Don't Fear the "T" Word

You don’t have to be a genius to know the basics of running for office: Look sharp, love America, take in big money, and—most important—promise you won’t raise taxes. Thanks to Grover Norquist and his band of anti-tax crusaders, raising taxes has come to seem akin to murdering puppies and loving terrorists. Even during the worst fiscal crisis in 80 years, if you’re a state lawmaker, you must cut core government programs without ever mentioning the “T” word. And if, God forbid, you decide to raise taxes anyhow, do everything you can to distract people from the effort. Openly calling for citizens to pay more to their government is nothing short of political suicide.

By this conventional wisdom, it may seem like Jerry Brown has a death wish. After years of mounting debt and drastic cuts to state services, California’s Democratic governor has proposed raising the state sales tax along with income taxes for wealthy residents. Despite its liberal reputation, California is hardly an easy place to pass a tax hike; to raise taxes, state law requires a two-thirds vote in the legislature or a successful public initiative. Brown has opted for the initiative process, and his statewide campaign lays out the stakes: Failure to pass his plan in November will trigger automatic cuts to education spending. Californians are getting the message. According to a Public Policy Institute of California survey, 68 percent of likely voters support Brown’s plan—including 53 percent of Republicans. 

Brown’s loud-and-proud tax plan is a bracing rebuke to the political norm. “The right wing has been so successful at demonizing taxes over the past three decades that it’s hard for there to be the climate for an honest discussion,” says Jon Shure of the Center on Budget and Policy Priorities. But state lawmakers are raising taxes. According to the center, between October 2008 and September 2009—the first year of the recession—taxes went up in 33 states. By and large, the hikes were modest and had to be combined with spending cuts, but they still helped save jobs and preserve essential services. “Despite all the rhetoric,” Shure says, “tax increases are in fact a major part of dealing with the impact of the recession and make very, very good fiscal sense.” 

You wouldn’t know it, though, from listening to most Democratic officials. New York Governor Andrew Cuomo campaigned on a promise of “no new taxes, period.” Even when he struck a deal last December to raise income taxes on the wealthy to close the state’s budget gap, he continued to insist, “I am against higher taxes.” When Democrats shy away from championing a vision of fair taxation, it gives conservatives the upper hand, rhetorically and politically. 

For instance, as the 2008 financial crisis hit New Jersey, Democrats raised income taxes on those making more than $400,000, as well as sin taxes—on alcohol, cigarettes, lottery winnings. But they didn’t make a strong case for the necessity of the taxes and passed them on a temporary basis. When Governor Chris Christie took office in 2010, he refused to renew the increases, and now, as the state faces another shortfall, he’s pushing for cuts disproportionately benefiting the wealthy. Democrats are fighting back but avoiding the “T” word as they do—talking instead about the need “to restore the surcharge differential on those who earn $1 million or more.” 

By contrast, Maryland Governor Martin O’Malley has been straightforward about raising taxes to maintain the state’s schools and services, which are among the nation’s best. In 2007, he combined tax increases with budget cuts to address structural deficits. O’Malley got re-elected in 2010—a bad year for other Democrats—by a 14-point margin. This year, even as he positions himself for a possible presidential bid in 2016, O’Malley is pushing a gas-tax increase and an income-tax hike on the wealthy. “Asking our fellow citizens to do more will not be popular,” O’Malley said in his 2012 State of the State address. “But without anger, fear, or meanness, let’s ask one another: How much less do we think would be good for our children’s future?” 

In 2012, Democrats have an opportunity to reframe the tax debate, as Brown and O’Malley have done. Public anger has risen over economic inequality. Most states are suffering from cuts to popular institutions—schools, firehouses, parks. Smart politicians can sell tax increases as fair and prudent. In the process, they can also highlight the extremism of Republicans who have sworn to never raise taxes, no matter the circumstances. Advocating a better tax policy needn’t be political suicide. In fact, the bigger political risk comes from failing to do so.

Comments

Oh my, I certainly hope every Democrat seeking election at the local, state and federal level make raising taxes the centerpiece of their campaign. Should make for an interesting November.

Abby - I guess you didn't look at California's fundamentals. Their tax revenue FELL by 22% in February and they have shed 130,000 jobs in the last 12 months, the same number of jobs that Texas has added. The state is already considered one of the worst states in the union to start a business.

