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Taxes “bad.” Discuss

IMHO longI’ve been wanting to get to a column expanding on the idiocy of “tax fear” for some time. I say “expanding” because two years ago the issue was broached in the item “Question Austerity.”

I haven’t written about it since and am not now (despite appearances) for one reason: I’m slammed. Just balls-to-the-wall busy. So instead, for now at least, a discussion will have to suffice.

So, a few (admittedly) loaded questions and I’ll turn you all loose. Please refer to each question’s number in providing your comments/thoughts.

(1) Why can’t elected officials, once elected, stop being politicians long enough to actually use the words “we’re raising taxes,” let alone (gasp!) DEFEND taxes as a necessary part of administering public services?

(2) How can so many of those who claim to be against public services and public welfare programs brag, with a straight face, about how Medicare covered all their expenses for recent hospitalizations/medical care – as if Medicare WAS NOT one of the very public welfare programs they so strenuously oppose?

(3) Why is the average American’s knee-jerk reaction to taxes that they are “bad,” when the services they pay for are administered without a profit motive – yet many of these same average Americans wholeheartedly support (so-called) “privatization” of public services, which by definition is performed by for-profit companies, thereby making the services both more costly and less sensitive to the actual needs of the people using them?

And finally…

(4) If we are really serious about living up to the American ideal (granted, that should probably be a question all on its own – but if we presume to be serious about the notion of equal opportunity and access for all) can we really, with a clear conscience and without contradicting ourselves, also believe that ANY profit should EVER be made on the misfortune of another person?

Responses (7)

  1. Rick Smiley says:

    I am sure you realize that the answer to question 1 is the reality that frustrates you in question 3.

    Regarding question 3, the conclusion that a for-profit company is inherently more costly (due to the addition of profit) isn’t always true. Public decisions are influenced by values that supersede cost-effectiveness – often inflating costs more than profit would. These values are pretty obvious – so obvious that we often forget about them as they hide in plain sight.

    We demand that our governments be transparent – the rationale for each decision must be clear and open. So we require decisions to be made while everyone watches – which makes decision makers risk-averse.

    We demand that our governments be accountable – every penny must be budgeted and tracked both before and after it is spent. So our governments create complex budgeting, accounting, and reporting systems.

    We demand that our governments be equitable – every vendor must have an equal opportunity to win the government’s business and vendors from every region get at least some of the work. So our governments create intricate procurement systems.

    We demand that our governments be reliable – we often don’t have a backup supplier. So governments develop redundant and over-engineered systems. Indeed, the provision of certain services is generally the reason we created the government in the first place – so it MUST be made to deliver.

    Generally, we demand that our governments satisfy the above values BEFORE we ask them to be cost-effective – but every one of them militates against cost-effectiveness. They all come at a cost – costs which look a lot like waste. However, the citizens that complain the loudest about waste are often the ones complaining the loudest about the other values too. It really isn’t reasonable to expect a transparent, accountable, equitable, and highly reliable system to also be cheap.

    I don’t mean this as criticism, there are many areas in which our society places these values above cost-effectiveness – policing, for example. We need our police to be reliable, transparent, accountable, and equitable – if we achieve that we can tolerate lower cost-effectiveness. National defense is another – we require our military to reliably defend the country, we don’t have another option if it fails, and the consequences would be catastrophic.

    What I do mean, though, is that some care should be taken to use government only to provide those services where the compromises above are acceptable or needed. We may also find areas in which the private sector has developed the ability to provide services that perhaps it could not previously provide. A private company can certainly be more cost-effective – even with a profit motive – as it need pay less heed to these other values (although it can’t ignore them entirely). We shouldn’t necessarily keep using governments to provide certain services just because we always have.

  2. Randall Martoccia says:

    1. The GOP extreme wing will blackball a politician for any sign of impurity. (Eric Cantor got the boot over immigration of all things.) While the famous tax pledge has not gotten much attention lately, I’m sure some signers of it feel its weight around their necks.)
    2. Medicare has been around long enough to become respectable. Let’s amend Hollis Mulwray’s famous line, “Politicians, old buildings, and whores [and giant social programs] become respectable if they hang around long enough.” Social programs take many years to thoroughly weave themselves into our lives. Once they do, we tolerate them–or learn that we can’t live without them.
    3. Good infrastructure, good teaching, good governance in general are at their best when we don’t notice them. And we are good at not thinking about things done competently–or even expertly. We drive over that bridge thinking, “Look at the view” or “Why is that jackass slowing down to look at the view?” not “I helped pay for this engineering marvel.” Those signs that went up after the 2009 Reinvestment Act (“Paid for by… “) were roundly mocked, but I think we should keep labeling these works. (On hiking trails, I always appreciate seeing the signs saying the WPA built this trail.) Society is so complex that we don’t connect improved infrastructure to the higher taxes you started paying five years ago. The tax bite that you see on your receipts and paychecks has an immediacy that can’t be matched.

  3. Anthony Noel says:

    Great thoughts so far. Here’s a little more fuel for the fire, from a few years back: http://www.nytimes.com/2012/02/12/us/even-critics-of-safety-net-increasingly-depend-on-it.html

  4. Anthony Noel says:

    Up top I noted that I’ve been wanting to write a column on our collective aversion to taxes for some time. Specifically, it’s been about three weeks. That’s when I received one of Councilor Calvin Mercer’s “Constituent Communication” newsletters (number 284, which Mercer sent out May 20).

