GraniteGrok Debate. POINT... Opposing a tax cap. - Granite Grok

GraniteGrok Debate. POINT… Opposing a tax cap.

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The following was sent to me from Ron Tunning, the chairman of the Laconia Democrat Committee. Writes Ron,
Doug,

I thought I’d share with you a column I’ve submitted to the Foster’s Daily Democrat regarding the proposed tax cap in Dover.  I know you’ll never agree with me, but at least you can see where I’m coming from.
He’s right about that, but, as he knows, I do like to listen to and ponder what those who stand in opposition to what I believe have to say. Ron is a thoughtful individual, and I always appreciate and enjoy the discourses and debates we have engaged. His piece follows in full as written. Tomorrow, GraniteGrok will present a counterpoint to his argument. Keep in mind that two cities right here in the ‘Grok’s neck of the woods have tax caps: Laconia and Franklin. Feel free to leave comments in the section below…

Opposing the Tax Cap Proposal in Dover, NH

by Ron Tunning
No one enjoys paying higher taxes, and it’s safe to say that everyone would prefer a lower tax bill. That is why ideas such as the tax cap being proposed in Dover garner immediate public support. But if voters are honest with themselves they’ll oppose the measure.
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Let’s be frank. We all know “there’s no such thing as a free lunch“, and experience has taught us that “you get what you pay for.” Those maxims should guide us as we evaluate the sensibility of imposing a tax cap.
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So, too, should careful consideration of the methodology proposed for determining how much municipal spending will be permitted to rise. The Dover plan mirrors the language adopted in Franklin and Laconia, limiting the annual increase in spending to the annual rise in the U.S. Department of Labor’s Consumer Price Index (CPI). After all, proponents of the tax cap argue, why should the cost of government rise more rapidly than the costs of consumer goods?
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For an honest answer one need only look at what goods and services the Department of Labor uses in measuring consumer prices and how that compares to government spending.
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The CPI focuses on consumer spending, breaking it down into eight basic categories. Those categories, and their percentage of total household spending according to the most recent Consumer Expenditure Report released by the U.S. Department of Labor, include food and beverages (13.7%), housing (32.7%), apparel (4.1%), transportation (18.0%), medical care (5.7%), recreation (5.1%), education and communication (2.0%), and other goods and services (20.7%). Included in other goods and services are insurance, pensions and social security, which account for 11.2%. The computations for education and communication, however, do not include the costs of public education.
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It’s important to note that our municipal budgets do not reflect consumer spending. Food and beverage, apparel, housing, transportation, and recreation can not be counted as significant municipal expenditures. Wages and benefits for our teachers, police officers, fire and emergency personnel, public works employees, and other public servants account for most of municipal spending, with capital and infrastructure maintenance and improvements representing the bulk of other expenditures.
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As we’re all aware, the costs of health insurance have risen at astronomical rates over the past few years. Those increases are not reflected in the CPI which only measures out-of-pocket spending by consumers — in other words, the amount consumers directly contribute out-of-pocket to their insurance premiums, co-pays, doctor visits, etc. Not included in the CPI are employer paid insurance premiums, nor medical costs covered by Medicare and Medicaid. Charitable care provided by hospitals and other medical providers, which amounts to millions of dollars annually in Dover, are also ignored by the CPI.
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But it isn’t just the municipal cost of health care that is rising disproportionate to consumer costs. The cost of construction materials utilized in infrastructure repairs and improvements has ballooned over the past five years. Steel prices have risen by over 70 percent, and other building materials have experienced similar inflationary rates.
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And all of us are quite sensitive to the painful rise in energy costs. As consumers we can reduce those costs by driving less, carpooling, or even walking shorter distances. Yet I dare say we wouldn’t favor reducing police patrols, garaging public works vehicles, or constraining our fire and emergency service vehicles even to save the cost of fuel.
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In other words, government has responsibilities that it cannot neglect. It has costs that it cannot avoid. As a community, the people of Dover have a right to expect government to provide certain services, and should expect to cover the costs of those services.
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The alternative is to follow the lead of the federal government. During the Reagan and Bush I administrations, the national debt rose from $997 billion to $4.4 trillion, a 341 percent increase, or an average of 28.5% per year. While it’s true that Reagan cut taxes, he wasn’t able to cut spending, adding an average of $155 billion annually to the nation’s debt during his two terms in office.
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Bush I, also an opponent of tax increases, averaged annual deficits of $388.5 billion during his four years in office. Again, he wasn’t able to cut spending, instead relying upon the national credit card to cover costs.
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Clinton, who by the end of this two terms managed to achieve a budget surplus by raising taxes, nevertheless piled on another $1.4 trillion in debt, averaging $175 billion in deficit spending per year. Bush II, however, cut taxes further, squandering the surplus and adding another $3.25 trillion to the national debt, an average of over $540 billion annually.
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The point is that cutting taxes does not equate to cutting expenses. Capping taxes will not cap expenses unless a corresponding reduction in services can be achieved. That means fewer police, fire and emergency personnel, teachers and other municipal employees. It means neglecting infrastructure needs.
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If indeed, voters wish to see a reduction in services, and a neglect of infrastructure maintenance and improvements, by all means they should vote for the tax cap. Otherwise, they’re only fooling themselves, and the long-term costs will accrue to their detriment.
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