by Chuck Collins, program director at United for a Fair Economy and co-author, with Bill Gates Sr., of Wealth and Our Commonwealth: Why America Should Tax Accumulated Fortunes (Beacon, 2003)

Published: August 12, 2003

    Across the land, almost every state in the union has been plunged into its worst budget crisis since World War II.

     As a result, localities are laying off teachers, firefighters, police officers and social workers, closing libraries and health clinics, cutting child care, mental health services, public transit and pollution control, raising public college tuition and reducing financial aid, letting schools, playgrounds, roads and bridges go unrepaired. Oregon has shortened its school year by three weeks. Tennessee is removing 200,000 residents from medical coverage, most of whom are children. The list goes on.

     At the state and local level, most communities are facing this fiscal disaster as if were a parochial problem. The voters in California are considering a recall of their governor because of their ballooning budget deficit. In Portland, Maine, 26 fire fighters have been laid off and the focus of anger is the local city council.

    These dire budget straits are not natural disasters nor accidents, but largely the result of political choices. In addition to factors such as recession, war and increased health care spending, many states during the 1990s gave away massive tax breaks to corporations and the wealthy. And every state has been clobbered by federal tax and devolution policies that have shrunk revenue to states yet increased their responsibilities for security, education testing, health care and social welfare.

    The federal government could have sent $100 billion in aid to the states to help them weather this period. And states could reverse their 1990s tax giveaways. But these solutions have been blocked by a well-organized conservative lobby that have a very different vision for America's future.

    There is a well-funded anti-tax, limited government movement that includes national organizations such as Americans for Tax Reform and Citizens for a Sound Economy and includes a network of state and local limited government policy and grassroots groups. They have a long-term strategy and program.

    Over several decades, they have succeeded in changing the terms of the debate on state and federal fiscal issues. As a result, most states will not consider raising taxes to face their budget deficits. Nor will the federal government provide meaningful aid to the states to enable them to overcome these "perfect storms."

    The right-wing fiscal agenda could be characterized as "shrink, shift and shaft." And according to some of the architects of this plan, the state budget crisis is right on schedule. Conservative tax-slashers are now positioned to make some of their biggest gains in decades with a "permanent tax cut" offensive strategy.

 SHRINK. The conservative movement has long had a goal of greatly shrinking or limiting government, essentially rolling back central elements of the New Deal and Great Society reforms, such as college loans, homeownership programs, public health insurance and pension programs. Budget deficits force budget cuts and thwart new spending initiatives. Underlying this program is an ideology about the role of government that is deeply out of step with the majority of Americans. How else can we explain the rationale for further federal tax cuts while our annual deficit exceeds $450 billion?

    Right-wing tax cutters want to dismantle the "opportunity state" and eliminate government programs that broaden wealth and opportunity for all Americans. They also aspire to weaken the elements of government that regulate corporations to protect workers, the environment and community interests. Their vision of limited government could be characterized as a "Watchtower State" -- with our tax dollars paying for military, police, fire and property rights protection.

We can now look forward to a "permanent tax cut offensive," with a long list of additional tax cuts on the agenda.

SHIFT.  Central to the right-wing fiscal program is to shift the tax burden and weaken the progressive tax system. For three decades, the basic thrust of this agenda has been to cut taxes on wealth and capital gains -- and shift the burden of paying for government onto wage and consumption taxes. Hence the focus on tax cuts that primarily benefit the rich, such as repealing the federal estate tax and cutting dividend and capital gains taxes.

    A second shift is to move tax and spending off the federal government and onto states, where unfortunately, the tax systems are much more regressive because of their dependence on broad-based consumption taxes.

    This is dramatized as many parents across the country are currently receiving checks from the IRS for the expanded Child Tax Credit. As some families are getting $400 per child checks, they are simultaneously watching their services deteriorate, and having to pay more in local and state fees, sales taxes and property taxes to make up for the federal to state tax shift.

The SHAFT part of the program is obvious. But these tax cutters are counting on the American public not to connect the dots between local service cuts and federal budget policies.

    We can now look forward to a "permanent tax cut offensive," with a long list of additional tax cuts on the agenda. "You'll have a tax cut each year," Grover Norquist of the Americans for Tax Reform told The Washington Post. "I state it that way in all of the [White House] meetings, and I never get an argument."

    The conservative strategy is to introduce a new incremental tax cut proposal every few months. It works politically for Republicans. "A tax cut bill a year keeps the Democrats away," said Kenneth Duberstein, Reagan's chief of staff. "Americans like their changes in bite-size pieces and not in huge chunks."

    Those of us concerned about public investment, equality of opportunity, social welfare spending and other public services are being "out-organized" by this neo-conservative anti-tax movement. But the Fair Taxes for All coalition is tooling up to fight future tax cuts and dramatize the connection between the federal tax breaks for multi-millionaires and the deteriorating quality of life at the local level.

    At stake is the question of what kind of society we want to become. Do we want to dismantle the ladder of opportunity we have attempted to build over the last half century? Do we want to further polarize our country along the lines of wealth and power? Ultimately, defense of a progressive revenue system must be linked to a broader frame and vision -- of what kind of communities and society we want to have.