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"What Do We Mean When We Say We Hate Taxes" is an excellent piece on our irrational attitude toward taxes - and our vulnerability to manipulation by some well meaning, and some not so well meaning folks on the right.One of the best aspects of the article is they way in which it provides almost a blueprint of what to emphasize around our dinner tables, with our friends, and among our colleagues - in short that "this is a .... country that expects to be left alone while at the same time expecting a certain level of services."
It is during hard times like these that most people forget about those services - both on a personal and an abstract level. Much like the gentleman who absurdly stated that he wanted the government's hands of his medicare, it always amazes me how many people who are DIRECTLY benefited by services, never reflect on that hypocrisy.
As Pierce writes, "Quite simply, if you love [or need] a particular government service - that your bridges are repaired, for example, or you emergency calls answered - you ought to love [or at least appreciate] the taxes that pay for it. Yet, that is rarely the case."
When there was a fledgling movement in Massachusetts to eliminate the income tax, it was defeated largely because most people understood this - on a private, practical level. Yet, when it comes to electing or supporting people who would move us in that same direction (some programs cut, just not all) we jump at the chance to voice our anger. Yet, philosophically, the votes would seem incongruous. As Stephen Crawford goes on to explain in the article about defeating the above mentioned initiative, "What I found surprising ... was the other side's refusal to identify a single thing they would cut. One person's cut is another person's benefit."
Pierce also includes comments from Barney Frank who also puts the situation in excellent perspective. “Taxes” are viewed by many as “my money going to things or people of which I disapprove,” which makes any political appeal in favor of raising them, even for the purpose of funding people and things of which you might approve, a dodgy matter at best. Navigating that predicament is so tricky that, over the past 30 years or so, many politicians -- most notably conservative ones in Washington -- have simply declined to do so at all, relying on former vice president Dick Cheney’s now-famous dictum that Ronald Reagan “proved deficits don’t matter." Frank expresses correctly that "The problem is that government got so unpopular in the last few years that the anti-tax side has an easy out, they don’t have to argue that we have to cut services anymore.”
In my own debates with people on the "cut" side of the argument, I have also found this to be true. They don't ever have to give any detail about cuts. The routine responses are all straw men: "Come on, can you honestly say you don't think government is too bloated." or "You don't think they can't find areas to cut that are clearly wasteful?" They all think there is this imaginary pie of "wasteful" spending that would be the only thing effected. And you know what ... people are buying it hook line and sinker.
A similar problem exists when people think they know how much things are "suppose" to cost. Schools are a perfect example. Using percentages and big numbers, the assumption has already been sold that too much money is spent on education or schools and that they are failing despite the money spent. For the most part, outside of struggling inner city or rural schools, most schools do an excellent job with the situation they are placed in. No one wants to talk about how schools are doing more in 2010 than anyone ever envisioned under the current funding structure or that more money is spent on special "services" for students than on the average student who simply comes to school, goes to class, plays a sport and does their homework. Ahh - but there is that magic word again. Schools provide incredible "services" that no one would want cut for "their" child but that in the abstract - everyone IS ACTUALLY ASKING FOR IT TO BE CUT when they vote down prop 2 1/2 overrides.
Schools should be cathedrals. They should be the thing we spend the most on and be proud of it. I think Newton should spend an exorbitant amount on a school and set a standard that all schools in Massachusetts want to emulate. How about that thought - a race to build the best schools - and with it - a "profit sharing" arrangement like they have in major league baseball so the poorer "markets" can be supported in some way by the more affluent who have more money than they seem to know what to do with. (how socialist of baseball - oh my)
But the culture of indignance to taxes and indifference to what that really means is with us and goes over the top in tough economic times. The faux populists find more receptive audiences for their messages these days, but that is not new. But what would be new is if knowledgeable, influential people actually used articles like this to turn the tide.
Even just using this section on the "Death Tax" would be a great first step to bring up at the water cooler or at the coffee shop ...
"Calling it the “death tax” gave its opponents a huge advantage in perception. Through this, and through taking advantage of the revamped terrain on which any discussion of taxes now must take place, the people seeking the elimination of the estate tax -- and, one can fairly conclude, the concept of progressive taxation generally -- have managed to make allies out of people whose estates never had a chance of being taxed at all.
In Death by a Thousand Cuts: The Fight Over Taxing Inherited Wealth, their 2005 book about the political battle over the estate tax, Michael Graetz, a Yale professor who worked for the Treasury Department in the first administration of George W. Bush, and Ian Shapiro, also a Yale professor, tell the story of Chester Thigpen, an elderly Mississippi tree farmer who testified before Congress in favor of repealing the tax despite the fact that his estate was too small to be taxed.
