Andrew,
You are asking for a logical argument from a liberal. It ain't gonna happen.

Liberals like Schmeling can't see past their noses to view the idiocy of their arguments. It's all too obvious his hypocrisy, as you point out, where it's OK for a government to keep all, or most, of their alleged contribution, but not for an individual taxpayers. The Schmelings of the world say the rich aren't paying enough, when the top 4% of income earners pay 50% of all income taxes.
Typical socialist nonsense. If these people don't get it at their advanced age, they never will.

Andrew,

Your post seriously and irresponsibly misrepresents what I was saying and attributes to me, in a very public way, views which I did not express and do not hold. I found it highly disturbing and disappointing to read.

For the record, I reject all three of the "assumptions" attributed to me:

1 That government and government alone is the source of all economic activity

I said no such thing, nor would I ever. Nor is this a reasonable inference from anything that I actually did say. You also go so far as to suggest my view is that "government is entitled to all of everybody's income, but generously decides to let you keep some". There is no basis whatsoever for attributing this view to me and I find it offensive that you so so.

2 That government is entitled to a fixed amount of revenue, no matter what services it provides, and

Nor did I say this. The claim doesn't even make sense to me.

3 That whoever produces the most should receive the most in government services and payouts.

Nor did I say this. This one is particularly stunning, since my actual words, which you quoted, were " Whether the rule you prefer is "as you contribute, so shall you receive" or "from each according to his ability, to each according to his need", or something in between…..". I explicitly left the criteria for judging "fairness" up to your choice.

It is impossible to understand what I was saying without recognizing that it was said in response to the claims that Providence is getting "too much" state aid and that residents of other communities are "subsidizing" Providence. That argument is premised on the assumption that (if taxes are justified at all) place-of-residence alone is what should matter, and tax payments from residents of one community should not be used to benefit residents of other communities. I have said that, especially in a small, densely populated, and interconnected state such as RI, such a rule is not justified. Further, the argument suggests that Providence is a net drain on the state's economy, which I believe I demonstrated to be false.

There are a number of other comments which I also find absurd and offensive (That I think "individuals are simple commodities") and I could go on, but I doubt that it would be fruitful. I am thoroughly uninterested in having an ideological (as opposed to factual or policy) argument.

Finally, I have felt comfortable commenting under my full name here on AR because I do my best to take principled positions that can be justified by evidence, and to treat people and their arguments with respect even when I disagree with them. I've acted on faith that the courtesy would be returned, at least by the blog editors. Up until now, I've been gratified that it has been. I now believe that faith was misplaced.

Professor Schmeling:

I am sorry if you are offended, but I have engaged in a perfectly legitimate line of political science inquiry. I submit that, without invoking all three assumptions listed in the main post, whether you subscribe to them individually or not, it is impossible to make a coherent argument that a community that de jure holds x% of the jobs in a state deserves x% of state aid.

More specifically…

1. In an earlier thread involving the John Simmons pension controversy, you made it clear that did not consider wasteful spending in Providence to be a legitimate issue for other communities in Rhode Island to consider, as long as Providence was only spending its own money…

I said: The residents of Providence...don't have a right to demand that their spending on their luxury items be subsidized by taking money from other communities.

You replied: The only way this could be relevant to this discussion is if in fact Providence is spending your money, i.e. that other communities are in fact subsidizing Providence. That, however, is precisely the point under debate. I disagree that they are.

2. In the same thread, you talked about how much revenue Providence generates…

With regard to education, as I pointed out before, Providence jobs generate roughly 27% of the state's income and gets roughly 27% of the total aid to local schools. I just did the same thing with the 2006 total state aid to cities and towns. Providence's share is 27.8%. My conclusion remains that Providence consumes a share of state income tax that is not significantly greater than the share of revenue it generates.

Excellent post Andrew. There is no logical, reasonable, well thought out argument why Providence should be subsidized by the rest of RIs communities. Thanks for uncovering some of the absurdities of the views held by people like the Schmelings of the world. Liberals rather make any sense if you can engage them in a discussion. I'm not surprised that he hasn't been back to argue his points or lack thereof.

