‘Tax talk:’ And why it might be misleading our votes
In many ways, Connecticut’s gubernatorial race has boiled down to a referendum on taxes. Many residents feel they can’t spare another cent on taxes, especially when it doesn’t seem like it ‘comes back’ to them in any substantial way.
We want to ‘save money.’ But how? ‘Tax talk,’ as I like to call it, is often convoluted at best. One candidate will say he would ‘cut taxes’ and argue that his opponent would ‘raise’ them. But then his opponent will say the very opposite. Voters are left scrambling to make sense out of what often feels like an overwhelming, convoluted heap of conflicting claims. In this chaos, it’s all too easy for us to end up voting against our own interests.
If we are going to let taxes influence our votes so significantly, then there are a few simple realities about state and municipal finance that we need to understand. Most importantly, regardless of who we elect for governor, Connecticut’s total tax burden (the amount of tax revenue the state and its municipalities need in order to fund their budgets) will be pretty much the same.
States get their revenue from a few different sources: about one half comes from state taxes on income, sales, and property and one third comes from federal grants (funded through federal taxes on all U.S. residents). If states get less federal funding, they generally consider two options: (1) cut state spending (which often puts more pressure on local governments to fund municipal services, usually by raising residents’ local property taxes) or (2) increase the state’s total tax revenue in some way (there are various options, only some of which place the majority of the burden on working- and middle-class residents).
In recent years, there has been a dramatic reduction in federal funds sent to states for both education and transportation, and states have to make up those funds in some way, regardless of who’s in office. What is up for debate, however, is who pays that price (e.g. corporations, individuals, residents of wealthier/poorer municipalities, residents with higher/lower annual incomes, etc.) and how they pay (e.g. via cuts to state/municipal services or via state/municipal taxes).
With this in mind, we can see that gubernatorial candidates can have plans to ‘cut taxes’ that won’t actually save working- and middle-class residents any money in the end. For instance, say the next governor ‘decreases state taxes’ for the average Connecticut resident (instead of just cutting them for corporations). That would likely just shift the burden to municipalities.
With less state revenue, the governor would either have to cut state services or decrease the amount of state funds sent to municipalities. Residents might face higher municipal property taxes or the indirect costs of decreased state and municipal services, like car expenses (for damages caused by poorly maintained roads), private tutoring (to compensate for under-funded schools), etc.
Either way, Connecticut’s working- and middle-class residents end up paying the price.
Cutting state taxes and sending less aid to municipalities puts an increased tax burden on all municipalities; but it creates a nearly impossible situation for those with little property-wealth. It fuels conflicts among municipalities that now have to compete with one another to get the crumbs the state has to offer.
We saw a preview of this kind of conflict in 2016, when Gov. Dannel Malloy proposed to send less state aid to wealthy municipalities and redirect those funds to impoverished cities (a proposal that was quickly defeated). These conflicts generally come down to an inflammatory debate about who is ‘entitled’ to what and who ‘deserves’ to pay for whom.
Is there a way to shift the total tax burden off of working and middle class residents? Absolutely. One particularly effective reform at the federal level could be redirecting funds from the military to education, health, infrastructure, and so on (the U.S. already spends more on our military than the next eight most militarized countries combined).
I support those reforms, but I don’t want to reinforce the tendency to automatically assume that any tax increase is ‘bad.’ All tax ‘cuts’ or ‘raises’ aren’t created equal. The phrases ‘cut taxes’ or ‘raise taxes’ say nothing of substance. They don’t tell us anything about who would or wouldn’t be paying or how they’d be doing so. They conceal more than they reveal and rely on our fears to fill in the details.
It makes sense that Connecticut residents scare easily when it comes to allegations of ‘higher taxes.’ But voting based on fear won’t reduce our tax liabilities, nor will it protect working- and middle-class interests in general. If that’s what we want, we can’t let fear take the wheel.
Rachael D. Stephens is a lifelong resident of Connecticut and a Ph.D. student at the University of Pennsylvania.
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