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Earmark Donor States
I have an op-ed in Politico about “earmark donor states.” It’s a term I invented to highlight a rarely discussed side of earmarking: public choice economics.
As public choice theory would predict, the earmarking process operates under a system of concentrated benefits and diffuse costs. Based on an analysis of 2009 data, 16 states receive a disproportionately large percentage of the earmark pie and can be labeled “earmark beneficiary” states. The other 34 states and the District of Columbia are “earmark donors,” as they receive fewer earmark dollars than they proportionally should.
To determine which states win and lose in the earmarking game, I looked at the share of taxes each state sends to Washington and compared it to the share of earmarks that each state receives.
In the op-ed, I use Colorado, one of the biggest earmark donor states, as an example:
Colorado taxpayers contribute about 1.6 percent of total federal taxes, but they receive just over two-tenths of one percent of earmarked funds—proportionally speaking, less than a third of what it should be getting. This works out to more than $200 million dollars that Coloradans are spending to subsidize earmarks in other states – hardly chump change. So while Colorado’s representatives might pat themselves on the back for securing funding for an occasional municipal bus or bioenergy plant, their earmarking rivals in other states like West Virginia and Hawaii obtain funding for larger and more expensive projects and send the bill to the Centennial State.
Below is a table with additional data indicating which states are earmark donors and recipients. The key column is the “earmark ratio.” The lower the figure, the smaller a state’s share of earmarks is relative to the amount of taxes its residents and businesses pay. A state with an earmark ratio below 100% is a donor state. As you can see, Utah is the first state on the table that receives slightly more than its proportional share of earmark funds. Mississippi, the last state on the list, remarkably receives 11 times more than its proportional share.
Also note that the most populous states in the country are earmark donors – almost 90 percent of Americans live in earmark donor states.
Nader Supports Health Savings Accounts?
In a recent article Ralph Nader attacks several critics of Obama’s health care reform proposal, including Cato:
Now enters the well-insured libertarian Cato Institute with full-page ads in the Washington Post and The New York Times charging Obama with pursuing government-run health care. A picture of Uncle Sam pointing under the headline “Your New Doctor.” Nonsense. The well-insured people at Cato should know better than to declare that this “government takeover” would “reduce health care quality.”
I agree that Cato employees are “well-insured” – a description so appropriate that Nader used it twice in a single paragraph. At Cato we have Health Savings Accounts, which are probably the closest thing to free market health insurance allowed by law.
It’s nice to see Nader, a proponent of socialized medicine, praise HSAs. But it’s unfortunate that his preferred options for health care would abolish HSAs entirely.
An Uneven Playing Field
Cato’s tax experts, Chris Edwards and Dan Mitchell, have written extensively on international tax competition. Their research shows that countries can help attract investment and spur economic growth by lowering their tax rates.
Could countries employ this same strategy to make their sports teams better?
Real Madrid, one of the most popular and successful soccer teams in the world, recently purchased the rights to two of the sport’s top players. They acquired Kaka, who was named the world’s best soccer player in 2007, from Italian powerhouse, AC Milan. And they lured Cristiano Ronaldo, the world’s top player in 2008, away from Manchester United, the reigning champions of the English Premier League.
There are a number of reasons why Kaka and Ronaldo are moving to Spain, but it’s pretty clear that taxes played a significant role. That’s because in 2005, Spain passed a tax break for foreign workers, including soccer players. This gives Spanish teams a huge advantage in bidding wars with teams from higher-tax countries like Italy and England. To make matters worse, England recently raised its top income tax rate.
“The new tax rate in England is going to make things much harder for English clubs,” noted Jonathan Barnett, a leading sports agent whose clients include Glen Johnson, Ashley Cole and Peter Crouch. “It will hinder the [English] Premier League and help the Spanish league because Spain has big tax discounts for footballers, so there’s an enormous advantage to go there. Someone like Ronaldo could be offered the same money at Real Madrid but be 25% better off.”
Similarly, a frustrated executive from AC Milan blames Kaka’s departure on the Italian tax system: “I repeat, this is all a matter of different types of taxation. If we were a Spanish club, we would have saved €40 million.”
Policymakers and soccer fans alike should take note.
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- At CNN.com, Ilya Shapiro says that the nomination of Sonia Sotomayor for the Supreme Court shows that identity politics matter to President Obama more than merit.
- In the Washington Examiner, Gene Healy makes the case for downsizing the imperial vice presidency.
- In Reason Magazine, Brink Lindsey discusses what he calls “Nostalgianomics,” and how liberal economists pine for days no liberal should want to revisit.
- At TheNextRight.com, Roger Pilon explains why the Sotomajor confirmation hearings are an opportunity for Republicans to reestablish their identity.
- In Wednesday’s Cato Daily Podcast, Tim Lynch says that hate crime laws sacrifice key constitutional protections.
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- In The Washington Times, Richard Rahn explains how the current tax crackdown could deepen the country’s economic woes.
- In the Washington Examiner, Gene Healy discusses Wanda Sykes’ speech at the White House Correspondents’ Dinner and the lost pastime of making fun of the president.
