Tuesday, July 18, 2017

No New Taxes?

I see every Republican and many Democratic office holders, politicians, and spokesmen constantly saying that we need to reduce taxes. This happens at the local, state, and federal level.

While social programs and the arts typically are the main targets of the reductions necessary to offset the reduced taxes, many other areas of government also must adapt to reduced budgets. Often these proponents of the tax reductions claim that reduction of waste and an improved economy will more than make up for the tax reductions.There will be increased real revenue from the larger, more affluent tax base. The improved efficiencies will also result in more meaningful spending.

If all that is true, why do we continue to have such huge shortfalls in revenue at every level of government? Our federal government needs to raise the country's authorized debt level every few months. That's the issue that causes all those threats to shut down the federal government. If your revenues exceed or match your spending, there is no need to assume more debt. Apparently, there is a constant revenue shortfall.

State and local governments often have balanced budget provisions in the state constitution or local charter. Yet, many still advocate lower taxes. If you can't run a deficit, what choices do you have? Either you reduce spending or you issue bonds. Those bonds come with interest rates so that the million dollars you borrow in bonds will cost well over a million dollars, maybe two or three times that original million depending on the interest rate and length. Why do state and local governments issue bonds? Mostly because they don't have enough revenue to pay for everything. There are valid reasons for bonds. Some locales are growing so fast that they need to build schools and infrastructure for all the new residents before the increased tax base is in place. Maybe to build an office, retail, or industrial park to lure a large employer and their taxes to the area.

The problem is that once the schools or infrastructure is built with bond money, the tax rates don't support the ongoing maintenance and improvements. So, the schools become overcrowded and run down, the roads don't get repaired, the water and sewer pipes rupture, the parks are not maintained. 

I continually see stories on the local news about potholes, decaying schools, fire and police equipment shortages, low teacher and government employee salaries, 50-year-old water and gas pipes bursting, and many other problems. Many profess their support for the police and firefighters yet will not vote for any tax increase to raise salaries and buy proper equipment. It's the same story at the state and federal level. There is never enough money to do the job.

Yet, during the next election cycle, many candidates will be advocating lower taxes. Our current president and GOP congress are trying to lower taxes, mostly for the rich, right now. The lower taxes, trickle down economic philosophy has been around since at least the Reagan years. That's over 30 years ago. It didn't work then and it won't work now. The rich get richer, the poor get poorer, the middle class becomes poorer and smaller, our deficit increases, and our infrastructure crumbles. Unless you are rich, what is good about that?

We owe it to ourselves and more importantly to our kids to fix this problem. It is selfish and unconscionable to leave the country and the world in worse shape than we inherited it in. Our parents, the Greatest Generation, passed on a much better nation and world to us. Somehow they managed to build the Interstate Highway system, build and repair other infrastructure, rebuild a robust consumer economy, fund the space program, etc. all within a fair tax structure.  

By all means, pursue efficiencies at all levels of government. Cut waste, eliminate programs that are ineffective, redundant or not needed. When that is done, fund what remains. If current tax levels don't do that, then raise taxes. 

This is not just a case of the politicians selling snake oil. The electorate must take a very big percentage of the blame. "There is no free lunch."  It was true the first time it was uttered and it is true today. Responsible, realistic fiscal policy is the only way out of the current mess.

Taxes are not evil. They fund all sorts of things we need. The military, first responders, roads, infrastructure, food safety, courts, and hundreds of other things and services we depend on every day. 

Let's stop passing the buck, or the 57¢ of the needed buck, to our future generations.


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