Heavy Lifting - thoughts and web finds by an economist
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Tuesday, May 11, 2004


The government misappropriates tax revenue?


This New York Times article points out that the state of New York collects $1.20 in special taxes per month from every cellphone subscriber in the state. The money is supposed to be used for enhanced cellular 911 systems that can track the location of callers and do other snazzy things. The taxes generate more than $130 million per year (there are lots of cellular subscribers in the Empire State), but still the 911 system is incomplete and is being funded by bonds. Why?

Alas, it seems that only $0.12 of the tax is actually being spent on the cellular 911 systems.
Most of the money goes far afield. Fifty cents of the $1.20-a-month tax paid by nearly every cellphone user goes not to the 911 system but to the state's general fund, the all-purpose budgetary pot that finances whatever the governor and the Legislature want. Twenty-four cents a month goes to the state police, which built and operates a statewide 911 system but has also used the money to pay for things like dry cleaning and travel.

About 34 cents goes for "homeland security," including the budgets of other state agencies, like Corrections and Parks and Recreation. Last week, the Pataki administration awarded the contract for a proposed $1 billion wireless radio network that will also be paid for using the money.

That leaves only about 12 cents of the monthly fee for the still-developing cellular 911 system, whose advocates complain that the state has misled its taxpayers and placed politics ahead of public safety.


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