Two Economists Blame Taxes For ‘Baltimore’s Rot’

Unfree State

Two local economists blame the tax-and-spend policies of past and present mayors of Baltimore City for its transformation from one of the country’s most populated seaports in 1950s to a drug-infested wasteland portrayed in the HBO series “The Wire.”

Steven Hanke, a economics professor from Loyola College, and Stephen Walters an economics professor from Johns Hopkins University, found that in the 1950s Charm City had a smaller percentage of residents living in poverty (22.7%) than the nation as a whole (27.8%), according to an op-ed they wrote in the Wall Street Journal.

In addition, they discovered that a greater percentage of families (23.1%) earned a middle-class income of at least $44,600 in today’s dollars than the rest of the country (19.1%).

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Fast forwarding to today, the city has a population that about half the 950,000 it had then, and about 40% of families with children live at or near the federal poverty line. Once among the country’s 100 most populous cities, Baltimore ranks near the bottom at 87 on median household income.

So what happened?

“The problem is that once capital is built, it can become a target for tax-and-spend politicians who bank on the fact that physical capital will continue to draw people, even as it is taxed more heavily,” the economists wrote in the Journal. “This is what has happened in Baltimore. The city has waged a war on capital for more than 50 years, raising property taxes an astonishing 21 times from 1950 to 1985.”

The professors also criticized current Mayor Sheila Dixon for continuing the tax-and-spending trend by not cutting a $3 billion budget, and by reneging on a promised property-tax cut.

“The city spends 61% more per person than the surrounding county. And in reality, cutting property taxes would only temporarily cut property tax receipts,” the economists conclude.

The solution?

The professors advise Dixon, if she really wants to turn Baltimore around, to cut all taxes and reduce spending.

“Making Baltimore friendly to capital investment would unlock a flood of new (unsubsidized) investment that would restore revenues and facilitate an organic, widespread renewal of the city,” they wrote.

Yeah, right! It would be nice, but I don’t see this happening anytime soon. Do you?

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