State can’t afford,
and doesn’t need, income tax cut
IT’S EASY TO GET drawn in by Gov. Mark Sanford’s proposal to
reduce income taxes. Yes, we’ve got unmet needs in this state, you
might say, but to hear supporters talk, cutting our top tax rate is
the only way out of the lingering recession. Leave the rate where it
is, and our unemployment rates are going to remain among the highest
in the country; business owners will be detouring through Tennessee
on their way from New York to Florida just to avoid so much as
driving through a state with such repressive taxes.
Besides, it would only cost $6 million — out of a nearly $6
billion budget.
Some perspective is in order.
Six million dollars is the first-year cost; it increases every
year, as the tax cut is phased in — jumping ten-fold next year, and
then doubling the next. By the time the tax cut is fully
implemented, in 2015, it will cost $959 million. That means the
money the government has to spend on schools and prisons and other
needs will be 13 percent less than if the tax hadn’t been cut.
And that’s if the projections are right. During the few seconds
of what passed for debate at last week’s House Ways and Means
Committee meeting, before resigning herself to the fact that what
she said “ain’t gonna change nobody’s mind in here no way,” Rep.
Gilda Cobb-Hunter reminded her colleagues that they had been assured
in 1995 that their residential property tax cut would cost no more
than $195 million a year. Today it costs $249 million a year — and
the only reason it’s that low is that the Legislature had the sense
to go back and cap the tax break when, after just three years, it
had already grown by 25 percent. Another property tax break, which
wasn’t capped, has grown from $47 million to $162 million over the
same period.
Of course, the same thing happens with many programs the
government provides: They end up costing more than anyone expected.
The difference, as we have painfully seen during the recent
recession, is that when times get bad, government programs get their
budgets cut; tax cuts are forever.
Cost should never be the only consideration in government. Just
as it would be smart to invest enough money to provide all our
children with a shot at a decent education, even if doing so were
painful, it would make sense to find a way to lower our income tax
if it really was so burdensome as to scare off investment.
It’s not.
Because of the way it is calculated, our income tax looks higher
than it is. When you plug in the exemptions and deductions that real
people take, and do the same for other states, ours lands in the
middle of the pack, even near the bottom under some
calculations.
Change the way the income tax is calculated, so the rates on
paper more accurately reflect the rates charged, if you will. That,
along with a reassessment of our entire tax code, is long overdue;
such a reassessment might even lead to lower income tax rates —
coupled with higher rates on some other tax.
But as long as we can’t find the money to operate the homework
centers and summer school programs we need to help catch up kids who
have trouble learning, as long as we can’t keep enough guards in our
prisons to keep the ever-growing inmate population in check, as long
as we have people with severe developmental and mental disabilities
who can’t get the services that we’re required by law to provide
them, we have no business reducing the amount of money available to
run the government. And that’s what this bill would do. |