So much in government in Connecticut is euphemism. Political patronage is called “equity” and “social justice.” Increasing the compensation of teachers is “aid to education.” Raising gasoline taxes is a “climate initiative.”
And now the new state budget, at the instigation of the House chairman of the General Assembly’s finance committee, Rep. Sean Scanlon, D-Guilford, is directing the Lamont administration to undertake another study of how “fair” Connecticut’s tax system is.
“Fair” is almost sure to be defined again as something that raises more money for state government. That is the only possible purpose for such a study, since the basics of tax incidence — which groups pay how much — long have been clearly established.
But contrary to the assumption made for the new study, the definition of fairness in taxation is highly arguable.
Lower-income people pay a higher percentage of their income in state and municipal taxes than higher-income people do. But this calculation omits federal taxes, where people with higher wages pay far higher percentages. (Investment income is something else.)
State sales and gas taxes and municipal property taxes can be construed as regressive — more burdensome for lower-income people — insofar as their rates are the same for everybody. But these taxes also can be construed as progressive, with wealthier people paying more than poorer people despite identical tax rates, since wealthier people buy more stuff, have larger homes and more expensive cars, and drive more for travel and pleasure.
Additionally, tax incidence studies don’t always take into account government benefits for lower-income people, like subsidies for medical insurance, housing, food, and child care.
Apart from percentages of income paid in taxes, in simple dollar terms higher-income people pay far more in state and local taxes than poor people do, and they use far less in government services. That’s why Connecticut’s cities are so eager to export their poor.
And while burdening the poor with taxes is easily portrayed as unfair, the less people pay in taxes and the more they receive in government services, the less they feel the burden of government and the less responsibility they take for it. No amount of waste, fraud, and ineffectiveness in government ever bothers advocates of higher taxes like Connecticut Voices for Children or the government employee unions.
Indeed, such advocates are never bothered even by the manifest failure of major government enterprises to accomplish their nominal objectives. Spending in the name of education increases as student enrollment and performance decline. Spending in the name of social welfare increases as poverty and dependence worsen. Spending in the name of rehabilitating the cities increases as living conditions there deteriorate.
So whatever fairness is, what is fair about claiming more revenue for state and municipal government when there are never audits of the performance of its most expensive undertakings, since audits would expose failure?
Yes, the federal tax code is full of provisions that diminish the progressivity of the federal income tax, especially now that the government is propping up the stock market. But ironically, liberal Democrats in Connecticut and other high-tax states want to repeal the big progressive change made to the federal tax code by the recent Republican majorities in Congress: the $10,000 cap on state and municipal tax deductions from the federal income tax.
It’s the federal tax system, not the state and municipal tax system, that needs more progressivity. With a weak economy and taxpayers leaving, Connecticut needs tax restraint, especially since “fair” in taxation here is just a euphemism for “more.”
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BRADLEY’S ‘SUBSIDY’: Last month this column asserted that Bradley International Airport in Windsor Locks is “subsidized” by state government. This might have misled.
The airport is a state government operation, run by the Connecticut Airport Authority, but it does not bill state government for its costs. Rather, the authority finances Bradley’s operations from its own revenue streams, including airline landing fees, parking charges, and commercial rents. The authority’s general-aviation airports are also supported by aviation fuel taxes, which state and federal regulations require to be used for the state’s aviation system.
Chris Powell is a columnist for the Journal Inquirer in Manchester, Connecticut.