Monday, July 25, 2011

Abdicating responsibility, devolving taxes

On the day that President Obama declared his willingness to cut spending “by historic amounts” to placate a Republican congressional caucus that is laying into social services, public goods and our already terribly-incomplete national safety net with a bloodthirstiness seldom seen outside of a Shakespearian tragedy, California’s state Democratic leadership is putting off a plan to “grant cities, counties and more than 1,000 school districts broad new taxing authority”.

Obama suggested that the “best way to take on our deficit is with a balanced approach” in which all parties “pay their fair share”.  This last is clearly aimed at the affluent and at large-scale corporations.  But Obama should not even consider cutting from those services, institutions and programs which benefit society at large and those in the most economically-fraught situations before asking the wealthy to pay their fair share.  Everyone should make a fair contribution, and those who have done especially well based on the structure of our society, and who are more secure, should obviously pay first and pay more.

While Obama ought to be pilloried for his historic lack of responsibility and leadership, as well as his callous abdication of the moral high ground, the question of taxation in California (beset by budget difficulties, an un-democratic legislative system paired with a democratic referendum system) is much more complicated. 

The LA Times reported that Steinberg “said he was tabling his measure as Democrats and Gov. Jerry Brown work to stitch together a political alliance—that would hopefully include some of the business groups angered by his bill—to push for a statewide tax initiative next year”.  It’s easy to see why businesses might oppose Steinberg’s bill.  After all, it might not only require them to pay responsible levels of taxes; it would also increase their costs, forcing them to buy off politicians and political parties at an entirely different level of local government.  I would not favour Steinberg’s solution, and so I’m happy to see it tabled, even if for the wrong reasons (one hopes that this failure to be up front about asking wealthy interests to do their bit doesn’t become a habit of state Democrats).

Although the localisation of taxing authority makes a certain amount of short-term sense, is directed squarely at the revenue problem the state faces, and looks more democratic than the existing tax framework, it has serious drawbacks that deserve the sustained and thoughtful criticism it is unlikely to get in any debate that will involve lobbying by the state’s Chamber of Commerce and associated taxpayer groups (code for tax evasion groups).  And Democrats and labour allies should resist the temptation to uncritically push forward a proposal that takes this satisfying easily but ultimately dangerous approach to revenue.

Most self-evidently, not every community has the same tax base, the same business interests, industries, and other potential sources of revenue.  What this means is that the principles of universality and equality (such as they exist in our current tax structure) would be thrown out the window and lead to a mad scramble where school districts, business locations and industry bases are concerned.  This would likely lead to a widening of the gap between (to take the education example) high-performing and struggling schools, which in turn exacerbates already serious and un-addressed socioeconomic inequality.   

The inequalities that would grow in education and in other spheres could lead to an unpredictable redistribution of population, businesses and industries in the longer term.  It is hard to say whether local government would be as susceptible to the monied interests that plague our state politics, but it seems improbable that the wealthy (who are, for example, able to send their children to well-funded private schools, thereby shielding them from the consequences of the de-funded education system their social irresponsibility and political intransigence are promoting) would not continue to be able to exercise an inappropriate influence over the distribution of political, social and economic resources.

Voters look amenable to a devolution of tax responsibilities where consumables like cigarettes and alcohol are concerned, though less sure about income, oil and vehicles.  In other words, people remain in many cases opposed to those taxes which are fairest, most evenly-distributed, and ask for contributions according to people’s means to make those contributions. 

While the leaning of some business interests towards a more rationale budget solution in California than that promoted by the increasingly deranged state Republican Party is a positive development, Democratic lawmakers should not then go out of their way to grant undeserved concessions to said interests.  But neither should those lawmakers embrace a policy that might, in the longer term, aggravate the very ills the policy in question is attempting to address.

There is a strong argument to be made for universality.  There is little point, after all, in thinking of ourselves as a community at the state or national level if we don’t accept that all people deserve access to the same quality of services in spheres as critical as education, healthcare and social welfare.

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