Citizens might pay more taxes if told what they stood to loseCitizens might pay more taxes if told what they stood to lose

One of our readers slammed my math skills in a letter to the editor in Monday's Athens NEWS. I have no problem being criticized on this basis, since I'm among the fortunate Ohio University Bobcat baby-boomers who attended OU when the journalism major had no math, science or foreign-language requirement. (Algebra might as well have been an alien language.)

But I do have a problem with the letter writer's logic. He challenged my conclusion in a column last Thursday that the state of Ohio wouldn't face an $8 billion budget shortfall now if the legislature hadn't passed a series of reckless tax cuts in 2005.

Those cuts account for at least half of the $8 billion that Gov. John Kasich is now trying to fill with deep spending cuts, many of them painful and shortsighted. (While my column cited the 50 percent amount repeated in recent news media accounts, figures from the Ohio Department of Taxation indicate that since the tax cuts were passed in 2005, the lost revenue has amounted to $3.7 billion per year. This would translate into 92 percent of the projected $8 billion budget hole in the next two-year budget.)

Here's the paragraph where the letter writer tries to show up my lack of math skills:
"If I earn $100 per week and am taxed at a rate of 25 percent, my net is $75. Then if, thank God, my taxes were reduced to 20 percent, or cut by 5 percent, my net would then be $80, creating more money for me to spend, and not a shortfall or deficit."

THERE'S A DIFFERENT WAY of looking at this, however, that has nothing to do with math.

Let's say a community's residents over the years had agreed to contribute a certain level of their incomes to the common good, in order to provide services that most people agreed they needed or wanted.

Then let's say the people in charge of that community said, "Hey, we don't need as much money from you, but we'll still be able to provide essential and desirable services, since with all that extra money in your pockets, you'll be spending more, stimulating the economy and generating more revenues for community services and schools and such."

Then, a few years later, when that doesn't happen, the community leaders realize that they're far short of the amount of money needed to fund all of the services that community members said previously that they wanted. As a result, the community forfeits many of these services.

Wouldn't those community members be justified in asking why their leaders ever thought they'd be able to continue providing services with far less money?
Wouldn't they have a good point if they decided to recall those public officials who sold them tax cuts in the first place, based on wishful fantasies of an improved economy, without ever mentioning that one fallout from lower taxes might be a bankrupt government with third-class services; el cheapo public schools; unaffordable, second-rate college educations; and a safety net shredded to nothing?

My point is that when given the facts, rather than trickle-down, anti-tax poppy-cock, community members often will choose to contribute enough of their incomes to the common good in the form of good schools, common-sense regulation, affordable colleges, attractive parks, and an adequate and humane safety net for the least prosperous among us. Polls consistently have shown that when given this choice in a straightforward manner, citizens often will agree to contribute more to the common good.

If they say they'd rather keep more of their earnings, however, at least that choice comes after assessing the true alternatives.

Unfortunately, when tax cuts are sold to a receptive public, the choices are never presented that way. Republicans (most of whom have been pressured into signing anti-tax pledges) present the seductive argument that somehow, magically, reducing taxes will generate more revenue, and reducing taxes a lot will produce even more.

Until reality and simple arithmetic! reassert themselves, and citizens start seeing services they value and depend upon erode and disappear, they rarely put two and two together. Not until it's too late do they realize that people get what they pay for, and when taxes are reduced, so are revenues and everything they pay for.

When budget cuts start affecting ordinary people, as will certainly be the case with Gov. Kasich's harsh program, that's when buyer's remorse should start setting in about those misguided tax cuts six years ago. Unfortunately, by the time ordinary citizens begin feeling the sting and raise the alarm, it will be far too late for the poor and disadvantaged among us, the ones who have been suffering the fallout from previous budget cuts.

But bottom line, I would challenge the letter writer's assumption that society and its people always benefit when citizens reduce their contributions to government. That's just as absurd as arguing that government always spends taxpayer money efficiently or correctly.

It can work both ways, and people ought to be given a fair choice in the matter.

REPLY TO THIS COMMENT

HockingHick

Huh. Doesn't seem to work locally.

Last two elections, township road taxes have been passed, and TS roads are in worse shape than they've ever been... In fact, they have progressively gotten worse over the last five years.

So we pay more and get less.

Now move that to a state and national level.

I think it holds...

