Saturday, July 17, 2010


You hear a lot about taxation these days.  The Republican Party, especially in California, has declared "no new taxes" its battle cry.  I find their laser focus on deficit reduction hypocritical, given that the Republican Party, when in power, has been responsible for some of the largest deficits in U.S. history.  The deficit tripled under Ronald Reagan.  George W. Bush ran two wars, off the books (so no one could clearly see what they cost), for most of six years.  Republicans speak of taxes as something horrific, something that will destroy us if they rise any farther.  Taxes are OK when Republicans need them, but not when Democrats ask for them.

What are taxes, anyway?  Taxes are not some kind of extortion racket (shut up, Howard Jarvis, you're dead).  We pay taxes to the government, which represents us, so it can use the money to make life a little better for us than it would be if we had to do everything ourselves.  Paved roads and sidewalks, for instance.  Street lighting.  Community libraries.  Clean drinking water. That's what your taxes pay for.  Exactly what your taxes pay for depends on what level of government you look at - the federal government pays for armies and navies, and regulates pharma companies and big food producers, and runs Yellowstone.  The state government pays to pave freeways, licenses professionals like doctors and lawyers, and manages Henry Coe State Park.  City governments pave streets, and license local businesses, and maintain city parks.  Do you really want to pay no taxes, and do all that for yourself, up to and including single-handedly defending yourself from criminals and putting out your own house if it catches fire?  I don't.

Proposition 13, in 1976, created a situation in California where a minority of the population can prevent the majority from taxing itself for the common good, or at all.  Passing any tax requires a 2/3 majority - 67% of the votes.  That means that 34% of the population can prevent the tax from passing.  This makes the anti-tax people just delighted, but the rest of us get tired of the way the state is cutting the services we thought we were paying for.  It's the recession, you see - the money isn't coming in any more, and since most taxation is a percentage, either of the money that's coming in or of the money that's being spent, the tax money isn't coming in either.

This is an oversimplification, of course.  But we seem to have lost the concept of agreeing on actions for the common good, and chipping in to pay for them.  A minority of the population says, "I'm not going to benefit directly from that, so I shouldn't have to pay any taxes to support it."  Because it only takes 34% to block a tax, they don't have to pay.  And the common good is not served. 

California had the best school system in the country 50 years ago.  Now we're near the bottom of the states in quality, and the complaints about the tax burden are louder than ever.  We've lost two generations of public school students because of the minority that doesn't want to pay the higher taxes.  Their kids go to private school, so why should they support public schools?  I guess there is no more common good - it's just "me."  But that's no way to run a society.


  1. I think a big part of the problem is that people no longer trust the government to spend the money properly for the common good. When times get tough it seems the first things that get cut are public schools and local services such as police and fire. I think repeal of the 2/3rds vote for tax increase is the critical first step but will it be enough to start seeing positive change?

  2. I think we've reached a watershed moment in the development of American social engineering.

    The jury may still be out on the Western European brand of social welfare, but the consistent verdict seems to be that though those societies enjoy a lot of benefits, the incentives we associate with ambition and social mobility and entrepreneurial ingenuity are thwarted. These conditions are often invoked by conservatives (and Republicans) to defend America's traditional laissez-faire bias against regulation, broadening of governmental service, and other "socialistic" tendencies. The evident failure of socialism (and Communism) in the 20th Century was often cited in support of lower taxation, and less government.

    Social conservatives are always trying to beat back social programs, using every excuse they can think of. But budgetary considerations don't seem to bother them when there's a nice little war to prosecute. But the bottom line is that America's economy has been allowed to deteriorate. We're losing capital and jobs by the bushel-full, and that's why our tax revenues are down. How do you maintain a high level of service in the public sector, when there is less and less money to support it?

    We can't afford open-ended military expenditures. But we can't afford open-ended medical ones either. Those are dreams that aren't going to continue to come true.

    Can we have good roads and good police and good border control and good business and banking regulation, and good park maintenance and so on? Maybe not.

    We were a frontier nation once. The new frontier may turn out to be a little wilder than we expected.