Tuesday, December 7, 2010

The Tax Deal vs. The Commons

Yesterday, the White House announced a deal to extend the Bush tax cuts for another two years. I’ll leave the analyses of the deal’s merits to economists like Paul Krugman and our friends at Citizens for Tax Justice. I’ll also let the pundits like Chris Cillizza dissect the compromise’s political fallout. But what interests me is the inability of our political and governmental leaders to have a conversation about the value and benefit that taxes contribute to our collective well-being.

One example of the value that tax revenue makes in the form of good government is the tax deal’s extension of unemployment insurance for another year. The UI program doesn’t just help people who are unemployed make ends meet in the midst of a recession (though that should be a worthy goal in itself); it has been shown over and over to have a stimulative effect on the economy for everyone. In fact the UI program and the expansion of tax credits aimed at moderate- to low-income people are estimated to generate more economic activity and jobs, and add less to the deficit, than extending the tax cuts for the rich. But instead of being able to see UI as taxes at work, the media has repeated the myth that asking anyone to pay more in taxes (even the super rich) would destroy the economy.

Another example of value of taxes is the high cost of states not having the revenues needed to maintain the infrastructure we all share. A study of Pennsylvania’s deteriorated roads and bridges found that the state’s transportation needs cost drivers about $8.2 billion a year in added costs for vehicle maintenance, gas, crashes and time lost in traffic jams. Without more revenue the infrastructure in our states will only get worse, and the costs of living in a crumbling commons are higher than paying a little more in taxes. But again, even though Pennsylvania’s political leaders can diagnose their transportation needs, the governor-elect, Tom Corbett, took the Americans for Tax Reform pledge to never raise taxes.

What will it take to reframe taxes as producing value?

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