RALEIGH – As the North Carolina General Assembly pursues action on annexation, the state budget, charter schools, and other topics, it may look like lawmakers are all over the map.
In reality, these issues are linked together, much like communities separated by hundreds of miles can nevertheless be connected together by geographical features such as river basins or water tables.
When it comes to the legislative issues, however, the connection isn’t hydrology. It’s ideology. Those who favor tax hikes and forced annexation, or oppose school choice and market-based health reform, share a common ideological commitment to the redistribution of wealth or income. Perhaps the legendary Spinal Tap said it best in one of their early hits:
Stop wasting my time
You know what I want
You know what I need
Or maybe you don’t
Do I have to come right flat out and tell you everything?
Gimme some money, gimme some money
On annexation, for example, what might appear to be a dispute about jurisdiction, voting rights, and growth management is really nothing more than a grab for money. Municipalities annex neighborhoods to get a fiscal payoff. They don’t typically annex low-income communities that will cost them more to serve than they will collect in property tax. Municipalities annex higher-income communities expecting to collect enough tax and fee revenue not merely to pay for services (grudgingly) provided to those future citizens but also to help defray the cost of serving their existing citizens.
Sure, municipal officials may talk a lot about fairness, about making sure that people who benefit from services actually pay for them. But it’s mostly hooey. Nonresidents don’t consume the truly expensive municipal services such as water, sewer, or police protection. Some may visit municipal parks, but not enough to impose any significant fiscal hardship. And to the extent nonresidents work or shop in the city, they bear the cost of services provided to the industrial or commercial property they frequent, via lower wages or higher prices that reflect the property and sales taxes levied.
Essentially, forced annexation is a fiscal tool for redistribution. (Do I have to come right flat out and tell you everything?) Its purpose is to raise taxes on county residents to pay for services to city residents. (Gimme some money).
On a broader scale, the state budget debate is about redistribution, too, only the intended effects on income are less clear. Property-tax burdens tend to be proportional to income, at least over time, so if municipalities annex neighborhoods with higher-than-average values and lower-than-average service needs, they can be reasonably sure the result will be income or wealth redistribution.
At the state level, the income tax tends to be progressive – your effective tax burden rises as your income rises – while sales and excise taxes tend to be regressive, with effective tax burdens falling as your income rises.
The big difference between Gov. Beverly Perdue’s budget plan and than of House Republicans, however, does not concern the income tax. Both plans allow the current surtax to expire and cut taxes on corporate income. Rather, Perdue’s budget imposes about $800 million in higher sales taxes than the House budget does.
Why, then, is the Left fighting so vociferously for the Perdue budget? Because liberals see the revenue regressivity of her plan as a price they are willing to pay for maintaining the current level of redistribution from the private sector to the public sector.
That is, at the moment the Left cares more about protecting the jobs of government workers than they do about tax fairness. If truck drivers, retail clerks, factory workers, and farm laborers making below-average wages have to pay higher effective tax rates to protect the jobs of teachers, professors, and other state workers making average to above-average wages, that’s a deal the Left is willing to take.
As David and Nigel put it in the last verse of their song:
Don’t get me wrong
Try getting me right
Your face is OK
But your purse is too tight
I’m looking for pound notes, loose change, bad checks, anything
Gimme some money.
The answer should be no.
Hood is president of the John Locke Foundation.