Vail Valley Voices: Tax increases to deplete family budgets
October 22, 2011
State and local tax authorities are asking voters to raise taxes again.
Proponents say they are only nickel-and-dime proposals. Those nickels and dimes will be spread over time. When valued today, they total $11,600 per Eagle County household.
Broken apart, the local school district wants $9,400, the local fire district wants $700, and state Sen. Rollie Heath, of Boulder, wants another $1,500, also for the public K-12 industry.
Should Heath’s five-year tax increase become a permanent tax increase, the present-value cost of the three ballot measures balloons to $43,000 per household. That’s big money for ordinary families.
These measures have some hidden charges, too. At the Colorado Public Employees Retirement Association (PERA), fast and loose benefit increases during good times are now coupled with losses from aggressive investing during bad times. That devilish duo opened a pension shortfall of $12,026 per taxpayer family.
PERA is trying to make up its losses by shooting out the lights in the stock market. If it fails, taxpayers are ultimately on the hook for the missing money. Every dollar of PERA payroll further increases taxpayer risk.
Local bureaucracies have made big money mistakes right here at home, too. Taxpayers now have expensive, excess boom-era buildings to pay for. Public-sector folks are often terrific people, but management practices seem intentionally designed to suppress employee initiative and productivity. Low productivity is expensive.
Then there is the power imbalance between the rulers and the ruled. Taxing authorities have zero tolerance for people who do not perform up to their expectations. Any doubt? Divert some of your taxes to a better cause, and see the reaction.
On the other hand, if a taxing authority does not fulfill a taxpayer’s reasonable cost and quality expectations, that individual citizen has no effective recourse. None.
And, of course, taxing authorities have great power to influence elections. They can call votes in off-off years – like 2011 – when turnout is expected to be low. A small but fired-up group of tax recipients can easily swamp the broader, more diffuse general interest.
Local governments also have the big budgets, consultants, salaried leadership, paid staff and employee leverage to push for ever more money. The lonely taxpayer, however, is on her own.
Given this unbalanced relationship, it is not surprising that government spending has grown much more quickly than the rest of the economy for generations. Public expenditures have increased from 10 percent of the gross domestic product to 38 percent over the past century – through a continual stream of “small” tax increases driven by politically opportunistic special interests.
A typical family earning $75,000 of cash income annually will pay approximately $1.3 million in taxes over its working career.
Beyond that $1.3 million tax load, Washington, D.C., state and local governments have piled on an additional $100,000 of national debt per $75,000 income family.
There’s more. The same gang mentioned above has run up an additional $70,000 in unfunded government employee pension liabilities.
Brace yourself for the big hit. Washington has arranged that each family and its descendants are liable for $600,000 (today’s value) more than current taxes to fund shortfalls in Social Security and Medicare.
It all tallies up to $770,000 in unfunded public liabilities per family. Oooph! Richer families are on the hook for more, poorer families for less.
Throw in the demographics of aging, and it is easy to build a muscular case that financial pressure is only starting to build, both globally and in Eagle County.
No wonder growing numbers of taxpayers feel like they are locked in a careening car with a drunken driver.
Regardless of the outcome in November, taxing authorities are likely to face ever more scrutiny from increasingly sophisticated, value-seeking taxpayers.
Rising demands for lower costs, higher quality and individual self-determination will certainly stress these traditional public institutions. Their most determined defenses are unlikely to protect them from reform forever.
The days when bureaucrats can expand their share of society’s wallet simply by saying “trust us” are rapidly drawing to a close.
That’s been tried and found wanting.
Vince Emmer, of Eagle, can be contacted at email@example.com.