Originally published by the Hartford Courant (Link)
Quick: What’s the best way to help businesses and residents trying to claw their way back from the devastating effects of the coronavirus pandemic?
If you’re a Democrat of a certain stripe, the answer is easy: Raise taxes.
We’re not arguing there isn’t a time or place to raises taxes to fund what needs to be funded, nor are we against making sure those who have been able to continue earning and reaping the gains of the stock market pay their fair share. This isn’t a straight up “taxes are bad” screed.
But let’s consider the bigger picture:
The state’s coffers have been showered with riches of late from two sources. President Biden’s stimulus plan is going to pump more than $10 billion into health care, child care, education, job training and other needed services aimed at getting those sidelined by the pandemic back to work. On top of that, the run-up of the stock market combined with surging real estate prices have increased revenue estimates for the state, fueling an anticipated $250 million surplus by the end of the fiscal year in June.
So you’d think this would be a great time for the state to let the federal infusion and our share of capital gains drive any needed additional spending and give the state’s taxpayers a break.
But, apparently misreading revulsion with Donald Trump and the anemic pandering of the GOP as a mandate for a progressive tax policy, the resurgent liberal wing of the Democratic Party in Connecticut has decided the waning days of a pandemic are a good time to load the citizens of Connecticut up with more taxes.
What’s on the table?
- A highway use tax on trucks that will undoubtedly make its way into the prices we pay for food, clothing, furniture or anything that arrives by truck.
- A $50 million tax on insurance companies to help fund a public option aimed at providing quality low-cost health insurance for those in need. A worthy goal, for sure. But why not improve the existing federal Obamacare program rather than creating a whole new state apparatus? Odds are good that tax makes its way into the co-pays and insurance fees paid by private users.
- A tax on digital advertising aimed squarely at Big Tech: Amazon, Google, Facebook. OK, they’ve got a lot of money and they make a lot here. But, again, is that going to come out of Big Tech’s pockets or the myriad consumers who use their products?
- Higher taxes on the wealthy, including a higher tax rates on those earning $500,000 or more, increased taxes on capital gains and a consumption tax that would charge higher sales tax rates based on income.
In fairness, support for some of the above measures extends beyond the party’s progressive wing. And the talking points around the initiative are sound. State Sen. Martin Looney, D-New Haven wants a share of the additional money channeled into an “equitable investment fund” to help undo many of the structural inequities that divide Connecticut sharply among haves and have nots. That’s a laudable goal. We need to right these historic wrongs.
But dumping more money on top of the billions that are already going to be flowing into the state is no guarantee you will fix anything. If anything, it’s a guarantee that those who know how to work the system will find a way to get richer.
Connecticut’s problem hasn’t been about having enough money. It’s been in harnessing that money to those who need it in ways that are effective and actually solve the problem. There is no debate the need is acute: Too many kids in Hartford were lost as a result of remote learning. Too many women were forced out of the workforce. Too many people at the lower end of the wage scale put their careers on hold as the economy shut down. The need to rebuild our society so it is more just and equitable is acute.
But piling more state money on top of more federal money doesn’t necessarily get you better outcomes. Too often, in the political reality of the state legislature, flowery talk of equitable spending gets mangled when budgets are finalized into a tepid compromise that ends up sending an extra 80 cents to Avon or Glastonbury for every extra dollar sent to Hartford or Bridgeport.
State budget chief Melissa McCaw told editors and publishers from newspapers across the state at a round table recently that the federal money was being distributed with a focus on equity. She assured there would be transparency and accountability not just in how the money is spent — but in outcomes. Great, sounds good. But let’s see how that works. Let’s see if the money actually drives the change that is needed.
Then, if we need more, if we actually figure out how to turn cash into equity, let’s have a conversation about increasing spending. Let’s have a conversation about taxes.
But not now. Now it’s just about more — and not about better.