Balanced State Budgets?There...
Balanced State Budgets?
There is always such nonsense spoken about balancing State budgets. Those who want smaller government, especially at the state level, slash budgets, slash programs’ budgets (even programs often underway), and refuse to raise taxes because they want to be seen as conservative. Meanwhile, in a recession, the notion that the federal government is going to “trickle down” additional funds to cover shortfalls is unlikely, especially with Congressional control as it is.
When the state houses and governors slash budgets or, at best, “stabilize” spending (another way of saying pay no more than already allocated) to so-called balance the state budget, all they are doing is kicking the can down the road to county and city administrations who, in turn, will either have to forgo plans, repairs and support of the people in their community, or they will have to raise taxes.
As inflation starts to creep up, the burden on municipalities and county budgets is going to get intense. The only way those two entities can raise sufficient funds to continue programs and government services at a reasonable level is to raise taxes. These come in two guises: purchase tax and property tax. Of those two, property tax is usually the easier for them to get behind because commercial interests always oppose purchase tax, arguing that people will only go to another county or state to make their purchases. As for property tax, usually the argument goes that rich people who own property can help pay for the least well off. I’ve been at town meetings where ordinary working folk who rent apartments and houses do not oppose a property tax because they think they won’t have to pay anything since they don’t own the house or apartment where they live. In fact, property tax affects the least well off more than it does the better well off because landlords need to finance the property tax increase so they pass 110% of the tax hike on to renters in the way of rent increases – and that includes rent stabilized and rent controlled properties.
Let’s say your family earns only $1500 at work per month as an example. Of that $1500 you will lose about $93 to Social Security, $22 for Medicare, about $46 for state tax, and only $4 for federal tax leaving you about $1260 to live off of. But your taxes are not through yet… if you live in Dutchess County, NY in a house (rented or not) you pay about $4000 a year in taxes (property and school), so knock off another $333 per month. Then if you buy anything, drive, have insurance, or enjoy any TV (cable or satellite), you are laying out (for that average family making $1500 a month) another $600 a month of which 8% was purchase tax. Of the total amount of your $1500 a month, your total tax bill is probably north of $250. And that’s 16% of what you earn. When you hear someone say that less well-off people pay no tax, tell them they are dead wrong.
Now, if you are the so-called average American family, making $63,700 before taxes, you will spend (according to the Dept. of Labor) about $17,100 on housing, $9,000 on transportation, $6,600 on food, $5,500 on insurance and pensions, $3,3 on spending generally, $3,600 on healthcare, $2,400 on entertainment, $1,600 on clothing, and maybe give away $1,800. But, every month, you would also have paid $590 in property tax, $300 to Social Security, $72 to Medicare, $430 to the IRS, $325 to NY State and approximately $110 in purchase taxes. That’s $1,827 per month or $21,924 per year – or about 33% of what you earn.
So when the State says they have balanced the budget, cutting services to police, fire, ambulance, road projects, water and sewage works (the list is endless), then those responsibilities fall to your local government. You can see how the tax burden trickle-down will adversely affect you, especially for those less well off. Property taxes are a huge chunk of our income and every time they are increased, evictions and mortgage failures rise. The only way we’ll deal with this at election time is to look at the whole tax picture – IRS right down to that local 8% you pay on your phone bill, or the portion of your rent going as property tax, or that 8% on the toy little Jimmy got for his birthday. Taxes are taxes. Who collects them and who controls them are serious issues affecting your daily life.
