By Jay Hansen
Conservative state governments seem hell-bent on cutting if not eliminating taxation altogether. Many have already imposed impossible legal requirements to ever raise taxes such as a two-thirds majority of Congress like in California and Oklahoma. Some want to abolish the income tax and replace it with a very regressive sales tax that hits the poor and middle class harder than the upper class. All of this is happening, mind you, at the same time as record-breaking state budget shortfalls and deficits, on which conservatives continually harp and preach about the evils thereof. Despite this, as I started with, it’s also the Republicans that continually push to cut taxes, which lowers budget revenues, and thus, creates more deficits.
Well I’m writing this article to share a little secret with you all that state lawmakers don’t want citizens knowing; there’s no such thing as a tax cut any more.
But perhaps I’ve already made many a claim you question or don’t understand about taxation. Allow me to start at the beginning. Conservatives and others of right-wing ideology oppose most modern purposes and facets of government. To varying degrees within the right-wing, conservatives want smaller government, sometimes to the point of recreating “the wild west,” a land of lawlessness where justice is determined by whoever had the most gun. The problem is a vast majority of civilized people do not like this ideology. We’re trying to build our society and the whole of civilization up, not tear it back down to the point it was centuries ago. I’m not accusing all conservatives of this ideology, of course, but this goal of the extremists within the Republican and Libertarian Parties is achieved through the same means more moderate conservatives (if there are any left) have applied for shrinking the government in the past, and still do today.
I’ve written about this before in my piece The Undermining of America. In the short-term, everyone loves tax cuts. It’s immediate gratification to satisfy our almost animalistic, and consumerist, nature; more money for me, less taken out of my paycheck, and less going into the hands of bureaucrats most will historically agree are either incompetent or corrupt (or both). The problem is, the more we cut taxes, the lower the revenue for the state. This ultimately leads to deficits and budget shortfalls if tax cuts are handed out freely, as the Republican Party always seems willing to do. With deficits comes outrage and perpetuation of the idea that the government is incompetent, thus fanning the anti-government flames. By exacerbating anti-government sentiment and creating a deficit, politicians of both parties are left with no choice but to cut spending in an attempt to quell public outrage and balance the budget, because the last thing they would want to do is raise taxes. It’s what caused the problem in the first place, and it would surely fix it in time, but it would only dramatically increase public outrage for taxes to be raised after the government proved to be so incapable of keeping a balanced budget, not to mention that the conservatives that pushed for the tax cuts would make damn sure through the media and talking points that raising taxes is demonized as thoroughly as possible. With such a situation created, the inevitability is that spending is cut from programs that primarily help the middle class and poor, as the wealthy have no need for aid from the government, and thus government shrinks. This is the back-door way through which conservatives are actually managing to shrink government, possibly all the way back to the point of a lawless frontier land, despite how deeply unpopular such a general idea is among citizens. Therefore, it is in fact in the best interest of the Republican Party, or any party that wants to reduce or eliminate the government, to cut or even abolish as many taxes as possible in a purposeful attempt to ruin the budget and make people more distrustful of government. To put it simply, the Republican’s primary message is that government doesn’t work. Put them in charge, and they’ll prove it (I also addressed this in an older piece, How Corruption Happens through Incentives and Disincentives).
