Professor Elam

Pittsburgh's City Council is proposing a 1% tax on the have nots, the city's college students, to fund the pensions of retired city employees.  It is brazenly called the Fair Share Tax. And it is referred to as 'an untapped revenue source.'

Let's follow the logic here. The City makes promises to city union employees that cannot be kept. Rather than just say no, or raise contributions from exisitng employed union workers, the City looks elsewhere. Would you go to college in Pittsburgh and pay more for a retired city employee?  

The latest Barron's quotes some financial planners that are putting clients into municipal bonds since 'taxes are going up.'  No question taxes are going up. But I doubt this sort of tax increase will be gladly born by the taxpayers.  The looming municipal fiscal crisis is simply another postponed train wreck. THe Barron's article noted that in the Great Depression only the state of Arkansas defaulted. This is not a valid analogy. In the 1930s we did not have union shop states and cities promising beanstalk to the sky pensions that the stock markets now cannot hope to fund. This is a time bomb that will eventually take some cities to default just as the unions took New York City to default in 1976.