Frank,

First, though I realize it's convenient to frame things in terms of simple categories, the present discussion has nothing whatsoever to do with "liberals" vs "conservatives".

Second, while I disagree that there is no good argument why Providence should not be "subsidized (and have presented several previously so feel free to address them), the argument to which Andrew objects is that, in fact, Providence is not not being "subsidized" by the rest of the communities. So, your objection is misplaced.

Finally, as to your assertion that my lack of comment in the last 24 hours has some significance, it only means that I've been busy. Andrew's post was made about 48 hours ago and I responded immediately. His comment in response was just about 24 hours ago. On the other hand, my comment, to which his post responded, was made January 31st, more than a month ago. Yet you are giving me a hard time for not responding quickly enough. That does not seems reasonable, does it? Try to be patient.

Andrew,

It's still not clear to me that this is going anywhere, but since you made the effort to respond...

First, please feel free to skip the honorifics. Since this topic is not part of my professional expertise, my degrees and my day job are as irrelevent as yours are. I certainly have never invoked them.

This is long, and I'm going to be repeating myself from earlier comments, but those comments were fragmented and I want to lay the whole thing out as clearly as possible.

In general, my argument all along has been this: "It is unreasonable for people to say, as some here and others elsewhere have, that Providence, even though it provides 40,000 jobs for citizens of the rest of the state, under no circumstances including considerations of need, deserves the state aid it gets, because that money in some sense "belongs to" the community of residence of the taxpayers, and should only be used to pay for the education of children in their own communities".

[Note that I am not interested in addressing arguments that money "belongs to" the worker and not the government. Either government has a legitimate claim on earnings or it does not. You are free to argue this as you see fit, but this entire discussion assumes that government (at some level) does have such a claim. The typical objection to aid to Providence is not that taxes are bad, but that communities should be treated separately and one community should not benefit from taxes on residents of another community.]

I also have argued, and continue to do so, that it is unreasonable, and even hypocritical, for residents of communities that benefit from the 40,000 jobs and $2 billion in income that Providence provides their residents, to turn around and say, "taxes on this money may be used to support education in my community, but not education in Providence".

[You can object that "Providence doesn't generate the value, people do". Fine, but then don't invoke community-of-residence of taxpayers as the criteria for distributing aid. It is no more relevant than community of employment of taxpayers.]

I have also argued that it unreasonable for people to keep referring to Providence as if it were some sort of economic "black hole" sucking up income from other communities. That view is only possible if one looks only at the "cost" side of the equation and ignore the "benefit" side. My conclusion remains, based on the economic data which I have laid out as clearly as I can, that Providence consumes a share of state income tax that is not significantly greater than the share of revenue it's employment base provides.

It is a mistake to think that I am actually arguing for installing a system of taxation based on place of employment. I am not. Even if I were, the principle that taxation should be based on place of employment is hardly radical. It's the same idea that underlies non-resident income tax. Would you exempt RI's 40,000 out-of-state workers from RI income taxes?

I am arguing, however, that such an arrangement would make no less sense than a system based only on place of residence. I do not think there is anything sacrosanct about town of residence, especially in a tiny state where town of employment is usually different.

My own central argument- which I think you have missed- is that we, as a state, would be a lot better off if we stopped worrying so much about where the kids live, and more about what would make our state's educational system sounder and our state as a whole stronger. But, if people insist on arguing that communities should get no more than they contribute, I am ready to argue that the current aid to Providence does not violate that principle.

Let me address the particular points you raise:
More specifically…
1. In an earlier thread involving the John Simmons pension controversy, you made it clear that did not consider wasteful spending in Providence to be a legitimate issue for other communities in Rhode Island to consider, as long as Providence was only spending its own money…
I said: The residents of Providence...don't have a right to demand that their spending on their luxury items be subsidized by taking money from other communities.
You replied: The only way this could be relevant to this discussion is if in fact Providence is spending your money, i.e. that other communities are in fact subsidizing Providence. That, however, is precisely the point under debate. I disagree that they are.