As for the form of taxation, thus far the income tax has been the most progressive form of taxation we’ve developed. I don’t mean politically progressive, but rather in terms of how it works. If you can afford to pay more into the system of which we are all a part, you pay higher income tax rates. If you can only afford a little due to a low income, you are expected to contribute less. If you make very, very little income for yourself, you are not expected to pay the income tax at all because you need 100% of your income just to live in poverty. This is why we have different tax brackets for different levels of income. Many conservatives make the claim that this system is flawed because it allows those that aren’t productive in society (the unemployed) to avoid paying taxes. In reality, they still pay taxes, just not the income tax. They still pay sales tax, property tax if they own land, and even the payroll tax if they’re making any form of legitimate income, just to name a few other taxes they still pay. On top of that, conservatives claim that there are too many people not paying into the system for it to work, or at least for it to be fair to those that do. The problem is that a majority of the people not paying the income tax aren’t paying it for a reason, primarily because they’re retired. The income tax allows us to no longer place as harsh of a tax burden on the elderly who have passed their working years. It allows us to go without taxing those that are struggling to find a job. It protects many of those seeking an education, the disabled, the underemployed, and those that have otherwise fallen on difficult times from having to contribute to the general upkeep of the state. There are also protections for families, veterans, and countless others through deductions and exemptions in the tax code that would not be possible in a sales tax-based system. The very core ideology of the income tax is that we are all in this society together; those that can give more should give more, while those that can give only little or none at all are expected to give as much, all the while everyone, from the very poor to the very rich, are still entitled to keep a huge portion of their income. We take care of each other, look out for each other, build each other up and make others stronger through this system of compassion and care for our fellow citizens. Conservatives will still argue that there are too many “leeches” on the system, often insinuating if not outright saying that all those not paying the income tax are good-for-nothing welfare queens, when I’ve easily demonstrated that is not the truth at all. Still, I’m not one to ignore the fact that there are those at the bottom of society that abuse the system… just as there are great scores of those who abuse it at the top. If anything, the damage abusers from the top of the socio-economic scale do unto our social system is far greater than anything the poor could ever do. But even putting that aside, just because someone abuses a right does not mean we get rid of the right. People abuse their right to free speech by saying hateful, damaging, or downright stupid things every day; do we get rid of the right to free speech because of it? Of course not; the damage ending such a facet of our society would do vastly outweighs any possible benefit of keeping it. The same is true for the income tax. It has served us well for nearly a century (100 years as of next February), and under its framework the greatest economic boom of the nation’s history, if not the world, was created and heralded in the great American middle class for which people all around the world admire our nation and culture. It was in no small part thanks to the income tax that this became a possibility.
Under a sales tax system, no such sense of fairness exists. Regardless of what you can afford, you are expected to contribute equally as everyone else. If you have no money to spare, be it because you’re unemployed, elderly and retired, a middle class, blue-collar worker, or anything in between, you’re still expected to pay as much in taxes and contribute as much to our society as a billionaire. How is that fair? How is that compassionate? Perhaps most of all though, just how high would a sales tax have to be if it is the exclusive source for revenue for the state?
But that’s the catch. That’s the key to my initial statement. That’s the wool that’s being pulled over our eyes by lawmakers; it’s not the exclusive source for revenue. Like I said, many states, Oklahoma included, have made it politically impossible to ever raise taxes. At the same time, we have a horrible deficit in Oklahoma. Lawmakers are doing whatever they can to prevent the budget from getting worse, but spending cuts can only go so far (especially when they’re matched or outweighed by tax cuts). The only other alternative is to raise revenue without raising taxes. This is done by raising fines and fees.
The costs of government fines and fees have been skyrocketing across the country because state governments are desperate for revenue, especially those that have fallen into the Republican trap of effectively outlawing tax increases. If you thought the sales tax was regressive and hard on the middle and lower class, you’d better hold on to your seat. The cost of renewing driver’s licenses, admittance into state parks, vehicle registration, parking or speeding violations, fireworks permits, traveling circuses, and many, many more have all gone up in desperate grabs for revenue by state governments. I recently heard a story (granted, from California, but nonetheless) about how a single speeding ticket was over $400. Now, do you have $400 just lying around to spare? Does the average member of the middle class or lower class just have a spare $400? Of course not. Do the wealthy? Absolutely. Hell, many wealthy people would opt to hire a pricey, high-quality lawyer and challenge almost any financial punishment dealt to them, disincentivizing law enforcement from even pursuing the wealthy when they violate the law. Let’s also not forget the fact that the wealthy could easily make bail while it’s out of the question for the poor.
