by Howard Stephenson
A lot of dumb things are said by people who think tax increases are wonderful.
Some of the things that are being said publicly in Utah about the “need” for tax increases and the “courage” of those who propose them is frightening to me. We seem to have arrived at a place in history when economic ignorance is so widespread that some, if not most, really believe that the people’s money is better spent by government than by those who earned it.
In the last part of his tenure as our nation’s chief executive, President Clinton made his famous statement about what to do with the federal surplus: spend it to improve government or give it back to the people in the form of permanent tax cuts. Congress was debating tax cuts, which eventually passed, and Clinton was doing his darndest to thwart them. The President argued that if the money were given back to the people, they might not spend it in the right way, but if it were kept by government the money could be put to use in ways that would benefit everyone.
He said this with a straight face and I believe he meant it. I’m also convinced that millions of Americans believed that what he proposed was the right thing to do.
During the last few months there has been a similar mood among public figures in the Beehive State.
A record number of school districts are adopting property tax increases this year. At Murray School District’s Truth-in-Taxation hearing there were many — including teachers and school employees — who spoke in favor of the tax increase, saying it was the right thing to do for our kids, even though nearly all of the $1.3 million tax increase was actually not benefiting today’s kids at all. I don’t believe many of those supporting the tax increase knew what the money was being spent on, they just liked the thought of a tax increase.
Murray district is increasing taxes to create a sinking fund to replace a jr. high school ten years from now! Somehow the school board feels that bonding should be avoided, so they’re building a $15 million reserve to be used in ten years. Not one of the children attending Murray School District today will benefit from this huge tax increase.
I tried to explain to the school board the lost opportunity costs to taxpayers in taking this money before it is actually needed. I tried to explain that bonding for capital projects is not deficit spending like Washington has done in paying for current operating costs with tomorrow’s tax dollars. I pointed out that school districts pay much lower interest costs on bonds than taxpayers could obtain individually. And I explained the ages-old concept that those who benefit from the building should pay for it while it is being used.
I was blown away by the response of a district representative. One school official justified the $50 per year tax hike on an average home by saying, “To you it’s not a lot of money. But when we get $50 from everyone, then we can do a lot with that.”
At numerous Truth-in-Taxation hearings, we constantly hear government employees, who financially gain from tax hikes, applauding elected officials for their “courage” in raising taxes.
Cities and community organizations in Utah County are now insisting that the county commission place the 1/10th of a cent Zoo, Arts, & Parks tax on the ballot. Fortunately, at the current time only one of the three commissioners say they will vote in favor of the ballot placement. However, Provo’s Daily Herald editorialized in favor of the tax hike by stating “And [the ZAP tax] is a practically painless tax. Most people won’t even bend over to pick up a penny . . . parting with a penny on every $10 is insignificant.”
Last year at a Salt Lake County Council meeting where a tax hike was being discussed, a taxpayer publicly asked one of the council members how high the county government would have to raise taxes until they could finally say they had enough of the taxpayers’ money. One council member firmly and indignantly replied “Never!”
At a public meeting to discuss a tax hike, the public was invited to speak on the proposal. Before the first taxpayer could say a word, a member of the Salt Lake County Council blurted out “I don’t want to hear people saying they are overtaxed!” He and one other council member stormed out of the room when the first speaker said “our taxes are already too high”.
Cutting taxes during a recession has an excellent track record as evidenced by the economic recoveries that followed the federal tax cuts in the 1920s, 1960s, and 1980s. While policy makers around the world are implementing or are planning to implement tax cuts, local leaders have different ideas. Former Salt Lake County mayoral candidate Karen Crompton wrote in the Deseret News “Now, when the economy slows, carefully targeted revenue increases should be considered.” The State Board of Education has stated “Any consideration of ways and means to increase revenue cannot be considered ‘serious’ without considering increases in the various taxes collected.”
Some Utah Legislators are also looking at tax hikes for next session. Having spent nearly all rainy-day funds and having bonded for projects that were originally funded with ongoing revenue, the failure of the Utah legislature to seriously cut spending has set the stage for tax increases next January. Already, legislation is being prepared to increase income taxes, to enact new business taxes, and to impose a 10 cent per gallon gasoline tax increase in a state which already has the eighth highest tax.
In a state which has the 9th highest tax and fee burden there has never been a greater need for effective taxpayer advocacy. There is no greater misstatement in the public arena than the argument that state and local government is too small and under-funded.