In an interview with KGO-TV in San Francisco Republican gubernatorial hopeful Tom Campbell suggested a higher gas tax as a solution to the state budget deficit:
Former State Finance Director Tom Campbell will be offering legislators his idea of a partial solution -- an 18 cent temporary gasoline tax.
"The price of gasoline has now fallen in our state. Last June it was about $4.60. If you were to put on a gasoline tax of about 18 cents, so we'd still be well under two dollars a gallon," said Campbell.
It would be nice if KGO explained that the Democrats' budget deal - which Arnold vetoed - would have basically done the same thing, replacing the current gas tax with a "gas fee" that would result in a net 13 cent increase to the taxes paid on gasoline. But it's good to see Campbell proposing an eminently sensible plan like this.
Whenever higher gas taxes - or higher taxes of any sort - are proposed, some progressives react with criticism, pointing out that some of these taxes are regressive. They're not wrong - when you're talking about taxes, progressive income taxes and property taxes are generally a fairer way to obtain revenue than excise and sales taxes.
But if you stop there, you're missing the point.
Because when you include the whole equation - the effect of spending cuts as well as tax increases - it becomes clear that even sales and gas taxes are much better for the economy, and especially for working and poor people, than spending cuts.
Such is the point Nobel Laureate Joseph Stiglitz makes, in work cited in this California Budget Project report. Stiglitz demonstrates, using hard evidence, the following points:
- The economies of states that substantially increased taxes in recent years performed as well or better than states that did not
- The economies of states that enacted large tax cuts in the late 1990s and early 2000s performed worse than other states
- Personal income taxes are better than spending cuts as they don't have as harmful an effect on consumption or local economies.
Much of this ought to be common sense. We are facing a recession driven by rising unemployment and folks having less money in their pocket. While the right-wing ideologues would have us believe taxes take money out of that pocket the amounts pale in comparison to the money lost to spending cuts.
In the early 1990s recession both California and the US government raised taxes. It didn't worsen the recession, and it didn't prevent an economic boom from emerging after 1993.
Spending cuts are really just a euphemism for mass layoffs. When you fire tens or hundreds of thousands of public employees that means they are spending less money. Fewer shopping trips, fewer visits to restaurants, fewer people paying their mortgage. That creates a spiral of job losses and business failures, which in turn mean fewer tax revenues. Spending cuts ultimately leave the budget worse off, not better off, than before.
This is true especially for lower-income families. A sales tax or gas tax hike will have some bite. But as much as a school closure? As much as a father being laid off from his job on a state infrastructure project, or a mother being laid off from her job in the county government office? I strongly doubt it.
For example, the cost to a family of a restored VLF, between $150 and $300 a year, is chump change compared to the cost of having to provide health care to an uninsured family kicked off of state assistance. If a school closes or higher education is priced out of reach that is going to have a far larger cost to a family both immediately and over the long-term than any tax increase.
This is common-sense stuff, obvious to anyone willing to give even a cursory glance at reality. But 30 years of anti-tax rhetoric has blinded us to these realities. Spending cuts are the most regressive form of budgeting there are - and while we need as progressive a tax code as possible, we need to keep in mind that this is a continuum of progressivity:
Income and property taxes > sales taxes > spending cuts
While there are differences among kinds of taxes and spending cuts, the above is a good shorthand to keep in mind as we push back against 30 years of ruinous policies and bad priorities that have brought California to the brink of a Depression. |
