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Trickle-Down Theory Makes Less Sense Than Ever Before

Memo Pad Politics

Trickle-Down Theory Makes Less Sense Than Ever Before

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By Ann McFeatters, Tribune News Service (TNS)

SEATTLE — The governor of Washington wants to raise the state tax on a gallon of gasoline by at least 11 cents. A continent away the governor of Maryland wants to block a scheduled increase in the state tax on gas.

We’ve got ourselves more battles between the Democrats and Republicans, and a lot of Americans are going to be miffed at the outcomes.

Governor Jay Inslee, a Democrat, argues that Washington needs billions of dollars in road infrastructure improvements and with gas prices currently the lowest they have been in years, he thinks now is the time for legislative action. He especially wants a $1 billion road improvement to ease a massive daily bottleneck between Seattle and Tacoma.

But Maryland’s new GOP governor, Larry Hogan, a proud “tax-cutter,” doesn’t care that a series of planned gas tax increases by mid-2017 would help finance $3 billion worth of road and transit work. That would include finishing the much-needed Purple Line to the Washington D.C.-area Metro and a Red Line in Baltimore, taking thousands of cars off clogged highways.

Hogan is against drivers paying $80 more in annual taxes, even to fix truck-devouring potholes. He also wants a legislative vote on every tax increase, including those already scheduled.

Even as Congress bickers over budgets, lawmakers refuse to raise the federal gas tax above 18.4 cents, set in 1993, despite competitiveness worries over the country’s crumbling infrastructure. Even President Obama, who likes to warn about toppling bridges and pothole-pocked highways, hasn’t proposed an increase.

But at the state level, there is a different approach, both pragmatic and vindictive. New Jersey desperately needs improved roads and bridges but Governor Chris Christie, hoping to snag the Republican nomination for president, doesn’t want to have anything to do with raising ANY taxes.

Somewhere there is undoubtedly a secret memo telling governors how to handle the problem — cut taxes on the rich and raise them on the poor. “Brilliant!” say many governors.

Chief among them is Governor Paul LePage (R-ME), who in 2011 signed a $150 million tax cut for the rich and doubled the estate tax exemption to $2 million. He now espouses taxing movie tickets and haircuts.

He and Ohio Governor John Kasich are among Republican governors proposing cuts in state income tax rates even though Kansas Governor Sam Brownback proudly pushed through tax cuts as his state promptly fell into economic freefall.

Wisconsin Governor Scott Walker, a Republican running for president, got so ensnared in tax-cutting frenzy he proposed cutting not only education funds but rewrote the soaring language about the purpose of state universities: To “meet the state’s work-force needs.” Amid the outrage, he blamed an “aide.”

Current state income tax rates are bad for the poor and comparably good for the rich, according to the Institute on Taxation and Economic Policy. While the rich pay more in dollars than the poor, the rate on the top one percent of the richest Americans is 5.4 percent while the rate on the 20 percent poorest segment of the population is 10.9 percent.

Republicans don’t dare risk losing their conservative creds by narrowing this gap but they do see potential windfalls in taxing new forms of consumption such as e-cigarettes, generally most hurtful to the non-rich.

We all think we’re too highly taxed. Because of additional local taxes, many residents of Washington state pay a whopping 9.6 percent in sales tax. Marylanders pay 6 percent.

When you start looking at all taxes, not just state and federal taxes but license tags, property taxes and a myriad of new charges such permits to hold garage sales and own dogs, many of us pay about half of our income in taxes.

Is it fair — or counterproductive — to cut the income tax of the rich and charge the poor and middle-class more for services they must have such as haircuts?

The trickle-down theory of economics — that income generated by the wealthy filters down the ladder to the poor and middle class — was always precarious. But it now makes less sense than ever.

Photo: Fort George G. Meade Public Affairs Office via Flickr

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9 Comments

  1. Lynda Groom February 19, 2015

    All of this nonsense is based upon a demonstratively disproven theory. They are pissing down the necks of the people of their states and telling them its raining. The agenda drivel drivel is what is important here, not the facts, figures and reality of trickle-down. Follow the money and you always find the moneyed elite pulling the strings of power.