As far as Maryland goes, it has a large poor population who don't pay taxes. You can win alot of elections in places like Maryland promising freebies to people accustomed to freebies.

But, the raise taxes first strategy won't work in places where people like to be productive and start businesses.

And why is it that places like California and Illinois have the largest current account deficits AND largest unfunded pensions when they ALSO have among the highest tax rates? Could it be that the Laffer curve is real?

Abby - I guess you didn't look at California's fundamentals. Their tax revenue FELL by 22% in February and they have shed 130,000 jobs in the last 12 months, the same number of jobs that Texas has added. The state is already considered one of the worst states in the union to start a business.

As far as Maryland goes, it has a large poor population who don't pay taxes. You can win alot of elections in places like Maryland promising freebies to people accustomed to freebies.

But, the raise taxes first strategy won't work in places where people like to be productive and start businesses.

And why is it that places like California and Illinois have the largest current account deficits AND largest unfunded pensions when they ALSO have among the highest tax rates? Could it be that the Laffer curve is real?

In general, voters don't mind taxes as long as they are getting something for it. In the case of California, they are getting $300K retirement packages for state workers who were making <$100K when they were on the job. Some people object to that. Some people don't . I'm constantly amazed when Progressives complain about people not wanting to pay taxes when people are basically saying they don't want the garbage progressives are offering. I look at my own town budget and get annoyed. Parents complain that the town isn't supporting education, when if they looked at the actual numbers in one school our personnel budget goes to 6 teachers, 4 teachers aides, 1 principle, and 3 assistant principals. We do not need one assistant principal for every 2 teachers! And NO - I don't care what the superintendent in his professional capacity recommends - it's still stupid. California like many parts of the country is debating the least evil approach - increasing taxes will allow for a momentary continuation of things like parks and education, but that money will very shortly be siphoned off into "progressive" policies like hugely inflated public union pensions and hopelessly naive schemes that will increase welfare dependency.

Maybe this tax raising spree might account for the fact that Republicans took 9 ( more?) state houses in 2010? California is hemorrhaging population. New York lost thousands of millionaires when they passed the " millionaires' tax" - which started at income $200,000. I believe Maryland has a majority minority population. Illinois is losing businesses daily. By all means, tell Dems to campaign on raising taxes. It can only go well for you, no?

Personally, I can't wait for California to complete its progressive sweep of politics in this state. Democrats currently own every state-wide elected office, a veto-proof majority in the Senate, and are only three Assembly seats from veto-proof status there. Once we're past November, they will complete and total power to pass any law, raise old taxes, create new taxes, and write regulations and environmental laws to their hearts content. The sight and sound of this once great state debt-detonating into a billion sparkly shards will be one for the ageless books. And without a single Republican to blame. Priceless.

I'm convinced!!! I want ALL Democrats to embrace and campaign tax hikes!! GO!!! YES!!! Count me in as one of the Republicans that fully endorse Democrats campaigning to raise taxes. Proud and Loud!!!

Government is currently spending about 40% of GDP. How high does it have to go "to be good for our childrens future"? I think enough is enough. I have to live within my means. I don't see why Jerry Brown is any different.

"Openly calling for citizens to pay more to their government is nothing short of political suicide."

As well it should be.

In a down economy, with only limited money to go around, which is more important? That people actually get to keep the money they've worked for? Or throngs of government bureaucrats go on getting over-paid for making life more difficult for taxpayers?

I guess JohnBoy didn't bother to look at California's information very closely.

California's income tax receipts were down in February because more people filed early so the state sent out more returns in February 2012 than they did in 2011. The sales tax receipts were down because the rates were lower; I know that rather hurts your Laffer Curve idea, but it happens to be true.

And I don't know where you got the information that CA had lost jobs over the past year; that's false. California GAINED 130,000 jobs year over year. The unemployment rate, while still unacceptably high, has decreased by 1.5 percentage points from the peak, which is one of the strongest rebounds in employment in the country.

Oh, and Cas4, that population "hemorrhaging" of population California experienced? According to census figures, the state's population grew by "only" 10% in the past decade. which means there were nearly 4 million more Californians in 2010 than there were 2000.

And not one of them was in the US legally!

I applaud all Gov. Brown does. The more he does and the faster he does it, the quicker California will hit bottom.

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