Tag Archives: taxes

Reality Bites….

It’s really a shame that American policymakers are so allergic to evidence, because we have recently had a couple of natural experiments testing the GOP’s most fervent economic ideologies, and we could learn a lot from both of them.

Most people who follow the news are aware of Sam Brownback’s effort to make Kansas a shining example of economic growth to be achieved by drastic reductions in state taxes. To say it didn’t go well would be an understatement. Eventually–after brutal cuts to public education, infrastructure and public services and no sign of the promised offsetting economic growth–more rational Republicans in the state legislature forced him to accept tax increases.

Fewer people are aware of an even more dramatic experiment in Colorado.

The story began with the 2008 recession; like many other municipalities, Colorado Springs was experiencing fiscal distress.

To fill a $28 million budget hole, Colorado Springs’ political leaders—who until that point might have been described by most voters as fiscal conservatives—proposed tripling property taxes. Nearly two-thirds of voters said no. In response, city officials (some would say almost petulantly) turned off one out of every three street lights. That’s when people started paying attention to a city that seemed to be conducting a real-time experiment in fiscal self-starvation. But that was just the prelude. The city wasn’t content simply to reject a tax increase. Voters wanted something genuinely different, so a little more than a year later, they elected a real estate entrepreneur as mayor who promised a radical break from politics as usual.

For a city, like the country at large, that was hurting economically, Steve Bach seemed like a man with an answer. What he promised sounded radically simple: Wasteful government is the root of the pain, and if you just run government like the best businesses, the pain will go away. Easy. Because he had never held office and because he actually had been a successful entrepreneur, people were inclined to believe he really could reinvent the way a city was governed.

Bach promised to transform city government, making it work for everyone without tax increases. (Sound familiar?) He promised to do away with the personal property tax for businesses and to reduce the time needed for developers to get permits. He promised that these and his other “businesslike” measures would promote job growth–he promised 6,000 new jobs a year. He sold himself as an outsider fighting the city’s “regulatory agency mind-set.”

“Sixty Minutes” and “This American Life” covered the election and the town’s new “business friendly” governance. We haven’t heard much from the media since then, and it turns out that a lot has changed. As Politico noted, “seven years after the experiment began, the verdict is in—and it’s not at all what its architects planned.”

It turned out that putting people who don’t understand government in charge of government isn’t a formula for success. The new mayor fired people who had institutional memory and governing expertise; deferred critical infrastructure maintenance, and quarreled with the City Council when its members had the nerve to act like a co-equal branch of government rather than as his subordinates. The promised job growth didn’t come. Chaos did.

The next election, Colorado Springs elected as mayor a man who  had spent his entire professional life in government.

It’s still a conservative town. Donald Trump beat Hillary Clinton by more than 22 points in Colorado Springs’ El Paso County. But even with that “small-government mind-set,”

[T]hree times in his first two years as mayor, Suthers has gone to voters either proposing a new tax or asking to keep extra tax revenue. By overwhelming margins, he has now persuaded the supposedly anti-tax zealots of Colorado Springs to commit $250 million to new roads, $2 million to new park trails and as much as $12 million for new stormwater projects.

What has all this “wasteful” government spending done to economic growth? Some 16,000 jobs have been created in the past 24 months, and unemployment is at 2.7%.

Amazing as it may seem, running a government requires different skills than running a business–and fiscal prudence is not a synonym for low or no taxes.

Who knew?

That Social Safety Net

It may be time to re-conceptualize the social safety net.

Most of the people who refer to a social safety net use the term as shorthand for a variety of so-called “welfare” programs, from Social Security, Medicare and Medicaid to TANF and other income-support measures. Defining the social safety net in that way—and focusing, as so many Republican political figures do, on support for needy Americans—facilitates criticisms of measures intended to help the poor.

After all, the comfortable ask, why should the prudent and solvent among us have our hard-earned monies taxed to support “those people”?

It’s easy to see the persistent attacks on income-supports for disadvantaged folks as both dishonest and mean-spirited, and most efforts to rebut them tend to revolve around the realities of social supports: the percentages of recipients who are children, elderly and/or disabled, the overwhelming numbers of impoverished Americans who work forty or more hours a week, etc.

We may be missing the forest for the trees.

A “social safety net,” properly conceived, is the web of institutions and services that benefit all members of a given society while building bonds of community and cross-cultural connection. In this broader understanding, the safety net includes public education, public parks, public transportation and other services and amenities available to and used by citizens of all backgrounds and income categories.

Public education is a prime example. Even granting the challenges—the disproportionate resources available to schools serving richer and poorer neighborhoods, the barriers to learning created by poverty—public schools at their best integrate children from different backgrounds and give poor children tools to escape poverty. Public schools, as Benjamin Barber has written, are constitutive of a public.

Common schools create common cultures, and it is hard to escape the suspicion that attacks on public education have been at least partially motivated by that reality. While supporters of charter schools and voucher programs have promoted them as ways of allowing poor children to escape failing schools, the data suggests that most children—including poor children—are better served by schools that remain part of America’s real social safety net.

