Wednesday, June 17, 2009

The truth about "tax reform"

What follows is based on an item submitted to the Coastal Journal some weeks ago, after it ran a column by Rep. Thom Watson of Bath entitled "Broaden sales tax base to effect tax reform." The CJ declined to run my response, which is not surprising, given their editorial inclination in the hard left direction.

Gina Hamilton, who writes most of the editorials, columns, and analysis items (at which she is quite good), clearly sets the tone for the weekly paper. And she makes no secret of her leanings.

Fine, I suppose. Hell, it's her job to make a go of it to keep her publishers happy, and you might as well cater to half the population if you want to succeed.

Watson, whose love of statism is well established, is a classic "trust me, I'm trying to lower your taxes while I increase the size and scope of government" type. I'm sure he does a spectacular job campaigning at local pot lucks and spaghetti feeds, where voting record is irrelevant. And his acting experience in local theater endeavors should come in handy, not to mention his lawyerly skills.
Without further adoo, here's the earlier item:

Rep. Watson's column in a recent edition of the Coastal Journal is full of the tired distractions and deceptions we get from Augusta whenever tax shifting (I mean reform) is served up for public consumption.

The first thing any informed taxpayer needs to recognize is that no-one, and I mean NO-ONE in the ruling majority is going to do anything that would risk even the slightest decrease in state tax revenues. The nature of government, especially of the sort we have, is to do everything it can to increase revenues, regardless of the story it has to tell to do it. That’s the context for Rep. Watson’s propaganda, along with a statehouse spending affliction that mirrors that of the populace, as they try to get the public to take the hook.

Simply stated, you can't return dollars to the pockets of the taxpayers of Maine while being so transparently focused on spending so much more at State and local levels. Any comments about "feeling our pain" and responding to it are DOA. Assertions that the new budget is lower than it's predecessor for the first time ever are comforting, but the fact is that it is only reluctantly so, because the legislators simply couldn't find enough blossoming money trees, and really had no choice. Not a one of them willingly reduced spending; they just didn't have any choice.

The bait in this case is dropping the top state income tax rate from 8.5% to 6.5%. Sounds good, until you look at the details, which qualified authorities have done. Now the switch: with all the other changes in deductions, credits, etc, the effective top rate will only drop to about 8%. For the average Mainer, the savings here will be more than offset by the increases elsewhere. Truth be told, this deception will work on far too many.

The victory for the pols is that the national surveys that monitor such rates will suddenly rate Maine as being in "the middle third" of states, when nothing has changed to lower our real tax burden. This is all show and no go. Remember, no one in the majority will knowingly or willingly do ANYTHING to put revenue and spending at risk. What they will willingly do is enact a shell game feel good law that makes you think they have, while protecting everything they hold near and dear.

To make the point more clearly, they could have lowered the top income tax rate to 4.25%, half of the current top rate, while eliminating nearly all deductions, and oh, by the way, adding a "tax surcharge of 5% of income. Done with appropriate finesse, such a change would have increased your taxes but allowed our so called "public servants" to score points for having "lowered Maine's income tax by half."

The attention in this new "tax reform" legislation is increasing sales tax revenue by broadening the base. Watson feeds us the old story about how our economy has changed, and our sales tax was structured for the economy of 50 years ago. Shoe factories are all gone, yada, yada, yada.

News flash, Thom: the sales tax is a consumption tax! It is not based on where you work, but on what you buy, and your shoe factory example is a distraction, as I expect any court would find.

Besides, we are virtually all addicted to consumption, and of the taxable sort. We take on unmanageable credit card and home equity debt to indulge our lust for things, gizmos, trinkets, toys, and vanity accessories of every sort. We eat out (taxable) far more than ever. We spend beyond our means, just as government does!

For proof, look around your house and compare your taxable possessions to what you had say 20 years ago. How many TV’s, video games, DVDs, computers, cell phones, cordless phones, and other electronic marvels did you have then? Do you have more toys, sporting good, clothes, and shoes than you did then, or less? How often did you eat out 20 years ago compared to now?

If your answer is as I expect, your consumer purchases, and therefore your sales tax “contributions,” have grown by leaps and bounds over that period. How many cars did you have then compared to now? Want an even greater shock? Take a look at your parent’s lives say 40 or 50 years ago or more. My parents had one car and five children. One lousy TV, no microwave, one dial phone, and usually one set of Sunday clothes. And we’re supposed to believe that the sales tax structure has not “kept pace” with life in the 21st century and needs to be redesigned? Excuse me?

Our life styles and the shopping and eating out opportunities that surround us have grown by leaps and bounds over the last several decades. Think about where you could shop and eat out in this area 30 years ago compared to now. Deception, distraction, thy name is Augusta.

Then there’s the tale of woe about cars and building supplies being the largest items in the tax base, and their volatility in economic cycles. They will always be the largest items; they simply cost more than anything else we buy. And all consumer purchases follow economic cycles; just look at your main street and ours, and talk to local business folks.

One last thing…..”people don’t make travel decisions based on lodging tax. If they did, no one would ever go to Disneyworld.” In case you haven’t heard, Thom, there is only one Disneyworld. But there are lots of places with trees and lakes and rivers and insects, and many of them are far more spectacular and accommodating than Maine.

Not to mention that you and I are "tourists" when it comes to taxation all year long, and usually several times a week. Any time you eat out, or stop for a cup of coffee on 95, or do any number of other things "tourists" do, you pay the tax supposedly being exported to them. The Mrs. and I go out for anything from coffee to an actual meal 5 or more times a week. And we've stayed at accommodations in state numerous times. I guess I should have asked the tourist at the next table or in the next room to pay the sales tax I was charged on my behalf. That should make some friends.

In conclusion, Rep.Watson, and your fellow propagandists, go ply your tax reform shell game somewhere else; we’ve got more than enough deception around here to keep us busy for a good long while.

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