In these dire economic times, it’s easy for politicians to take the No New Taxes pledge. How could you possibly raise taxes when people are hurting, right? Wrong. A refusal to raise taxes when needed is political cowardice, plain and simple.
Fiscal responsibility doesn’t just mean cutting the cost of government, it means making sure that essential programs and services remain adequately funded. In an economic crisis, we need to look both for where we can save money and where we can raise it.
It’s easy for the President and Congress to take the No New Taxes pledge. The federal government can run a deficit. The states can’t. But state governments can pass the buck, which is what Maine is doing.
When state government takes the No New Taxes pledge, it just means cities and towns either have to raise taxes or cut vital services such as police, fire, general assistance and public education. A failure on the part of Gov. John Baldacci and the Maine Legislature to use their powers to increase revenues is doubly damnable as it means the state cuts revenue sharing and state aid to education even as it mandates that municipalities provide general assistance and public education.
In 1991, during the last recession, Republican Gov. John McKernan, faced with a $125 million budget deficit, engaged in some good old fashion political horse trading of the sort that no longer seems possible, either in Washington or Augusta. McKernan traded $300 million in new income, sales and gas taxes for a reduction in workers compensation insurance payments that led to sweeping workers comp reform and the creation of Maine Employers’ Mutual Insurance Company. Of course, he had to shutdown state government for a few days in order to do so.
These days, we just accept rolling government shutdowns (furlough days) as a fact of life.
Maine’s elected leaders should be looking for new money to help plug the current projected $438 million deficit, but they seem to lack the guts to do so. Should they find the political courage to do what needs to be done, I can suggest a few places they might look for new money.
This would be an ideal time, for example, to bring back the snack tax. With First Lady Michelle Obama leading a nationwide crusade against epidemic childhood obesity, Maine would do well to slap a tax on any foodstuffs with little or no nutritional value.
In 2008, Maine voters repealed a tax on beer, wine and soda that would have paid for the Dirigo Health program, but that was more a rejection of Dirigo than of taxing junk food. Politicians seem to have no trouble at all taxing tobacco out of existence, so I see no reason why they shouldn’t be willing to put the hurt on booze, pop and Twinkies as well.
For that matter, there are a host of services that might bear a light tax. Auto repair comes first to mind as the cost of getting anything fixed on a car these days is so high that motorists in sticker shock wouldn’t even notice a little state levy on their new tie rod ends.
Finally, I’d love to see legislators get a little more creative with the property tax. Specifically, the way school funding works, most communities are required to raise $6.37 per $1,000 of property valuation for education. But towns with high property values, most often meaning coastal communities with a lot of out-of-state property owners, can get away with a much lower mil rate. Kennebunkport, for example, only assesses $2.53 per $1,000 for education, Mt. Desert a mere $1.12.
What this means is that, in a state with the highest percentage of out-of-state property ownership in the country, non-residents aren’t paying their fair share. There’s a lot of out-of-state tax money being left on the table.
Don’t cut school funding. Raise taxes. Share the wealth.