Coupled with a sales tax system, these fees and fines are the most regressive form of taxation we’ve ever seen implemented in this nation. It’s the fees and fines that are the true culprit gutting the middle and lower class, because they are silent killers. How often is taxation a topic in the news and political talk shows? Nearly every damn day. Not a tax-related issue can come up in government that won’t be discussed heavily in the media, but what about fees? When was the last time you heard the news talking about the cost of getting your driver’s licensed renewed? Maybe if the news day is really, really slow, and it happens to fall around the same time as the increase, it can slip into a five-second long blurb in a news story. For the most part though, you almost never hear or learn about the increases in fees and fines; they just happen as we all go on about our everyday lives, completely unaware of the scheme being pulled on us.
To further elaborate upon this “scheme,” as if I haven’t enough already, and since we’re talking about fees, consider the price of filing for public office. Did you know that to file as a candidate, let alone run for office, for the US House of Representatives in Oklahoma it costs $750? Just to file – $750. On top of that, I once heard a story about someone filing for office who was warned to not do it unless he had at least $10,000 for campaigning, otherwise it “wasn’t going to happen.” If the middle class, let alone the poor, didn’t have the spare $400 to pay for a speeding ticket, how on Earth are they supposed to be able to afford $750, much less $10,000?
Now consider who are the ones making the laws about taxation and fees, and you get this:
Well… there’s your problem. Lawmakers only represent their wealthy donors and wealthy selves. Fair representation for all is a long lost concept in America, and it’s no clearer than when it comes to representation of the poor and middle class. This is why lawmakers don’t bat an eyelash at the idea of cutting federal aid to the poor, spending programs that benefit the middle class, worker’s rights, the cost of everyday fees and fines, fairness in tax burdens, or just economic justice in general.
I’m sure you’re still all itching with anticipation of my initial statement though; there is no such thing as a tax cut any more. How can I say such a thing? Under good economic times, tax cuts can work because when there’s a surplus in a state’s budget there might not be as large of a need for people to be contributing as much. Cutting taxes during this time won’t affect the budget too badly so long as the cuts are modest and revenues are predicted not to go into the red within the time frame of the cuts. Currently though, many state governments are in horrible debt. Tax cuts reduce the amount of revenue the state is getting. Therefore, that money must be made up elsewhere in the budget. As I’ve just thoroughly elaborated upon, this can’t be done through increasing taxes for both legal and political reasons, so many states are forced to do so by increasing fees and fines or other indirect means. The only other option is to cut spending, for better or for worse, and it almost always starts with cuts to education and programs that benefit the poor.
Given that, when a government “cuts” taxes, they’re really just shifting the cost elsewhere to the budget. Revenues lower from tax A, so they go up through fine B. The most direct means through which this is accomplished is by tricky, indirect ways of raising revenues that don’t involve raising taxes. Cutting spending will increase the cost of living for someone, somewhere, and likely a great number of people when these cuts hit public education, Medicaid, financial help for homeowners, or a great number of sectors. If your revenue goes down while already in debt, something will have to make up for it, because people will not respond kindly to increasing the debt further when it’s already gotten so bad. This is particularly true for Republicans who pride themselves on being budget hawks. Someone has to pay for it somewhere down the line.
So, just like there’s no free lunch, there’s no such thing as tax cuts anymore. At some point, somewhere, someone has to pay, be it in money or physical labor, to make that lunch, just like someone, somewhere pays for the cost of cutting taxes that almost always disproportionately benefit the rich over the poor. Until we get serious about fixing our budget, which will require raising taxes, and recover from this debt debacle brought on by years of Republican control and right-wing, supply-side economics, this will remain the case for both state and federal governments facing such deficits.
The core of the problem, as I mentioned above, is that our government does not represent us, and those within the political system; the lawmakers, pundits, and politicians, are incentivized to actually make the budget worse and weaken a once strong government. The only way we accomplish that is by removing money from politics. Democrats, Republicans, Independents, and majorities of just about any category of American all agree that this needs to happen; we just have to summon the will to do it.