Friday, April 23, 2010

Non-taxes are Taxing

Few politicians campaign on a promise to raise taxes. Indeed, they frequently state that they will not do so. For example, last fall Mayor Ma Parker said,
I have stated on a number occasions on the campaign trail that I don't plan to raise taxes in this economy — that's the wrong thing to do to struggling taxpayers and business. My pledge is not to raise the tax rate — certainly not in the near term. That's not necessary.
So far, she has "kept" this pledge--she hasn't raised the tax rate. However, Houstonians are finding that despite no tax increases, more and more of their money is going to support the city government. On Wednesday city council passed the largest water rate increase in the city's history. Retired city workers had their health insurance premiums increased nearly 50 percent. And home owners are now forced to use biodegradable lawn bags, which can cost ten times more than other bags.

While Houstonians are poised to see their water rates soar, the city's $140 million budget deficit will not be affected by the rate increase. Which means that we had better hold on to our wallets, because Ma will be coming for more money. Following the water rate increase the Chronicle reported:
The mayor compared the “tough vote” to eating “a healthy dose of vegetables,” something she promised the city has only begun to do as the budget process heats up for next year. 
Ma previously warned us that she would make us eat our vegetables. As I pointed out at the time, while her threat might have been made facetiously, the fact remains that her edicts can and will be forced upon all Houstonians. If we don't "eat our vegetables" or do anything else she demands, we risk going to jail, having our property seized, or both.

To date, Ma's non-taxes have been very taxing and she hasn't made a dent in the budget deficit. There are only two ways to balance the budget--cut spending or raise more revenues. Since politicians seem to be genetically incapable of cutting spending, my money--literally and figuratively--is on increased taxes. When that occurs Ma will once again trot out the "tough decision" line in an attempt to make us feel sorry for her.

Given Ma's track record, the only "tough decision" will be deciding which Houstonians to rob so that the city can continue its profligate spending. Cut spending and returning city government to its proper function--the protection of individual rights--would be the really tough decision, for it would require Ma and her cohorts on city council to question their most basic premises. Sadly, that isn't going to happen.


Rational Education said...

I do not understand the connection: "Houstonians are finding that despite no tax increases, more and more of their money is going to support the city government."
If the city has taken up the job of providing a good or service like water (we agree that it is not the legitimate job of the govt. in the first place) it is still affected by market prices - it will move costs to consumers. We can leave aside for the time being the fact that as a govt. bureacracy not based on profits and competition, it will be grossly more expensive to consumers.
The example of the retired city workers - in the face of inflating premiums, that a city already in the red is faced with, what would be the alternative I am not sure.

Brian Phillips said...

The point I was trying to make is that even though taxes haven't been increased--yet--the city is trying to balance the budget on the backs of the citizens rather than cutting spending.

For example, the city is forcing us to use biodegradable bags because it will save the city $1.5 million in landfill fees. But it will cost home owners far more than that. So we are paying for it, though not directly through taxes or increased fees.

I think that this is a good example of the fact that when government is involved where it shouldn't be, there isn't an easy solution.

In the case of water and trash collection, we don't have a choice. The city forces us to use its inefficient service. Since we have no choice, and there is no competition, I would argue that fees are not affected by market prices. Certainly, the city has costs and passes those on to consumers. But market prices are determined by the free and voluntary choices of consumers, and such choices do not exist in this context.