This point was recently underscored by Thomas Ratliff, a Republican member of the Texas Board of Education—a board not noted for progressive understandings of the role of education. After setting out the comparative data about costs and outcomes achieved by traditional public schools in Texas and those operating via various “privatization” programs, he concluded

When you hear the unending and unsubstantiated rhetoric about “failing public schools” from those that support vouchers or other “competitive” school models, it is important to have the facts. ISDs aren’t perfect, but they graduate more kids, keep more kids from dropping out and get more kids career and college ready than their politically connected competitors. Any claims to the contrary just simply are not supported by the facts and at the end of the day facts matter because these lives matter.

Recognition that “these lives matter” is the hallmark of a society with a capacious understanding of citizenship—both in the sense of who counts as a citizen, and what constitutes the mutual obligations of citizens to one another.

The actual social safety net is not limited to the (grudging and inadequate) financial assistance given to the most disadvantaged in our society. The true safety net consists of the many institutionalized avenues within which the citizens of a nation encounter each other as civic equals, and benefit from membership in a society built upon the recognition that all their lives matter.

Defining the social safety net that way allows us to see that the portion of our taxes used to assist needy fellow-citizens isn’t “forced charity.” It’s our membership dues.

 

 

Self-Interest Properly Understood–and Taxes

Since at least the late 1980s, policy disputes in the United States have largely revolved around the actual and perceived deficiencies of government. It has been an article of faith among self-styled fiscal conservatives that wasteful state and federal governments are imposing excessive and unnecessary tax burdens on the American public.

Engaging in this line of argumentation is particularly  appealing to candidates for public office, since it plays to widespread resentment of the obligation to pay taxes while avoiding the pesky need to identify specific instances of the “fraud and waste” that are widely supposed to exist.

There are certainly situations where tax dollars are misspent. Most of those situations involve poor management practices, since voters tend to base their support for political candidates on ideology rather than perceived managerial competence. But more often than not, assertions of “waste” are based upon disagreement with something that government is doing–a belief that services being provided or programs being supported are unnecessary (especially when such services or programs are primarily seen to benefit others).

What government should do, and how it should fund what it does, are persistent and entirely legitimate issues. The problem is, too many of us have imbibed the Kool-aid; we want the services, we want to live in thriving communities with a good quality of life, but we don’t want to pay for the services and amenities necessary to produce that quality of life.

Worse, we frequently don’t recognize the ways in which we benefit even from government programs and services we don’t personally use. A couple of examples:

When voters are asked to support bond issues or tax increases for public education, people who do not have children in the system (usually a majority of those voting) often oppose the measures, because they see no personal benefit, no immediate “return on investment.” What they fail to recognize is that the quality of local public education systems affects their property values, enhances (or diminishes) job creation efforts, and makes their communities safer and more attractive. In the long run, good schools are in their personal self-interest.

Similar metrics apply to taxes for public transportation. Even people who will never use transit benefit personally from public transportation systems that reduce congestion, improve air quality, connect low-income workers to their places of employment, and improve mobility for the elderly and disabled.

Even people who care only about minimizing their personal tax burden will ultimately benefit, because long-term, the ability to hold down tax rates  (especially here in Indiana, where constitutionally-imposed tax caps severely restrict municipal governments’ revenue options) will depend upon a city’s ability to grow its tax base–its ability to entice people to move in, buy homes and start businesses. Cities that successfully market themselves do so based upon quality of life measures–good schools, well-maintained parks, excellent public transportation.

Often, sound investments take time to generate returns. That’s particularly true of investments in our communities.

Sometimes, “self-interest properly understood” (as De Tocqueville noted many years ago) is the opposite of immediate gratification. That doesn’t mean the investments aren’t necessary and worthwhile.

 

One Mystery (Possibly) Solved…

None of the theories to date about the reason for Trump’s refusal to release his tax returns have seemed very persuasive, but when I read this reporting by the Washington Post’s David Fahrenthold, I had an “ah ha” moment. 

Apparently, “deadbeat Don” has reported–and presumably deducted– charitable gifts that he didn’t actually make. Multiple charities are telling Fahrenthold that they never received donations that the Trump Foundation listed and claimed on IRS submissions.

One can see how the disclosure of tax returns reporting non-existent donations might be…embarrassing.

Of course, even if the existence of improper deductions does solve one mystery– the reason for Trump’s refusal to share his tax returns–it leaves us with a number of others. Why, for instance, would a man who clearly has no interest in public policy or administration run for public office? Why would a candidate who is totally ignorant of the basics of constitutional government refuse to inform himself about those basics? Why would someone who has never run in a political campaign ignore all advice from people who understand what such campaigns require?

The answers to those and similar questions are probably only obtainable on a psychiatrist’s couch. And ultimately, unless he wins (which, thankfully, is unlikely) the idiosycrasies of a self-obsessed megalomaniac will ultimately be matters of only passing interest.

