The vote to increase Arizona’s sales tax (Prop. 100) ironically comes at a watershed point in the history of Western democracies.
We have lived through an era in which voters around the world have demanded services from government for which they have no intention of paying. Governments have responded by piling taxes on the most productive members of society (“the rich”) and accumulating gigantic debt loads in order to win the favor of government dependents and employees.
But the party is almost over. Greece is today’s poster child of the inevitable consequences of the spend-tax-debt cycle. There is no logical end to the spending and no point at which the sense of entitlement is satisfied. Eventually, no more taxpayers and lenders can be found and the Ponzi scheme crashes.
Although we have yet to see a major government in bankruptcy, several are in serious trouble financially. Spain, Portugal and Ireland have spent themselves into supplicant status in the EU. California and New York are among states reaching a point of no return, with Arizona not far behind.
Yet even governments facing economic calamity find that those who receive government largesse consider no sacrifices tolerable. Like Greek civil servants rioting because German taxpayers are no longer willing to subsidize their cushy jobs, the Prop. 100 crowd can’t think of anything worth trimming, even in hard times.
So cutting back the hours of the highly subsidized light rail is “foolish.” Privatizing highway rest stops is “unthinkable” (at least to the government workers’ unions). Anything less than a full boat use-it-or-lose-it health insurance plan for every indigent Arizonan will “kill people.” A mother complained that losing free after-school childcare was “unfair” for a two-earner family. So it goes. Programs unknown not long ago are now considered essential.
Ten years ago voters agreed to raise the sales tax, with the promise that it would “protect education” (sound familiar?) and that some of the bloated middle management in our public education system would be reduced. It didn’t work out that way. A recent auditor general’s report indicated that the share of education funding reaching the classroom actually fell slightly from 57.7 to 57.3 percent since the last tax increase.
Education spending meanwhile rose from $7,228 per student in 2001 to $9,707 in 2008, a 34 percent increase. Unfortunately, student achievement scores showed no corresponding improvement. Test results stayed essentially flat despite the increased funding.
Prop. 100 advocates insist that a healthy education system is important to our future. Yet there is nothing in the proposal to improve student outcomes except more money. Time after time, higher funding alone has proven ineffective. More money is wildly popular with the unions who dominate public education, however.
Business supporters of Prop. 100 argue that “debt destroys wealth” and that we’re soon going to be strangled with debt service if we continue to fund operations with loans from our grandchildren. True enough. But there’s a problem with that argument. The proceeds of the new tax won’t go to reduce debt. Instead, it will actually protect government spending, for which alternate budgets have already been created.
Prop. 100 funds won’t relieve Arizona’s financial dilemma. Indeed, according to the non-partisan Joint Legislative Budget Committee, the projected deficit in 2014 will be almost $1 billion if Prop. 100 passes, $200 million if it fails.
Think about it. Raising taxes during a recession is lunacy according to every economic theory. Transferring money from the private sector to the economic sector that has seen the least harm in the past few years — government — would be foolish. It would cost thousands of productive, non-government jobs and would delay our exit from the recession.
The lesson from Greece and around the world is that the spend-tax-debt cycle is a downward spiral. There is a huge reward for governments who learn this sooner rather than later.
The many commercials for Prop. 100 ludicrously claim that it is necessary to maintain our quality of life. The truth is that more taxes will only postpone our day of reckoning and make our crash to earth more painful when it does come.
Just say no.
East Valley resident Tom Patterson (firstname.lastname@example.org) is a retired physician and former state senator