Dogma, Presumptions Blur Tax Cut Arguments

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The Oklahoman editorial board has attempted to philosophically defend the GOP push for a tax cut this year despite the cut’s future impact on revenue in a state that has faced budget reductions in recent years.

Unlike Gov. Mary Fallin and to an extent House Speaker T.W. Shannon, a Lawton Republican, who mostly engage in sweeping, Republican generalizations when it comes to cutting taxes, a recent commentary in the newspaper actually tried to parse the issue and offer specific counter arguments to those people who oppose an income tax cut right now.

The newspaper should be commended for actually trying to construct a logical argument, but ultimately the overall argument fails because of misguided assumptions, lack of empirical evidence and over reliance on unproven conservative dogma. It would be nice if state leaders, including editorial writers at Oklahoma’s corporate media, could have a rational discussion about taxes, but it can’t happen if we must begin with prevailing conservative presumptions that simply aren’t true.

The editorial, “High-tax states wouldn’t mind an economy like Oklahoma’s” (April 12, 2013), essentially offers counter arguments to the Oklahoma Policy Institute, which has opposed any income tax cut this year, primarily because of its future effect on state revenues and in light of recent budget cuts. The latest proposal under consideration, which came out of the state Senate, would drop the top tax rate from 5.25 percent to 4.95 percent starting in 2015, sunset some tax credits and would cost the state $169 million a year. That proposal is now under negotiation. Fallin and Shannon have pushed for a cut from 5.25 percent to 5 percent starting in 2014. It would cost the state more than $100 million a year.

I have outlined my argument against a tax cut at this time here, but in this post I want to address some of arguments put forth by The Oklahoman in its response to OK Policy and others opposed to a cut.

The commentary, for example argues that a “tax cut is hardly going to make the poor poorer” because the top income tax rate starts at $8,700 for a single filer. This argument supposedly addresses concerns OK Policy has about the relationship between taxes and poverty in the state. But the editorial doesn’t address the fact that any flat cut that doesn’t take into account income brackets is always regressive and shifts the most money to the wealthiest in our society. Also, declining government revenues eventually lead to budget cuts or stagnation, which could mean fewer dollars for safety-net programs that help the poor.

The Oklahoman dismisses OK Policy’s concerns that state workers haven’t had a cost-of-living raise since 2006, arguing in italics that it’s a political sales pitch that comes off like this: “You need to accept less take-home pay so a bureaucrat can get more.” Not every state worker is a bureaucrat, of course, and under Fallin’s original plan 43 percent of Oklahomans wouldn’t even receive a tax cut. I’m unsure the sales pitch for stopping a tax cut right now comes off to a majority of people as described by The Oklahoman. Here’s the real sales pitch: You will receive no tax cut at all or a token amount of money and it will take money away from schools.

Higher education funding from the state has declined in recent years because of lower state revenues, prompting tuition hikes, but that’s okay, according to the commentary, because colleges will raise tuition no matter what. This type of argument dismisses any real discussion of just how much tuition has skyrocketed or of the increasing cost of college, which is saddling many students with crippling debt. It also makes a presumption that colleges will always raise tuition each year, which isn’t necessarily true. A few years ago, for example, many state colleges came together and gave students a year without any increase. It also implies that colleges would have raised tuition that same amount with more state support. I don’t think that’s true, either.

The editorial goes on to argue that “no amount of taxation is ever so great that government boosters won't claim poverty,” which is a misguided, conservative assumption. On the philosophical level, so-called “government boosters” are usually people who want a fairer, progressive tax system. They actually favor tax cuts for the less fortunate in our culture. They want to adequately fund education and safety-net programs and call attention to the growing income inequality between the richest people in our culture and everyone else. Specifically, they recognize the state’s historical and well-documented lack of decent funding for education and the state’s historical and well-documented poverty levels. How can we not “claim poverty” when it stares us in the face?

Many of us opposed to the tax cut have argued that the median cut is only $39 a year, a trivial amount, at the same time it collectively takes a large chunk of money away from overall state revenues. The answer from The Oklahoman is more Republican dogma and presumption. The editorial claims, even though the cut is small the private sector “allocates money far better than any government agency.” That’s certainly true if you’re a billionaire, like the newspaper’s owner, Philip Anschutz, but it’s not so true if you’re working at a minimum wage job and don’t even receive the extra $39 annually. The free market enforces poverty as much as it makes people rich. The newspaper is making an assumption certainly not held by everyone and probably not even a majority of voters in this country.

Finally, the newspaper claims tax collections actually went up after recent tax cuts, but it completely ignores the impact of the Great Recession on Oklahoma and the steep decline in revenues after 2008. I’m trying hard not to engage in hyperbole here, but this claim borders on rewriting not just history but extremely recent history. A strong argument could be and has been made that the tax cuts sent state revenues into a devastating downward spiral once the economy tanked.

Still, I’ll give The Oklahoman some credit here for the attempt to argue ideas and also for its rather subdued approach to the tax-cut proposals presented by lawmakers so far this year. The editorial seems okay with the idea that lawmakers “may favor state spending over tax cuts this year, and consider tax cuts again in future years.” I’m okay with that idea, too.