Cheerful little poor boy standing portrait near brick wall at his home and looking to the camera portrait close up.

Testimony in support of HB 24 (Student Prosperity Savings Program – Tax Amendments)

Statement in support of HB 24 Sub 1 (Student Prosperity Savings Program – Tax Amendments) as prepared by Christine Cooke, who testified before the Senate Revenue and Taxation Standing Committee on Feb. 17, 2017:

Thank you, members of the committee.

I’m Christine Cooke, education policy analyst at Sutherland Institute.

Sutherland understands that every child has unique needs – especially when it comes to education – and believes that legislation ought to reflect these realities.

My colleague sits on the state’s intergenerational poverty advisory board, so we recognize that students experiencing IGP have very distinct needs.

Especially for children experiencing IGP, a life of prosperity – including educational and economic opportunity – is likely out of reach without the help of policy that incentivizes charitable donations from private actors and encourages financial self-reliance.

Because we believe HB 24 Sub 1 is sound policy, we ask you to support the bill.

Thank you.

Poster map of United States of America with state names. Print map of USA for t-shirt, poster or geographic themes. Hand-drawn colorful map with states. Vector Illustration

Federal funding: far from free

Recently, the Tax Foundation released a study showing which states rely most on federal aid and what percentage of their budgets come from these federal dollars.

States receive a significant amount of assistance from the federal government in the form of federal grants-in-aid. In fact, when averaged together state governments relied on federal money for almost one-third of their general revenue in 2014.



This dependence diminishes local priorities in favor of national special interests, incentivizes unnecessary spending at the state and local levels, mandates burdensome regulations, and leaves states vulnerable to future federal spending crises. Simply put, these dollars aren’t free – and the economic, social and financial costs are passed along to taxpayers.

Sutherland Institute wrote an article a year ago about the negative consequences of federal aid in an op-ed in the Daily Herald titled The Myth of Free Federal Money:

“No such thing as a free lunch.”

“If it sounds too good to be true, it probably is.”

“You don’t get something for nothing.”

We know all this. Yet the allure of “buy one, get one free!” “no money down!” and “get 6 months free!” still draws us in.

We see this natural impulse at work when “free” federal money is offered to our elected officials. With billions of tax dollars dangling in front of state and local governments, the sales pitch of better schools, stimulated economies and improved roads usually proves too enticing to turn away.

Unfortunately, this promise is based on a misconception. Federal funding isn’t free at all. In fact, according to new research, it costs Utah taxpayers hundreds of millions of dollars per year.

A new study from Economics International (EI) reports that each additional dollar of federal grant money to the states is associated with an average increase of 82 cents in new state and local taxes.

In Utah, the extra tax burden from every dollar of federal funding is 72 cents. To illustrate, a hypothetical 10 percent increase in federal grants to Utah ($560 million) would be associated with approximately $400 million more in spending from state and local government — an additional tax burden of about $140 per Utahn.

That’s slightly below the national average, but it is cause for genuine concern. It means Utah’s elected officials are being manipulated by the federal government into increasing the financial burden on Utah taxpayers in ways they wouldn’t do otherwise.

We encourage the public and policymakers to reread this op-ed and reject federal funding’s empty promises.

'I hate you Washington,' Americans beg

Waaah!Gallup conducts an annual poll asking people to “Please say whether you are very satisfied, somewhat satisfied, somewhat dissatisfied, or very dissatisfied with our system of government and how well it works.” The percentage of people answering “very” or “somewhat” dissatisfied has risen steadily since 2000 from a low of 23% in 2002 to its current high of 65%. I’m shocked, shocked to find out people are increasingly unhappy with their government.

I would have posed the question differently, though. Instead of asking about their “satisfaction with our system of government and how well it works,” I’d have asked about their “satisfaction with how well our government works.” The difference is that, with the Gallup version, someone could be an avowed Marxist who’s dissatisfied with our system of government even as they’re happy to see it implode. In my version, we’d find out how people think the government is working irrespective of their preferred political or economic philosophies.