    In that newsletter, with the rather innocuous title, “Taking Care of Things, Latest Bond News,” Mercer first detailed council’s approval of a committee to advise council as planning for the much-discussed voter bond continues. Next Mercer offered an item called, “A Penny For Maintenance – Taking Care of Our Capital.” It read…

    We agreed to direct the manager to prepare a draft budget, for consideration in June, that includes one penny on the tax rate to address facilities maintenance costs that are going to get higher if we don’t address them now. Here are some specific considerations:

    –The facilities maintenance issues have to be addressed, either now in a cost efficient manner or in the future at greater expense to taxpayers.

    –Leaders in our business community that I spoke with in recent days were in general agreement that bond money should not be used to address routine facilities maintenance, which should be addressed in the annual operating budget. Borrowing money with a bond for operating expenses, like maintenance, is risky financial policy.

    –We have worked hard as a city to revitalize run-down, dilapidated areas that were neglected by owners. We certainly don’t want our city facilities to begin moving down that unwelcome path.

    –As background, it is important to keep in mind that the city is operating with about 2.1 million dollars less property tax revenue annually since 2012, due to the downward property tax reevaluation. So, in 2012 citizens in effect got a reduction in taxes of about four cents on the tax rate. Adding this one penny to address mounting maintenance issues in a fiscally sound way helps recover some of the income lost with the reevaluation.

    The motion to add, to the draft budget, one penny to take care of mounting maintenance passed 4-1, with Rose Glover dissenting. Councilmember Smith was absent and Mayor Thomas votes only in case of a tie.

    …and if that sounds to you (1) needlessly opaque, (2) like an attempt to minimize what is clearly a 1 percent tax increase, and (3) obvious in its determination to avoid the very phrase “tax increase,” you’re not alone – it sounded the same to me, so I immediately sent Mercer the following email:

    “My next column (whenever I get around to it) will without question point out the difficulty you must have had rising from the chair in which you compose your CC newsletter given the pretzel-like shape into which you’d contorted yourself in avoiding the term ‘tax increase’ regarding capital maintenance funds. If you have a comment in your own defense let me know.”

    In an ensuing phone call, Mercer of course had plenty to say in his own defense. And (to his credit) admitted he could have been clearer, and that providing real numbers of the effect of the increase to homeowners would be helpful. He did just that in another newsletter sent within hours of our conversation – and, it’s important to note for our purposes here – more than a week before the NC General Assembly’s and Gov. McCrory’s boneheaded move in revamping privilege license fees. The GA’s action has forced cities across the state to find alternate sources of funding (I’ll say it: RAISE TAXES) and/or slash services to fund the state-mandated balanced budgets which many were within days of approving – and which were based on the pre-boneheaded-move reality extant throughout each city’s budget-making process.

    All of which brings us back to the central question: Why are elected officials so unwilling to embrace and defend taxes as absolutely essential? To educate the people they serve about how much more they really pay for services which are “outsourced” to for-profit companies, through compromises to those services driven by such companies’ overarching raison d’être, to turn a profit?

    One of my early mentors in my other profession – cabinetmaking – was a first-generation German immigrant who fled the Nazis. He often railed against the standard bid process used so widely in this country, where municipalities and even private individuals take multiple bids and award the contract to the lowest bidder. “In Germany, we most often gave the job to the one in the middle,” Heinz would say. “How can you expect anything which is done as cheaply as possible to last?”

    His point harkens to Smiley’s above – that those complaining the loudest about costs are the same ones screaming about diminished and/or poor quality services.

    Everything comes at a price, and the better the thing you are buying, the higher that price is going to be.

    Or, put more familiarly: You get what you pay for.

    T’was ever thus.

  5. ed2291 says:

    Great post! I would add yet another question:

    (5) Why is the past half century of continual and substantial tax reductions by both the state and federal government ignored? This has happened under both halves of the Uniparty with republicans eagerly voting for tax reductions for the rich and corporations and democrats reluctantly voting for tax reductions for the rich and corporations. Is it not obvious that past a certain point that does not stimulate growth and leaves the government underfunded? Compare with the federal and tax rate under Eisenhower and Nixon – hardly left wing radicals. See Economic Graphs – http://www.newprogs.org/economic_graphs

  6. Don Clement says:

    I see at least two factors affecting collective attitudes about taxes. First is a growing libertarian mood that holds that individuals should be able to make the primary decisions about how they use their property. Many simply have trouble having someone else (i.e., governments) telling them how to spend their money. While this is ultimately a simplistic view of societal living, it has become a strong theme among conservatives, especially of the Tea Party variety. Libertarians, I think, face a conflict between their support of the Constitution–which establishes representative democracy–and their abhorrence of any system that spends their money in ways they don’t individually approve of.

    A second factor is the power game inherent in politics. Politicians have gotten very good at reading their constituents’ attitudes and playing up to them. We’d like to believe that our elected reps have the good of the populace at heart, and are willing to tell us the hard truths that we need to hear. Some do, but too many are concerned first with gaining power. That doesn’t call for telling hard truths–in clear language. It usually encourages deception, weasel words, and exaggeration. If elected Joe and Jane care mostly about staying in power, they will weigh everything they say so as not to to offend their voters. If voters are seen as reflecting the attitude in my first paragraph, regardless of Joe and Jane’s political philosophies, their talk about taxes will cater to that attitude.

    Our implicit social contract to live together as communities is a complex thing. Unfortunately our politics have become so simple-minded, we’re in danger of losing sight of of our common goals.

    • Anthony Noel says:

      Well said, Don.

      I wonder how many self-proclaimed “lovers of democracy” and advocates of “direct democracy” have even heard of – let alone actually taken the time to read and comprehend Rousseau.

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