Goldwater Institute

Arizona voters were not the only ones that considered ballot measures last week that dealt with schools. Across the country, voters were faced with a variety of proposals, from tax increases to new charter school laws. In three states, children benefited from voter-approved initiatives.

Arizona Proposition 204: Failed

This attempt to raise the sales tax was filled with carve-outs for special interest groups and lacked any meaningful innovations or effective ideas for Arizona children. Now lawmakers can focus on real reform, like successful implementation of education savings accounts, updating the school finance formula so taxpayers stop paying for empty seats in classrooms, and expanding online learning that has been proven to boost student achievement.

Washington State’s Initiative 1240: Passed

The initiative creates the nation’s 43rd charter school law (42 states and the District of Columbia). The measure calls for the creation of a statewide charter school authorizer, much like Arizona’s state charter board. These offices independent of local school districts have been a boon to charter schools in states like Arizona (where the statewide office has authorized nearly 90 percent of Arizona’s charter schools), South Carolina, and Colorado.

Georgia’s Amendment 1: Passed

Georgia already had a charter school law, but parents’ and community leaders’ freedom to create these schools has been under attack by school district officials. This state constitutional amendment restores the statewide charter school authorizer the Georgia Supreme Court ruled unconstitutional in 2011. The passage of this amendment will create more charter schools and give parents and children more choices among schools in their state.

Now that the votes are counted, let’s get to work making sure every child has the chance to go to a school that challenges them and prepares them for life.

Learn more:

Goldwater Institute: Ghost Busters: How to Save $125 Million a Year in Arizona’s Education Budget

Goldwater Institute: Education Savings Accounts: A Path to Give All Children an Effective Education and Prepare Them for Life

Goldwater Institute: A Custom Education for Every Child: The Promise of Online Learning and Education Savings Accounts

According to the Financial Times, at least one U.S. Senator has declared the nation should jump off the fiscal cliff rather than compromise on a budget that brings the national debt under control.

No wonder why Thomas Jefferson said over two hundred years ago, “I wish it were possible to obtain a single amendment to our Constitution. I would be willing to depend on that alone for their reduction of the administration of our government to the genuine principles of its Constitution; I mean an additional article, taking from the federal government the power of borrowing.”

With unbridled fiscal brinkmanship in Washington, no doubt the federal government deserves to have its credit cards cut up. But we shouldn’t forget that there is a legitimate role for a reasonable level of debt in responsible hands. That's why the Balanced Budget Amendment advanced by the Compact for America Initiative would do the next best thing: It would require a majority of state legislatures to approve any increase in federal borrowing above an initial debt limit. In other words, 26 state legislatures would be required to cosign on the federal government’s credit card. In addition, to ensure the initial debt limit is respected, the President would be empowered and required to designate spending cuts when 98% of the debt limit is reached. Congress would then be required to override those designations within 30 days with alternative cuts.

Unlike the current national debt brinksmanship, the Compact for America Initiative is designed to force Washington to agree upon a budget that can command a wide national consensus long before the midnight hour arrives. The Compact for America would keep the nation’s credit rating from being held hostage to a game of chicken between the President and Congress. With the states serving as Congress’ fiscal control board, and the buck stopping at the President’s desk, the Compact for America Balanced Budget Amendment Initiative would powerfully check and balance Washington.

This initiative is just the sort of powerful, yet pragmatic reform that could only be originated outside of Washington, D.C. It’s time for the states and the people, led by their Governors, to seize the day.

Learn more:

Financial Times: Don’t Fear the Fiscal Cliff

Compact for America: Home page

U.S. Debt Clock: Home page

During the economic boom of the 2000s, the poverty rate – the percentage of the state population that lives under the federal poverty line – went down in many states. That’s not too surprising – a rising economic tide will usually lift all boats.

But some states were more effective at lowering the poverty rate than others. As I explain in my new report published by the Goldwater Institute, government policies can decrease poverty by encouraging a key driver of job creation in a state: the level of entrepreneurship.

There has been a substantial number of academic studies that show entrepreneurial endeavors can help move people out of poverty, whether they start their own business – like a food truck or a hair salon – or whether they are hired by an entrepreneur. A classic study published by the National Bureau of Economic Research in 2000 concluded that, “for individuals who began toward the bottom of the earnings distribution, continuous experience with self-employment was a successful strategy for moving ahead (relative to wage-earners), both in the short- and long-term.”

In my study, I found that higher average rates of entrepreneurship in a state correspond to bigger declines in poverty. In fact, for every one percentage point increase in the number of entrepreneurs in a state, there is a two percent decline in the poverty rate. A decline in the poverty rate of this magnitude means thousands of families would be able to provide for themselves and start pursuing their versions of the American Dream.

The engine that drives economic growth – free enterprise – is also the best way to help lift people out of poverty. In this light, striking down barriers to entrepreneurship – like licensing requirements that hurt poor entrepreneurs the most – should be seen as an anti-poverty policy. And it’s one that has a much better chance of long-term success than temporary government programs.

Learn more:

Goldwater Institute: Increasing Entrepreneurship is a Key to Lowering Poverty Rates

Goldwater Institute: Unlocking Entrepreneurial Forces

National Bureau of Economic Research: Horatio Alger Meets the Mobility Tables

The tax debate in states over the past few decades has been largely centered on how high or low taxes should be. This is an important concern; but recently the conversation seems to have shifted to a debate about fundamental tax reform that alters radically how a state collects revenue.

The Midwest tax competition brewing between Oklahoma and Kansas is a perfect example. The first salvo in the battle against old-school, growth-sapping tax codes came from Governor Sam Brownback of Kansas when he proposed a dramatic reduction in that state’s income tax rates. It’s the first step in an overall goal of phasing out the income tax altogether. Meanwhile, Governor Mary Fallin of Oklahoma proposed a plan to phase-out the income tax in her state over the next decade.

Two versions of Gov. Fallin’s plan passed the legislature, but unfortunately for Oklahomans, hit a snag in negotiations to iron out the details. The resulting compromise did reduce income tax rates, with the top rate dropping from 5.25 to 4.8 percent. Kansans received a substantial tax cut too: a version of the governor’s plan passed and income tax rates in that state will fall. The top rate alone will drop to 4.9 percent from nearly 6.5 percent in 2013. Both governors are planning to take another run at getting rid of the income tax in 2013 or at least cutting their income taxes even further.

This is a competition that Arizona ignores at its peril. The nature of our modern economy means that we need to make our state more attractive than all others, and ample empirical evidence shows that states without income taxes do vastly better economically than those with income taxes. Residents of states like Texas and Florida see the fruits of these economic realities firsthand.

Arizona can still be a strong competitor in this tournament, but we need to get in the game quickly and make sure we approach it the right way. Eliminating the income tax in the next few years could make Arizona the first state to take that step in just over three decades. The choice is clear: it’s time to make history.

Learn more:

Goldwater Institute: A New Tax Plan for a New Economy

Goldwater Institute: The Hidden Cost of the Income Tax

Goldwater Institute: Tax Day Blues Should Lead to Thoughts of Reform