“Eventually, any large organization comes to serve the interests of its permanent staff.” – The Managerial Revolution by James Burnham (paraphrased)

Yesterday, we wrote about those “Henny Pennys” (you know, the ones who shout, “The sky is falling!” when presented with any new idea) who support not only a big government trough but also an expansion of the trough. Today we are going to take the example of Burnham’s law and apply it to the false information that the Missouri Association of REALTORS® (MAR) is providing to their members about the Missouri Tax Relief Amendment.

Falsehood #1

“MAR believes that any one of these proposals, if passed, would reduce Missouri’s General Revenue by as much as $2 billion, a shortfall of nearly 25% that would devastate the state and our economy.”

The proposal supported by Let Voters Decide has been researched extensively over the past five years. Experts in economics and tax policy have developed a robust model, which clearly demonstrates that – if anything – we are being conservative in the amount of revenue this proposal will generate. A detailed fiscal analysis was provided to the State Auditor in support of the proposals. While there are four versions currently at the Secretary of State’s office, all have essentially the same fiscal outcome. (The differences lie only in certain phrases used for clarification purposes.)

Real-world data, primarily from Tennessee but also drawn from comparisons to other no-income-tax states, have been used in developing and testing the model. The purpose of these comparisons is not to show that every non-income tax state is the same, because certainly they are not (although Tennessee bears some striking similarities to Missouri). The express purpose, rather, was to validate various parts of the model outputs in comparison with real-world examples.

The source of the Realtors’ false claim is the Missouri Budget Project (MBP). MAR and MBP rely on failed economic models whose outcome purposely supports more government spending. MBP is a big-government, pro-wealth-distribution social advocacy group. When I was House Budget Chairman, MBP and their now chief economist made projections that were notoriously inaccurate.

The Governor, House and Senate enter a process that is supposed to result in what is known as the Consensus Revenue Estimate (CRE). To my knowledge, I am the only Budget Chairman to have refused to agree to the CRE because the data was so bad. In his last year of making projections for the state, MBP’s chief economist supported a number that was over 6% off of the actual revenue number! To this day, MBP continues this pattern of inaccurate projections.

MBP has opposed nearly every government reform that involved making government more accountable for its spending, and certainly those reforms that reduced that spending. For example, they opposed Medicaid reform in 2005. Their projections were woefully wrong then – and they are woefully wrong now!

I must say, it comes as a surprise to me that the Missouri Association of Realtors®  would hitch their wagon to such an organization. However, the next-to-last paragraph of the “political analysis” explains that they are willing to throw their own members’ future prosperity under the bus for the “good” of the Association – thereby becoming a prime example of Burnham’s Law.

You can find a few more details in yesterday’s blog posting, Opponents of Tax Reform Running Out of Bottles of Beer on the Wall.

Falsehood #2

“In fact, The Kansas City Star reported on August 21 that proponents of the sales tax scheme acknowledged Missouri would be faced with ‘…cutting spending or — more likely — broadening the sales tax to cover hundreds of goods and services that (the proposals) now exempt. ‘We would have to expand the base,’ said Marc Ellinger, a spokesman for Let Voters Decide…”

The MAR e-mail not only conveniently takes the quote out of context, but also falsely asserts that the proponents of the Missouri Tax Relief Amendment acknowledge that it won’t raise enough funds and cuts will have to be made. This is patently untrue, based on the abovementioned research and modeling.

Falsehood #3

“If any one of the current proposals is enacted, MAR believes that lawmakers will opt to broaden the tax base by repealing the exemptions (e.g. taxes on real estate commissions and rents) rather than raise the tax rate or find other more difficult solutions.  As such, any pledges of protection for those who are now exempted are hollow and cannot be sustained due to the likely huge revenue shortfall.  This conclusion is supported in the Memorandum from MAR’s Sr. Vice President of Governmental Affairs, Sam Licklider.”

Once an exemption is approved by voters, ONLY voters can change it. Apparently, MAR is afraid of the voters. Legislators would be barred from removing any exemption or taxing ANY real estate transactions or commissions.   MAR gives short shrift to the fact that the express Constitutional protection in the proposal further strengthens Amendment 3, which did not protect commissions. In reality, Realtors can only benefit from the Missouri Tax Relief Amendment.

Disagreements are just part of life. However, knowingly making substantial false statements is not and should not be a part of legitimate disagreements. I confess that even after my long tenure in politics, it’s still discouraging to see such outright false statements by organizations who should know better and are expected to have more integrity.

Interestingly, I have run into very few Realtors who don’t agree the proposal is a good one. They may just want to give their association another look, because it is apparent that MAR is not looking out for the members’ best interest.

Again, to paraphrase Burnham: “Eventually, any large organization comes to serve the interests of its permanent staff.”

Realtors have already paid $200,000 to work against better job opportunities for themselves, their kids and their grandkids. Yes, Burnham was on to something.