“My father recently died,” recalls Elizabeth Warren, a Harvard Law professor and the chairwoman of the Congressional Oversight Panel monitoring the Troubled Asset Relief Program, which bailed out banks at the expense of (yes) the taxpayer. “He worked all of his life, and at the end of the day he had a modest home that was paid off, Social Security, and a few bucks in the bank, and he was worried about paying ‘death taxes.’ That man would have had to make 100 times more than he’d made, he was so far away from ever paying a dollar of the so-called ‘death tax.’
There was something heartbreaking about it. Where should his interests have aligned? Toward a much more populist notion of a progressive tax structure. He saw his interests in avoiding ‘death taxes.’ It broke my heart.”The battle over the estate tax -- which is ongoing in Washington -- is a nearly perfect prism through which to look at the consistently problematic view Americans have of the concept of taxes.
Ultimately, no matter which side of the political aisle you find yourself on, taxes are a public demonstration of the kind of political commonwealth we desire for ourselves. And there is a terrible price to be paid for believing that we can get something for nothing. The way we look at taxes is the way we look at ourselves, even if we choose to look away."
Full article and link below...
Our Love-Hate Relationship With Taxes
The fight over taxes -- in Massachusetts and across the country -- is as furious as ever. But what is the battle really about?
Charles Pierce - Boston Globe Magazine - February 7, 2010
It’s hard not to wonder about them, as they drive north to New Hampshire, blinded by plasma screens and home furnishings. As we are all painfully aware, Massachusetts -- “Taxachusetts” to political consultants and other public people on the dodge -- raised its sales tax to 6.25 percent back in May. This sent folks scattering northward, at $2.75 a gallon or more, mind you. People even told reporters that they were going to New Hampshire to shop for groceries, which are not taxed at all in Massachusetts, and apparel, which is not taxed here either until the purchase goes above $175. Nevertheless, they heard all the radio commercials asking them to come shop in “tax-free” New Hampshire, and they were on the road before they knew it. They were running away from ghosts.
Put simply, this state is fairly average when it comes to taxing its citizens. According to data from the Tax Foundation, a nonpartisan tax research group in Washington, D.C., the state and local tax burden in Massachusetts is 9.5 percent, 0.2 points below the national average, placing Massachusetts 23d among the 50 states. The personal income tax system is the 29th highest. On the other hand, the data show that the state’s corporate tax structure ranks it fourth among those states that have corporate income taxes, and property taxes here are the eighth highest in the country. In short, by any empirical measure, calling this state “Taxachusetts” in 2010 is no more accurate than calling it “Massachusetts Bay.”
“That’s been the case since 1991,” says one veteran analyst who declined to be identified and who worked on the state’s tax structure under both Republican and Democratic administrations. “There’ve been about 50 tax reductions enacted by governors and the Legislature since then.”
Nevertheless, the cars still drive north, and the arguments continue, exacerbated over the past year by the national economic downturn and the angry, inchoate populist politics that resulted from both the downturn itself and the occasionally erratic attempts to solve it. The arguments were most clearly evident in the upset victory of Republican and former state senator Scott Brown in the race to replace the late US senator Ted Kennedy. Brown ran on the vague, but eminently salable, notion that he would lower our taxes, even though, as the member of a legislative minority with the least seniority, what he could actually do about them remained unclear. Indeed, some interviews with voters prior to the election led one to believe that people voted for Brown because he would somehow reduce all their taxes, state and federal.
However, we can be ambivalent about taxes. In Dedham last month, voters passed property tax hikes totaling more than $15 million and earmarked for a new elementary school and improvements to another school. At the same time, the town gave 55 percent of its vote to tax-cutting Brown. If nothing else, the results prove that, on a local level, if a proposal to raise taxes is tightly drawn as to the purpose of the increase, it has a better chance of succeeding, even amidst a seismic event elsewhere on the ballot.
More clearly than ever, the issue of taxes must be seen as something far beyond pure economics, and well beyond simple dollars and sense. Taxes have become the way we define ourselves as a political commonwealth, or a way of determining whether we still see ourselves as such at all. There’s a strong -- and occasionally successful -- school of political thought that sees very little in government or in society that belongs to us all. “Right now,” says Robert Borosage, the president of the Institute for America’s Future, a nonpartisan research and education center in Washington, D.C., “when you say ‘taxes,’ it’s a substitute for government, and in some contexts that means Big Government, which is oppressive, and taxes represent the intrusion of Big Government into our lives.”