And that’s a distinction with a difference. I think most Americans are on board with a capitalist economy and a republican form of government. Most of us would just like to give it a try. Unfortunately, the way Gallup words the question we can’t break out which of those dissatisfied Americans are unhappy with the current trend towards crony corporatism and its inevitable failure to treat them fairly, or if they’re just upset at not getting their share of the plunder.

Read more

Voices across the political spectrum question dependency culture

Nicholas D. Kristof (Photo: World Economic Forum from Cologny, Switzerland)

In The New York Times, columnist Nicholas D. Kristof makes an uncomfortable point:

This is painful for a liberal to admit, but conservatives have a point when they suggest that America’s safety net can sometimes entangle people in a soul-crushing dependency. Our poverty programs do rescue many people, but other times they backfire.

Mr. Kristof notes that part of the problem is the anti-marriage incentives in welfare programs:

Antipoverty programs also discourage marriage: In a means-tested program like S.S.I., a woman raising a child may receive a bigger check if she refrains from marrying that hard-working guy she likes. Yet marriage is one of the best forces to blunt poverty. In married couple households only one child in 10 grows up in poverty, while almost half do in single-mother households.

The column is heartbreaking.

In an extended comment on the Kristof piece, the excellent David French makes a compelling argument through a story that concludes: Read more

Intergenerational poverty, taxation and the Scrooge response

Earlier this week I spoke at an important conference on intergenerational poverty in Salt Lake City. Karen Crompton of Voices for Utah Children and State Senator Stuart Reid organized the conference and invited my participation as a follow-up to Senator Reid’s legislation on the topic.

My remarks drew on a passage from Charles Dickens’ A Christmas Carol, when Scrooge was invited to to “make some slight provision for the Poor and destitute, who suffer greatly at the present time. Many thousands are in want of common necessaries; hundreds of thousands are in want of common comforts, sir.” Scrooge’s response?

“Are there no prisons?” asked Scrooge.

“Plenty of prisons,” said the gentleman, laying down the pen again.

“And the Union workhouses?” demanded Scrooge. “Are they still in operation?”

“They are. Still,” returned the gentleman, “I wish I could say they were not.” Read more

Romney, Obama and the 'takers'

Like many Americans by now, I listened to the recording of Mitt Romney talk about the “47 percent.” While there are some things to criticize about what Romney said, I have to admit that after I listened to him I thought, “Yeah, he’s right.” I had an instinctive concurrence with what he said. I didn’t pay attention to the actual number 47 but I sure felt like that number was pretty close to what I imagined Romney was talking about. So what was he talking about?

I assumed he was talking about a composite citizen – a person who comprises many of the characteristics he described. Are there people who are dependent on government? Yes, of course, there are. My mom and dad receive Social Security payments. Was Romney talking about them? No, I didn’t think so. Social Security isn’t a welfare program even if seniors are dependent upon it today.

Frankly, I assumed Romney was talking about people, who because of a variety of socio-economic variables, choose government welfare over work, inflexible people out of work who pridefully choose unemployment checks over work, people from intergenerational poverty who only know government assistance, and even young people from strong families who choose food stamps, WIC and Medicaid benefits instead of asking parents for help just to maintain the appearance of independence and adulthood.

Read more

Government welfare and moral excellence

The great demographer Nicholas Eberstadt recently wrote in The Wall Street Journal about the dramatic explosion in the receipt of government welfare. His concluding paragraphs:

The prospect of careening along an unsustainable economic road is deeply disturbing. But another possibility is even more frightening — namely, that the present course may in fact be sustainable for far longer than most people today might imagine.

The U.S. is a very wealthy society. If it so chooses, it has vast resources to squander. And internationally, the dollar is still the world’s reserve currency; there remains great scope for financial abuse of that privilege.

Such devices might well postpone the day of fiscal judgment: not so the day of reckoning for American character, which may be sacrificed long before the credibility of the U.S. economy. Some would argue that it is an asset already wasting away before our very eyes.

In a time of uncertainty, people understandably seek for security. Increasingly, it is sought by reliance on government munificence. That quest for security however, can easily become a repudiation of responsibility. Read more

One more hidden cost of welfare?

