Sunday, October 30, 2005
Tax Cuts and Wealth
Those who favor big tax cuts, whether a TABOR style tax limitation measure ala Colorado, or the sort of tax breaks that President Bush got passed a few years ago, promise that the lower taxes will result in more money in the pockets of ordinary citizens, and therefore more wealth. Oddly, this is roughly the opposite of what seems to be happening.
I just read an article from the Wall Street Journal (not noted for a liberal slant, you'll observe) about the decline of traditional parades. Parades, of course, cost money, and many municipalities have cut funding for non-essentials like parades. This has led to a rise in corporate funded and uniform floats with advertising on them. A small thing I suppose, but it does eliminate the fun people used to have (or so I'm told) putting the floats together every year. Rising prices for the steel, flowers, and even paper poms used to decorate floats have also contributed to the decline, just as rising prices have contributed to the decline in purchasing power of average people in the last six years, probably for longer than that. I can almost see a Frank Capra movie about the poor little float builder who perserveres against the corporate greed of a larger world. He could decorate with lots of bells, to keep angels flying. It would be heartwarming.
I allude to It's a Wonderful Life because the situation seems similar to the days portrayed in that movie, when the large financial institutions were beginning to flex their now quite considerable muscle. Then it seemed as if the "little people" didn't stand a chance against big money: the discrepancy in buying power was just too great. Same thing now with floats, sports arenas, public buildings. I could care less if your stadium is "Nextel Arena" or "Municipal Ball Field" but the fact that more and more of them are named by a large corporation is evidence of a tax drought from the point of view of governments which, unlike the Feds, can't simply print more money to make up a shortfall. A few states, for instance Nevada, have excess tax money and actually offer refunds to their taxpayers. But most states, and virtually every local government, is in a pinch. Not only can't they fund parades, they can't even patch potholes properly. I'm not just talking about Detroit, where the major industry has crossed the river to another country, but cities like Denver, which are in an essentially rich area. Cities in an area of low unemployment and prosperous citizens yet are struggling for money can only be feeling the effects of a penny-pinching tax relief effort.
The thing is that people want things from their government. It was in Colorado, in fact, that I heard someone, in one paragraph, go from complaining about the taxes he had to pay to complaining that "they" weren't fixing a highway near his house. Something fails to connect in that man's mind, and in the mind of many a tax rebel. That is that any government service costs money, and that such money can only come from taxing something. Our tax system is messed up, for sure. Allowing multibillion dollar corporation to skip to an almost fictional nation in the Caribbean and avoid paying anything is asking to robbing the rest of us. But the sad fact is that taxes must be paid at some point. By supposedly shifting the tax burden away from individuals and onto large corporations we have in effect caused more of those large corporations to seek shelter elsewhere, thereby actually lowering our tax base even as our population continues to grow. That, if you will, is dumber than George W. Bush has ever been. There's a simple rule of thumb, expressed by economists as "There's no such thing as a free lunch." That doesn't mean that you can't ever get someone to buy you lunch, just that everything is paid for somehow. By being stingy and stupid in our attitude toward paying taxes we have lowered our ability to pay for some things we really enjoy, such as smooth streets, municipal services, student loans, and even parade floats.
Another aspect of taxes that tends to get lost in the debate is that taxes are just a way to spread the burden of social support systems around in order to make it less expensive for the average person to live in the town, state or nation than it would be if everyone had to pay their own way. It's good to help each other out, just ask Jesus, or Buddha, or Allah via Muhammad; they all say so. But apparently it's not all that easy to remember those lessons when looking at a tax bill. Still, Yankee stadium is named after its owners. Same for Wrigley Field. There are still quite a few WPA built municipal buildings and parks around that aren't named for a corporation, maybe not named for anyone. The WPA was a government funded project that put an army of people to work during a time when corporate America was unable to provide jobs. It was a way for the people of the country to help each other out during a tough stretch, and it worked to the extent that many of the projects it constructed are still in use seventy years on. Very few people alive today paid a nickel in tax to fund the WPA, but we all still benefit. That's what taxes are supposed to do, but they can only do it if they are levied and paid.
It's popular in the West especially to deride government handouts. This belies the fact that the West has always received more in Federal money than it has paid in, with the exception of California, which has been a net contributor for some time. First came free land to the railroads so that the area could be settled by normal respectable people who could then spend their lives complaining about government handouts. The homestead act ensured that there would be plenty of agriculture in the area, even though most of it might not have been hugely profitable. Very low cost mineral leases and grazing permits continue to enable people in the West to make a living off of land that is otherwise pretty much barren. Since things tend to be hundreds of miles apart in the West, highways and airports are more vital than in the more densely populated East. The "solidly conservative" West is, and this is the plain truth, a leech on the liberal establishment, because among the "blue states" we find that they are all net contributors to the Federal budget. The "red states" tend to be net recipients. And there's the gratitude: surly griping about paying taxes to fund "liberals." Hmmmph.
My overriding point is that we were actually wealthier as a nation and as individuals when we thought more about societal needs and wants and less about our greedy little selves. Some sad but true facts: one good solution to the condition of public education would be to throw some money at it; the cost of health care is getting so distorted that only a publicly funded form of universal health care, be it insurance or making employees of doctors, will be the only way for us to stay healthy; and no, you're not nearly as self-sufficient as you think. Even if you live in a shed in the north woods, you need to know that somebody mined and refined the lead you pour into your bullets, the brass of your shell casings, the iron in the nails with which you hold together your shack, the steel in your axe head, and so on and so forth. I know, it's tough not being the center of the universe. Believe me, I know, but somewhere in the past I realized that the sad fact was that I'm not, and further that I'm stuck sharing the world with a mess of other people, and still further that the only way to do that was to work together with my fellow humans. Reaching those conclusions is part of a process known as "growing up." I commend that to any strident tax protestor who may happen to come across this. Try it: you might even like it.