- Nat Hentoff cries foul on the new “hate crimes” legislation that is currently advancing through Congress.
- On NPR.org, Michael Cannon explains why 2009 will not be a good year for health care reform.
- At National Review online, Jerry Taylor contends that Jack Kemp’s political career ultimately did the cause of limited government more harm than good.
- In Wednesday’s Cato Daily Podcast, Mark A. Calabria discusses the president’s plan for regulating credit card companies.
- Watch Chris Edwards on CNN discussing why the pay gap between government and private workers is rapidly growing wider.
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- Don’t want to buy GM, Chrysler or AIG stock? Too bad, says Richard Rahn.
- Jim Powell spells out Obama’s tax assault on U.S. businesses in National Review.
- In Forbes magazine, Dan Mitchell reiterates his defense of tax havens.
- Will Wilkinson explains what happens when you start playing politics with private enterprise in Marketplace.
- In Thursday’s Cato Daily Podcast, ElCato.org editor Gabriela Calderon discusses elections in Ecuador.
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- In the Boston Herald, Jeffrey A. Miron argues that states should balance their budgets by cutting spending rather than raising taxes.
- In the Detroit News, Doug Bandow argues that strengthening our economic ties with South Korea could increase American influence over the region even as China’s power grows.
- Listen to Will Wilkinson comment on the Chrysler bankruptcy on American Public Media’s Marketplace.
- Watch Dan Mitchell discuss offshore tax havens on The Today Show.
- Join the Cato Institute on June 1 for a conference on the lessons we can learn from the New Deal and the Great Depression.
- In Wednesday’s Cato Daily Podcast, Jason Kuznicki discusses the newest edition of Cato Unbound.
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- Appearing on Fox News, foreign policy analyst Malou Innocent discusses the recent violence in Pakistan.
- In the American Spectator, Doug Bandow questions the reasons why the U.S. is still a member of NATO.
- Randal O’Toole argues that high-speed rail is not the solution to efficiency and environmental problems in the Cleveland Plain Dealer.
- In The Washington Times, Nat Hentoff argues that officials who sanctioned and participated in torture should not be allowed to use the “just following orders” excuse.
- In today’s Cato Daily Podcast, Mark Calabria discusses the Troubled Asset Relief Program.
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- In the Chicago Tribune, David Boaz questions whether Arlen Specter’s party change will take the Senate further to the left.
- Appearing on News Channel 8 in Washington, Boaz comments on Obama’s record as president.
- Watch Brandon Arnold discuss Obama’s first 100 days in office on BNN Canada.
- For more on Obama’s first 100 days, watch Gene Healy’s interview on AP TV.
- Join Cato on Capitol Hill tomorrow to see Chris Preble and Paul J. Saunders discuss Preble’s new book, The Power Problem: How American Military Dominance Makes Us Less Safe, Less Prosperous, and Less Free.
- Chris Preble will be on Capitol Hill again on May 11 with Jim Harper to explain why overreaction and misdirection play into the strategy of terrorism.
- In Thursday’s Cato Daily Podcast, legal scholar Ilya Shapiro discusses how a Supreme Court decision could change racial preference hiring laws in the United States.
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New articles, videos and Podcasts today:
- Ilya Shapiro asks the Supreme Court to review a medical law case with First Amendment issues in a new legal brief.
- Doug Bandow argues against economic retreat in East Asia.
- At National Review online, Edward Crane discusses Obama’s 100-day record.
- Also at National Review online, James Tooley tells the story of black-market schools in impoverished countries.
- Appearing on Fox Business Network, Gerald P. O’Driscoll Jr. discusses the Federal Reserve’s current meeting.
- In Wednesday’s Cato Daily Podast, Aaron Yelowitz discusses the problems with employer health care mandates.
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- Dan Ikenson and Scott Lincicome argue in a new study that restoring the pro-trade consensus must be a top priority for the Obama administration.
- In the DC Examiner, Gene Healy discusses Obama’s first 100 days and argues that he’s massively expanded the power of government in a short period of time.
- In the Asia Times Online, David Isenberg discusses private security contractors in the war in Iraq.
- Watch Patrick J. Michaels discuss energy on CNBC.
- In Tuesday’s Cato Daily Podcast, Peter Van Doren discusses the interaction between Congress and regulators on the issue of food safety.
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- Marian Tupy discusses African aid in his new Development Policy Analysis, “The False Promise of Gleneagles: Misguided Priorities at the Heart of the New Push for African Development,” and an op-ed in the Washington Times.
- Swaminathan Aiyar argues against a global currency in The Guardian.
- Daniel J. Mitchell calls for abolishing the death tax in USA Today.
- Will Wilkinson argues for more liberal immigration policies in The Week magazine.
- In the Christian Science Monitor, Benjamin Friedman says the United States should cut military spending in half.
- In Monday’s Cato Daily Podcast, Jim Harper explains why Obama’s record on following through with his campaign promise to post bills online for five days before signing is worse than the Washington Nationals’.
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