Of course, as with so many things in our politics, in the discussion of what taxes represent, inexactitude is everybody’s friend. Last summer, when the Tea Party movement hit high tide, there was some very loose and unformed talk about keeping the hands of “government” off people’s Medicare. This is a state -- and beyond it, a country -- that expects to be left alone while simultaneously expecting a certain level of service from its government. One that expects, in the words of its founding document, to provide for the common defense and promote the general welfare, but to do it, at best, on the cheap. Quite simply, if you love a particular government service -- that your bridges are repaired, for example, or your emergency calls answered -- you ought to love the taxes that pay for it. That, however, is rarely the case.
“What I found surprising during our debate,” explains Stephen Crawford, the Arlington-based public relations executive hired as the spokesman for the successful opposition in 2008 to a ballot question that would have eliminated the state income tax, “was the other side’s refusal to identify a single thing they would cut. One person’s cut is another person’s benefit. That’s why we were successful.”
The drive to repeal the income tax was led by perennial libertarian candidate for everything Carla Howell of Wayland. Her next project takes aim at the state sales tax: This November, Massachusetts voters will likely see a proposal on the ballot that would slash it to 3 percent.
“Taxes” are viewed by many as “my money going to things or people of which I disapprove,” which makes any political appeal in favor of raising them, even for the purpose of funding people and things of which you might approve, a dodgy matter at best. Navigating that predicament is so tricky that, over the past 30 years or so, many politicians -- most notably conservative ones in Washington -- have simply declined to do so at all, relying on former vice president Dick Cheney’s now-famous dictum that Ronald Reagan “proved deficits don’t matter.”
“The problem is that government got so unpopular in the last few years that the anti-tax side has an easy out,” says US Representative Barney Frank, the chairman of the House Financial Services Committee. “They don’t have to argue that we have to cut services anymore.”
Part of that is the thrall that the theories of supply-side economics have held over Republican leaders through the years of conservative ascendancy that began with the election of Reagan in 1980. Much of supply-side theory holds that lower taxes eventually translate to higher government revenues. Over the years, this morphed into a kind of reflexive and general anti-tax fervor so pronounced that Jonathan Chait, a reliably centrist senior editor at The New Republic, wrote a book in which he called supply-siders, among other things, “sheer loons.” Even so, they succeeded so well politically that the entire national debate on taxes changed and, with it, the way we looked at ourselves as a self-governing people with certain institutions and values that we hold in common. Right about the time Reagan brought the theory into the federal government a similar thing was happening in Massachusetts, and, unlike in Washington, it was happening from the ground up.
Thirty years ago, she was a noisy voice from the sidelines, a bleacher-creature heckler in Massachusetts politics. She was loud and raucous and far too easily dismissed by people in the state’s political establishment who should have felt the ground shifting beneath their feet, but who had been standing in the same place so long that their legs had gone numb. She was pounding away on the subject of taxes -- not merely on how much they cost, but on what they had come to represent -- in the same relentless catechism with which William Lloyd Garrison once blessed himself here: She was in earnest; she would not equivocate; she would not excuse; she would not retreat a single inch. And, Lord knows, she would be heard. In this, Barbara Anderson probably has affected Massachusetts politics more than anyone ever has who’s never been elected to anything.
“To me,” she says, “taxes have never been about the money. It’s been about power and who’s in charge and who’s in control.” A native of western Pennsylvania, where her parents ran a hardware store, the former Barbara Hervatin enrolled in the DuBois campus of Penn State, where friends introduced her to the work of Ayn Rand. By 1980 and two husbands later, she found herself here, working as the executive director of Citizens for Limited Taxation. CLT was six years old then, a creature of the state’s lively, if powerless, conservative libertarian political subculture. (At the time, the national headquarters of the John Birch Society was tucked into the leafy streets of Belmont, across from the public library.) By the time Anderson took over from Greg Hyatt -- who, in 1986, would become briefly notorious for abandoning his gubernatorial campaign when he was said to have been spotted naked in his office -- CLT was struggling and nearly broke. But it had been paying attention to what had been going on in California, where in 1978 a tax revolt led by a man named Howard Jarvis had resulted in an amendment to the state constitution severely limiting property taxes. In 1979, CLT launched an initiative petition in Massachusetts called Proposition 2½ that would limit a municipality’s total annual property tax revenues to 2½ percent of the assessed value of all the municipality’s property and would cap a municipality’s ability to raise its property taxes at that same 2½ percent. It also would reduce the excise tax on automobiles.
