Steve Klingaman

Steve Klingaman
Location
Minneapolis, Minnesota,
Birthday
January 01
Title
Consultant/Writer
Bio
Steve Klingaman is a nonprofit development consultant and nonfiction writer specializing in personal finance and public policy. His music reviews can be found at minor7th.com.

Editor’s Pick
MARCH 16, 2011 8:34AM

Are we on the brink of a national tax revolt?

Rate: 23 Flag

Mangano 

Naussau County Exec Edward Mangano cuts taxes to bone, triggers state takeover of finances.

cdn.newsday.com 

Thirty three years ago, Proposition 13 roared out of California to signal the beginning of the nation’s first serious tax revolt since 1932.  Prop 13 restricted property taxes to 1% of valuation, allowed reassessment only when property changed hands and required supermajorities for local governments to pass makeup taxes.  California’s once and future governor, Jerry Brown, spent state money to make up for lost local revenue back then, setting the stage in part for the budget breakdown he faces again today.  Yet, in California, which is facing a $25 billion deficit, Prop 13 remains sacrosanct--the third rail of state politics.

While the effects of Prop 13 will be debated until California tumbles into the sea, some on the frontlines, like L.A. Mayor Antonion R. Villaraigosa, say, “We are just decimating government and the services it provides.”  This, it would seem, is the perfect year for those who would like to starve government and the services it provides.

According to the Center on Budget and Policy Priorities, 44 states and the District of Columbia face budget shortfalls for the fiscal year beginning in July. Yet, according to the New York Times, “Governor after governor has publicly forsworn the prospect of raising income taxes, preferring to talk layoffs and cuts in programs and public union benefits.”

The way most recessions work, states experience the worst budget crises towards the end of the recession and in the year or two after recovery begins.  Historically, they cut first, then raise taxes.  But this year may be different.  According to Donald J. Boyd, a senior fellow at the Nelson A. Rockefeller Institute of Government at the State University of New York in Albany, as quoted in the Times, “We’re in quite an extraordinary anti-public union, anti-tax climate right now.”

One enterprising Tea Party-backed county executive in Nassau County, New York was so eager to undo an unpopular tax that he acted before he was even sworn in.  To shouts of “Eddie, Eddie, Eddie,” Republican Edward Mangano whacked an energy tax, triggering a wholesale takeover of the county finances by a state watchdog panel.  “A lot of people who got elected on this type of anti-tax platform are running into the brick wall of fiscal reality,” noted Matthew Gardner, executive director of the non-partisan Institute on Taxation and Economic Policy in Washington.   Interestingly, “Eddie” did not advertise the word “Republican” in his bid for office.  He went exclusively with “tax revolt.” 

Then there’s suburban San Carlos, in San Mateo County California, which outsourced its police department to the county. Dave Maggard, police chief of Irvine and vice president of the California Police Chiefs Association, does not think this will turn out to be unusual. “I think many cities are evaluating their police services based on their fiscal constraints," he said. 

From sea to shining sea we seem to be witnessing a redefinition of the social contract that once held that taxes and government meant services and local autonomy.   What we have now is, well, to be determined.   Whereas once, “starving big government” was a theoretical trope of the right, now it seems to be entering the realm of distinct possibility.  Is this our third wave of implicit tax revolt in a century?  If so, this one will be engineered not by tax relief organizations or curmudgeons like Howard Jarvis, but by those already elected to office in the last wave of voter upheaval—and perhaps those to come. 

When you face a budget deficit as large as that of California, Illinois, or New Jersey, you begin to hear some crazy things, like using bankruptcy to get out from under state pension obligations.  That hasn’t been tried since Arkansas hit bottom during the Depression. 

It’s instructive to realize that dismantling government—or at least its benefits—can be achieved.  California boasted one of the best public education systems in the nation in the 1960s.  Today it is ranked 48th by many measures.  I left the state largely for reasons related to that decline.  I paid more in taxes in my new home state of Minnesota, but my kids received a pretty great public education in an urban environment.  Today, those two terms are never paired in polite discourse in my old home state. 

There are many ways to dismantle a working democracy; semi-crazed self-interest is one of them.  But I wonder: if government is the enemy, why haven’t private interests already solved our problems?  Is it true, as some claim, that if we just dismantle government, the private sector will kick into high gear?  Will health insurance companies cover the uninsured?  Will for-profit kindergartens obliterate the achievement gap? 

To my ears, these sound like dumb-ass rhetorical questions, but that’s what we are being asked to swallow.  Despite that, I would venture that we are not on the brink of a tax revolt; we are in the midst of one.


[This article appeared originally at does this make sense.com.]

