Republicans opened the door for sensible taxes
The fantasy that tax cuts will lead us all to prosperity dies hard.
As many states conclude their annual legislative sessions, there are several stellar examples of the failure of trickle-down economics despite the proselytizing of the anti-tax zealots pledged to Grover Norquist from Americans for Tax Reform. It’s been disheartening to see governors cling stubbornly to a dogma that has produced nothing but pronounced income inequality, especially as they pretend they’re not really raising taxes to cover looming budget deficits.
In contrast, a majority of Nevada politicians finally rejected the “taxes are evil” ideology that kept us perpetually in last place in so many quality-of-life indicators, approving Republican Gov. Brian Sandoval’s record $1.4 billion tax increase, with most of the new funds dedicated to improving education. One can almost pardon our schadenfreude as we watch the meltdowns in other states.
Kansas, led by Gov. Sam Brownback, has been paralyzed by the failure of the governor’s heralded income tax cuts in 2012 that caused an epic revenue shortfall despite promises of prosperity. Brownback blamed the national recession for the $470 million budget hole, but even he recognized he couldn’t slash that much from the state budget. Instead, he implored the Legislature to do something, saying, “You’ve just got to act.”
Regretfully they acted by raising the regressive sales tax from 6.15 percent to 6.5 percent, and Kansas now possesses the highest sales tax on food in the nation. While the governor’s plan to eliminate income taxes for 380,000 of the lowest-income citizens was approved, some analysts argued the poor will end up paying more taxes than ever thanks to the hike in sales tax. Meanwhile, the Legislature did nothing to address the income tax exemption for business owners, another Brownback solution that hasn’t trickled down to the working class.
Brownback’s solution left the education budgets flat and state employees with no pay raises. Worse, the Legislature enacted a “ratchet” provision backed by the Chamber of Commerce to utilize future revenue growth over 2.5 percent to reduce state income tax rates, with the goal of eventually eliminating the state income tax altogether. Since Medicaid costs alone will easily use up the growth cap, it’s virtually guaranteed there will be no significant increase for education or other critical areas of the budget in the years ahead.
But Kansas pales in comparison to the budget farce perpetrated by Louisiana’s newly minted presidential candidate, Gov. Bobby Jindal. Facing a deficit of $1.6 billion due to crashing oil prices and Jindal’s previous tax cuts, he cooked up a creative but utterly ridiculous solution in order to keep his pledge to Norquist not to raise taxes. He presented the Legislature with a choice of cutting $350 million from education budgets or accepting his “purely fictional, procedural phantom, paper tax credit,” as a member of his own party described it.
College students in Louisiana will now be charged a new “fee” while also receiving a “tax credit” in the same amount. The fake fee doesn’t count as a tax increase and the fake tax credit offsets millions of dollars from cigarette tax increases and rolling back subsidies to the film industry and other businesses. Mind boggling, but Norquist-approved. Conservative Republicans derided the plan as “money laundering” and “stinky, yucky stuff” but went along to avoid cutting millions from the education budgets.
As Brownback and Jindal celebrated their success, the Nevada Republican Party announced it will not support the re-election of any Republican legislator who voted for taxes in 2015. The party will also get behind a ballot referendum to repeal the tax plan.
Granted, taxing corporations to improve the education of their future workforce is a novel concept in Nevada, but shouldn’t we at least give it a try?