“If you want more of something, subsidize it; if you want less of something, tax it.”
The Gipper’s concise philosophy of government might work for some things.
It is the idea behind taxing, sometimes at very high rates, cigarettes and alcohol. And for subsidizing, for reasons that escape logic in the 21st century, oil wells and coal mines.
Although true libertarian economic thinkers would point out that, if sin taxes get too high, it only serves to create a black market in butts and booze, reducing government revenue and moving product that might be even more unhealthy than the legal stuff.
And their progressive brethren would note that subsidizing an industry unwisely insulates it from market forces that, as the real price of renewable energy goes down, could help to clean up the planet.
Reagan’s aphorism also explains the motivation behind the latest plan to “reform” Utah’s state tax structure.
Clearly, legislative leaders think there should be fewer poor people in the state, so they would raise taxes on them. And they want more rich folks around, so they propose to subsidize them.
The plan might also be read as an incentive for families in Utah to have more children, as it would greatly increase the per-child income tax break. Though those who think it through, as anyone contemplating being fruitful and multiplying should, might see that another part of the same plan, to cut back on the state’s main funding source for public education, would have the effect of discouraging reproduction hereabouts.
The scheme to raise the sales tax on groceries while cutting taxes on income has one purpose and one purpose only. It is a play to suck up to rich people, kind of and very, and give the back of their hand to poor folks who have the gall to hang around smelling up the place.
The Legislature’s own bean-counters figure that, under this plan, richer, bigger families make out the best, while smaller, poorer families benefit little or not at all.
By the tax-and-subsidize theory, a plan such as this would encourage poor people to leave the state and rich people to move here. Though, given the outbreak of “luxury” apartments that are already going up all over the place, and the increasing number of homeless folks being displaced by them, it’s hard to see that it would matter much.
Besides, if rich people are really so short-sighted and policy-illiterate as the tax plan supposes — and, if they are, how come they’re rich? — it would be really easy to find an affordable apartment in high-tax California and the population of no-income-tax Wyoming would be booming.
It’s more complicated than that, of course. There are high-tax states growing and shrinking and there are low-tax states growing and shrinking. So how attractive a place is depends on a lot of things that aren’t taxes. Like job prospects, outdoor recreation, good schools and universities and the likelihood of earthquakes, wildfires and hurricanes.
The plan also includes adding sales taxes to some services — in an increasingly service-based economy — like landscapers and yoga instructors.
That might be not-so-horribly regressive, as rich folks are more likely to be buying those services. Or it might be damaging to those barely hanging on, as they are the ones doing the landscaping and the instructing.
If Utah really wanted to anchor its revenue to a reliable source, it would increase its income tax rates and make them progressive rather than flat. At the current 4.95%, we would have lots of room to inch up Utah’s tax brackets and still be a relatively low-burden state. If continue to pretend that really matters.
We could double our rate for high-earners and still be well below the top bracket in California (12.3%) and in the neighborhood of Minnesota (9.85%) or Iowa (8.53%).
But to the people flogging this plan, who have no desire other than to run about shouting, “Tax cut! Tax cut! Tax cut!” the real numbers don’t matter.
Neither do the real people.
George Pyle is the editorial page editor of The Salt Lake Tribune. Email him at firstname.lastname@example.org. Follow him on Twitter, @debatestate