RAISE OUR TAXES!!!

How often do you see a protest where citizens are chanting "Raise Our Taxes!"

http://www.youtube.com/watch?v=J0Dbx7buT9c

Local and State governments do not have the power to print money (well, not really), but they can implement tax hikes directly and indirectly.

Now the fact of the matter is that taxes at some level are necessary to fund programs that the state should provide. One of the clear programs that the state needs to provide is law enforcement and the court system. I certainly don't have an exhaustive list of what services the state should provide, but there is a reality that these services need to be funded. If there isn't sufficient funding though, the services need to be diminished or eliminated, or revenues need to increase.

There are different ways to increase revenues. It is important to understand that increased revenues are not always synonymous with increased taxes. Tax increases can in fact lead to decreased revenues.

One of the problems that governments throughout the U.S. have is that they treated the boom times as normal, and now that there has been a downturn, revenues have not been sufficient to cover expenses and rather than cut back on spending, debt was incurred. Now further debt is not an option, and service cutbacks are more likely.

Those service providers though are people, and while the majority of the private sector doesn't have the same sort of mechanism to pressure ownership to keep jobs, unionized workers do have some similar capabilities. Government workers are unionized, and the chant "raiser our taxes" is essentially the same as chanting "Raise your Prices."

Thing is, if a union demanded that their employer raise their prices, there is a clear competition mechanism that limits that option. When unions demand that the STATE raises its prices, there is a clear conflict of interest. The mechanism to counter that is the ballot box, which is likely to be invoked if legislators choose to increase taxes in Illinois, but that has yet to play out. But there is a flaw with the ballot box. If those that benefit from taxes outnumber those that PAY taxes, they can out-vote those that PAY taxes. This is an extreme scenario, but that seems to be the rode that this is leading to. The demonstrators aren't asking to have ONLY their taxes raised. They are asking to have everyone's taxes increased, so THEY can be paid.

Clearly at some point this system can fall apart. But what is telling is that this sort of position is considered reasonable to those paid by the state (or at least these protestors). When tax revenues suffer due to reduced economic activity, it would seem reasonable to expect the state to stop performing a variety of services, or to implement cuts in salaries and benefits to reflect the new economic reality.

Situations similar to this are playing out through the country. If you are a member of a state workers' union, you should consider what it is you really expect when the State doesn't have sufficient revenues. If you aren't, you need to consider just what it is you want the state to provide, and you should look into what it is that the state DOES provide, because odds are good that there are many programs that you don't think should be there. And be careful if your legislators claim that essential services such as police and fire need to be reduced. That may be true, and for that matter, it may be prudent (I believe that both services could be overstaffed or overpaid, but for the most part consider it unlikely), but clearly other programs need to be reviewed and reduced first.