In my column this year, I took a few positions that seemed less than popular with a college audience. Two in particular stand out: keeping tax cuts for the rich at the federal level and opposing the proposed tax extensions in the state of California (which almost certainly means higher tuition rates for you and me).
At first, these two issues seem related only in that I am defending low taxes. But in reality, they are connected in a much greater sense, in something intangible without which numbers and details become meaningless.
Way too often in politics facts are cited entirely bereft of context. This complication muddies the waters of political debate, as we attempt to navigate through what isn’t outright false, but is instead a flawed interpretation or argument that must be carefully picked apart.
For example, in opposition to tax cuts for the wealthy, some have cited statistics on the lack of increase in household income since about 1980. But household income is entirely separate from the better indicator of individual income.
“The household thing is really a tipoff, I think,” said economist and Hoover Institution Senior Fellow Thomas Sowell in a recent interview. “Whenever I see someone quoting household income, he’s trying to make things look bad.
“For example, over a period of about 30 years, household income rose by only 6 percent. Over those same years, per capita income rose by 51 percent, because the number of people per household was declining all the while.”
In other words, since the Reagan and Bush tax cuts were enacted, it is inaccurate to say that the rich have been getting richer while everyone else has been left behind. On average the rich have been getting richer, but others have been getting richer too. The notion that tax cuts for the rich hurt you and me is a myth based on statistics viewed without context.
Though I increasingly enjoy arguing economic policy to determine what will make us all more prosperous, I must switch gears with the little space I have left to look at another example of a debate without context.
Tens of millions of Californians are on the verge of getting tax relief in a bad economy. Life in the Golden State has been on the decline in recent years, as a tough job market, a bad housing market, increasing gas prices and one of the highest overall tax burdens in the nation have all been driving folks out of the state at a rapid rate.
It’s all well and good for us to gather and demand high taxes so that our tuition rates don’t go up any further, but the problem is that the money we seek doesn’t actually come from the state government. It comes from our fellow Californians.
So as the governor, the legislature and the state consider keeping sales, vehicle and income taxes at their present levels, we must consider what that means not just for us college students, but also for John Q. Public.
Sales taxes hit rich and poor alike. They increase tax consumption, not income, and even the poor must be consumers of something. Are we really prepared to deny lower taxes to the poor to even partially fund our time at one of the premier college systems in the country? How many of the California poor do you think have a four-year degree?
Vehicle taxes are indexed for the value of the vehicle, but it is little consolation to me with my 1998 Mazda van that the rich guy in El Macero has to pay more for his Mercedes too. Higher taxes are higher taxes.
And higher income taxes, even merely on the rich, are not economically sound, as we’ve already looked at in multiple columns.
I am increasingly concerned that we in America are becoming a tribal society, in which different groups of people compete for their own demographic to get additional money from the government.
It is nothing new – at least for political scientists, of which I am thankfully not one – to note that the tax burden is spread across many, while government monies are often spent on smaller, select groups. The cost is spread out, and the benefits are concentrated.
This makes those receiving the benefits (for example, college students at a public university) much more vocal than the millions of California consumers and vehicle owners who face the prospect of tax extensions for years to come.
There is no changing the fact that we are faced with difficult times. But if we make smart decisions, if we look at facts within context and without forgetting the bigger picture, we have it in our power to make a more prosperous society for years to come.
Take your last opportunity of the year to e-mail ROB OLSON at email@example.com.