Hauser’s Law proposes that, in the US, federal tax revenues since World War II always approximate 19.5% of GDP, regardless of wide fluctuations in the marginal rate (from fiscal years 1946 — 2007, federal tax receipts as a % of GDP averaged 17.9%, with a range of 14.4% — 20.9%, though the top marginal federal rate varied from 28% — 91%.

Hauser’s Law proves true because the US has no national sales tax, instead collecting taxes in a federalist system (unlike many Western nations). It represents a socio-political policy trend rather than a true economic law and would change if value-added taxes are ever imposed at the federal level.

Conversely, journalist Jonathan Chait said in The New Republic: “Swings are fairly dramatic through US history for tax receipts as a percent of GDP.” He says the George H W Bush and Bill Clinton administrations received “massive” extra revenues as the result of tax increases while the George W Bush administration tax cuts led to a “massive” drop in revenues and labels the idea of static, flat revenues as a “scam”. And they may both be right in a narrowly-defined way.

A quote from Obama’s State of the Union speech on 25 January 2011: “And if we truly care about our deficit, we simply cannot afford a permanent extension of the tax cuts for the wealthiest 2% of Americans. It’s not a matter of punishing their success. It’s about promoting America’s success.”

Yet the top 1% of the richest Americans pay 40% of the federal tax bill and the bottom 47% of taxpayers pay no federal income tax — the bottom 40% even get money back. The top 5% pay about 60% of the federal tax bill. The top 1% earned 19.6% of total income before tax, yet pay 41% of the individual federal taxes — more than the bottom 95%.

Historically, each $1 in higher taxes results in $1.17 of new spending. Since WWII the debt has not come down even once no matter how much the tax increases or decreases.

The upper 1% earned 19.6% of total income before tax, and paid 41% of the individual federal income tax.

No other major country is so dependent on so few taxpayers.

Eagle

Terry,

While I agree with our President's use of force in Libya (though I thought it should have happened earlier), I'm guessing you don't. In addition, he didn't go to Congress beforehand to get a resolution supporting military action in keeping with the War Powers Act (my guess is he, like every President since it's been law, feels it's unconstitutional).

So my question is, will Thursday's column be a full-throated attack on the President as a war monger - you know, so you'd be consistent in your treatment of Presidents, regardless of their party affiliation? I look forward to that column.

Don't get yer hopes up, Eagle. Terry probably won't do a column this week. He's still trying to figure out a pro-Zero-Man spin on this thing...

People, sadly do not seem to understand or want to acknowledge the Constitutional issues this brings... Our executive branch is effectively choosing to make war on countries who have not attacked us.

They are fighting their own civil wars, throughout the ME, and we have no way of knowing which side's victory will be best for our interests, let alone who are the good guys, if any...

We are f'd up. This will come to no good.

"No troops on the ground" is not a measure of whether or not this is an invasion of a supposedly sovereign country in the middle of THEIR civil war.

124 Tomahawk missiles, totaling $71 million in cost IS an invasion. That's not counting the cost of delivery and mop-up.

We will pay for this, in many ways, none of which will be good.

We should not be the judge and jury of the legitimacy of other nation's governments, ESPECIALLY when it is NOT clear that we have national interests at stake, or even WHICH SIDE best represents any national interests...

If we don't choose to intervene in human rights tragedies and ethic cleansing, what gives us the right to ignore our Constitution and do the bidding of the EU?

This goes for Afghanistan and Iraq, obviously, also...

How would you like it if another country decided that this government is illegitimate, and fired missiles at us? Would you care if the UN or EU agreed with them? I would hope not.

This is a bunch of convoluted BS, partly manufactured by our historical meddling in the ME, and by being the guts behind any EU inititative, and used by a president who is supposedly against the expansion of the executive branch power, to see just how far he can take his own executive powers.

Well, you and I disagree on the merits of intervention in cases like this. Because of our unique standing in the world, I believe there are times when someone needs to act, and in many cases if we don't do it (or at least help), no one will.

That said, it would be nice if everyone could pick a side on this debate and stay there, regardless of who is currently President. In light of the unmerciful attacks on the last President, the current logical backflips liberals are doing to justify what our current President is doing are nothing short of amazing. If Bush was a war monger, then explain why Obama is not? I'm sure Terry will, like Rachel Maddow has, come up with some rationaliztion for why they shouldn't hate our current Presidenty as much as they hated our last one. I can't wait to hear Terry's.

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