Myles Spicer: With no race to run, I can say it: Taxes
- Article by: MYLES SPICER
- January 19, 2010 - 5:04 PM
Without a doubt, any talk about taxes by politicians is suicide. This is unfortunate, because taxes are vital component for any civilized, safe, progressive society -- the dues we pay for essential public services. A discussion of the subject should be enlightening and rational. A lack of discussion allows myths and fiction to persist. Since I have no political plans, I feel free to bring the subject up and perhaps dispel a few myths:
Myth No. 1: U.S. citizens are taxed excessively.
It depends on what you mean by excessive, but if you define it as measuring our taxes against those of other prosperous, industrialized nations, it is not true. Personal income taxes in the United States are pretty average. At a top rate of 35 percent (subject to deductions), they are well below those in Europe (Austria, Belgium, Spain, for instance -- all up to 50 percent), Japan (50 percent) and even China, where a booming economy still allows top tax rate of 45 percent without disrupting significant growth. It should also be remembered that many of these countries get universal health care as part of their taxation.
Myth No. 2: America's corporate tax rate is too high.
Not at the low end (15 percent), and certainly not at the top end (35 percent). India -- another country with a vigorous economy -- taxes corporations at a top rate of 40 percent. And there are myriad techniques corporations use to avoid taxes altogether.
Myth No. 3: Taxes inhibit, or are destructive, to economic growth.
There is simply no empirical data to prove this. Indeed, there are examples of when tax increases (Bill Clinton in 1993) were followed by a growth spurt and when reductions (George W. Bush) were followed by a downturn. Minnesota's economic halcyon years occurred when it was considered a high-tax state. This is not to claim that raising taxes helps the economy, but simply to point out that correlations between taxation and economic health do not exist.
Myth No. 4: Minnesotans are taxed excessively.
Minnesota has a longstanding image as a high-tax state but with an average rate of 10.2 percent is now 12th among the states. That still may seem pretty high, but the rates of states below us are only incrementally lower. You have to go all the way down to 33rd on the list to get even a 1 percent reduction. (That happens to be North Dakota.)
Myth No. 5: Companies will move out of the state because of our taxes.
There are many other factors that determine where a company locates, among them a skilled workforce; transportation; availability to research and educational resources; synergy with nearby companies, and cultural and sports amenities. The fact is, Minnesota is the home to 19 Fortune 500 companies. One that did move away -- Norwest Corp., when it purchased Wells Fargo -- moved to California, a higher-tax state.
Myth No. 6: Government is inefficient, and our taxes are mostly wasted.
Sure, there's poor performance in government -- exactly as there is in the private sector, and probably less. What grinds on me is conservatives' image of a fat bureaucrat feeding at the public trough. I prefer to think of public employees as the nice woman at the local driver's license bureau or the doctors at a VA hospital or those at regulatory agencies who provide consumer protection or judges or teachers or the police. People do not enter public service to gain wealth, and there is no evidence that public employees are less motivated or less competent than those in the private sector. A myth!
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I, too, do not like taxes. But if we can get decent schools, safe streets, a modern infrastructure, national security, a healthy society and other things we depend on from government services, the taxes paid can be measured as value received. What conservatives feed on is the idea of pitting "us" against the government. But who is the government? It is us, folks. It is our government. And we depend on taxation, pure and simple.
Myles Spicer, of Minnetonka, is a retired ad agency owner.
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