Tag Archives: taxes

More Lessons from Canada

Yesterday I shared Canada’s approach to management of government contracts–an approach American government officials would do well to emulate. Today, I want to share two examples of good urban policy from our neighbors to the north.

First, from Vancouver:

In Vancouver, Canada, walking, cycling and public transit are now viable alternatives to driving. Todd Litman blogs on Planetizen that recent data indicate that Vancouver’s “automobile mode share” represents about half of all trips.

By contrast, in most North American cities, personal vehicles are used about 80 percent of the time. Litman is executive director of the Victoria Transport Policy Institute.

Vancouver’s urban planners have worked to make the city easier to navigate without a vehicle. As a result, in addition to the obvious environmental benefits,  Vancouver’s residents spend less money on transportation than urbanites elsewhere, have more opportunities for active lifestyles, and are less likely to be killed in an automobile accident– Vancouver has experienced a sizable drop in traffic fatalities.



Can’t find Place Jacques-Cartier? Curious about the history of Mount Royal? Ian Hardy reports for MobileSyrup that Montreal’s CA$23 million  (US$18.4 million) “smart city” plan would provide easy answers via free public Wi-Fi. The 70 projects to be completed by late 2017 would include real-time updates about buses and subways and digital access for citizens to municipal data.

The city promises to deploy free wireless connectivity at 750 locations. It also would require all major urban development projects to include superfast, wired fiber optic Internet connections, the article says. In addition, Montreal hopes to attract companies and startups that specialize in innovation that improves how cities govern and interact with citizens.

I served in city government “back when”–in an administration committed to making Indianapolis a place where people would want to live, a forward-looking city with a great quality of life. That was back when we still had planners…back before the entire focus of state and local government became keeping taxes low by providing only the most essential services at the lowest possible cost, before we took to selling off public assets to make budgets work.

Before the word “government” became a sneer.

About Those Religious “Victims”

Speaking of religion and government–as I have been for the past couple of days–it might be well to consider just how much the pious victims of religious persecution are suffering financially in our (ostensibly) secular culture. An article in the Washington Post recently considered the fiscal relationship of church to state.

Well, sort of. The article actually reported on a study detailing the various tax benefits our religiously “neutral,” government extends to religious organizations, the vast majority of which are Christian.

When people donate to religious groups, it’s tax-deductible. Churches don’t pay property taxes on their land or buildings. When they buy stuff, they don’t pay sales taxes. When they sell stuff at a profit, they don’t pay capital gains tax. If they spend less than they take in, they don’t pay corporate income taxes. Priests, ministers, rabbis and the like get “parsonage exemptions” that let them deduct mortgage payments, rent and other living expenses when they’re doing their income taxes. They also are the only group allowed to opt out of Social Security taxes (and benefits).

What is the value of all this preferential treatment?

The article quotes the authors of the original study, who calculated the total subsidy at $71 billion. But the original study didn’t include the cost of a number of subsidies, like local income and property tax exemptions, the sales tax exemption, and — most importantly — the charitable deduction for religious donations.

The charitable deduction for all groups cost the government approximately $39 billion dollars in 2014, according to the CBO.  Since some 32 percent of all charitable donations are made to religious groups, the value of just those exemptions is around $12.5 billion.If you add that to the amounts reported in the original study, you get a religious subsidy of about $83.5 billion.

Next time someone whines about the war on religion or Christmas, or complains that government is insufficiently protective of “people of faith,” think about that.

I’d love to be “victimized” to the tune of 80+ billion dollars…

If It Walks Like a Duck, Call it a Turtle

A couple of weeks ago, Catherine Rampell had a must-read column in the Washington Post, beginning with “Don’t tax you, don’t tax me. Tax that feller behind the tree!”

Rampell focused upon the rampant hypocrisy of the “no tax” ideologues:

Jonathan Gruber has been vilified for (among other things) noting the “tortured” way that sections of the Affordable Care Act were written in order to stay in the good graces of both the Congressional Budget Office and the public. But such budgetary gamesmanship has long been an open, and bipartisan, tactic in Washington. When “spending” became a dirty word, Congress phased out earmarks. In their place, it doled out treats to special interests through the tax code, now awarding more than a trillion dollars each year in federal tax breaks, carve-outs and loopholes. Arithmetically, letting someone pay less in taxes is identical to spending money on them, but voters don’t see things that way….

Voters hate taxes and will punish any politician who threatens to raise them (or, in many cases, does not accede to cutting them). But schools, roads, police forces, garbage collection, firefighters, jails and pensions still cost money, even when you cut them back as much as voters will tolerate. So instead of raising taxes, state and municipal governments have resorted to nickel-and-diming constituents through other kinds of piecemeal, non-tax revenue raisers, an outcome that is less transparent, and likely to worsen the economy, inequality and social injustice.