How does that position not depend on assumption #2? [i.e. That government is entitled to a fixed amount of revenue, no matter what services it provide

I understood the discussion this way: You were saying you should have a say in (not just have a right to have an opinion about) Simmon's salary precisely because Providence is spending your money. My point was that, in order to make that claim in that way, you have to establish first that Providence is spending your money. I thought you had not done so, are were therefore assuming something you needed to prove. I thought you should have saved your point about Simmons until after you showed I was wrong that Providence is generating more tax money than it consumes.

As I said before, your assumption #2 does not make sense to me, unless you think I was arguing that each community deserved exactly as much in state aid as it produced in revenues. As I hope all of the forgoing makes clear, that was not my argument.

"How is wrong for me to point out that your 27% figures assume (assumption #1) that the City of Providence should get 100% credit for economic activity that occurs there, while people work there but live elsewhere get 0% for the efforts they bring? "

First of all, even if I agreed with the above characterization of my argument, it has nothing to do at all with any assumption "That government and government alone is the source of all economic activity". Nobody thinks that. At least not me or anybody I know.

But "giving government credit for" (your phrase, not mine) economic activity that takes place within its jurisdiction is not the same thing. And, it happens all the time. Again, non-resident income tax says that RI "gets credit for" activity by MA residents that takes place in RI. Do you disagree with that?

Let me put it this way, however. The "taxes should depend on place of residence" argument gives "100% credit" to residents, regardless of where their income-producing activity takes place. I don't think that's any more justified than the alternative.

There are several typos in the above. The worst is when the italics stop before the end of the quotation of Andrew's statement regarding Simmons.

The last paragraph should read:

Let me put it this way, however. The "taxes and benefits should depend on place of residence" argument gives "100% credit" to the town of residence , regardless of where their income-producing activity of the resident takes place. I don't think that's any more justified than the alternative.

Thomas,

You bring up an interesting point. Who does an employee’s income tax “belong to"? In the fairest sense I would say that after the state has taken it’s share of income tax revenues to cover costs related to items that are necessarily utilized for the benefit of all Rhode Islanders, the rest would be divided in some equitable fashion based on something, but what? Under our current system, right or wrong, these monies come back to RI residents predominantly in the form of state aid to education to the various towns. So the system as it currently stands mandates that each town is the relevant unit to which a level of value and need is prescribed and to which a payout is then made.

Since school costs are the driving force behind the “needs” of all of the individual towns, wouldn’t the most relevant way to share the monies coming back to communities have to be based on where the employee lives? That’s where the need, the potential school children, come from - residences. Businesses don’t put kids into the school system. Providence’s “economic engine” doesn’t cost a dime in public school costs. So how can Providence make a legitimate claim on a disproportionate amount of the monies that come back to the towns when it comes back in the form of aid to education?

No matter how you care to paint this issue the bottom line is that the bulk of the monies the state returns to the communities comes back in the form of state aid to education. Aid to education covers about 30% of the per pupil costs in most of the suburban/rural communities while in Providence it pays for 70% of the per pupil costs. Providence’s large tax base, including all those businesses, only have to pick up 30% of the per pupil cost of education while the suburban/rural towns have to pay more than twice that in per pupil costs! How could that degree of inequity be considered anything other than subsidizing some towns at the expense of the others? It certainly is no wonder that the highest (property) taxed communities are in the suburban/rural ring, not in the urban core.

Make no mistake the rest of the state is subsidizing Providence, and based on where most of those funds are being directed, the schools, it makes absolutely no sense. To state the obvious, Providence and the urban communities, with their high number of representatives in our legislature, have created a tax system that is highly and unfairly favorable to their own towns and economically harmful to everyone else’s.

Frank,

First, I appreciate the thoughtful tone of this comment. Thank you.

Frank said: I would say that after the state has taken it’s share of income tax revenues to cover costs related to items that are necessarily utilized for the benefit of all Rhode Islanders…

OK, but I would first note that state dollars don't always benefit all Rhode Islanders equally and we can't expect them to. For instance, highway dollars benefit those who drive more than those who do not, though they benefit all by making it possible to deliver goods and services. Cleaning the Bay benefits shoreline residents and boaters more than others, etc.

