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Letter to the Editor: Taxation and Spending are Valid Roles of Government

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In Kathy Lohmer’s recent email to her constituents, she repeats the old and largely fictional talking points from the 2012 campaign, congratulating herself and the GOP for the “$1.3 billion surplus,” created with accounting tricks and budget “shifts” and not representing a true surplus at all. She claims that “We’ve used extra dollars to completely pay back the school shift…” But there are no “extra dollars” here at all; a $1.1 billion budget deficit still exists for the coming cycle -- $2 billion if you factor inflation in. 

While better-than-expected revenue collection allowed the state to pay back a portion of what was borrowed from the schools, we still owe the schools $1.1 billion. We’re still a long way from paying it back. A headline in the December 21st Stillwater Gazette proclaims, “Revised ISD 834 budget ‘tightest in years’” – and schools across the state are suffering similarly.

Rep. Lohmer persists, too, in equating government budgets with household budgets, exhorting us to “live within our means.” That’s usually good advice when it comes to household finances – but government’s “means” – its income – and its obligations are determined in an entirely different way than those of an individual household.

We the people have determined collectively what services we want our government to provide by virtue of whom we elect to represent us. Government has the power – and, indeed, the obligation – to increase its income by increasing taxes on those it serves when revenues fall short of expenses.

But legislators like Rep. Lohmer believe that the only valid way for a government to meet its obligations is to continue to cut spending and then to cut taxes further to justify additional spending cuts in a downward spiral that shrinks government “until it is small enough to be drowned in a bathtub.”

Many of us disagree with that anarchistic dictum and would argue that taxation and spending are the valid roles of a government that serves the people it represents.

--Susanna Patterson, Stillwater

Susan January 05, 2013 at 05:53 PM
Thanks, Markus. As always, you make me do my research. :-) You are correct in pointing out that my use of the word 'subsidies' is mostly wrong. Here are some interesting points I found online. I realize my link is a 'progressive' source, but I have also looked at the sources from the right that counter these specific points, and they seem more like artificial justifications vs. facts. "In the USA Petroleum companies are the beneficiaries of preferential tax credits and rates which are significantly lower than other businesses. Including Federal subsidies for: Percentage depletion allowance, nonconventional fuel production credit, Expensing of exploration and development costs, enhanced oil recovery credit, Foreign tax credits (FTCs), Deferral of foreign income, Accelerated depreciation allowances, Expensing of tertiary injectants, and Exclusion of interest on industrial development bonds for energy facilities." "1. Intangible drilling costs. 2. Deduction for tertiary injectants. 3. Percentage depletion allowance. 4. Passive investments. 5. Domestic manufacturing tax deduction. 6. Geological and geophysical expenditures. 7. Foreign tax credit. 8. Enhanced oil recovery credit. 9. Marginal well production. The total government savings from eliminating these subsidies is projected to be $45 billion over 10 years." Further explanations for items 1-9 are found in the link below.
Susan January 05, 2013 at 05:53 PM
http://www.americanprogress.org/issues/green/news/2010/05/13/7756/eliminating-tax-subsidies-for-oil-companies/
Susan January 05, 2013 at 06:09 PM
(corrected) And BTW, I agree with you regarding the farm subsidies. I don't think they should be completely eliminated, but I do think they should be income/profit based. I think the small farmer barely making ends meet should be subsidized to help keep the price of food down by keeping more of these guys in business. Although I understand your frustration about not getting a tax break because your home is paid off, the deduction is to help defer the cost of mortgage interest. You are not paying mortgage interest so you wouldn't need help deferring that cost. I assume you know this and were simply making a point. I'm not sure if you were following along with that other (long) conversation when we were talking about taxes/rates etc. I would like to see a progressive tax system with NO deductions. This would lower the tax rates and simplify the whole thing, saving the government (think IRS) an amazing amount of money!
Markus January 05, 2013 at 07:11 PM
Susan, I'm not arguing for any sort of tax benefits for any corporations. However, if the government is going to allow them, they should apply across the board. The government has a poor record of picking winners and losers. My argument for eliminating corporate taxes is a better one, but there's plenty of people blogging about that subject, so I won't elaborate. Regarding the farm subsidies, they should be eliminated completely. You cite the reason as keeping food prices low. First it's not the government's role to manipulate food prices, that's the market's role. Secondly, the government is woefully inept at virtually all it does, especially running the economy and trying to control the market. The market does a much better job when allowed to. The home interest deduction along with cheap and easy money distorts the market, encourages malinvestment and causes bubbles like the one we're still recovering from. Eliminate all subsidies and deductions designed to affect behaviour and we'll all be better off. You should come over to the free market side. It's so liberating and freeing! Come on in, the water's fine.
Susan January 05, 2013 at 07:25 PM
Haha, you, Donald, and Nick have done a wonderful job educating me on the subject of free markets, but I still have hang-ups. Of-course you know that I do not agree with a free market in health care as this would mean that those who cannot afford it won't get it. I understand all of the things that have contributed to the high cost of health care which has added to (even created) this problem, but I am not seeing how we can go backward. Re: farm subsidies for low income farmers and food prices...this would be the same concept as I explained above. If all of those small farmers go out of business our food prices will go up, and again, those who cannot afford food, won't get it. Or just as bad, they will be able to afford all those cheap and unhealthy foods that are adding to the health problems in this country. Yes, free markets are good for this country and should (mostly) be left alone but there ARE exceptions to every rule. The health of human beings should be an exception.

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