04 February, 2010

Remember Folks: Taxes Can Be A GOOD Thing

So, I was reading Krugman's blog the other day, and he linked to a story about Colorado Springs. Apparently, the city is broke and cutting costs everywhere. Streetlights will not be lit, police and firefighters are being laid off, parks are going to be left to die (according to the article, the fertilizer and flower budget for parks is a whopping $0), streets will not be repaved, public funded buildings (ie, museums and city pools) will close unless they get private funding.

All this because the voters said no to a property tax increase. In November, the city voted on whether or not to triple the property tax, a tax which traditionally affects the richer citizens. This tax would have restored over $27 million in revenue to the city and would have prevented many of the cuts they now face (not all of them, but enough to make a difference). Unfortunately, the voters said no.

"Fowler and many other residents say voters don't trust city government to wisely spend a general tax increase and don't believe the current cuts are the only way to balance a budget."

Really? So balancing the budget through tax increases are out because you don't trust the government to spend it correctly, but cutting costs the way they are isn't the only way? Well, how, voters of Colorado Springs, would you solve the budget deficit. Remember, states are not financially sovereign, and therefore cannot run a budget deficit. So, explain to me how you would balance the budget. Cut education costs? Cut welfare funding? Cut unemployment benefits? Yeah, that'll really help.

NEWS FLASH: Taxes are not evil! The government doesn't take your money for shits and giggles, they actually use it to fund programs to help keep the state afloat! Now, I'd understand voting down the tax hike and then using that money to help pay for these programs, but you're not doing that. If you don't trust the government to do it, then do it yourself.

There's a larger picture to all of this, however. This is what happens when people feel small government is the way to go. Small government only works if people directly pay for these programs out of their own pockets. In other words, you'll pay less in taxes, but the money you save from taxes you need to pay firefighters, school teachers, etc... However, people often don't understand this. Voting down a tax hike leads to cuts in a state budget (national budget is different) unless that money comes from somewhere else. However, I'm guessing the people who turned down the tax hike would laugh if you asked them to help pay for some of these programs.

So really, the choice is this: You can have big government where your taxes will be higher, but programs will be funded and you'll probably get most of that money back through the multiplier effect (people who get that funding will spend it on things you produce, increasing your income). Or, you can have smaller government. Sure, you may pay less in taxes, but you'll end up like Colorado Springs: Underfunded and in trouble.

Me? I'd rather pay more in taxes and make sure the school system has funding, the police and firefighters are there to protect me, and the roads are safe to drive on.

But that's just my opinion.


-The Economist

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