I just read an article from the Wall Street Journal (not noted for a liberal slant, you'll observe) about the decline of traditional parades. Parades, of course, cost money, and many municipalities have cut funding for non-essentials like parades. This has led to a rise in corporate funded and uniform floats with advertising on them. A small thing I suppose, but it does eliminate the fun people used to have (or so I'm told) putting the floats together every year. Rising prices for the steel, flowers, and even paper poms used to decorate floats have also contributed to the decline, just as rising prices have contributed to the decline in purchasing power of average people in the last six years, probably for longer than that. I can almost see a Frank Capra movie about the poor little float builder who perserveres against the corporate greed of a larger world. He could decorate with lots of bells, to keep angels flying. It would be heartwarming.
I allude to It's a Wonderful Life because the situation seems similar to the days portrayed in that movie, when the large financial institutions were beginning to flex their now quite considerable muscle. Then it seemed as if the "little people" didn't stand a chance against big money: the discrepancy in buying power was just too great. Same thing now with floats, sports arenas, public buildings. I could care less if your stadium is "Nextel Arena" or "Municipal Ball Field" but the fact that more and more of them are named by a large corporation is evidence of a tax drought from the point of view of governments which, unlike the Feds, can't simply print more money to make up a shortfall. A few states, for instance Nevada, have excess tax money and actually offer refunds to their taxpayers. But most states, and virtually every local government, is in a pinch. Not only can't they fund parades, they can't even patch potholes properly. I'm not just talking about Detroit, where the major industry has crossed the river to another country, but cities like Denver, which are in an essentially rich area. Cities in an area of low unemployment and prosperous citizens yet are struggling for money can only be feeling the effects of a penny-pinching tax relief effort.
The thing is that people want things from their government. It was in Colorado, in fact, that I heard someone, in one paragraph, go from complaining about the taxes he had to pay to complaining that "they" weren't fixing a highway near his house. Something fails to connect in that man's mind, and in the mind of many a tax rebel. That is that any government service costs money, and that such money can only come from taxing something. Our tax system is messed up, for sure. Allowing multibillion dollar corporation to skip to an almost fictional nation in the Caribbean and avoid paying anything is asking to robbing the rest of us. But the sad fact is that taxes must be paid at some point. By supposedly shifting the tax burden away from individuals and onto large corporations we have in effect caused more of those large corporations to seek shelter elsewhere, thereby actually lowering our tax base even as our population continues to grow. That, if you will, is dumber than George W. Bush has ever been. There's a simple rule of thumb, expressed by economists as "There's no such thing as a free lunch." That doesn't mean that you can't ever get someone to buy you lunch, just that everything is paid for somehow. By being stingy and stupid in our attitude toward paying taxes we have lowered our ability to pay for some things we really enjoy, such as smooth streets, municipal services, student loans, and even parade floats.
Another aspect of taxes that tends to get lost in the debate is that taxes are just a way to spread the burden of social support systems around in order to make it less expensive for the average person to live in the town, state or nation than it would be if everyone had to pay their own way. It's good to help each other out, just ask Jesus, or Buddha, or Allah via Muhammad; they all say so. But apparently it's not all that easy to remember those lessons when looking at a tax bill. Still, Yankee stadium is named after its owners. Same for Wrigley Field. There are still quite a few WPA built municipal buildings and parks around that aren't named for a corporation, maybe not named for anyone. The WPA was a government funded project that put an army of people to work during a time when corporate America was unable to provide jobs. It was a way for the people of the country to help each other out during a tough stretch, and it worked to the extent that many of the projects it constructed are still in use seventy years on. Very few people alive today paid a nickel in tax to fund the WPA, but we all still benefit. That's what taxes are supposed to do, but they can only do it if they are levied and paid.
It's popular in the West especially to deride government handouts. This belies the fact that the West has always received more in Federal money than it has paid in, with the exception of California, which has been a net contributor for some time. First came free land to the railroads so that the area could be settled by normal respectable people who could then spend their lives complaining about government handouts. The homestead act ensured that there would be plenty of agriculture in the area, even though most of it might not have been hugely profitable. Very low cost mineral leases and grazing permits continue to enable people in the West to make a living off of land that is otherwise pretty much barren. Since things tend to be hundreds of miles apart in the West, highways and airports are more vital than in the more densely populated East. The "solidly conservative" West is, and this is the plain truth, a leech on the liberal establishment, because among the "blue states" we find that they are all net contributors to the Federal budget. The "red states" tend to be net recipients. And there's the gratitude: surly griping about paying taxes to fund "liberals." Hmmmph.
My overriding point is that we were actually wealthier as a nation and as individuals when we thought more about societal needs and wants and less about our greedy little selves. Some sad but true facts: one good solution to the condition of public education would be to throw some money at it; the cost of health care is getting so distorted that only a publicly funded form of universal health care, be it insurance or making employees of doctors, will be the only way for us to stay healthy; and no, you're not nearly as self-sufficient as you think. Even if you live in a shed in the north woods, you need to know that somebody mined and refined the lead you pour into your bullets, the brass of your shell casings, the iron in the nails with which you hold together your shack, the steel in your axe head, and so on and so forth. I know, it's tough not being the center of the universe. Believe me, I know, but somewhere in the past I realized that the sad fact was that I'm not, and further that I'm stuck sharing the world with a mess of other people, and still further that the only way to do that was to work together with my fellow humans. Reaching those conclusions is part of a process known as "growing up." I commend that to any strident tax protestor who may happen to come across this. Try it: you might even like it.
