It’s a cliché. “When you tax something, you get less of it.”
That’s shorthand for a Ronald Reaganism: “If you want more of something, subsidize it; if you want less of something, tax it.”
Would that economics could be so simple.
A bill in the legislature this year would excuse residents of St. Charles and Jefferson Counties from paying the St. Louis City one-percent earnings tax. That’s a tax that St. Louis collects from people who come to the city to work and then leave it to go home in those two counties.
One of the supporters of the bill has trotted out the old cliché to justify it.
The trouble with cliches is that they are so easily punctured.
Those who think earnings taxes are appropriate note that daily job emigrants are served by St. Louis police and other St. Louis first responders, among others, that they drive on the city’s streets, contribute to the city’s trash burden, that they go to city hospitals or doctor’s offices if they get sick or hurt during working hours or recreational tie at the ballpark, and on top of it all, they have jobs in St. Louis that they don’t have at home.
St. Louis and Kansas City have earnings taxes. Many years ago, when financier Rex Sinquefield, long an opponent of earnings taxes spearheaded a drive that got law passed requiring the two cities to re-approve their earnings taxes every five years. The Post-Dispatch reported a few days ago that Sinquefield had donated $25,000 to the campaign of the bill’s sponsor, Rep. Phil Christofanelli, a candidate for the state senate. In the process of requiring the five-year re-enactment of the tax in the cities, voters also approved a statewide ban on any other city ever considering such a tax. Voters thus gave up their right to decide what is bests for their town on this issue.
The problem with the cliché is that the word “it” needs to be defined. Does this bill mean the elimination of the tax will bring thousands of new workers to St. Louis? Where will they come from—St. Charles and Jefferson Counties? Will they leave their jobs in those counties where they don’t pay an earnings tax now to flock to St. Louis just because employees won’t pay it there any more?
Will elimination of the tax result in lower prices for goods and services? It’s hard to visualize why it would. Will it make funding public services more difficult?
The cliché has a big problem; the definition of “it.”
A look at Missouri’s loosened marijuana laws tends to indicate high taxes are no barrier at all to the weed businesses. Maybe if we jacked up the tax even higher there would be less marijuana sales. Or maybe not. I recall when cigarettes were two dollars a carton (ten packages). Big price increases did not seem to be the factor in reducing smoking many years later. Smoking laws were a much bigger factor.
Property. If you tax it, you get less of it? It’s true that increasing taxes might force someone to move into a less-expensive home. But the old property is still there—for someone else to inhabit. People go away but property doesn’t.
Yes, there is less in the pocket but there is more for “it,” and by “it” we talk about the institutions and services that are necessary to protect us, to heal us, to educate us, to make it possible for us to go from one place to the next—taxes are the only way there can be more of “it.”
So the cliché is just that, and cliché’s sound good but they are just surface words that substitute too often for careful thought.
(It’s kind of like a former colleague who once remarked, “Stereotypes are so handy because they save so much time.”)
It’s a campaign year, though, and tax cuts always are cheap and easy things to promise and they do seem to persuade some voters who fail to realize the consequences of the cuts, especially when the economy drips and the programs those services finance aren’t available when they are needed the most.
Maybe in a campaign year, we should levy a wordage tax on politicians. There’s a lot of “it” that, under this philosophy, would go away.
Maybe the tax should be a pretty big, now that you mention……….