Joshua Holland lays out how lower taxes on the wealthy at the federal level, cause higher taxes on the poor, working, and middle class Americans at the state and local level. How ‘Small Government’ Conservatives Raise Your Taxes Through Stealthy Back-Door Fees.
Here’s a simple fact the Right would like you to ignore: cutting public spending doesn’t lead to fewer dollars being “taken out of your pocket” for the services government provides; it merely shifts those costs around, and often increases them.
When conservatives say, “I’m for lower taxes and fiscal responsibility,” what they really mean is that they favor cutting top marginal tax rates – those paid by a relatively wealthy few – capital gains taxes on investments, inheritance taxes and taxes on corporations. And to make up for those revenue losses, they are happy to run higher deficits and very quick to raise taxes on the rest of us.
At the federal level, they can and do finance some of the tax cuts they hand out to their patrons through deficit spending. That’s why Ronald Reagan increased the national debt by almost 14 percent per year, both Bushes upped it by around 10 percent annually and yet under Bill Clinton it increased by just 4.2 percent per year.
But the states – and local communities – can’t run deficits. Whether dealing with a massive drop in tax revenues as a result of a recession, or gaps they created by pandering to voters with endless tax cuts, they have three ways to go. They can: a) cut services, which is politically unpopular and also can lead to situations such as in Texas, most of which is on fire after it slashed firefighting budgets; b) make up the gap with federal funds, as so many conservative governors who rail about federal spending are happy to do; or c) hike the fees their citizens pay for government services – fees for everything from motor vehicle registration to hunting licenses and user fees for recreational areas.
This last option has proven appeal with conservative politicians because they can say, with only technical accuracy, that they didn’t raise your taxes. Across the country, state and local governments are squeezing ordinary people for every penny they can lay their hands on, and the burden these fee increases can put on ordinary families is often significant. Make no mistake: these fees are completely regressive — it costs a billionaire the same amount to renew his or her driver’s license as it does a pauper.
Historian Rick Perlstein goes back to 1973 and tells us how this all got started, Reagan’s Failed Sell of Government as Too Big.
When he made statistical claims, he blithely let them contradict each another. For instance, they said his plan would create deficits. He responded it would produce $41.5 billion in 15 years in new money. But then he also stated as the plan’s fundamental intention giving the state less money to spend. His critics would scratch their heads—and unveil another brace of statistics. Then he would respond with moralistic perorations, making them look like pedantic asses—which was the game he was playing: “When the advocates of bigger and bigger government manage to get their hands on an extra tax dollar or two,” he would quip, “they hang on like a gila monster until they find some way to spend it.”
Again, his opponents opponents threw up their hands. If Reagan wanted to cut taxes and spending, what of his last seven years as governor? California’s secretary of state, who was also the son of the governor Reagan replaced in 1966 and who himself hoped to succeed him in 1974, pointed out that he’d increased both dramatically. And already had a line-item veto, which he had never effectively used. “How can a magic formula, written by invisible lawyers,” Jerry Brown asked, “do what Ronald Reagan has been unwilling or unable to do?” The same services Reagan had been refusing to cut in the last seven years as governor, critics would logically observe, would suffer. Reagan would indicate the emergency fund would protect them. But then he would say he didn’t even want to protect government bureaucrats anyway.
But if government employees were all money-sucking monsters, why was the state budget in surplus in the first place?
But demagoguery, it seemed, was working. On Election Eve the Las Vegas oddsmaker Jimmy the Greek gave Proposition 1 a three to one chance of passage.
Then came election day. Proposition 1 was crushed 54 to 46 percent. One conservative state senator said that if the governor used the same strategy to run for president, he’d “be lucky to find a plane ticket to where the convention is.”
What happened? You might say the ideological conditions were not yet ripe. Just how radically those ideological conditions have changed between then and now is suggested by an extraordinary editorial on Proposition 1 that appeared in the far-off Milwaukee Journal. Entitled “Voters Smarter Than Reagan,” it argued Californians’ admirably “saw through the phoniness, and recognized the menace to the well-being of the commonwealth of this scheme.”
Now check this out. The Milwaukee Journal continued, “the proposition had the surface appeal of the politicians’ favorite, but false, homily that says government should ‘live within its income like everyone else.’ Government in fact is not like everyone else, but uniquely different. It alone can, and most be able to, determine the level of its own income, through the taxing power. To equate its financial situation with that of a private household is utter illogic.”
I need not dwell on the fact that what a provincial newspaper late in 1973 saw as “utter illogic” is n ow the hegemonic common sense even among ostensibly liberal Democrats, and is the favorite budgetary metaphor of President Obama himself.
Now, as most of us know, a tax limitation proposal was indeed written into the California constitution, in the form of Proposition 13, five years later. I don’t have time to go into the details, but the reasons Proposition 13 won were highly contingent to the entirely unique fiscal situation of California at the time, and had little to do with any universal rejection of government itself.
What did happen, however, was that conservatives quite effectively claimed Proposition 13 as a nationwide mandate for radical reduction of taxation and government. They did that, of course, in 1980 too—and had lots of success passing budgets and laws that harmonized with the claim.
But here is a very crucial point about our political moment: Ronald Reagan did not get elected because he promised to dismantle big government in America.
The statistics are compiled in the perennially useful 1986 study Right Turn: The Decline of the Democrats and the Future of American Politics by Thomas Ferguson and Joel Rogers. One poll they cite from Opinion Research Corporation asked voters in 1980 whether “too much” was being spent on the environment, health, education, welfare, and urban aide programs. Only 21 percent thought so, the same percentage as in 1976, 1977, and 1978, The amount saying the amount spent was either “Too little” or “about right” was never lower in those years than 72 percent. The number favoring keeping “taxes and services about where they are” was the same in 1975 and 1980—45 percent.
The pattern continued well into Reagan’s presidency. In 1983 the Los Angeles Times found that only five percent of Americans found regulations “too strict,” while 42 percent called them “not strong enough.”
Between 1978 and 1982, according to surveys from the Chicago Council on Foreign Relations, the number of voters who wished to “expand” rather than “cut back” not just social spending in general, but the dreaded “welfare” programs, increased by 26 percentage points.
And finally, in 1984, when Reagan’s approval rating was 68 percent, only 35 percent favored cuts in social programs to reduce the deficit, which of course was their president’s strenuously stated preference on the matter. 65 percent believed such cuts were imminent—and, of course, that November, well over 60 percent of them voted for Reagan instead of the Democrat Walter Mondale.
Think of those 1976-1984 public opinion statistics when you read the ones today that show the vast majority of the American public want jobs, not cuts—and for rich people and corporations to finally pay their fair share in taxes. And yet, still, somehow, the engines of austerity keep grinding on, and taxes on corporations and the rich keep getting lower, and lower, and lower. It’s frustrating, baffling. Rogers and Ferguson call that “policy alignment without electoral realignment.” How and why did it happen? That will have to be a topic for another time.
Via Eschaton, What She Said!
I hear all this, you know, “Well, this is class warfare, this is whatever.”—No!
There is nobody in this country who got rich on his own. Nobody.
You built a factory out there—good for you! But I want to be clear.
You moved your goods to market on the roads the rest of us paid for.
You hired workers the rest of us paid to educate.
You were safe in your factory because of police forces and fire forces that the rest of us paid for.
You didn’t have to worry that marauding bands would come and seize everything at your factory, and hire someone to protect against this, because of the work the rest of us did.
Now look, you built a factory and it turned into something terrific, or a great idea—God bless. Keep a big hunk of it.
But part of the underlying social contract is you take a hunk of that and pay forward for the next kid who comes along.