The deterioration and degradation of America continues apace. Maintaining the things that provide for good public services and infrastructure takes money but increasing personal income taxes to pay for such services has now become seen as an unconscionable imposition. Some states have resorted to raising taxes to pay for specific functions, perhaps hoping that this close link between taxes and expenditure will appease people who think that their tax money is being wasted.
But this strategy has its own perils. Alec MacGillis says that one such tax may have doomed the chances of the Democratic candidate for governor in the usually reliable Democratic state of Maryland where, in addition to him being a weak candidate, there was partly a revolt against a small tax of $21 to $39 for homeowners to help reduce the pollution in Chesapeake Bay caused by storm water runoff. This was labeled a ‘rain tax’ and was portrayed as some kind of immense over-reach by the government.
Yet everyone I spoke with cited it as the crowning example of the nickel-and-diming taxing regime under O’Malley that also includes the $60-per-year “flush tax” to upgrade sewage treatment plants and higher taxes on alcohol, cigarettes, and gas. “The rain tax was the last straw,” said Mike Eline, 64, who does pest control at the University of Maryland campus in Baltimore. “How many taxes can there possibly be?” “It seems any reason they can, they say, ‘let’s tax the people,’” said Daniel, a 63-year-old African-American warehouse worker. “What really upsets me is the rain tax. Rain is something natural that’s just given to us. Nobody has to work for it. But they say, ‘let’s tax it.’”
Kevin Drum draws a comparison of this year’s Maryland race with how Arnold Schwarzenegger rode to the governorship on another trumped up issue over a car tax.
As a native Californian, this naturally brings back memories of the infamous “car tax,” which Arnold Schwarzenegger cynically rode to victory in a special election in 2003. And this wasn’t even a new tax. A few years earlier the vehicle license fee had been lowered under Governor Gray Davis, but with a proviso that it would go back up if state finances deteriorated. Sure enough, when the dotcom boom turned into the dotcom bust, the state budget tanked and eventually Davis signed an order restoring the old VLF rates. But the VLF never actually increased; it merely returned to the same level it was at before it had been cut.
It didn’t matter. Schwarzenegger ran endless TV commercials starring ordinary citizens who simply couldn’t believe that anyone expected them to survive if they had to pay the outrageous Democrat car tax. It was just more than a body could bear. (Yes, that really was the tone of the ads. I’m not making it up.) All this caterwauling was over an average of about $70 in taxes that everyone had been paying with no noticeable distress just four years earlier.
So that is where we stand. General income taxes are bad because they are wasted on inefficiencies and profligacy and there is nothing to show for them. Small, targeted taxes are bad because people feel they are being nickel-and-dimed.
It looks like we will have to wait for a complete collapse before people realize that you cannot have nice things without paying for them.
Paying for infrastructure projects is best done at the federal level. States operate under strict budget constraints which don’t apply to the federal government (such as balanced budget requirements). Relying on state governments for funding means massive underinvestment.
If you think about it, we’ve got the whole thing backwards anyway. We decide what to spend on infrastructure and then apportion those funds between competing projects. Imagine if you took your car to a mechanic and said “Fix whatever you can for $500.” That makes no sense. Instead you ask “What needs to be done, and how much will that cost?” Your car maintenance budget depends on the actual needs of the car. Likewise, our infrastructure budget should not be set in advance. It should be determined by identifying what infrastructure projects need to be done, and figuring out what that will cost.
State governments should determine what infrastructure projects they need, and the federal government should fund those projects. If you don’t mind deficits (and you shouldn’t), you don’t even need to raise taxes to do it.
This is a kind of re-jiggering of history. Schwarzenegger was elected in a special election because Governor Gray Davis had been recalled. Davis wasn’t the best governor, but he was far from the worst. He got caught in a perfect storm of troubles. The dot-com boom busted. Because of that, people lost lots of money in the stock market and many more lost their jobs. My commute in San Jose got about 20% faster from 2000 to 2001 because there were so many fewer people driving to work. We had electricity blackouts due to Enron jerking around the power markets, and then southern California had massive wildfires. Finally, we had a cynical campaign to “Dump Davis. As Wikipedia says:
The special election was a circus. We had something like 50 candidates, including pornstars and D-list comedians. Such a goofy atmosphere made it look like Schwarzenegger actually had gravitas. I think all this had much more to do with Schwarzenegger winning election than one anti-tax argument.
“before people realize that ….”
I am not the smartest guy in the world -- I never finished university -- but I realized this at the age of 11.
Why bother, since the world will end in our lifetimes?
*Not my opinion, but a depressingly common one.*
That’s why this last election is the last I’ll be voting in…Perhaps for the rest of my life. It ain’t gonna get fixed until it breaks, Who better than the republicans to do just that…The long game, for humanity wil be in building an entirely different wa of living and governing. I don’t know what that is, but NOTHING is going to change through business as usual anymore. When the Democratic party presents a real progressive candidate…I’ll come back otherwise, I’ll wait for the phoenix that rises from the ashes of a country no one seems to care about enough to NOT burn it to the ground
The roads in the Florida county where I live have a multi-hundred-million-dollar repair backlog, and a ballot measure to fund their fixing just lost last Tuesday. The cost to the public from vehicle damage will run to much more than the taxes would have, but the “no taxes! government can’t do anything right!” mentality swept all logic away before it.
moarscienceplz @ # 2: The initial drive for the recall was fueled by funds from the personal fortune of U.S. Rep. Darrell Issa…
But the money which really put the recall campaign over the top came from Howard Ahmanson, the S&L fortune heir better known (at least around here) as the financial angel behind the Discovery Institute creationist wank-tank.
Americans are like someone who buys a vehicle and only ever fills the gas tank. The person never does any maintenance or repair, and when the thing breaks down, blames everyone except the person in the mirror who failed to do anything that would prevent the breakdown.
To adapt an old phrase, the American attitude is “not in my back pocket!” They want the benefits of taxes without actually paying for them. And who says the average American is any different than the 1%ers?
Some/Many would probably say “Sell bonds or borrow money to fix the infrastructure!” without ever considering that those two things have to be paid back. Someone should ask them what would happen to themselves if they borrowed money and didn’t make payments. (No doubt some would just say, “I’ll declare bankruptcy and never have to pay it back!” as if that would ever be allowed.)
Mano,
Government spending as a % of GDP is about 36% today, down from a 50 year high of 41% a few years ago, but up from a 7% low one hundred years ago. We have a lot of nice things now we didn’t used to.
http://www.usgovernmentdebt.us/spending_brief.php
What is the optimal level? Do you have an idea about an upper limit you wouldn’t recommend passing?
md,
There is no optimal level. I don’t think you first decide how much money to spend and then look around for what to spend it on.
What you need to do is look at what you value, what needs to be done, what you think makes for a good society, and then find the money to do it.