Tuesday, August 14, 2007

This'll hurt just a little 

I know the writer doesn't pick the headline, so I can't fault Dane Smith for the headline on his editorial yesterdat morning, "Modest increase in taxes could improve our safety." But Dane begins his column,

A harmful spell is beginning to break in Minnesota, making it possible at last to move forward and rebuild all kinds of bridges.

Gov. Tim Pawlenty is to be praised not only for his energy and unifying eloquence in responding to the I-35W bridge collapse, but for casting off the anti-government, anti-tax, anti-investment hex that has paralyzed Minnesota for a decade.

"A harmful spell"? "[T]he anti-government, anti-tax, anti-investment hex"? Someone's been reading too much Harry Potter.

Your data. Spending has in fact risen each year. The Democrats are, of course, rather upset about the last two numbers on this sheet, but they have only themselves to blame for trying to pressure for a huge tax increase when a more modest one might have peeled away enough votes. Particularly on transportation, there were votes for an override. The attempt now is for a do-over.
His recent declaration that he will be "moving to consider and put on the table a gas tax increase" ends almost five years during which any form of general state tax increase � no matter how grave the budget shortfalls, no matter how compelling the case for investment in infrastructure and human capital � was "off the table" in budget negotiations.
Ah, how soon they forget.
Bridges are powerful symbols of our democratic governments' role as the steward of our shared assets. They physically connect us and we realistically cannot build, replace or repair them as solitary individuals, but only through our community institutions.
In Tulsa, Oklahoma, a new privately-constructed and privately-financed toll bridge is proposed. It would go where a previous toll bridge was constructed by Tulsans back in 1904. Texas has a long history with them. Even in Massachusetts, the Charles River Bridge in 1786 was funded by investors (who earned a good return from them.) Their history in the 19th century was successful, but attitudes changed and people want them publicly provided. Fine, but it's not correct to say that "we realistically cannot build, replace or repair them" -- that is a choice.

The choice made by Minnesotans apparently should be unchanging, Smith continues, both in terms of time --
--and in terms of income. It is interesting that Smith's view appears to be that the state is entitled to a share of your income; perhaps he has a tithe in mind. Oh that it would be only 10%! -- Milton Friedman thought that would be right for government as well as for the church -- but alas the combined marginal tax rates are much higher.
The promised payoff for the tax cuts, an economic boom and a supply-side gusher of extra revenues did not materialize. To the contrary, recent reports show Minnesota for the first time in three decades is underperforming the nation in income and job growth. State Economist Tom Stinson recently summed up the trend as "disquieting."
I've noted that this is more due to industrial mix than anything else. Look at any state with a high share of employment in manufacturing -- do any of these states grow faster than the national average? We still rank 10th in per capita GDP in 2006; yes, we were 7th four years ago, but two of the three states that passed us (Colorado and Virginia) have had tax restraint. The third is California, which bounced back from the tech bubble. And 2003 and 2004 were years in which we grew faster than the national average. And there is this little matter of convergence to consider.

A 5 cent or 10 cent increase per gallon in the gas tax to tackle the backlog of neglect of our transportation systems is a good start. It's been 20 years since the gas tax was raised and its inflation-adjusted value and buying power has fallen dramatically. But these other bridges need attention, too, and more revenue will be needed to strengthen them. Minnesota has descended to near the bottom in investment for early childhood education, for instance, and federal mandates for water quality improvement will require hundreds of millions of dollars in the next decade.

Meanwhile, the badly damaged bridges across partisan and ideological divides could use some repair and rehabilitation too.

Get that? A modest increase, a good start ... to what? I was again listening to a podcast, this time after I had finished a book rather than started it, and while listening learned of a very old essay I had not heard of before. William Graham Sumner wrote this in 1883, but it applies here as well:
As soon as A observes something which seems to him to be wrong, from which X is suffering, A talks it over with B, and A and B then propose to get a law passed to remedy the evil and help X. Their law always proposes to determine what C shall do for X or, in the better case, what A, B and C shall do for X. As for A and B, who get a law to make themselves do for X what they are willing to do for him, we have nothing to say except that they might better have done it without any law, 'but what I want to do is to look up C. I want to show you what manner of man he is. I call him the Forgotten Man. Perhaps the appellation is not strictly correct. He is the man who never is thought of. He is the victim of the reformer, social speculator and philanthropist, and I hope to show you before I get through that he deserves your notice both for his character and for the many burdens which are laid upon him.
It will take you about 20-30 minutes to read that essay, but you will read there a philosophy that Smith is now attacking. The Forgotten Man is forgotten by the Wy Spanos and John Gunyous; the Forgotten Man is the one who walked back to the school bus after the bridge fell but now is told he or she has been bad for wanting to keep more of their earnings. They should give "a modest amount" to bridge "partisan and ideological divides."
Republicans and conservatives and their constituencies, as Pawlenty has begun to do, need to acknowledge that a reasonable increase in the amount of revenue we put into the common wealth is necessary and vital for our economy and safety.
As the St. Cloud Times editorial board notes this morning, we don't know that yet. The rush to do something is to put the taxpayer at risk. It's easy to remember the 13 victims of the bridge collapse; what is not seen is the panoply of goods and services not purchased and increasing the welfare of our citizens by the seizing of their resources so we can create a package to make legislators feel like they did something. Those dreams dashed by increased taxes are also part of our common wealth.

Labels: , ,