Friday, March 17, 2006

Government ala carte: Giving Credit Where Credit is Not Due

Two proposals are now before the New York Legislature to provide $400 million to $1,200 million to private and religious schools in the state. One tax credit plan proposed by the Governor and another by legislators would allow parents to offset the cost of sending their children to private schools against their state taxes. While titled a “tax credit,” each plan is a variation on what have historically been promoted as school “voucher” plans.

One argument used by supporters of school voucher plans is “I should be able to decide where my money goes because I pay taxes for my child to go to school.” This argument at first may seem reasonable, but it is not, for two reasons. First, taxpayers do not get to determine where any other portion of their tax dollars go. Second, parents do not pay taxes for the education of their own children.

The argument “I should be able to decide what school gets my tax money because I pay taxes for my child’s education” is shown to fail by putting the logic in a different context. By replacing the italicized words in the previous sentence, one could argue for replacing a whole host of government services with private options at the will of individual citizens--government ala carte. I pay taxes for road repair. If I do not like how the town maintains the street by my house, I might ask for a voucher to hire private pavers. I pay taxes for police. If I decide to hire private security I would be able to ask for a tax credit. I pay taxes for welfare. If I see poor people in my community my local church might appreciate help for their food bank by me demanding that the government send them money.

A principle function of government is the social agreement to provide certain basic services to all citizens. It cannot function if individuals can opt out of such services and extract the cost from the taxes they would otherwise pay. If one hires a private concern to provide a service that the government already provides, s/he must pay the total cost of that service.

The other fallacy of the vouchers/tax credits argument is that parents pay taxes for the education of their own children. They do not. Property owners pay school taxes because the democratic society in which we live needs effective schools for its continued existence. People who have no children still pay school taxes. Parents with two children do not pay more taxes than parents with one child. Families with one, two, three or ten children all pay the same taxes—if—each of those families lives in a home of equal value in the same school district. School taxes are based on one’s status as a property owner, not as a parent.

Most voucher advocates propose some system giving the appearance that money shunted to private schools through vouchers will not be taken from the public schools. Even if that is the case, using government money to fund private schools takes money away from some government function which either means that another government service is reduced to make up the difference or the government will increase taxes on everyone including those who do not use private schools. In New York, the Legislature is currently under a court order to provide billions in funding to public schools to improve school equity. Every dollar that goes to fund tax credits to parents of private school children is, at the very least, a dollar that will not go to the poorest public schools in New York. The Legislature and the Governor have resisted the court order, in part claiming that they don’t have the money. They will have less if either of the proposed tax credit programs is enacted.

Monday, March 06, 2006

Here comes Ma Bell again

The more things change, the more they stay the same, or so it seems. With the announcement that AT&T is to buy Bell South for $67 billion, the world of telecommunications is moving one step closer to the reassembly of an old monopoly: namely the old "Ma Bell"/AT&T local and long-distance telephone monopoly that dominated U.S. telecommunications for nearly 70 years. The monopoly (or near-monopoly) was not dissolved until 1984. It was allowed to remain in place for so long because AT&T managed to argue successfully that its business was a "natural monopoly" that wouldn't work effectively in a competitive environment.

Now one of the "Baby Bells," Bell South, is coming back to momma in a deal that, if approved, will see four of the original 7 Baby Bells brought back together under AT&T's wing. Ironically, perhaps, the old "monopoly" is reassembling precisely because of fear of competition. And it's not exactly a monopoly anymore precisely because of all that competition--which is not from other traditional phone companies but from cable companies, cell phone companies, internet companies and other hi-tech firms all entering the digitally converging new media environment of 2006.

So it's a very different AT&T ("Ma Bell") than the one that used to rule the roost from the 1920s through the 1970s. But although it won't be a monopoly--natural or otherwise--it will be huge. The New York Times notes that with all this competition, "and more and more services available on mobile phones and on the Internet, companies like AT&T are trying to bulk up and turn themselves into one-stop shops for all communications needs." And AT&T is really bulking up for this battle. The "new" AT&T--which, as NPR's Jim Zarolli notes, already has more customers than any other U.S. telecom--will be dramatically expanded under this deal. The combined company "would also have full control of Cingular Wireless, the largest cell phone provider in the U.S." It will have 360,000 employees, 70 million local telephone customers, 10 million broadband customers, and it'll be a massive player in all aspects of the telecom business. And it'll be streets ahead of its nearest rival, Verizon. In fact it might be a bit too big and powerful for its own good. The deal has to be approved by the government's antitrust regulators in the Justice Department. Let's see what happens there.