Continuing with my ongoing focus this week on taxes and spending (it is federal budget week, after all), I wanted to point out this terrific column by Ed Quillen that does a terrific job of explaining what local, state and federal tax debates are really all about:
Let's consider the imaginary Colorado town of Galena. It has 1,000 households. Each household pays $1,000 a year in municipal taxes, and the annual budget of $1 million goes for streets, parks, fire and police protection - services that presumably benefit everyone in town.
Now, suppose that 20 households in Galena manage to arrange matters so that they pay no municipal taxes. The town government can either cut the budget to $980,000, thereby reducing services that everyone there relies on, or the town can raise taxes on the remaining 980 people who haven't hustled a tax break.
In the latter case, the individual household tax goes up to $1,020.41. The extra $20.41 per household is to make up for the taxes not paid by the Favored Twenty.
Galena's mayor sees the unfairness here, and proposes to make the Favored Twenty pay their fair share. Overall tax revenues will not rise, the government will not expand, and 980 residents of Galena will see a reduction in their taxes.
But the Favored Twenty will whine that they're getting hit with a "tax increase," that they're important people who generate great amounts of economic activity, and if Galena insists on treating them in such a mean and unfair way, they'll move somewhere else.
So why do politicians nonetheless kowtow to the anti-tax fervor? Because they are afraid of campaign commercials hitting them as "tax-and-spenders." And indeed, those commercials have been effective - but they have been effective in a vacuum.
Until lawmakers start making the positive case for taxes - until they start laying out the stark choices that tax debates really are all about - our politics will continue to be dominated by the anti-tax narrative, and our country will continue starting to look like Colorado Springs.
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