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The Property Tax Paradox

October 9, 2016

Brookings Institute Fellow Vanessa Williamson has an op ed piece in today’s NYTimes titled “Tax Me. Please”. The article provides an overview of data she collected over the past several decades indicating that voters see the payment of personal taxes in our country as a civic duty and are intolerant of those who fail to pay their fair share. Here are a couple of paragraphs that summarize her findings:

Pollsters have been asking Americans whether “it is every American’s civic duty to pay their fair share of taxes.” Every year, about nine in 10 Americans agree with that sentiment. In 2009, 3 percent of respondents disagreed. That level of accord is very rare. To give you a point of reference: About 6 percent of Americans think the Apollo 11 moon landing was faked. On the civic responsibility of taxpaying, Americans are about as close to consensus as they ever get.

This sentiment has been stable for as long as questions like this one have been asked, even at the height of the Reagan revolution. In 1983, in an era when popular estimates of government waste were at a record high, tax cuts were at the top of the political agenda, and politicians competed to hate “big government” the most, Time magazine asked respondents if they agreed with the statement “Government spending is out of control, so there’s nothing wrong with holding back a little bit on taxes.” Such a leading question should have pushed Americans to express any unwillingness they felt about footing the bill for government. But given every opportunity to sign off on tax avoidance, 80 percent of Americans still said no, it was not O.K. to hold back on your taxes.

Given this attitude, why do taxpayers yawn or even applaud when local, State and federal politicians enact deep tax cuts for corporations in the name of “Economic Development”? Has a corporation ever remained loyal to a small town or city after these tax cuts were provided? It’s possible that one reason the pubic is not outraged over this treatment is that voters do not see these “incentives” for what they really are: a form of extortion. When a politician at any level of government “negotiates” a tax benefit package in the name of “economic development”, they are doing so because if they fail to agree to a lower tax package they know that the corporation will relocate and if they do so the tax base will collapse completely. But by diminishing the tax base through “incentives” like reduced property taxes the politicians compromise local revenues for schools, police, and infrastructure and by paying de facto ransoms to corporations they set themselves up for future bargaining or— as is often the case— abandonment by the corporation. In the final analysis, the corporations are rarely loyal to a town. A trip through any part of this country will illustrate how corporations abandon communities seeking lower taxes, employees who will accept lower wages, and towns with looser regulations. And if the low taxes, low wages, and loose regulations can’t be found in our country? We know the answer.


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