The real problem with the Republican tax bill, now being reconciled by the U.S. House and Senate, is not about taxes. It’s about democracy.
The legislation was not put together in public, with hearings and scrutiny that could allow the bill to take on changes and improvements. It was put together behind closed doors, rapidly, with little scrutiny (and no small number of mistakes).
The result is a bill that adds to the power of the federal government – with all kinds of goodies for favored people and industries who can lobby at the national level – and hammers regular people (whose meager tax benefits are phased out) and especially local governments.
That’s the real problem with the bill’s attempts to get rid of credits for state and local taxes. It’s true that the exemption benefits mainly better-off taxpayers in better-off states like California. But the other beneficiary are local governments and the communities they serve; the deduction makes it easier for citizens to support such taxation and offer the essential government services that make people’s lives better.
That money also offers choices – putting real teeth in local democracy. In California, where local democracy is weak because state government is too strong and centralized, every little bit of help the locals can get is important.
So when the federal government comes after local tax exemptions in particular, it’s asserting federal control at the local level. Nicole Gelinas of the Manhattan Institute’s City Journal has pointed this out. She wrote recently that while getting rid of exemptions is usually good, “no scholar argues that states, cities and towns don’t possess the right and obligation to staff schools, pave roads, purify water and put out fires.”
“For this,” she added, “local and state governments need money — which they mostly get from their own taxpayers, not from Washington. To assert that the federal government has the primary claim on this tax dollar, as Republicans are doing, is to claim that the federal government bears the primary responsibility for these tasks.” Gelinas goes on to suggest that removing the local and state tax credit exemption could eventually force an increase in federal taxes to fund a federal bailout of local and state governments.
Our local communities and governments already labor under heavy regulation, Sacramento power, and fiscal stress. And now Trump and the Republicans are attacking too.
I don’t think California should secede from the union to preserve its democracy. But maybe some of California’s cities should.