BY PATRICK HART

In print | February 24, 2005

Gov. Ed Rendell’s latest state budget proposal is not particularly remarkable one way or the other. It contains small increases in social welfare spending, small cuts in the corporate tax rate and some toughened rules for state spending on health care. In short, it is a budget that no one will love, but everyone will live with.

Liberals can take the budget as a kind of victory, especially when compared with the monstrosity that is President Bush’s recent budget proposal. Still, it is telling that the kind of “victory” with which progressives must content themselves in today’s political climate is a budget that maintains the status quo without making devastating cuts. No one thought that Rendell was about to initiate any new proposals in this budget.

The depressing part of it all is that Rendell is the sort of governor who might actually propose such an initiative. Right now, he is facing a state legislature controlled by Republicans — a legislature that has done little to cooperate with Rendell during the first two years of his term. It is easy to forget that Rendell was elected on an ambitious platform that included a plan to shift a large portion of the state’s education funding away from regressive local property taxes. Once elected, he was forced to pare down his plan and sign into law a less-sweeping alternative supported by the legislature. Rendell had mixed success with his other proposals, but one that did ultimately pass was a plan to allow slot machines in multiple locations across the state. This proposal is revealing about the state of revenue policies today.

Most Americans hold somewhat contradictory views about taxes and spending. There is a strong anti-tax feeling in most areas of the country, including Pennsylvania, while at the same time people still want government programs to function well. The result of this paradox is that politicians have resorted to a strategy of nibbling around the edges — raising state fees and creating new ones, fiddling with the tax code as much as possible to squeeze out extra revenue while at the same time being able to say that they will never raise taxes. Casinos, slot machines and state lotteries are part of this trend; for many politicians, they provide an ideal way to generate state revenue without having to raise taxes. Despite their attractiveness to politicians, though, these nibbling-around-the-edges solutions are the wrong way to go to address our states’ fiscal problems. Many state fees (and such stopgap solutions as increased alcohol and tobacco taxes) tend to be regressive, and the gambling-oriented solutions are even worse. State lotteries are essentially a tax on the poor, and casinos and slot machine parlors, while they may generate much-needed revenue, also tend to increase crime and other social problems in the areas where they are located.

If these stopgap proposals are so problematic, why are they attractive to many voters? The answer is simple: It’s easier to sell a proposal that contains no broad-based tax increases to the public, and too many politicians tend to go for the easy solution. In fact, a move to make taxation more progressive - for instance, creating a graduated income tax rate at the state level (which Pennsylvania does not do) or allowing municipalities to impose income taxes to begin a move away from the more regressive property tax (which Pennsylvania does at a limited level) - could, if done right, actually reduce the tax burden on lower-income taxpayers while increasing general state revenues. Such a plan would entail political risk, but sooner or later, someone is going to have to stand up and show the country’s middle and lower classes that most of the anti-tax sentiment of the last thirty years has been shrewdly channeled by the right into large tax breaks for the wealthy. These tax breaks have done nothing for the vast majority of Americans — in fact, they have increased the cost of living for most of us. Casinos and slot machines may provide revenue in the short term, but in long term, they will end up hurting the state’s residents while doing nothing to stop our tax system’s slide into regressive policy.

Patrick Hart is a senior. You can reach him at phart1@swarthmore.edu.

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