going out of business.