The lie of 'no new taxes'

ALL LEVELS of government continue to reduce services in keeping with the voter mandate of no new taxes. Raising taxes has replaced Social Security as the third rail of politics, even though the United States ranks below more than 20 other industrialized countries in terms of taxes as a percent of GDP and Massachusetts ranks 36th in state and local tax burden as a percentage of personal income.

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Besides demanding no new taxes, taxpayers also should be asking how much are they receiving in services for their tax dollars.

Are they getting a good deal? I argue that while taxes have not gone up, the return to taxpayers is dropping precipitously. The deal is getting worse for taxpayers. As government costs such as employee health insurance and Medicare increase, outpacing revenues, elected officials reduce other government services while keeping tax rates constant.

For example, suppose you are paying $100 in property taxes and the only local government service you receive is access to the town library for 50 hours per week. The return on your $100 tax investment is 50 library hours. If the town decides to reduce the hours of the library to 40 per week and keeps the property tax at $100, you are now receiving 10 fewer library hours while you are paying the same taxes. Your return on investment has gone down.

Taking this example to the extreme, if the library completely closed while taxes remained constant at $1OO, you would be receiving a huge tax hike since now you receive nothing for your invested tax money.

Many cities and towns have in fact reduced their library hours as well as reducing police and fire personnel and closing fire stations. As a result, emergency response times, a critical government service, have worsened. Increasing the number of students per classroom results in less teacher time for each student. Students are now charged to play sports and ride the bus, government services that were formally covered by existing taxes.

At the state level, local aid has been cut, MBTA bus service is being reduced, roads and bridges are not being repaired, which causes traffic woes (time is money) and in some cases necessitates auto repairs. There have also been reductions in job search and training programs, state college funding, HIV screenings, and smoking prevention programs while tax rates remain constant.

Clearly, fewer services for the same number of dollars equals a tax increase.

At the federal level, Social Security is the next major benefit that will probably be cut with no reduction in taxes. Future benefits may be decreased anywhere from 9 to 25 percent, but recipients will continue to pay the same payroll taxes. In other words, the same taxes for fewer benefits. Another tax hike!

Taxpayers paradoxically demand no new taxes while keeping current levels of government services. This naive wish is obviously being violated but incrementally, quietly, and slyly -- which hasn't disturbed the herd as yet. The elected class claim they are keeping the mandate of no new taxes but as we can see that's a half truth. Taxes are going up every day at every level of government as citizens receive fewer and fewer services for their money.

The fantasy world of no new taxes while maintaining services will not go on forever. Eventually citizens will realize that are getting less and they will want more and they will be willing to pay. A few more incidents of closed libraries, improperly tested drugs, contaminated food, increased crime due to more high school drop-outs or increased poverty among the elderly should do the trick.

Larry Overlan is a professor of government at Bentley College.