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Hi Steve. You make plenty of good points. I tried to cover this point several months back. Short version - the U.S. is undertaxed compared to most of Europe, Scandinavia, Canada and Australia. The U.S. has a tax "burden" of around 28% of GDP versus the 32-50% of its comparables. Given that the U.S. also spends way more on its military and prisons, it's likewise why so many perceive little benefit from the relatively lesser amount that they do pay.

If you have a remedy for this mess, please don't keep it to yourself.
Agree, and where this all will lead is anyone's guess. Now that the unions are mad, we've got opposing revolts.
I see no tax revolt in our near future. Quite the opposite in fact. Once public roads and services are so far gone we'll be begging for higher taxes....but to the right groups, of course.

let's not touch our sacred, all holy corporations.

Or.....we'll leave services up to industry. EMS, Firefighters, roads...all done by competitive services in a total free market with no taxes.

Corporate anarchy.

Or shit will muddle along as it has, with the pendulum swining back and forth between conservative and liberal. I consider this to be the most likely scenario.
Doug's last line says it all except that it should have ended, "for the few years left before it all lands in our laps."

.
The whole thing is totally insane. What do people (or legislators) think they're working toward? Abra makes a good point - y'all are supporting a huge military and a huge prison system; if instead you got universal health care and all the other services and benefits other countries provide their citizens out of tax revenue, then perhaps attitudes would be different.

In the meantime, however, what benefit do people see in dismantling schools, police, pensions, blah blah...when everyone is reduced to nothing, will something miraculous put it all back together? (The return of Jesus Christ?)

My suspicion is that white Americans of the voting and ruling age and class would cut off their own noses to spite the Mexicans and blacks that 'threaten' to 'take over' the country. Hopefully that 'takeover' won't take too long and things WILL get put together in a sane fashion. (I saw a news item about how the Hispanic population in the Northern states is a lot larger than previously thought. I could have told them that a couple decades ago when shopping in the groceries of those WASP-deserted old factory towns of New York I found nada but Mexican food...[which I didn't know what to do with...])
To be honest, I don't think we're anywhere near the revolt that's coming down the tunnel. We're now at a point where we can't afford to pay for things, and the next step is forcing someone to start paying more to fund things that not everyone wants. That never ends well. And I doubt it will.
I think Abra does make a good point. First, there's the rate you pay, then there's what you get in return. As to whether we can't afford to pay for things, the whole point is that we have to prioritize. It's not that we are broke. That is a bogus claim. Tax receipts will come back when the economy comes back. Wasteful, inefficient systems like our current private health care systems make people feel broke. Four dollar gas makes people feel broke. But national economies far less affluent that ours manage to provide services that in many cases exceed ours. I am amazed that our present solution is to beat up on teachers. Who are we trying to kid?
It isn't dumb-ass rhetorical questions that's the problem, it's dumb-asses that don't ask those questions and can't comprehend that the questions aren't rhetorical when your kid can't read or there's no policeman or fireman to come to rescue your dumb-ass.
This is so short-sighted on the part of 90% of the people who are clamoring for lower taxes that it boggles my mind. The other day I heard a radio piece about a town that's now relying heavily on volunteer police officers. It's not far from un-paid, gun-toting volunteer police to a true every-person-for themselves Wild West world. And that's just one example; education is another great one. Infuriating.
Strong piece, Steve. I don’t know much, but my common sense says one logical source of state revenue could be taxing soda and sugary drinks. It won't only bring in money-- it might also change our sickness-promoting eating habits (which cost the country a fortune).
Nah, they're a bunch of sheep for the most part.
Ditto on Abrawang's comment."the U.S. is undertaxed compared to most of Europe, Scandinavia, Canada and Australia" They also live completely different because of it. Their entire systems are better over all, we fight the same battles over and over to support healthcare, social services, etc. The biggest problem we have is that our tax system is not fairly reflected on all levels of citizens. The rich, large corporations are out of balance with the rest of us. We should be revolting...
The country has been sold a bill of goods by the corporations and über-wealth.

It goes like this: First you drop taxes on the wealthy (while throwing a bone to the middle class) so they can "invest in jobs."

Then, as govt revenues decrease correspondingly, you point out that government (Doesn't matter which: state, local, federal...same-same) is spending to much and spending needs to be cut back.

So you cut spending - on all services to poor, old, middle class, infrastructure, education, regulatory agencies, state parks, county parks, etc.

Then you declare your state bankrupt, so you can terminate every public sector union contract in force.

Now that you can't get your street swept, or the sewers unplugged; or the cops won't come to you house and check out the break-in that happened last night; or your old man (who lost his job at 58 years of age to some guy in China that does the same work for a buck a day) can't get food stamps; or you find out your kid, who's a senior in high school, reads a 5th grade level...then you might begin to think that something's rotten in Denmark.
The country has been sold a bill of goods by the corporations and über-wealth.

