Friday, August 09, 2002

Wandering Around the Real Point

Today's Commercial Appeal has an editorial on the two gubernatorial candidates and their positions on the State's budget/tax situation. It really seems more an excuse to trundle out the same old newspaper distortions. Their efforts are growing tiresome.

First, they can't even keep their own story straight. In the second paragraph, they say:
After Tennessee primary voters tossed four incumbent state
lawmakers out of office last week, apparently as punishment for
their support of tax reform....
and then later in the same editorial say:
...a state senator and three state House members
who had supported tax reform were defeated in party primaries
by income tax opponents.
C'mon guys. Pick one!

Hilleary said he wants to repeal the 1-cent sales tax increase
lawmakers approved at the end of this year's legislative session
to balance the new state budget. Earlier this year, when
lawmakers considered a better option - a tax reform package
that would have swapped sales tax cuts for a fair, broad-based
income tax - the East Tennessee congressman similarly vowed to
seek the repeal of the proposed income tax.

Reversing the sales tax increase would require major reductions
in state spending. Hilleary has declined to offer specific, detailed
ideas along those lines.
This last is a rhetorical trick, favored especially of the CA against its enemies: Derail your enemy by making him bog down in details. Hilleary has already announced an advisory committee to help him here, but getting real numbers to work with will, I'm sure, prove to be very difficult. Dr. Warren Neel, the State Finance Commissioner, is famously tight with real and unfavorable numbers, and demonstrably disinclined to help anyone not favoring an income tax.

Notice in the middle of the second paragraph the propagandizing. It's not "another option," but the "better" one. The massive changes to be wrought on Tennessee's citizens is breezed over with "swapped." And, of course, they call the income tax is "fair, broad-based." The IT is neither fair nor broad-based. It would shift the tax burden from nearly 100% of Tennesseans to roughly 40%!

It was no "package," either. There were numerous plans and plan-lets as various lobbyists tried to preserve their benefits and legislators had their own say. The IT plan changed almost daily.
Bredesen, who echoed Hilleary's anti-income tax pledge last
spring, said this week that he, too, disapproved of the
legislature's decision to create the nation's highest state-local
sales tax rate. The Democratic nominee proposed a "sales tax
holiday" for back-to-school shopping.
Notice that it is Bredesen "echoing" Hilleary. That's telling. It tries to pin the blame to Hilleary, while allow Bredesen weasel room for future changes of mind.

The "nation's highest state-local sales tax rate" is certainly bad, but don't forget that the IT would have imposed a similar level of tax increase, but in a different way. Somehow, that kind of tax increase isn't so bad.
Consumers deserve the tax relief a temporary sales tax
suspension could offer for certain purchases. But a "holiday"
could depress state revenue collections and make it harder for
the budget to stay balanced.
Reread that first sentence. "Deserve?" It's not for goverment to hand out, but for them to ask. Also notice the two weasel uses of "could" in each sentence.
Neither candidate has done the heavy lifting of offering a plan
that would fix inequities and shortcomings in the state's
antiquated tax system while allowing the state to fund
adequately such essential services as education, health,
recreation and public safety.
Neither has the CA or any other paper offered to their readers the raw stuff, nor the tools, nor the methods, to do the same. Once again, check the word choice: "...inequities...shortcomings...antiquated...." The only true shortcoming is that legislators can outspend the revenue growth.

Many Tennesseans would take exception to the CA's choice of "essential services" from their government. The only true essential is public safety--police, fire, emergency services, courts and jails. Education and roads are two nearly-essential services, but the others they list, most especially recreation (?!), are not. It is TennCare, which the CA protectively and reflexively defends, that is causing so much havoc for the State. Reverting to Medicaid will hurt many, yes, but draining the pocketbooks of Tennesseans to prop up a hemohraging TennCare is patently unfair.

Then the editorial takes a strange, sudden turn:
House Speaker Jimmy Naifeh (D-Covington), who worked
unsuccessfully during this year's session for a tax reform package
that included a flat-rate income tax, apparently gained a
Republican opponent in November through a write-in campaign.
Notice the long build-up for Naifeh, only to rush past the unnamed "Republican opponent." It seems an out-of-place insertion.
If, as Bredesen suggests, those results effectively have taken the
income tax off the table, the question remains: What is a better
approach? Those who insist the state can cut its way to solvency
had better be ready to show - in detail - how that can be done
without crippling basic services that too often are already falling
For ordinary Tennesseans, the first point is true. They do expect the IT to be off the table. The newspapers and the Democratic leadership, and their ultra-wealthy Republican allies, are going to continue to work for it. The battle is far from concluded.

As for "be[ing] ready to show - in detail - how that can be done..." it seems that the coming Legislative session, which will have a very large incoming freshman class with a clear voter mandate, will be taking up that very thought. Both gubernatorial candidates waited for the primaries to clear things, and are even now beginning to present and shape those ideas. Of course, the real work for cutting would come from the Departments themselves. But I wouldn't hold my breath waiting on them, as they have fiefdoms to protect and enrich.
And simply loading more and more of the state's tax burden onto
the regressive sales tax cannot be sustained. Higher sales taxes
are too inelastic to respond to changes in the economy, drive
consumers across state lines to make major purchases, and
deliver additional business to Internet marketers, most of whose
sales are not taxed.
Notice that there's no consideration, none at all, of trying to slow down or reduce the load--only restructure the way it's placed. This paragraph continues the false idea that a sales tax is "inelastic," a thought promoted by the often-wrong Dr. Fox. In fact, this very year, sales taxes have begun rebounding in Tennessee as other States with income taxes are still struggling with lagging revenues.

They also promote Dr. Fox's false idea of sales lost to the Internet. One study has already shown that for Dr. Fox's numbers to work, would require that the equivalent of the top twenty shopping malls' sales would have to be going to Internet sales--something no one believes.

The newspapers also have a public service that they have completely ignored. It would be simple for them to show how cross-border shopping generally doesn't save anyone much money. The tax differences are merely a dollar or two per hundred. The extra gas for the trip eats that savings up. But don't expect the papers to undermine their own position with common sense!
A major change in the state's revenue collection system is
inevitable. Lawmakers - and candidates for governor - who
oppose a permanent fix are essentially voting to ensure that the
revenue problem remains a permanent fixture on the legislative
Notice that those who don't want the IT are "oppose[d] to a permanent fix..." But the proposed IT would only have met this year's needs, which ballooned by one billion dollars over last year. Do they expect us to believe that spending next year would be any slower? Where will that additional money then come from? It's not a revenue problem, it's a spending problem. Always has been.
The failure of the state's so-called leadership to address the
issue will require the legislature to put out budget fires again and
again, and to engage in rancorous arguments about the state's
fiscal problems without ever solving them.
That address, I suspect, is coming this session. The "failure" was in this year's leadership, which is already on its way out, which stone-walled and buried in committee alternative spending-cut plans, ridiculed and threatened legislators who opposed the IT, and constructed the scenario that steamrollered the whole of the State into the crisis point we reached.

The CA has been derelict in its mission: "Give light and the people will find their own way." The CA shines a false light at its own targets and then tells the people what they should think. Problem is, they aren't very good opinions.

Until next time, that is all.
Your Working Boy

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