    Reply
  2. chisolm February 20, 2015

    An increase in gas taxes hits lower income folks much harder than others yet Democrats can hardly wait to increase that tax. Bit of the normal liberal hypocrisy?

    Reply
    1. BillP February 20, 2015

      Were you this concerned for the lower income people when gas prices were over $1.00 or more higher per gallon? Raising the gas price by $0.11 per gallon is easier to deal with than the higher prices were.

      Reply
      1. chisolm February 20, 2015

        High gas prices concern me for all people. Every dollar that goes to filling your gas tank is one less dollar that consumers can spend in different ways, benefiting the entire economy. Adding a tax merely allows the government to spend that money as they see appropriate. Where is the gas tax money that has gone into a supposed fund? If this cash goes to the general fund how it is spent is anybody’s guess.

        Reply
        1. BillP February 21, 2015

          Having the $0.11 per gallon go into a fund to pay for infrastructure projects would cost people using 18 gallons of gas per week a grand total of $2.00 per week. This gas tax could be temporary one based on a length of time or tied to the price of a gallon of gas. In cities most of the lower income people don’t own cars so the tax wouldn’t have an effect on them. So the most of lower income people that you are concerned about would not be effected by this tax.

          Reply
          1. Independent1 February 22, 2015

            And what Chisolm and many others who oppose the tax increase are overlooking, is that if fixing our highway infrastructure improves traffic flow (which it should), it should cut down on traffic bottlenecks and the ‘idle time’ people spend sitting in traffic during their commutes to work; such that spending that added 11 cents/gallon of gas, may in fact improve their car’s gas mileage so that in the end they’re actually paying less to run their cars each month.

            And not only that, it should cut down on the pollution being created by lines of cars sitting idling on parking-lot like highway segments.

            Reply
          2. BillP February 23, 2015

            Great reply. What annoys me most about these comments is that they are usually accusing liberals/progressives of being hypocritical and that they, the Conservatives, are so concerned about the plight of the lower income people.

            Reply
          3. Independent1 February 23, 2015

            To me, the biggest problem is that Conservatives have tunnelvision – all they see is that a proposal is going to cost money; and as soon as money enters the picture they’re against it. They do absolutely no further thinking that would allow them to realize that maybe spending that money up front, will actually save them money in the long run.

            That can be seen in even their total opposition to approving Obama’s jobs bills a couple years ago which would have created millions of jobs and fixed a lot of our roads, schools, government buildings etc. Not only were they against it because it would have created jobs which may have made Obama look good, they were against it because MONEY was involved. Completely ignoring the fact that if all that infrastructure repair would have cost say 450 million back in 2012 or so, that doing exactly the same infrastructure repair now or a couple years from now (when everything really starts falling apart), may well end up costing 550-650 million or even more because now what may have been maintenance repairs has turned into the need for total replacements in some cases.

            Conservatives are clearly mindless robots who only think about the moment, and if a proposal requires them to spend a few dollars. If the answer to that is yes – then they’re going to strictly oppose the proposal giving no thought whatsover to whether in the long run there would be a big savings in spending a little money now to save a lot of expense later; or even actually save them lots of money in the future.

            Conservatives use absolutely no common sense – they have none – Money in their pockets today is the only thing they think about.

            Reply
        2. Independent1 February 22, 2015

          And what so many people are forgetting is that if this increase in gas tax does in fact improve our highway infrastructure which should reduce traffic jams and commute times, people may actually see a reduction in their gas costs because they won’t be sitting idling in traffic so long wasting gas. All everyone seems to look at is that it’s a few more cents/gallon (the .11 cents even at $2.50/gal is only a 4% increase); they totally forget about the potential for improved gas mileage because our highways should move traffic more efficiently, meaning that overall they should see a reduction in their gas costs.

          Reply

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