I forget if we’ve discussed this phenomenon here before or not, but I recall hearing this notion in the recent past, and I was reminded of it by a discussion at Mike Kole’s site regarding copy fees (his specific post had to do with wildly unrelated subsidies and hidden taxes).
Anyway, the notion is this: price caps often act as price magnets. (Now I recall, I heard it from a commentator on NPR discussing maximum rates on payday loans). I’m obviously not a free market purist, but this is at least something that do-gooder regulators should keep in mind. When the government sets a cap, it saves industry competitors the trouble of having to conspire to restrain trade – the price is effectively fixed for them.
My particular experience had to do with medical copying fees. 760 IAC 1-71-3 (pdf) sets maximum prices for your medical records of $20 for any pages 1-10; $0.50/page from 10-50; and $0.25/page thereafter. I forgot the exact wording but the medical provider I got my records from had a notice that suggested, without explicitly stating, that the fees were mandated by statute as opposed to being a maximum fee. (“Oh, we wouldn’t charge such outrageous prices for copies, but darn it, the mean old government is *making* us.”)
I wonder if this is also true for, say, property tax caps. There’s probably a study out there somewhere…
Another example of this is wages for certain union-covered positions at IU. The position classifications have a strict salary schedule, and – at least for some departments – it wouldn’t surprise me to learn that the wages are strongly polarized around the minimum & maximum for each category. In fact, I once heard a supervisor claim that the “union wouldn’t allow” the department to pay an employee more than the minimum for that position. I guess if you can’t blame it on management, you can always blame the unions.
The thing about property tax caps is eventually people who are below the caps will slowly creep closer. Either through AV growth or higher property taxes. When you mix in the raised sales tax, increased user fees and cutting of services, property tax caps will increase the burden on the less well off while and decrease the benefits they receive.
As public parks, pools, and schools limit their services, the more well off, with their stunning new pot of money from reduced property taxes will just purchase those services from the private sector.
I am not even considering the hit that someone like me, decently well off and frugal in their house purchase, will be affected. I am a fair amount away from having my property taxes capped, but now pay higher sales tax and increased user fees.
It will be interesting 5-7 years from now when we look around and realize that we have basically reinforced and fortified the have/have not divide currently developing in Indiana.
When the now-retired Judge of the Tippecanoe Circuit Court made a local rule to the effect that “these are the probate attorney fees I won’t blink at; you’ll need to justify anything higher,” I thought the fees were a bit high and an incitement for all lawyers to wink at each other and charge them en masse. The return of the collusive fee schedule in new garb.