At the same time, a court decision in Massachusetts had stopped the practice of taxing businesses more and more and had forced a shift in the property tax from industrial property to residential property. “Prop. 2½ really was a money problem back then,” Anderson recalls. “People were generally angry about the concept that we had gotten sales taxes, income taxes, and the Lottery on promises to lower the property taxes, and it didn’t happen. People saw that they had to do it themselves.”
The campaign for Proposition 2½ wasn’t entirely a people’s crusade. The Massachusetts High-Tech Council, furious at the state Legislature for ignoring a milder tax-limitation amendment in July 1980, threw itself and its money behind the CLT’s ballot question. Anderson, however, was the public face of the campaign. She was uncompromising. Once, when countering an argument that passing the measure would cause the closures of public libraries all over the state -- which it did -- she responded with a discussion of how cheaply people could buy paperback books. Nonetheless, the message got through, and an unlikely coalition of technology millionaires, small-business owners, and put-upon homeowners gave the ballot question a whopping 59 percent of the vote that November.
Making the new law work, then, became the problem. The Legislature’s taxation committee took up the job. The underlying question remained what the passage of Proposition 2½ meant beyond simple budgetary mathematics. Did it represent anything more than abandoned wrath? Was it a plea purely for lower taxes and the devil take the hindmost, or was it really a kind of angry call for better and more responsive government? And if it was all of those, then its implementation was a very complicated thing.
“The bill, as it was drafted, was really Draconian,” recalls US Representative Michael Capuano, who at the time was chief counsel to that committee. “Even its proponents knew that. We asked them, ‘Is this really what you want?’ Barbara and I worked together. The answer was that we agree that, in general, we want significant tax cuts. If we implemented the whole thing right away, one community could have had 50 percent tax cuts that year. The state couldn’t command that. The internal argument was, even if you do this, you’re not living up to the spirit of what you said you wanted -- which was thoughtful tax policies.”
One thing the Legislature declined to do was to substitute its judgment for that of the voters, which was in its power to do. (Proposition 13 in California was different. It was a constitutional amendment and not simply a new law, the way Prop. 2½ was here.) “Right after it passed,” Anderson says, “there were a stack of bills to amend or repeal 2½. The Legislature, to its credit, decided that somebody had to do something about property taxes and we’re never going to do it. There were some people you could trust up there then.”
Proposition 2½ is now an established part of how the state governs itself. (There have been sporadic attempts to repeal it, which rarely got beyond the talking stages.) Other tax rollback attempts have not fared so well. In 2000, voters overwhelmingly passed another Anderson-led petition, this time to rescind state income tax increases that had been passed in 1989 and 1990 that would have brought the tax rate back to 5 percent, but the Legislature froze the rollback at 5.3 percent. The howls that greeted that action had little to do with money. “That was the whole motivation of the campaign in 2000, when we didn’t even talk about how they spend most of the money,” explains Anderson. “It was, ‘Aren’t you sick of politicians who lie to you and then break their word?’ People in this state have long memories about ‘temporary’ taxes.”
Within the context of Prop. 2½, the fight over what taxes really mean has moved to Massachusetts’s cities and towns. Whenever a municipality wants to override the provisions of the law, it must do so at the ballot box. This can range from the $6.2 million override for the town library that passed by eight votes last June in Walpole, to the crowded ballot in Winthrop last May, when the town passed eight of 10 overrides. (Up with the library and trash collection, down with the town planning and grants office.) Between 1990 and 2005, 224 communities passed a Proposition 2½ override. The more affluent the community, the more often an override seems to pass. Cape Cod seems to have been one of the more enthusiastic spots; in that same 15-year period, Chatham passed a whopping 55 overrides and West Tisbury passed 46, while Eastham, Tisbury, and Truro passed 34, 32, and 30, respectively.
“Government has gotten so big that it’s hard to track where the money goes,” says Capuano. “When people know where the money’s going, they like it better. At least you know with the gas tax that the money is going to roads and bridges. They’re more accepting of that than they are of general taxation.” At the very least, Proposition 2½ forces municipalities wishing to override it to say precisely why they are doing so.
“Nobody likes paying taxes,” Crawford says, “but nobody likes potholes in their roads or myriad other impacts that we’re just starting to see in this state. The other change in our culture here has been a deep commitment to provide local aid that was not there before Proposition 2½. [Prop.] 2½ is there, but it also required the state to provide state aid not provided at that level before.” On the 2008 income tax ballot question, Crawford’s interpretation prevailed, but it is significant that the campaign was fought on the terrain that Barbara Anderson had helped define 30 years ago.
