Waiting for the Nobel Prize

Today we want to recognize an important first step in re-shaping economic thinking so significantly that reducing or eliminating the national debt could be done easily, a concept so brilliant that—if appropriately expanded—could merit international recognition.

The tax bill recently approved by the House of Representatives in Washington proposes to tax graduate student tuition waivers.  For those of us who never got far enough in our higher education to be offered those waivers or who came along before they were widespread in higher education, here’s how they work:

A University tells a student pursuing a master’s degree or a doctorate they will not have to pay tuition if they help teach or do research beneficial to the university.  The university pays those students a small stipend for their work so they can eat and pay their rent.

The House bill wants to consider the tuition waiver as income.   And to tax it.

It is a matter of considering money a person never has and does not spend as income and then levying an income tax on those never-had and unspent funds.   Think of the possibilities!

Paying a tax on the raise you did not get could provide millions of deficit-reducing dollars to the federal government.  Paying a tax on a stock dividend that did not materialize would add even more.  Considering the difference between what you wanted on a car trade-in and what the dealer gave you as income and taxing that amount would add to the deficit-reducing federal income.

Here’s one we thought of the other day when we went to Columbia where the gas price that day was nineteen cents less per gallon than the price in Jefferson City.  We used our grocery store gas rewards card to knock another forty cents a gallon off of the fuel we put in our tank.  Think how much the federal government could collect if it considered supermarket gas refunds as part of our personal income.

Soon the pre-holiday price reductions we are seeing in our stores will give way to the post-holiday sales prices.  If Congress were to take the simple step of taxing the hundreds of millions of dollars that are not spent because of those pre-and-post-holiday price reductions, the annual federal deficit could be eliminated and bites could be taken out of the total national debt.

The car companies are offering multi-thousand dollar incentives to clear their lots of 2017 models.  If Congress were to consider those price reductions as income and tax it, another important debt-reduction step could be taken.

Think of how much money is saved every single day by people who shop at the day-old bread counter at the grocery store.  It might seem like pennies for each loaf, but when applied nationally and for an entire year, taxing the savings on all of those loaves of day-old bread will add up to millions of dollars a year in tax collections.

Oh, and here’s a biggie.  An industry that decides to build a factory, a warehouse, or any other facility in a foreign country instead of in the United States because it can save millions of dollars in construction and operation costs:  If those savings were considered corporate income and taxed—even at the proposed lowered corporate tax rate—the economic benefit would be enormous.

And—oh, wait, there’s one more and it’s particularly appropriate at this time of year.  Further, it’s pretty comparable to the tuition waiver.   We are awash in online and catalog offers to provide customers with a benefit if the customer provides something of value to the merchant in return for which the merchant waives a fee or charge.  Give us money, says the merchant, and we will give you a sweater but we will waive the shipping charge.  Since the customer receives the benefit–a sweater—but spends no money to receive it, the shipping charge is thus income and can be taxed as such, just as a graduate student receives a benefit—an education—by providing something of value to the university (teaching or research assistance) but does not pay the equivalent of a “shipping charge” to get it and therefore faces paying income taxes on money never possessed or spent.

Think of the incredible benefits this economic philosophy of turning unspent dollars into taxable income could provide if applied widely, assuming the federal government doesn’t just increase spending to or beyond the amount of additional funds it would collect.  Congress could wipe out the national deficit and it could provide billions of dollars that could trickle down throughout America in programs and services beneficial to the poor, the hungry, the sick.

And to graduate students.

We’ll be watching for next year’s announcement of the Nobel Prize for Economics to see if this great advance is deservedly rewarded.

Notes from the road–November

(Tick line, Kansas)—Trivia question:

What was the tick line?

Nancy and I crossed it a few days ago on our ten-day excursion to and from Colorado, where we spent Thanksgiving helping our son and his family move into a new house.

Kansas had a tick line.

In the years right after the Civil War, there was a shortage of beef in the northern states.  At the same time, Texas had millions of cattle and no significant market for them. But a lot of those cattle were infested with ticks that killed Kansas farmers’ dairy cows, leading the legislature to pass a law basically banning Texas cattle east of Topeka, an area that was filling up with new farmer-settlers.

A nice tourism magazine we picked up in Abilene tells the story of one Joseph G. McCoy, an Illinois fellow who realized Texas’ two-dollar-a head cattle were worth twenty times that much in Chicago and set out to find a place west of the tick line where trains could haul those infested longhorns to Chicago for slaughter, eliminating contact between them and the Kansas dairy cows.

