Saturday, June 17, 2006

Endowments: A solution to taxation?

The school district that services my area, Highland Park ISD, announced a few months ago that it was trying to raise an endowment to, among other things, reduce taxation. (Unnamed critics of using private money to reduce taxation were named in the newspaper article, so I sent, and they published, an angry letter.) This got me thinking as to whether municipal endowments would be an effective way to end taxation without being what Tim West calls "Anarchy Next Wednesday" nuts. Parts of the municipal budget that can be eliminated would be, and that money would be put into the bank until it reached a point where the interest would be able to pay for the remaning municipal government. (Banks might be willing to give high interest, since it would be guaranteed that the money would never be removed.)

As an experiment, I tried it with my town's budget (.pdf). Parks and pool, library, and half of public safety (we have lots of extra cops) can be eliminated - a nice 29.3% of the budget. Assuming 10% interest , (100-29.3)/(29.3 * 10%) = 24.1297 years until taxation ends, completely - and I'm sure there's more that can be eliminated, like some of the administration fees. Assuming a halving of administration fees, it's 18.5714 years until taxation ends. That's not bad, right?


Post a Comment

<< Home