Don’t Be Bamboozled!
Public debate over taxing and spending is polarized and frequently inaccurate. STAFS hopes to empower citizens and policy makers to sort through it all and advocate for common sense change.
Here are current examples from Minnesota of how political leaders, and other partisans in these debates, attempt to bamboozle the public with claims that are misleading, or downright inaccurate, or perhaps occasionally intentionally false. Fiscal information, though, is complicated and scary enough that sometimes those making claims may be bamboozling themselves as well. You be the judge as to whether those attempting the following bamboozles are deliberately trying to bamboozle the public, or are fooling themselves as well.
"Minnesota Government Spending Has Been Growing at Double Digit Rates"
This bamboozle refers to growth in just the state general fund budget. See The Spending Increase Bamboozle for how the bamboozlers try to make you think government spending is growing more than twice as fast as the state general fund really is growing, and how the state general fund is less than half the whole story (but generally with a growth rate much higher than total state and local spending)."Businesses Don't Pay Taxes"
This bamboozle is a lollapalooza. Intelligent people, including some economists, regularly make this claim. It lacks two words to be accurate: “want” and “to”, as in “Businesses don’t want to pay taxes.” Guess what – neither do people. That’s why one of the great maxims of tax policy has been, “don’t tax me, don’t tax thee, tax the guy behind the tree.”The solemn claim that businesses don’t pay taxes generally is accompanied by the claim that business taxes are passed on in regressive fashion to consumers, so we had better help out the beleaguered consumers by cutting business taxes (and generally looking to regressive, consumer-paid sales taxes to make up the difference). Economic theorists may say businesses don’t pay taxes, but practical people know better – if business taxes were just dumped on low income people, businesses would not spend billions of dollars trying to reduce business taxes.
While businesses, like people, do pay taxes, they do not vote, which may be why, historically in Minnesota, businesses have been the guys behind the trees. The Minnesota Legislature’s historical attitude toward business taxation can be summed up in one phrase – “clobber production in Minnesota.” That no longer works very well because capital is increasingly mobile and so are businesses. So we need a balancing act that insists that businesses pay reasonable taxes, but without discouraging production in Minnesota. (Actually, the legislature did historically make one significant exception to clobbering production in Minnesota – allowing businesses to weight the sales factor in the apportionment formula at 70% when most states were at 1/3, which mightily helped Minnesota-based exporters.)
Confused? See “The Businesses Don’t Pay Taxes Bamboozle” to understand the bamboozle and the options for plucking as many feathers as possible from the business goose, with a minimum of honking and biting, which is how U.S. Supreme Court Justice Benjamin Cardozo once described the art of taxation. Of course, in this metaphor, people as well as businesses are geese, and that’s just the way it is.
"Repeal the Corporate Income Tax to Create Minnesota Jobs"
This bamboozle generally comes from the same folks who push The Businesses Don’t Pay Taxes Bamboozle. While a strong case can be made that the corporate income tax should be modified to make Minnesota look good when businesses contemplate where to expand, complete repeal turns out to be grossly inefficient as a means of job creation because almost all of the tax is paid by corporations that are highly unlikely to create many jobs in Minnesota. Why give away roughly $1 billion per year to corporations that certainly won’t create jobs because of the state’s generosity, and probably won’t create many in any event because their opportunities for pre-tax profits are better served by expanding elsewhere? See the Repeal the Corporate Income Tax to Create Jobs in Minnesota Bamboozle for details. And ponder this: if businesses don’t pay taxes in the first place, why would their advocates want to repeal the corporate income tax? It’s simple: businesses don’t want to pay taxes and corporate income tax repeal satisfies that desire."If You Cut Local Government Aid, Many Small Cities Will Die"
This is an especially serious bamboozle, for it plays to people’s fears, and, wittingly or unwittingly, is focused directly on maintaining the status quo. The play to people’s fears is a common problem in changing the status quo, and one reason why it is difficult for the legislature to do more than fiddle with existing programs. The options for change identified by STAFS would end Minnesota’s traditional approach to city LGA, but, far from causing cities to die, they would create opportunities for cities to thrive, replace the current utterly arbitrary property taxation of homeowners across the state with a defensible standard for how much property tax effort the average homeowner should be expected to make toward paying for local government, enable legislators to hold cities and other recipients of state tax dollars much more accountable for how that money is spent than they now can do, and make the property tax a friend instead of an implacable foe of the environment, as it now is. See “The If You Cut Local Government Aid, Many Small Cities Will Die Bamboozle” to understand just how bad the current system is and how ending city LGA could make cities better off. Minnesota can no longer afford the status quo in taxing, spending and how governments operate, but legislators will have to overcome this bamboozle to improve the situation."Minnesota's Budget is Balanced"
This bamboozle is heard from the governor and legislators every year. In a highly technical sense tied to the Minnesota Constitution, the annual cry is correct, but the technical meaning is so far from what rational people would understand as a balanced budget as to be seriously misleading when finances are tight, and often when they are not. The most serious problem may be that governors and legislative leaders come to believe their own rhetoric that the budget is balanced, when in fact it may be out of balance and getting worse. To see through this bamboozle, see the Minnesota’s Budget Is Balanced Bamboozle. To understand what could be done to end this bamboozle, see What’s Wrong with Minnesota’s Budget Process under Minnesota Big Picture Detail.Click on the links below for additional information and details.
Future bamboozles under consideration for illustration by STAFS include:
- The Deficits Don’t Matter Bamboozle
- The U.S. Can Have More Middle Class Tax Cuts and Solve Its Fiscal Problems Bamboozle
- The Big Oil Needs Tax Breaks Bamboozle
- The Free Market Solves All Problems Bamboozle
- The Professional Sports Teams Deserve Publicly Subsidized Facilities Bamboozle
- The Health Care Is Just Like Any Other Market Bamboozle
- The Natural Capital Needs No Protection Bamboozle