McCoy settled on Abilene, then a place of “about a dozen log cabins and dugouts” where one entrepreneur was trying to solve the community’s prairie dog overpopulation problem by selling pairs of them to tourists for five dollars.  The town fathers sold McCoy 480 acres of land that became the destination point for those desperate Texas cattle-raisers. The cattle drives enabled Abilene to flourish—but it did so at the expense of a Missouri city. The unsigned article in the Abilene Chamber of Commerce magazine is a little condescending on this point:

Herds were transported in 1866 to Sedalia, Missouri along the first cattle trail.  Why Sedalia isn’t genuinely recognized as the first Cowtown of the West is because very few cattle herds actually made it to their destination.  There were a series of hillbillies guarding the Southern border of Missouri to ensure that the Texas Longhorns carrying the deadly tick fever were not going to cross over. Several drovers lost their lives in an attempt to break through the Missouri wall.  The Sedalia trail was also a nightmare even without the coonskin-capped border patrol because the path would send the drovers through the Ozark Mountains, which isn’t exactly the Rockies, but it wasn’t the best to run thousands of cattle.  Beyond the Ozarks, there was always a possibility of Indian raids in which there were still tribes looking around to establish their dominance in the Wild West even though the government had forced many Native Americans out to unwanted lands.

We suggest the MISSOURI Chamber of Commerce, or at least the Sedalia Chamber, might find itself sipping from the cup of umbrage at that characterization.  Coonskin-capped border patrol?  Hillbilly guards?   Hmmmmmphhhhhhh!

About three-thousand cattle were being brought into Missouri from Texas in the pre-Civil War years but the Texas ticks were hurting Missouri cattle, leading to a proposal in the 1855 legislature to ban diseased cattle from Missouri.

Sedalia, however, became a point for Texas cattle, particularly after the railroad reached there in 1860.  And when the KATY railroad built a line from Sedalia to Texas, the city became a major watering stop for the steam-powered trains that hauled cattle to Chicago in the post-Chisholm Trail days.

But when Joseph McCoy set up shop in Abilene, Sedalia’s development as THE western cattle trail head quickly ended.

The Texas cow boys (it was two separate words in those days) drove a couple million head of cattle up the Chisholm Trail from San Antonio to the railroad at Abilene from about 1867-71. By then, those bothersome Kansas farmers who had learned that winter wheat could flourish in Kansas and argued their land had become too valuable to be tromped on by ticky Texas Cattle, had expanded operations and the tick line kept getting moved farther west and other towns, including rip-roaring Dodge City, had become the cow towns of American West fame.  On March 7, 1885, Kansas enacted a strict quarantine banning Texas cattle everywhere except for December, January, and February—the cold weather months when tick-borne diseases were less likely.

By then the cow boys didn’t need to go to Kansas because the railroads had gone to Texas, including the KATY with its links to our own Abilene-maligned Sedalia.

(Concrete, America)—Covered a lot of miles on I-70—a road that makes any state boring except Missouri, where lax billboard standards just make the state look boring AND trashy—on that trip.

Saw a lot of hybrid vehicles on the road with us including a few Teslas and, as frequently happens, wondered about where they go to recharge.

We recalled that one of the diesel cars we owned years ago had a book in the glove compartment listing gas stations with diesel pumps for cars—they were kind of rare in those days—and we wondered if anybody provided a source for electric car owners that listed places where they could plug in.

Turns out there are at least two sources: Ameren.com and solvingev.com.  Might be kind of nice in MODOT had a webpage with the same information.   But the two sources that we looked at a minute ago show there are a LOT of places to plug in, power up, and go on (kind of a modern Timothy Leary phrase).  And the increasing number reflects the changes that are gaining momentum in our transportation system.  Doesn’t solve the pothole problems, though.  That might be a challenge for the legislature: figure out the equivalent of a gas tax on EV battery fill-ups.

A few years ago we suggested to a national motel chain that it might pick up a lot of customers if it had charging stations for overnight guests.  Still a good idea although we have yet to see a motel with a charging station.

(Wakeeny, Kansas)—This. place. is. starting. to. feel. weird.  Regular readers might recall that last summer we stopped at a motel in this town of fewer than 1800 people three counties away from the Kansas/Colorado border and ran into someone who recognized us from the time many years ago when he worked at the Capitol while I was scratching for news there.  This time we stopped and the young lady behind the desk was from Boonville and used to listen to “Across Our Wide Missouri,” the daily historical program we still do on the Missourinet.

I don’t know, after this, how often we want to stop at Wakeeney in the future.  It’s starting to feel a little Twilight Zoneish, like we’ll wake up some morning and be the only people in the town and we won’t be able to get out.

(Mailbox, Mo.)—Stopped at the post office and picked up our mail held for the last ten days.  46 things.  Ten were catalogs although we were surprised that only one was from L. L. Bean, which usually seems to send us a new one every three days, or from the Duluth people who are almost as prolific.  Of the 46 pieces of mail, only four were personal (cards or letters) unless you count the three bills.  Eleven were solicitations, usually reminders that it’s getting late in the year and you better donate to our cause so you can beat the IRS.  Eight were non-catalog ads, including one from Barnes and Noble which seems to have forgotten that it closed its store here months ago (we also get a lot of email solicitations from Sears, which took their store away from us months ago, too).

Less than ten percent of our mail was from people contacting people.

(Stamp Counter, Mo.)—Mailed a letter the other day and stuck one of those “Forever” stamps on it—you know, the one that’s good no matter what this month’s postage rate is. (We include this in the “notes from the road” entry because we drove to the nearest postal facility to mail the letter instead of raising the flag on the mailbox on the curb.)  The idea came to mind that the postal service should change the image on future “Forever” stamps.    It should be a

Snail.