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Op-ed column: Confusing the issue

State’s poor rating on taxes is hardly an objective study

Sunday, October 21, 2012
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Studies are often the final word in politics. The word evokes the idea of careful scientific practice, providing a clip at the knees to a political opponent whose claims suddenly appear made up. What’s otherwise a confusing world of contradictions is suddenly something we can quantify, and verify too.

At least it can appear that way. The truth is that no study is truly objective, or world-encapsulating. But some are certainly more objective than others. And once you’re in the realm of subjectivity, it tends to be the “ranked list” brand of studies that are the most bandied-about, but also most useless.

Last week, it was one of these ranked lists that appeared to deflate Gov. Cuomo’s reputation for being a tax-cutting fiscal conservative, and provide Republicans with campaign ammo for this fall. A study by the Tax Foundation rated New York at the bottom of the business tax climate.

Gov. Cuomo, who has invested a lot of political capital on the subject, has already dismissed the study as skewed, unfair and unreflective of the “progress” that has been made so far in his term. And he’s correct to worry about this study. Let’s ignore the fact that you can’t treat “business” as one indivisible thing (corner stores are slightly different from hedge funds). Who would know better about tax policy than a non-partisan think tank like the Tax Foundation?

Important difference

Actually, almost anyone else. The Tax Foundation bills itself as a non-partisan research organization, but there’s a difference between being non-partisan and being objective, or scientific. In the context of Beltway think tanks, being non-partisan really means they’ll support anyone who will sign on to their ideas.

Rather than being driven by party loyalty, the “non-partisan” think tank has the ability to make politicians compete for their ideological approval. In the case of the Tax Foundation, it means correctly answering the question: How can we return to the Gilded Age as quickly as possible?

This is not much of an exaggeration. Their policy idea has been, for a while, imposing a flat tax, or some variant thereof. A flat tax rate seems to best meet their inviolable criteria for “sound tax policy”: simplicity, transparency, neutrality, stability, no retroactivity, broad bases and low rates.

It’s not a shock, then, that states with flat taxes rank prominently on their leader board. And why shouldn’t they? We don’t want to demonize the rich by making them pay a penalty, do we?

Well, the alternative is penalizing failure, which is already kind of a penalty. Even ignoring that small issue, in order for a flat tax to work, and for a reasonable minimum level of social spending to remain, the poor would see their rates go up dramatically in order to compensate for the removal of what used to be the upper brackets. (To their credit, some conservative theorists exempt the poor from these tax rates. But that just means taxes will have to go up on the middle class instead.)

So, in order for us to be sunnily regarded in the eyes of the Tax Foundation, we’d have to head in that direction. It’d be pretty bad to not be rich, but business would presumably have it easy! (As long as their customers aren’t the poor or middle class.)

Tax freedom day

Need further reason we should toss this study out? The Foundation is also the genius consortium behind “Tax Freedom Day” — the day that, every year, Americans have worked enough to pay off their annual tax burden, and thus are free from taxes! And imagine if we could be. Then we’d be free from police protection, the fire department, roads, public transit, schools, and so forth. Oh, the sweet, sweet liberty!

If we’re looking at tax policy in the Grover Norquist sense — keeping tax revenue down so as to drown government in the bathtub — Gov. Cuomo’s tax policy is pointed in the right direction, albeit not as unambiguously as other states. Unless he goes all-out, as in Wisconsin or Florida, there is no way he can ever placate the far right. (This raises the question, why try?)

The unfortunate thing for Gov. Cuomo, though, is that he does try. He tries very hard. He actually cited the Tax Foundation’s annual report in 2011 when he began his crusade to reform the tax climate. But despite all of the advances he’s made, it’s not good enough for the Tax Foundation. New York ranked 50th, both then and now. Such is the danger in flirting with far-right think tanks: Unless you point your fiscal compass straight toward anarcho-libertarianism, they will burn you.

So as far as New York goes, yes, our taxes are comparatively high — generally speaking. We probably should get rid of property taxes and shift to a more progressive income model. But our standard of living is pretty high too. We could be like Mississippi as far as tax climate goes, but if anyone thinks we wouldn’t start to mirror Mississippi’s education and health care systems, they clearly don’t understand the relationship between two sides of a ledger.

Other questions

The truth is that there are more important metrics to tax climate than what some conservative organization thinks about “business taxes.” We need to ask other questions, like: How are our schools doing? How long until their emergency funds run out? How is Medicaid holding up? Could our transportation infrastructure be better, or is it more important to make sure the rich keep the cherry on top of their cake?

To fund these things, we’ll need taxes. So New York: It’s really not all that bad. This particular rating is, but that’s the price we all pay for living in the highly developed economic center of the country.

Steve Keller lives in Averill Park and is a regular contributor to the Sunday Opinion section.

 
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comments

October 21, 2012
7:42 a.m.
manjoe says...

Methinks Steve protests too much. Let's ask the taxpayers of New York what they think. Oh, it seems thousands of them have moved out of the state in recent years to lower tax states. Oh, it seems thousands of them would like to move out of the state but can't sell their homes in NYS because few people wants to move into a high tax state. So the tax foundation might be right after all and Andrew Cuomo might have to try a little harder before he can sit back and smoke another cigar.

October 21, 2012
3:56 p.m.
albright1 says...

Steve,

Why don't you point out just one finding in the study that is wrong. You wrote an entire essay and didn't point out any mistakes or errors.

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