It goes like this: First you drop taxes on the wealthy (while throwing a bone to the middle class) so they can "invest in jobs."

Then, as govt revenues decrease correspondingly, you point out that government (Doesn't matter which: state, local, federal...same-same) is spending to much and spending needs to be cut back.

So you cut spending - on all services to poor, old, middle class, infrastructure, education, regulatory agencies, state parks, county parks, etc.

Then you declare your state bankrupt, so you can terminate every public sector union contract in force.

Now that you can't get your street swept, or the sewers unplugged; or the cops won't come to you house and check out the break-in that happened last night; or your old man (who lost his job at 58 years of age to some guy in China that does the same work for a buck a day) can't get food stamps; or you find out your kid, who's a senior in high school, reads a 5th grade level...then you might begin to think that something's rotten in Denmark.
As a native of San Carlos, California, it's certainly ironic to see my home town outsourcing police services at the same time it has become the quite prosperous home to several biotech companies. My once very middle-class home town now boasts multi-million homes and a downtown that I hardly recognize, yet apparently can't afford to pay for police officers.

And as the product of the once fabulous (and cheap!) University of California system, it's equally sad to see tuition rates rise and education at all levels in California suffer.

What's stunning is the degree to which Californians still back Prop 13, as you note. Even elderly relatives, who have lived in their homes for decades and now find themselves unable to downsize because of the huge property tax hit they'd see if they bought a new property, still sing the praises of Howard Jarvis.

Here in Washington State where I now live, we have a Democratic governor and a Democratic legislature, yet they are unable to raise revenue of any kind for at least two years, thanks to a successful initiative campaign last November. One of our professional right-wing initiative sponsors successed in passing an initiative requiring a supermajority of the state legislature to pass any revenue increases, essentially making tax/fee increases impossible. Add to that the repeal of a tax on candy, soda pop, and bottled water that the legislature had previously passed. With the resulting gaping budget hole, higher ed, K-12, Medicaid and health care, and law enforcement are all being cut, with no options on the revenue side. When this happens in a reliably Blue State, it sure looks like a tax revolt.
Excellent points. As if there wasn't enough of a feedback loop, when gov't services start to break down for lack of funding - or cronyism - it only reinforces the mem that gov't is the problem. Brownie's shadow cast over us all. Heckuva job!
Good questions all around. In Michigan, the republicon governor has proposed business tax breaks, but everyone else is getting an income tax hike. Pensions will become taxable. I think a sales tax hike is also proposed. Voters (especially seniors) are hopping mad, but what will they do? My guess is nothing. I voted for his opponent, Lansing mayor Bennero, who it was obvious was much better qualified and had some great ideas.

So the voters wanted republicans -- now they've got them. Guess they've gotta lie in the beds they made. Unfortunately, we're in the same bed together. Do you think anyone will remember at election time? American voters seem to have ADD =(
Excellent piece! Rather than attacking employees working in the public sector, they should raise taxes so that everyone equally (to some degree - since we have a progressive tax system) shares the deficits created by state governments. Alternatively, they could cut in programs that affect everybody, rather than a certain portion of the electorate.

I was told by a few Californians a while back that many home owners could not buy their own house if they were to sell it.
"if government is the enemy, why haven’t private interests already solved our problems? Is it true, as some claim, that if we just dismantle government, the private sector will kick into high gear? Will health insurance companies cover the uninsured?"

this is exactly what I am struggling with lately, perfectly stated - doesn't make sense at all...this was such a great commentary - refreshing, thanks
Steve, I think the big problem is a kind of national lack of interest in details. Politicians deal in broad brushstrokes and we let them. We blur the difference between what's good for big business and what's good for small business. We talk about taxation as if there is no such thing as a good tax, but taxes on different things have different effects, and we must have revenue somehow. We talk about cutting government for the sake of jobs without understanding that some of those things we're cutting are jobs and there is no promise of a private sector job to back it up. We talk about cutting expenses, but investments are expenses, and we don't distinguish between buying someone an ice cream sundae and an education—it's all just an expense at the level of current public rhetoric. And you ask other great questions related to this. We need to be more specific in the questions we ask and the answers we demand. Much of it is just smokescreen to draw attention away from where the people with the money to control the media message are getting their benefit from the government and to throw attention onto defenseless patsies they've picked out exactly for their lack of ability to defend themselves.
"Will health insurance companies cover the uninsured?"