Long ago, in the days before supply-side economics and Propositions 13 and 2½ and the supremacy of what taxes have come to mean over what they actually are, it was a Republican named Oliver Wendell Holmes Jr. who, when asked by a young secretary whether he hated paying taxes, replied, “No, young fellow. I like paying taxes. With them I buy civilization.” And it was another Republican named Theodore Roosevelt, arguing for the implementation of what we now call the estate tax -- and what conservative politicians frame as the “death tax” -- who argued: “The man of great wealth owes a peculiar obligation to the state, because he derives special advantages from the mere existence of government.”
According to a study by the Center on Budget and Policy Priorities, a nonpartisan institute in Washington, D.C., eliminating the estate tax would blow a $1.3 trillion hole in the federal budget over 10 years. Meanwhile, the tax itself in 2009 only applied to an estimated 0.24 percent of all the people who died that year. And according to another study, this one by the Urban Institute-Brookings Institution Tax Policy Center, more than 99.7 percent of estates owe no estate tax at all. The estate tax revenues in the United States as a share of our gross domestic product are below the international average for such taxes. In a country that believed in progressive taxation, the issue likely would not even arise. But the brawl over the estate tax is not strictly a matter of money and percentages. It is also deeply, profoundly political. Opponents of the estate tax have argued against it on an issue of “fairness.” They contend that the estate tax penalizes people by “making them pay taxes twice.” As journalist Peter Beinart pointed out in The New Republic four years ago, they have managed to cast the estate tax as a millstone tied to the American dream. “Ultimately,” Beinart wrote, “the argument against the estate tax . . . is moral. It is about right and wrong.”
Calling it the “death tax” gave its opponents a huge advantage in perception. Through this, and through taking advantage of the revamped terrain on which any discussion of taxes now must take place, the people seeking the elimination of the estate tax -- and, one can fairly conclude, the concept of progressive taxation generally -- have managed to make allies out of people whose estates never had a chance of being taxed at all. In Death by a Thousand Cuts: The Fight Over Taxing Inherited Wealth, their 2005 book about the political battle over the estate tax, Michael Graetz, a Yale professor who worked for the Treasury Department in the first administration of George W. Bush, and Ian Shapiro, also a Yale professor, tell the story of Chester Thigpen, an elderly Mississippi tree farmer who testified before Congress in favor of repealing the tax despite the fact that his estate was too small to be taxed.
“My father recently died,” recalls Elizabeth Warren, a Harvard Law professor and the chairwoman of the Congressional Oversight Panel monitoring the Troubled Asset Relief Program, which bailed out banks at the expense of (yes) the taxpayer. “He worked all of his life, and at the end of the day he had a modest home that was paid off, Social Security, and a few bucks in the bank, and he was worried about paying ‘death taxes.’ That man would have had to make 100 times more than he’d made, he was so far away from ever paying a dollar of the so-called ‘death tax.’ There was something heartbreaking about it. Where should his interests have aligned? Toward a much more populist notion of a progressive tax structure. He saw his interests in avoiding ‘death taxes.’ It broke my heart.”
The battle over the estate tax -- which is ongoing in Washington -- is a nearly perfect prism through which to look at the consistently problematic view Americans have of the concept of taxes. Ultimately, no matter which side of the political aisle you find yourself on, taxes are a public demonstration of the kind of political commonwealth we desire for ourselves. Even the most radical anti-taxers -- and they have moved far away from anything like what Barbara Anderson was pushing in 1980 -- believe that. (Remember, the fundamental principal behind supply-side economics was that cutting taxes would increase government revenue.) At the same time, anyone on the other side who believes in progressive taxation has a deep and abiding responsibility to make sure the money is neither wasted nor grafted away. “Taxes have become a litmus test,” says Capuano. “Maybe they always were, I don’t know. But my argument is that what you can’t do on the local level we can do on the national level. You can cut taxes and then just increase the debt ceiling. Borrow and spend is just as bad [as], if not worse than, tax and spend. You can have anything you want and you don’t have to pay for it.”
Like them or don’t like them, taxes are the statement of what we freely choose to be, and not what we wish we were. “We have a badly structured society, a decrepit infrastructure, and we’re now seeing the collapse of the university system that was our pride and joy because tuition costs are rising so much faster than the cost of living,” says Borosage, referring to the whole nation. “There is a terrible price to be paid for believing that we can get something for nothing.” The way we look at taxes is the way we look at ourselves, even if we choose to look away.
© Copyright 2010 Globe Newspaper Company.
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