April 25, 2008
-- by Dave Johnson
This post originally appeared at Speak Out California
It is a popular misconception that taxes add to the squeeze on the middle class. But it isn't tax increases that have squeezed the middle class, it's tax cuts. It may be hard to believe (after so many years of constant anti-tax rhetoric) but here is why.
The middle class IS squeezed these days. There are pressures and long hours at work, long commutes, health insurance costs, housing costs, food and gas prices rising, and wages are not keeping up -- they haven't been for a long time. But it is not a coincidence that the middle-class squeeze began at the same time as the corporate-funded anti-government, tax-cutting fervor. In fact a good case can be made that many of the reasons the middle class feels squeezed are the result of pressures brought about almost entirely FROM the effects of tax CUTS and cutbacks in government services, regulations and enforcement that went along with the tax cuts.
There are direct and indirect relationships. One example of a direct relationship is the dramatic rise in the cost of a college education. Sending kids to college has become extremely expensive. And this places a very hard squeeze on parents who want their children to get a degree. But here in California tuition was very, very low before Proposition 13. Tax cuts directly led to this squeeze on the middle class. (And remember, most of the property taxes that were cut were on business property.)
Indirect results include rising energy prices from cutbacks in government R&D and subsidies for oil alternatives as well as longer commutes as the government cuts back on transit solutions like buses, trains and roadbuilding or improvements. Health care costs continue to rise because of government inaction and deregulation -- the result of the anti-government sentiment encouraged as part of the the anti-tax campaign. And insurance costs rise while coverage is reduced or even denied as the government cuts back on regulation and enforcement. (My wife is the one who brings in the health insurance for our family. Every year she gets a raise, but every year the amount taken out of her check to cover her portion of the health insurance payment goes up by more than her raise, and her take-home pay is lower. So more squeeze.)
Other areas where the anti-government, anti-tax campaign has increased pressure on the average person is at work. Anyone that works for a corporation is feeling the extra pressures there. As government of, by and for the people declines corporate power fills the vacuum.
And there are so many more areas where we are squeezed by this increasing dominance of corporations in our lives. As government -- the power of We, the People -- diminishes, the corporations swoop in to pick us clean. How many examples of corporate power coming to dominate over people power can you think of?
Click through to Speak Out California
Posted by Dave Johnson at April 25, 2008 7:32 PM
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Prop 13 is one of the most miserable things humans could do to their fellow human beings. It drove up the price of housing, drove up the profits of landholders -- who didn't do a thing more (or less) than their tenant neighbors to contribute to that land value. It has created awesome sprawl, with the time-wasting, fuel-wasting, polluting commutes that keep parents and children separated and turn a "normal" 8 hour workday into 10 or 12 hours away from home.
Were California to simply ditch Proposition 13, and treat all its landholders consistently with the proposition which someone thought was self-evident, that we were all created equal, and should therefore pay taxes in proportion to the value of the land we called our own -- be that a cottage on a postage stamp, a mansion on an estate, a mansion on a waterfront postage stamp, an apartment complex, a shopping center, an office building, a hotel.
Were we to switch to land value taxation, many of the problems of the middle class and the working class would get better rapidly, with no other intervention required. And the programs we now spend lots of money on to try to help would have some chance of succeeding -- if indeed they were still needed at all!
Posted by: lvtfan at April 26, 2008 1:57 PM
Having said all that ...
I do not think we should be continuing to rely on sales taxes, or wage taxes. So-called balance in taxation is a very poor idea.
Land value taxation is the only tax that is remotely consistent with the canons of taxation. Sales taxes burden the economy, and, particularly the poor. Wage taxes burden everyone. Building taxes burden those who would build, or need a place to live, or a place to work, or a place to do anything. (That's pretty much everyone I think.)
Land value taxation doesn't burden the economy. It invigorates it -- causes the holders of our best land to seek to put it to better use, which is good for all of us.
Posted by: lvtfan at April 26, 2008 3:26 PM
My goodness, you're a Stalinist... no wonder you've such an abysmal view of current society - you don't control it.
Posted by: bains at April 28, 2008 1:13 AM
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