POSTED ON SEPTEMBER 12, 2012:
Waiting for the Trickle
Taxation policies of the right defy common sense
When it comes to dreaming of an income tax-less Oklahoma, Gov. Mary Fallin is just a gal who can't say no.
It doesn't matter if it defies elementary arithmetic. Or common sense. Or even hard evidence that it doesn't stimulate economic growth.
In the uber-right bubble, eliminating the state income tax is the Holy Grail -- and Fallin seems almost pathologically bound to promote the cause, no matter how fantastical the theory or how devastating it would be practically.
In a recent Wall Street Journal interview, the governor vowed that more tax cuts are coming, even though Oklahoma is so strapped financially that it's laid off thousands of teachers, postponed sorely need capital investments and repeatedly turned a blind eye to the mentally ill.
"We are going to get that tax cut done next year," she declared. "We only had $2 in our rainy day fund when I came into office, but now we have a healthy reserve to finance a rate cut."
It evidently matters not to her that nearly two-thirds of those surveyed in a recent Tulsa World Oklahoma Poll expressed grave concern about the funding of their local public schools.
What seems to count most are the wishes of the silk-stocking cabal that writes big campaign checks and stands to gain the most personally from eliminating the state income tax.
This is where next year's legislative session could get quite interesting.
There is no question that tax cuts are political pleasers. There also is no question that Oklahomans love their local schools ... good roads and bridges ... law enforcement, public health and child welfare protections.
So which do Oklahomans value most? Lower taxes? Or vital services?
The Republican-dominated Legislature and the governor will decide -- and pay the consequences if they choose unwisely.
Don't give me the baloney about rampant waste in state government. Sure, it always can do better. But the fact is, state government isn't the bloated bureaucracy of the far right's wettest dreams.
State appropriations this year are $200 million less than in 2009. Does anything cost less than three years ago? OK, maybe some houses in depressed real estate markets ... but not airfare or unleaded gasoline, car insurance premiums or prescription drugs, a gallon of milk or new tires.
Moreover, $200 million less in state appropriations is providing essential services to hundreds of thousands more residents -- now an estimated 3.79 million.
Do you know why Oklahoma's public school classrooms are so overcrowded, making learning ever more difficult? Or why so few correctional officers are now on duty to supervise one of the nation's largest per capita inmate populations? Or why the wait is so long to take a driver test or secure a new driver license?
The worst worldwide economic crisis since the Great Depression is partly to blame, though its effects are somewhat muted in this state thanks to an energy boom that has kept unemployment well below the national average and job creation well above it.
The real culprit is nearly $1 billion in income tax cuts engineered by legislative Republicans in recent years and signed into law by a guy -- Democratic Gov. Brad Henry -- who also couldn't say no.
In Fallin's world, these are magical times in Oklahoma.
"We cut our unemployment rate by 30 percent," she told the Journal, "and we've led the nation in manufacturing jobs."
Further, the Rainy Day Fund totals $577.5 million -- nearly 10 percent of the entire 2012-13 state budget.
Three decades ago, another Oklahoma governor suffered the same illusion. With the state in the midst of an oil and gas boom, Democratic Gov. George Nigh joined the pack of hyenas braying for tax cuts.
Cut they did ... and then the boom went bust (as it always does). Suddenly there wasn't enough tax revenue to meet essential, basic state services. Nigh and Co. had no choice but to wipe the egg off their faces and raise taxes.
The tax hikes steadied the ship of state and protected core services. But it also energized the Grover Norquist government haters -- those who want to shrink government to the point that what's left can be drowned in the bathtub.
The anti-tax fervor culminated in passage of State Question 640, the constitutional amendment that made it all but impossible for the state to ever raise taxes again -- it requires a super-majority of lawmakers or a vote of the people, neither of which is remotely likely.
So the nearly $1 billion in income tax cuts so far probably won't ever be reversed. And we're seeing the consequences of the starve-the-beast mentality. Just visit your local school.
Now Fallin wants to double-down on the penny-wise, pound-foolish approach, in effect promoting the long ago discredited supply-side economics canard that cutting taxes actually generates more revenue.
And, of course, pigs can fly. And the balance in your checking account mushrooms when you quit your job or take a pay cut.
More preposterous is the assertion that tax cuts will stimulate even more economic activity.
Voodoo economics lives!
Fallin knows better -- or should.
Just weeks before her tax-cut-promoting WSJ interview, Bloomberg BusinessWeek's BGOV Barometer reported that "governors seeking to expand their economies by eliminating income taxes find little support for the idea in the record of states that lack such a levy."
In fact, BGOV Barometer noted, a study by the non-partisan Institute on Taxation and Economic Policy discovered that "the nine states with the highest personal income taxes on residents outperformed or kept pace on average with the nine that don't tax their residents' incomes."
"States that have higher overall taxes have better capacity to weather economic downturns," the Institute's Ralph Martire told Bloomberg. "Then they can maintain their spending on the salary of workers, who then go out and spend their paychecks on the local economy."
I don't know anything about Fallin's net worth. But I do know that past income tax cuts in Oklahoma disproportionately benefitted the state's wealthiest residents.
The same would be true if Fallin succeeds in slashing rates further, perhaps from the current 5.25 percent down to 4.8 percent "or lower," as she told the Journal.
Worth noting: Fallin probably would benefit more, too. Her $147,000 annual gubernatorial salary is more than three times the state's median household income of $42,979.
Trickle down is so old school. And so discredited.
Wouldn't it be wiser -- and smarter politics -- to find ways to help the many rather than the richest few?
It's time to give voodoo economics a rest, governor.
URL for this story: http://www.urbantulsa.comhttp://www.urbantulsa.com/gyrobase/Content?oid=oid%3A52330