Throughout these last few weeks of autumn, a debate has been raging over taxes at both the state and federal level.
State voters have rejected proposals to raise taxes to protect public services, and approved proposals to defund services. Republican lawmakers in the District of Columbia have forced President Obama to agree to extend all of the Bush tax cuts for the wealthy, which will cause our national deficit to go up again.
The prevalent view that has dominated most, if not all, of the discussions that have taken place in this debate is that taxes are at best a nuisance, and at worst, legalized theft. Consequently, unaffordable tax cuts are portrayed as tonic for the economy, and proposals to raise taxes are portrayed as a recipe for permanent recession. This view of taxes is not only wrong, it’s extremely counterproductive.
If we ever want to break out of this downturn, we need to rethink how we view taxes.
Let me offer a metaphor to present an alternative view. If you belong to the Lake Washington Youth Soccer Association – or your child does – you pay membership fees. Why? Because it costs money to run the association. It costs money to take care of the fields at Sixty Acres Park. It costs money to pay the referees who enforce and interpret the rules during matches. It costs money to buy equipment for member clubs.
The taxes we pay can be thought of as membership fees in Washington state and in the United States of America. All of the public services that we use on a daily basis are paid for by our tax dollars. When we pay taxes, we are pooling our resources to get things done. We can’t build our own highways, roads, trails, rail systems, schools, police stations, firehouses, parks, libraries, pools, and so forth as individuals. That’s why we pool our resources into a commonwealth.
We’re stronger together.
There is no businessperson in this state or in this country who has not taken advantage of the many investments made possible by our common wealth to make their money. Businesses use our court system to settle disputes; the patent and copyright office to protect their trademarks, discoveries and creative works; our ports and highways to transport goods to market; and the Internet for communication and electronic commerce. The list goes on, and on, and on.
Our common wealth, and the public services that it pays for, are necessary for America’s (and Washington’s) economic security.
To put it simply, the idea of pooling resources to get things done is one of America’s richest traditions. Voters here and elsewhere have repeatedly demonstrated a willingness to strengthen our common wealth when they can clearly see where their money is going. When they can’t, they are easily persuaded by corporate lobbyists or initiative pitchmen like Tim Eyman to vote against raising taxes, or to adopt undemocratic schemes to prevent lawmakers from doing so.
Eyman and others maintain that taxes are always skyrocketing and government is constantly getting bigger (which they say is inherently bad). They produce misleading graphs showing tax collections and spending rising year by year as proof.
The reality is that taxes and public expenditures naturally increase in absolute terms every budget cycle. There are many reasons why, but the most important factors are inflation, population growth, and new development.
If you look at Washington state’s taxes and expenditures in relative terms, and more specifically, by $1,000 of personal income – which is how economists make historic comparisons – you’ll find that state and local taxes in 1990 were $118.27 per $1,000 of personal income, but declined to $105.49 in 2008. So actually, taxes have been going down slightly, not skyrocketing. Expenditures have likewise remained fairly constant. They’ve dipped up and down, but right now, they’re only $7.78 higher than what they were in 1990. (Again, this is per $1,000 of personal income).
Eyman and the right wing are wrong when they say government is getting gigantic. The public sector is simply keeping pace with the private sector. And that’s not a bad thing. At present, we have a lot of crumbling infrastructure that needs to be rebuilt or repaired. We should be investing in America’s future and Washington’s future now, not letting our common wealth degrade.