December 11, 2005

S.O.B Alliance Member Viking Spirit Nukes 2 Petro Claims about Colorado and TABOR; Bizzyblog Takes Care of Another

Filed under: Bankruptcy & Reform,Taxes & Government — Tom @ 12:02 am

The claims made in Ohio gubernatorial candidate Jim Petro’s campaign literature (first noted at Right Angle Blog), are these (quoted items are from a direct review of the campaign flyer sent to me by RAB):

  • Colorado, “in per capita spending on higher education ….. has fallen to 48th in the nation.”
  • Colorado’s “unemployment rate has nearly doubled” while TABOR was in place.
  • Colorado’s “bankruptcies have increased by 16%.”
  • Colorado’s “personal income growth rate ….. had fallen to 45th by 2003.”

Viking Spirit shows that unemployment went down, and did not double, and also refutes the personal income growth rate claim.

I think both of the other claims are suspect. I’ll take care of the bankruptcy claim right here and right now.

The Bankruptcy Facts

From 1992-2004, one year short of the period Colorado’s Taxpayer’s Bill of Rights (TABOR) was in effect, as noted by Parker at Viking Spirit:
— Annual business and nonbusiness bankruptcy filings nationwide grew by 65.6%, from 977,476 (12 months ended 9/30/1992) to 1,618,987 (12 months ended 9/30/2004), vastly more than Colorado’s 16% specified by the Petro campaign.
— Filings in Colorado went from 16,316 during fiscal 1992 to 27,879 in fiscal 2004, a 70.9% increase.

Note: 2004 data is available by downloading a spreadsheet available here (“2004 Fiscal Year by Chapter”), and 1992 data came from a PDF file for 1987-2003 listed on that same page (“1987-2003 Fiscal Year Bankruptcy Filings by Chapter and District”).

Giving the Petro folks a HUGE benefit of the doubt, it’s possible that they meant that Colorado’s nonbusiness bankruptcies went up 16% FASTER than bankruptcies went up in the nation as a whole, because if I look only at nonbusiness (i.e., personal) bankruptcies, that statement is true (specifically 16.9%). But even then, their literature should have specified personal bankruptcies, and does not, and should have specified growth in filings compared to the rest of the country, and does not. TABOR affected the growth of all taxes in the state, both individual and business, so it’s appropriate to look at all bankruptcies, and inappropriate to exclude business bankruptcies. I’m not presenting the figures to support the possible Petro claim because there are too many numbers flying around already.

Making Sense

Before the Petro people do a victory dance and try to say it’s just some kind of clerical error, the “faster” claim, even if somehow true, ignores two very relevant factors (comparative population growth and the general explosion in bankruptcies nationwide). Ignoring those two factors makes the Petro claim meaningless. Colorado’s population went up more than twice as fast as that of the rest of the country during the time period involved. The state’s population increase actually masks an improvement relative to the rest of the country in the growth of bankruptcy filings. Though Colorado’s filing rate is still higher than the national average, that difference has narrowed significantly. Here’s the proof:

Population (000s)–
Colorado 6/1/1992 — 3,496
Colorado 6/1/2004 — 4,601 (31.6% increase)
All USA 6/1/1992 — 256,514
All USA 6/1/2004 — 293,655 (14.4% increase)
(a download in .pdf or .xls is required to see 2004 results)

Bankruptcies per 1,000 population–
Colorado 6/1/1992 — 4.67 (16,316 divided by 3,496)
Colorado 6/1/2004 — 6.06 (27,879 divided by 4,601)
All USA 6/1/1992 — 3.81 (977,476 divided by 256,514)
All USA 6/1/2004 — 5.51 (1,618,987 divided by 293,655)

12-Year increase in bankruptcies per 1,000 population–
Colorado — 29.8% (1.39 increase divided by 4.67)
All USA — 44.6% (1.70 increase divided by 3.81)

Rate by which Colorado’s filing rate exceeded the national rate–
1992 — 22.6% (.86 difference divided by 3.81)
2004 — 10.0% (.55 difference divided by 5.51)

Conclusion:

Bankruptcy filings benchmarked against total population went up faster in the rest of the US than they did in Colorado during a period covering nearly the entire time TABOR was in effect. It’s reasonable to believe that TABOR’s restraint on total taxes enabled the state to keep its taxes lower than they would have been without TABOR, and increased Coloradans’ ability to stay out of financial trouble relative to the rest of the country’s population. The Petro Colorado bankruptcy claim is very misleading at best, and totally out to lunch at worst.

The central point is that, given what happened during the same time period in the rest of the country, TABOR cannot be blamed for the increases in bankruptcy filings that occurred during the time it was in effect (other factors too numerous to mention influenced the nationwide explosion in bankruptcy filings during this time period). In fact, based on the state’s improvement relative to the rest of the country, it’s reasonable to believe that TABOR reduced bankruptcy filings from what they would have been had TABOR never gone into effect.

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4 Comments

  1. I got the personal income growth rate nuked too.

    Comment by VikingSpirit — December 10, 2005 @ 9:23 pm

  2. [...] Jim Petro is caught by Viking Spirit here and here, and Bizzyblog takes on the other issue here. What’s interesting to me is that Petro is taking on decidedly weak policy positions. Is there some [...]

    Pingback by NixGuy.com » Blog Archive » When Jim Petro Attacks — December 11, 2005 @ 9:08 am

  3. Jim Petro crosses the line

    Jim Petro has been on full-out, blast-Blackwell mode lately, mostly calling the TEL Amendment dangerous by comparing it to a similar law passed in Colorado.

    VikingSpirit has ripped into a recent mailer Petro sent out, debunking the candidate’s cla…

    Trackback by Project LOGIC — December 11, 2005 @ 5:52 pm

  4. Petro Fudges Truth About TEL

    Members of the Southern Ohio Bloggers Alliance have done a tremendous job of exposing the untruths in Jim Petro’s latest attack on Ken Blackwell’s Tax and Expenditure Limitation (TEL).

    Trackback by A Face Made 4 Radio, A Voice Made 4 the Internet — December 12, 2005 @ 7:44 am

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