Certainly a dumb-ass question -- thankfully rhetorical. Nevertheless, the thoughts surrounding the potential answers thereto reveal why insurance companies remain in business, while government social programs fail.
It may look like we are beating up on teachers as the solutions, but it's simply that they are just making the most noise right now. For those that believe government workers are overpaid and if not completely lazy then surely one of the most inefficient workers around, we want ALL government workers paid less or we want MUCH, MUCH more in productivity. So you can't teach Johnny to read because his parents suck, that's fine, then you also don't get paid $75K to keep having a system that fails. If you want the pay, then churn out the results and no one will complain. Teachers have had years and years and years to understand the playing field and the conditions they will be required to perform in. However, before any of you go jumping on my comments about teachers, my criticism is for all government workers. Almost every if not every government program out there is run about as inefficiently as humanly possible and that starts with every congress, committee, subcommittee, etc. at federal, state and local levels. You show me just ONE of those running as it should and everyone in the country will show your example to be such an overwhelming minority that it doesn't even deserve recognition. How many people do we need standing around a pothole? How many fat and out of shape police, fire and military should we employ? Sorry, the job has actual physical standards and those standards don't change because you age or your metabolism slows down, nor should we incorporate fake written standards to allow aged and female workers to mystically find a way to "perform" at the same level. I'm all for anyone having ANY of those jobs, provided they operate under ONE standard, period. But instead we find convenient ways to justifiably discriminate and yet also claim we want everyone to be equal too. Anyone want every business they ever patronize to operate like the DMV?

Amazing how in this "taking of power" from the American Worker as it's been claimed, another union found that the most powerful way for it to operate was to actually dissolve and not be forced to pursue collective bargaining. WHAT???!!! Seriously you jest!!! We've spent weeks whining how this principle is a necessary core, especially for GOVERNMENT unions who clearly have been the backbone of the labor movement and sacrificed steadily to secure...um, ABSOLUTELY NOTHING for any other worker. People need to realize there is a world of different between unions operating in a corporate environment and the public sector. No corporate unions are being harmed because now your local DMV worker can't collectively bargain to get a raise above CPI and instead must have it approved by, gasp, the voters of the state. Oh No!!! You mean, I might have to actually work efficiently so that people will reward me for my work? Say it isn't so!!!
"Certainly a dumb-ass question -- thankfully rhetorical. Nevertheless, the thoughts surrounding the potential answers thereto reveal why insurance companies remain in business, while government social programs fail."

Interestingly, this comment is even more stupid. We don't expect nonthing less from know-nothing UC.
'nothing' above
ya, 50 states will cut $100 billion from their budgets this year, prez obama submitted last year what in the fuck was it only $6 billion!
now, he shooting away $25 million a day just for missiles into libya! plus another $50 million a day to feed fucken middle-east rebels plus more than a few billions to stop the fucken meltdown in japland, oh, i'm sorry are we still feeding the haitians too? guess i better stock of on food before it all given fucken away to fucken foreigners........
Prop 13 took aim at the wrong end of taxation. It limits local taxation, where you, the voter, have the most control over the taxes and how they are spent. What's been substituted is money brought in from the state and federal level where you have little control over the amounts and how it's spent.

Of course, the fun thing about federal money is you can get it from other states and actually wind up with your state getting more money than it pays in taxes (I'm looking at you, Red States!).
I think the reason people are taking drastic cuts is because we need them to survive. States can't print money like the fed so they have to balance their budget. If you look at the fed budget Obama says he only wants 20 billion cut out of a 3 trillion dollar budget and a 1.5 trillion budget deficit. When asked to go back to Bush level spending he says no way. He was leading the fight to say Bush was spending to much. It's all bull. All these giveaways are going to go one way or another. We will either cut them now or when the country collapses we will cut everything then. The dems are causing more problems by the way they talk about the cuts. So if they don't like these cuts what are their cuts? What a bunch a bull. Are you kidding me. I could cut 2 trillion out of the budget in an hour and be done. Social Security age increases right away. SSI taxes increases and is redirected into private accounts. In two seconds I just fixed the dam program how hard is it. Medicare is easy. The premiums go up and deductibles go up and problem solved. This getting something for nothing crap is over. The military comes home today. It is redeployed on the boarder and it's cut by a quarter. Corporate welfare is done. No more. Bailouts are over. Departments of education and transportation are finished . They do nothing. The drug war is over and is all legalized and taxed. Do you see how easy this is. I'm tired of all this crap that nothing can be done. Are people going to get hurt and loose jobs, yes. Too bad. We will all be hurt if they do nothing. This is why people are so pissed at politicians right now. We want results not pandering.
the poor are always unwelcome, and as long as they are a small segment of america, both major parties must ignore them in attempting to capture the votes of the 'i've got mine' demographic.'

sooner or later, clipping off the losers will create a significant political force which some man on a white horse will ride to the white house. with luck, he'll be the head of a socialist party. more often they are fascists.

the rich will ride the storm or else leave, whatever is left of the middle class will learn that clipping off the losers comes to them in turn.