Examples abound. Call it a toll. Call it a fee. Finance local government with smoke and mirrors.

This “no tax” chicanery plays to our worst impulses, the “I’ve got mine, Jack, and piss on the public good” attitudes that have crippled efforts to improve our communities and build a more inclusive, robust public square. But as intellectually dishonest as the “that’s not really a tax” strategies are, they’re a subset of a larger, even more troubling phenomenon: we’ve stripped our language of content.

I’ve frequently noted–in response to overheated rhetoric from the Right–that President Obama really can’t be both a socialist and a Nazi, because those words have meanings, and they are different. (And actually, in a sane world, neither remotely applies to the President, whether you like his policies or hate them.) Science is not a system of “beliefs” equivalent to religion, because falsifiable empirical facts are not matters of “faith.” LGBT folks don’t have “lifestyles,” they have orientations. I could go on and on.

The problem with misuse and abuse of language is that we lose the ability to communicate with each other. When words no longer have generally accepted meanings, we are just making sounds–and when those words are turned into epithets and insults, intelligible conversation comes to a screeching halt.

Language is one of the most important achievements of the human race; it is fundamental to human progress. We jeopardize more than we realize when we debase it.

Tax and Mend

In the last few days, I’ve come across a couple of intriguing tax proposals aimed at reducing the gap between the 1% and everyone else.

We already index taxes for inflation, so Yale economist Robert Shiller wants to know why we can’t index them for inequality as well — and tax the rich at higher rates as the nation’s income becomes more concentrated at the top.

Shiller and his colleague Leonard Burman suggest a plan that would offset the loss in tax revenue that occurs when we index for inflation by imposing higher tax rates on income falling in the top tax brackets.  (Shiller, clearly an optimist, thinks this approach might even be achievable in the current political environment.)

Shiller thinks we need to see our income taxes “as a colossal insurance system, guarding against extreme income inequality.”

Good idea, but I’m not as optimistic as Shiller–I don’t think such a proposal would survive the displeasure of the guys who pay the lobbyists.

A bill I really like has somewhat better prospects, and has actually been introduced in California.

California’s pending Senate bill 1372, introduced by state senators Mark DeSaulnier and Loni Hancock would tie state corporate income tax rates to corporate pay disparities.

Corporations in California currently face an 8.84 percent tax on their profits. The DeSaulnier-Hancock legislation would up that rate to 13 percent for companies that pay their top execs over 400 times what their typical workers are making.

The same legislation lowers the state corporate tax rate to 7 percent on companies with a CEO-worker pay divide less than 25-to-1. Under the bill, all firms with a ratio under 100-to-1 would end up with a tax cut, all above with a hike.

Carrots and sticks….

Connecting the Dots

It’s time to say goodby and good riddance to the month of April–the “cruelest” month, presumably because federal taxes are due. And let’s face it, no one likes taxes.

And every year,  the avalanche of anti-tax articles is predictable as April showers.

Over at The New Republic, Jonathan Cohn makes an important point: people resent paying taxes when they don’t see what that money is buying. I’ve made that same argument in the local context, and it is actually easier to see what our local money buys: police and fire protection, garbage collection, parks, schools and the like. Those local public goods are more visible than the goods our federal taxes purchase.

That payroll tax taken out of everybody’s check? It’s buying you Medicare and Social Security, which means a more secure retirement free of crippling medical bills. Your federal income tax? Its effects are a lot more diffuse. But chances are pretty good that you’ve already used some infrastructure today—whether it was a road or railway you took to work, or maybe the information technology connections you’re using to read this article. Federal, state, and local taxes helped pay for that. Is your water and air clean? Are you safe from threats, domestic and foreign? Then you’re getting something valuable from the Environment Protection Agency, the Federal Bureau of Investigation, and the Department of Defense. Your tax dollars paid for those, too.

Sometimes, of course, your tax dollars pay for supports and services you won’t use. And you might resent that. But even taxes that pay for someone else’s benefits can benefit you. Why does the U.S. not have the massive underclass that characterizes many third-world countries—or the incipient danger of violent upheaval that accompanies it? The safety net your taxes purchased, tattered as it is, buys a degree of social harmony, too.

We can legitimately argue about lawmakers’ priorities. We can–and should–monitor government at all levels to insure that its operations are businesslike and efficient. We can debate whether government should do some things at all.

But while we are griping and doing everything we can to reduce our bills, we should take note of Cohn’s admonition, and remember that our tax dollars buy a lot of things that most of us agree–however grudgingly– make our lives safer and better. Things we would miss.

In the private sector, we acknowledge the truth of the old adage: you get what you pay for. Somehow, we ignore that homely truth when it comes to taxes.