Bob's Words of Wisdom News

Let’s Talk Turkey on Taxes

First, I would like to chime in on some of your comments about the legislature and how they do a lot of talking but when it comes to cutting their bloated budgets and reducing taxes, they are nothing but a flock of lame ducks. Let’s be honest; most of them have yet to prove themselves worthy of being called public servants. For example, if anyone thinks that this is a workable plan by Rep. Megan Blanksma to shift $19 million from the sales tax and get rid of the counties’ Indigent Fund and the state’s Catastrophic Health Fund, they would be mistaken.

Getting rid of the Indigent Fund and the Catastrophic Health Fund was originally part of the proposal for Medicaid expansion going back five years ago. It was a bad idea then and it is a worse idea now. This will do nothing but shift money from one category to another because our legislators made a bad choice with Medicaid and now they have dug themselves into a hole they from which they cannot escape.

Someone eventually has to pay the bill, and you can be sure that it will be the Idaho taxpayers. The legislature has created a new expense of at least $105 million per year for the taxpayers by bringing in Medicaid Expansion. They did this because of a referendum that passed with 60.58% of the vote—after a huge influx of outside money and a campaign that told more lies than truths about the cost.

It is quite likely that those costs will go even higher because medical costs increase every year, and we don’t know when the federal government will cut their match rate for the program from 90% to 70% or even less. These predictable increases will ultimately make this program completely unaffordable for our state, and it may well eventually become a true budget buster.

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We have been saying that the prospect of repealing the grocery tax is in imminent danger during this next session because the money will not be there to cut this tax. You can’t add an estimated $105 million to the budget without cutting expenditures in other areas. The legislature is robbing the taxpayers to pay for its sins.

They say they will cut costs from the counties’ budgets, but they admit that they have no idea how this move will affect the counties. The legislature never had a plan to pay for this new cost, yet they will tell you that they can fix the problem. To put it very simply, you can’t take on new costs without adding new revenue—especially when these costs are going to escalate every year.

A recent caller to Kevin Miller’s radio program named Dean said that he thought that the sales tax is the fairest for everyone. Perhaps he is living in a different world than most of us or he just hasn’t spent much time studying the problem. The idea behind a consumption tax (e.g. the sales tax) is that the consumer is taxed on how much they spend on goods and services. This is often regarded as the “fairest” form of taxation because (in theory at least) the more you have, the more you will spend. But what if you are poor and have little or nothing?

The problem with this theory is that it ends up taxing those in the lowest income brackets on the essentials of life. Many Americans seem to forget that those of us on fixed incomes like Social Security benefits are hurt by these taxes even more because the cost-of-living increases that the government calculates each year are based on government figures that don’t accurately represent the full impact of the rapidly rising costs of food or energy.

The grocery tax is one of the most regressive taxes you can impose on lower-income people. The number of food stamp recipients in Idaho has declined somewhat from its high of more than 230,000 in 2011-2012, but the number is still much higher now (146,000 in May) than it was before the recession (when it was fewer than 100,000.)

Sales tax isn’t charged on food purchased with food stamps, but any additional food that is purchased is taxed. Those who struggle to feed their families are faced with a 6 percent sales tax on top of the already rapidly increasing cost of food. Those who opt for self-sufficiency and don’t go on government assistance are effectively penalized by being forced to pay the tax on all of the food they purchase.

The gas tax is another regressive form of taxation because poor people tend to drive older cars that have worse fuel economy and they often live farther from where they work and shop. When the state raises the gas tax (as they did in 2015), it is again the low-income folks who suffer the most. You might assume that “conservative” Idaho has one of the lower gas taxes, but it is actually the 18th highest in the nation.

It has been shown that up to 30 percent of the poor who are on Medicaid have missed doctor appointments because they can’t afford the gas to get to their appointments, yet Idaho has increased the gas tax as well as expanded Medicaid. How stupid is that? We force taxpayers to subsidize healthcare for the poor through Medicaid Expansion, ostensibly because we want them to have access to treatment, yet we burden them with higher taxes on their fuel. This is especially problematic in poor, rural communities where people must often drive long distances to access care.

While our legislators look for ways to spend more money, our counties are increasing property taxes at rates that are so formidable, many of the elderly folks on fixed incomes will not be able to meet the increased burdens imposed on them. These increases are driven in part by poor planning. Local and county governments have often been far too willing to cater to the whims of developers by charging them only a fraction of the actual infrastructure costs associated with new development. The remainder ends up as an increased burden on existing property owners.

Most politicians have never learned that when you have dug yourself into a hole, the first thing you need to do is stop digging!

Government needs to be put on a diet. If you want to lose weight, you need to reduce your intake, and if we want balanced budgets without tax increases, we need to stop our state and counties from spending like a bunch of drunken sailors.

We Get the Government We Deserve.

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