The more pressing question–the question that keeps me up nights and consumes reasonable Americans, Republicans and Democrats alike–is why would anyone vote for this man?

In any sane universe, Donald Trump is a joke: a tacky, ignorant narcissist who communicates at a third-grade level, lies compulsively (and not very convincingly) and thinks childish insults and ad hominem attacks are debate points.

The reason for some portion of his support is abundantly clear. (Despite walking her comments back, Clinton quite accurately described these voters as belonging in a “basket of deplorables.”) White supremacists, anti-Semites, racists, sexists and xenophobes see him–probably accurately– as one of them. But other people, who don’t appear to fall into those categories and who don’t appear to belong in the basket, also tell pollsters they support him.

I assume some number of die-hard Republicans will vote for the party’s candidate no matter what–although Trump has made it clear that he has no respect for longstanding Republican positions (assuming he even knows what those are). And I suppose there must be some people who are so horrified at the prospect of a woman in the Oval Office that they will opt for any male, no matter how unfit and/or dangerous. But beyond those (hopefully small) categories, I am hard-pressed to understand why any voter would see this repulsive ignoramus as remotely Presidential.

I know I’ll hear from readers who hate Hillary and who will claim that Trump is no worse; however, even they know that is manifest nonsense. Even if you believed every accusation that has been thrown at her (despite the innumerable investigations that have come up empty), there is still no equivalence. Besides, large numbers of critics who detest her have publicly confirmed that they won’t vote for Trump. They’ll vote for third-party candidates or leave the Presidential line blank. Depending on the state the voter lives in, those actions do help Trump, but they aren’t the same as affirmatively supporting him.

I want to know about the people who actually plan to cast a vote for him. Who are they? What am I missing?

Why would anyone who isn’t a White Nationalist vote for an unstable, demonstrably unfit blowhard whose election would quite obviously pose a clear and present danger to the nation and the planet?

Inquiring minds really want to know.

The “Liberty/Equality” Conundrum

In my classes, when I get to the 14th Amendment’s Equal Protection Clause, I generally begin with a discussion of what Americans mean by “equality,” and the perceived tension between equality and liberty.

Clearly, if we are talking about the operation of law and civil government, we are bound to understand the call for equality as limited to those areas in which government operates, and not surprisingly, there is a pretty substantial literature exploring what it means to be “equal before the law”– to have equal civil rights and liberties.

It isn’t simply us lawyer types, either; political philosophers have argued for years–okay, centuries!–that government efforts to nudge us in the direction of egalitarianism–that is, in the direction of material equality— diminish liberty and are ultimately immoral, because advocates of redistribution tend to ignore the issue (near and dear to more libertarian hearts) of merit or desert.  Those who see it that way read the famous Marxist admonition: “from each according to his ability, to each according to his need” as support for expropriation — a system where productive and conscientious workers would be taken advantage of by the ineffectual and/or lazy.

Americans have a deeply-rooted cultural belief that people are poor because they are morally defective, and it didn’t start with the Tea Party. I once traced Indiana’s welfare system back to the 15th Century English Poor Laws- laws that prohibited giving “alms” to “sturdy beggars.”

So here we are, stuck, policy-wise.

We have a longstanding (and probably insurmountable) concern about the fairness of taking money from people who have (at least theoretically) earned it in order to help people who–for whatever reason–have much less. In more selfish eras (like now) that distaste for redistribution jaundices our approach to taxes for even the most traditional civic purposes. Paying more taxes than absolutely necessary (i.e., police, fire and maybe the sewer system)  is seen as state-sponsored theft, or at the very least, a deprivation of liberty.

As I previously noted, it isn’t difficult to find people arguing that efforts to narrow the gap between rich and poor (redistributive taxes) are assaults on liberty. If there is one thing Americans appear to agree upon, it is the pre-eminence of liberty over other values. What we don’t see discussed very often, however, is what we mean by liberty–and the extent to which government is responsible for ensuring that citizens can access it.

Liberty, at its most basic, is my ability to live a life of my own choosing, so long as I am not harming someone else–my right to live where I like, marry whom I love, choose or reject a church, vote for candidate A rather than B, raise my children as I see fit, opt to spend the weekend at a museum or in the garden….But there are a lot of people in my state (as elsewhere) who do not have liberty in any meaningful sense, that is, the ability to make these minimal choices, because every waking moment is spent simply trying to survive.

Every person struggling to make ends meet is not a “sturdy beggar,” trying to pull a con. (If research is to be believed, relatively few are.) But rather than trying to change this stubborn cultural meme, or reminding ourselves of the multiple ways we all benefit when societies are more equal, let’s ask a different question.

If a 10% increase in your taxes could be shown to provide public services  allowing every American to enjoy at least a minimal level of liberty/self-determination–would you pay it?

Or is the liberty you cherish limited to your own? If it’s the latter–I think that’s privilege you are valuing, not liberty.