Sunday, December 20, 2015

Looney’s Confession

''Don't tax you, don't tax me, tax that man behind the tree” – Russell Long

Appearing on WFSB Channel 3’s Face The State with Dennis House, President Pro Tem of the State Seante Martin Looney made an alarming admission. Mr. House noted that Ben Barnes, Governor Dannel Malloy’s Office of Policy Management chief, had said the state “might be seeing deficits for some time.” Deficits were “the new normal. Do you agree with that?”

Mr. Looney drew a deep breath and, his breast expanding to the ball, rode valiantly into the valley of death.

“Well,” Mr. Looney said, “it’s hard to predict what the performance of the economy will be too far in advance, which is why we always wind up in fact adjusting the second year of the biennial budget. We passed a two year budget in the session’s odd years, and we wind up adjusting that second year budget. So, the situation is volatile, but one other trend that we do have to recognize is that, while unemployment in our state is down and actual employment is up, we are to some extent victimized by the progressivity of our own tax structure.  Because of an array of credits and deductions that we have, most people earning under $40,000 a year or so wind up not having income tax liability. A lot of the jobs that have been created are in the service economy. So, while we are seeing an increase in employment, we are not seeing an increase in tax revenues. But I think that’s why both the Governor and the General Assembly are committed to advance the interest of high tech businesses and others that will, in fact, pay high wages, so that people will then be able to support the state.”
To put it in other terms, Mr. Looney was admitting that progressivism carries within itself the seeds of its own destruction. A good part of the reason tax receipts in Connecticut are down is that a truly progressive income tax collects its bulk of receipts mostly from the middle class. The rich, as everyone knows, possess the means to avoid being plundered by rapacious tax gatherers both at the state and federal level. Not only does money make money, the very rich can afford to hire professionals who are able to finagle credits and deductions so that they end up paying less in taxes than their secretaries, which is the case with the fabulously wealthy Warren Buffett. Only a few weeks ago, Mr. Looney’s co-partner in Connecticut’s General Assembly, Speaker of the House Brendan Sharkey, was publicly declaring that General Electric, still pondering whether it should leave Connecticut, paid few taxes to the state.  

Workers in Connecticut who earn less than $40,000 a year, like the rich, pay little in taxes. On opposite ends of the tax scale then, revenue collection is diminished. “We are,” in Mr. Looney’s felicitous phrase, “to some extent victimized by the progressivity of our own tax structure.”

Connecticut's government has increased taxes threefold since pre-income tax days. Difficult as it may be to think of such a government as a victim, one must admit Mr. Looney has a point, and he makes it as lucidly as anyone might who is partial to a flat or fair tax. Under a flat, non-progressive tax, everyone – rich, middle class and poor – would pay the same rate; the tax would be so fair and so simple that even Mr. Buffett would pay it rather than hire an army of tax consultants to avoid his progressive “fair share”; credits and deductions would be eliminated; the very poor would have their taxes remitted; and Connecticut’s revenue basket would be much larger. More people would be paying taxes and, to put the matter in Looney terms, “the people then will be able to support the state.”

Other members of the Malloy Administration have also fessed up. The Head of the Office of Policy Management, Ben Barnes, said months ago that Connecticut should get used to budget deficits. And when Mr. Malloy presented a budget that reduced state funding for hospitals, Mr. Barnes, asked why the Malloy administration was forcing hospitals to recover the reduced income from sick people, responded “because that’s where the money is.” Willie Sutton gave the same answer when asked why he robbed banks – “because that’s where the money is.”

Mr. Sutton’s disarming honesty later gave birth to “Sutton’s law,” which is now taught in medical schools. The law holds that one should first consider “the obvious” in diagnosing illnesses, ordering tests in a sequence most likely to result in more rapid diagnosis, so that treatment will minimize unnecessary costs.

An application of “Sutton’s law” to Connecticut’s economic ills might force even progressive ideologues to an unwelcomed admission: Progressivism IS the disease it purports to cure. Mr. Looney is not there yet, but his recent comment provides hope that he may arrive at a curative solution to his beloved State’s economic woes in due course.
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