Second, and more importantly, I would make the claim, and have done so here before, that quality education is actually one of those things that does benefit all Rhode Islanders. Poorly-educated bank-tellers, cops, teachers, DMV workers voters, etc., harm you and me even if we don't have a child in school, and it makes no difference whether that person is educated in Providence or Lincoln and, in this tiny state, it frequently makes no difference where they live.

Frank says Since school costs are the driving force behind the “needs” of all of the individual towns, wouldn’t the most relevant way to share the monies coming back to communities have to be based on where the employee lives? That’s where the need, the potential school children, come from - residences.

I agree that education funding should be based on where the children live. That's why I think that the "equitable fashion of distribution" you are looking for requires that state money should be distributed according to that need, not some other criteria. That means we should look at the students actually are, and that may or may not be where the taxpayers live. If some town had zero children, I would not exempt them from paying state income taxes that went to aid to education, and presume you would not either.

Of course, cost-per-student may vary. In rural areas, transportation costs are going to be higher per-pupil. Economies of scale may have an effect. (New Shorham has the fewest student and the highest cost-per-pupil in the state by far). Poverty, low educational achievment by parents, and the necessity of teaching English to immigrants makes costs higher in urban areas. I believe all of this should be taken into account as well.
By the way, Providence's cost-per-pupil is right about in the middle of the pack of all RI school districts.

Frank:Businesses don’t put kids into the school system. Providence’s “economic engine” doesn’t cost a dime in public school costs. So how can Providence make a legitimate claim on a disproportionate amount of the monies that come back to the towns when it comes back in the form of aid to education?

Yes, but it produces the dimes that people take home to the suburbs, and with which they pay their property taxes which go to their local schools and not Providence's. Again, RI is second-to-last in the share of public education that is paid by state money, as opposed to property taxes, so this makes a much bigger difference than it would elsewhere.

Frank:Providence’s large tax base, including all those businesses, only have to pick up 30% of the per pupil cost of education while the suburban/rural towns have to pay more than twice that in per pupil costs!
How could that degree of inequity be considered anything other than subsidizing some towns at the expense of the others? It certainly is no wonder that the highest (property) taxed communities are in the suburban/rural ring, not in the urban core.

Providence's property tax rate is the highest in the state. It is 50% higher than Barrington's or East Greenwich's. It is twice that of Coventry's and North Smithfield's, just to give a couple of examples. Meanwhile, Providence's "tax capacity" is actually the second lowest in the state; only Central Falls is worse. Providence's "tax effort" is thus the highest in the state, by a long shot.
http://www.infoworks.ride.uri.edu/2006/state/

Here's a funny thing. Given that Providence's per-pupil expenditures are about average, if we eliminated property taxes entirely as a source of education funding and moved the entire amount to state funding on a per-pupil base, you would no longer be able to say that the share of state aid to Providence is out of proportion to its student population. (I have no idea whether it would be out of proportion to its citizens' income tax receipts (we have a lot of poor people, but a sizable community of wealthy people too) but I don't really care either way because I don't think it matters. Even if it were, there would be a lot of other communities that would be in the same position is worse because their average income is lower.

I thiink it is safe to say that the fact that Providence's current share of state education aid (27%) is out of proportion to its student population (19%) is entirely driven by the fact that we rely so heavily (49th in the nation) on property taxes to fund education.

Frank: Make no mistake the rest of the state is subsidizing Providence…

Again, only if you look at the expenditure side of the equation and not the production side.

Here's a thought experiment for you. This is obviously over-simplified, but it gives a sense of what's going on:

Let Providence secede from RI. Providence will charge a 10% income tax on "non-residents". RI can do the same to Providence residents who work there.

RI will tax 25,551 Providence residents on the average non-providence RI income of $39,021 yielding about $100M Providence will tax 66,510 RI'ers on the average Providence income of $45,434, yielding $302M. Net gain to Providence of $202M. Now, add to that the income tax on the approximately 42,000 Providence residents who work in Providence (and currently pay RI taxes, so you lose those too) and the roughly 10,000 Providence workers who live in MA, CT, etc, and I believe the total will quite dramatically exceed current state aid to Providence.

As I keep saying, I don't really think it's right to think this way, and I have have nothing against the rest of RI, in fact I love my state. But if people are going to play the "your town vs. my town" game, I think it has to be said.