As we’ve noted before, government welfare programs generally carry a hidden cost beyond that paid by taxpayers – a cost paid by the recipients, in whom dependency and a loss of independence are fostered.

An interesting new study in the Journal of Family and Economic Issues suggests that dependency on government largesse may carry an additional cost, this one for recipient spouses. The study involves a survey of Utah couples and found: “Individuals that experienced the combination of earning less than $20,000 per year while receiving government assistance had significantly lower levels of overall marital satisfaction and commitment than individuals receiving government assistance with higher incomes and individuals who have never received government assistance.” Read more

Costs of Dependency


Like the poor, the debate over what to do about poverty we will always have with us. Recently, unsustainable federal budget deficits have reawakened the controversy because it now seems clear that (since payments to individuals make up two-thirds of the federal budget) entitlement reform has to be considered.

The caricature of those who insist that cuts in entitlement programs must be made is that they are cold and unfeeling, looking out only for their own interests and not the least concerned by the less fortunate living around them. Perhaps there are some who fit this profile, but very likely not many. Read more

Utah tax dollars used to treat drunken drivers

By law, DUI offenders in Utah must complete an assessment to determine whether they need substance abuse treatment. In many cases, Assessment & Referral Services (ARS) at the University of Utah provides this evaluation free of charge, at a cost of $220 to Utah taxpayers. Should government cover this fee even though the average alcoholic spends as much as $100 per week on alcohol?

Watch this brief report and decide for yourself:


Here’s the script for the video:

STAND UP: Should you be paying for a drunken driver to receive treatment for his or her drinking problem? Well, that’s EXACTLY what’s happening with YOUR tax dollars. Assessment and Referral Services, housed at the University of Utah, receives county and federal tax money to help fund assessment for DUI offenders.

VOICE-OVER: By law, in the state of Utah if you have a DUI arrest you must get an assessment to determine whether you need substance abuse treatment. Assessment and Referral Services, also known as ARS, provides such assessments. ARS Director, Dr. Kelly Lundberg, explains the primary role of ARS.

DR. KELLY LUNDBERG: “We assess people who are in need of county-funded substance abuse treatment. And they could be in need of substance abuse treatment either because the court has indicated that they need to or because they want to and have no court involvement.”

VOICE-OVER: ARS was created because Salt Lake County judges were aiming to get more objective assessments of those cited with drunken driving. In 2003, ARS began operating on a five-year contract from the Utah State Legislature worth $1.3 million, which was handed out by the Division of Substance Abuse and Mental Health. Today, ARS receives taxpayer money from both the federal and county governments to pay the assessment fees of DUI offenders.

DR. LUNDBERG: “The county gets money through tax dollars and through block grants; federal money also. So the federal government allocates money for substance abuse treatment services to each state, and it’s done by population. State gets that and they funnel it through different counties or different local authorities.”

VOICE-OVER: Being “eligible” for county-funded treatment requires a few things. If you are a Salt Lake County resident, you will be charged for the assessment based on a sliding pay scale; however, if you cannot afford the treatment or if you are under 21 and drinking illegally, it’s FREE. If you are not a Salt Lake County resident, you must pay the entire fee of $220. Dr. Lundberg explains why Utah taxpayers are paying the bill for drunken drivers.

DR. LUNDBERG: “But these are individuals who are indigent; they can’t afford insurance, so we are set up so we can see those individuals and assess them and then plug them into the right place that will provide them with the right treatment.”

VOICE-OVER: For someone who is indigent, a $220 bill may sound difficult to pay. But according to the American Medical Association, the average alcoholic spends $10-$15 per day on alcohol. In other words, the $220 assessment fee for ARS services represents about 2-3 weeks of drinking for the average alcoholic. Taxpayers should not pay when drunken drivers clearly have the ability to. Dr. Lundberg says she is in favor of finding ways to get drunken drivers off the taxpayers’ tab.

DR. LUNDBERG: “Whenever we can look at some other means where people can go and get the same services and they don’t have to use taxpayer money, we are all for that.”

STAND UP: But is ARS really motivated to find other ways to fund alcohol assessment? Only time will tell. But for now, taxpayers are stuck with the tab.