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Economic Empowerment: 11 ways costs are shifted onto You (After taxes are cut for the Wealthy)

posted Jan 25, 2019, 7:36 AM by Rahni Sumler   [ updated Jan 25, 2019, 7:37 AM ]
Reposted from David Akadjian at Daily Kos 

The idea of “tax cuts” is popular because people tend to think that they are getting some kind of break. Somehow, they’ll be able to save more because they’ll have more money. 

While the idea sounds good, the only taxes that ever seem to really get cut in our country are those paid by corporations and the wealthy. 

After these cuts are pushed through, what tends to happen is that either government has to cut services or revenue has to be raised some other way. In each case, average people still end up having to pay. And they tend to have pay more to make up for deficits that come from subsidizing corporate America and the wealthy. 

Here are 11 ways corporate special interests shift costs onto average people. 

Up-charging Cut Taxes: Increased Tolls

The Newell Toll Bridge is a privately owned suspension bridge over the Ohio River on the Golding Street Extension between Newell, West Virginia and East Liverpool, Ohio.

The Newell Toll Bridge is a privately owned suspension bridge over the Ohio River on the Golding Street Extension between Newell, West Virginia and East Liverpool, Ohio. 
The bridge is privately owned and its owners corporate special interest strategy is to privatize the profits, the tolls, while socializing the costs/risks. 
Photographed by Highsmith, Carol M., 2015, Library of Congress.

Increases at the Local Level

When the federal government makes cuts, these cuts are often pushed down to the state. The state then can either raise state taxes like sales taxes to help cover costs, or it can push the cuts down to the local level—or both. 
You may hear this strategy referred to as “broadening the base.” This is the spin that corporate special interests use for “we pay less, you pay more.” 
What we’re seeing across the country as cuts are made at the federal level include: 

1. Increased sales taxes

As Governing.com writes
A handful of states have slowly started to shift their reliance on various taxes in recent years. Much of the movement has occurred in states controlled by Republicans who’ve targeted income taxes for cuts and have looked to raise sales taxes to offset part of the difference.

Everyone buys food and everyday goods so sales taxes impact consumers. Wealthy people don’t typically buy any more food or consumer products than anyone else, so the bulk of sales taxes are collected from average people. 

2. Increased property taxes

In Ohio, as the state cut funding to local schools and communities, districts raised property taxes. We are also seeing property taxes increasing as home costs go up and as the federal government limits deductions (as part of the new Trump tax law). 
You might think property taxes affect only people who own property. However, property taxes are also passed on to renters in the form of higher rent. 

3. Increased sin taxes (alcohol, tobacco, etc.)

Similar to sales taxes, sin taxes are simply targeted sales tax increases where consumers have to pay more. Sin taxes are popular with many because they target what is often seen as undesirable behavior. 
Like sales taxes, these impact average people. 

4. Tolls

If you live in an area with a bridge or highway that needs repair or expansion, you’ve likely seen the toll discussion.  
Here in Cincinnati, we’ve had a bridge expansion across the Ohio river stalled for decades because Ohio insists the only way to pay for it is with tolls. And Northern Kentucky opposes any solution that includes tolls. 

5. Other increased government fees

These can be at the federal level, state level, or local level. At the federal level, we’ll see increased passport fees, increased copyright fees, increased park and museum fees, and so on. At the state level we’ll see increased licensing fees, increased business registration fees, and increased ticketing. At the local level we’ll see increased parking fees, increased permit costs, increased sewage costs, increased garbage collection costs, increased court fees, and so on.  

Services you now have to Buy (That you didn’t Before)

In the propaganda that we hear so often on TV/radio, the private sector is exalted while the public sector is demonized. 
This is ludicrous. Since the founding of our country, government has been a way for people to come together to accomplish things that would be extremely difficult on their own. That includes things such as railroads, highways, mail, communications infrastructure, public education, sewers, a social safety net, and so on. 

If these things are cut, it’s not like people won’t still have to pay. They’ll just have to pay someone else. If it’s the private sector, they’re going to want profits on top of services. 

A few recent examples: 

6. School supplies/equipment


7. Privatized police/fire departments

As police budgets are cut, people have to pay more for private security services.  The need to prevent crime doesn’t go away, it’s simply transferred onto individuals. We’re seeing an increase in private police forces

We’re also seeing this with fire departments. In South Fulton, Tennessee, firefighters let a house burn that hadn’t paid its $75 fee

Mortgaging the future

8. Deficit spending

Trump’s most recent tax plan cut taxes for the wealthy while increasing spending. How does he do this? 

Deficit spending. 

While deficit spending isn’t always bad, it does transfer costs into the future. 

Socializing the Risks

The term economists use to describe a situation when someone gets rewards with no risks or costs is moral hazard. Moral hazard was the cause of the 2008 financial collapse. All the incentive was for banks to lend recklessly to homeowners because they could resell the loans into privatized securities (that supposedly could not possibly fail). 

9. Climate change

According to the government accountability office (GAO), climate change has cost the United States government alone $350 billion over the past decade. Costs include clean up and disaster assistance from flooding and storms—and this is just what it costs taxpayers. 
If you include the entire U.S. economy, it’s more than $240 billion per year

10. Increased pollution

If you get rid of regulations/enforcement against pollution, corporations will pollute more.
The most infamous recent example of this is Flint, Michigan, where 12,000 kids have been exposed to excessive levels of lead that cause developmental disabilities

11. Decreased public Safety

In 1991, an Amtrak train with 407 passengers onboard was passing through the town of Lugoff, South Carolina, when a switch broke. Six passenger cars flipped off the tracks. Seven people were killed and as many as 125 were injured.

Investigators from the National Transportation Safety Board quickly determined that the accident was the result of improperly done repairs. CSX maintenance crews had used shims to level the crossing (though it wasn’t designed for leveling), and the switch was being held together with nothing but a rusty nail.

As David Cay Johnston writes:
The roadmaster and some of the work crew used the jury-rigged shims because their employer never allowed them enough time or money to do their jobs properly. CSX cut corners to inflate its profits, which in turn meant riches for its executives, whose pay packages were tied to reported profits and the price of CSX shares.

When regulations are cut or bypassed, what often suffers is public safety. The railroad realizes an increased profit at the expense of the public. 

Summary

Whenever you hear the term “tax cuts,” what you should really be thinking is cost shifting, because that’s what’s going on. The only taxes that our government ever seems to cut are taxes for corporations and the wealthy. 

Everyone else—in some way, shape, or form—tends to have to pay more. This may not be immediately apparent, but it’s what happens every time. 

The corporate special interest strategy is to privatize the profits while socializing the costs/risks. 

David Akadjian is the author of The Little Book of Revolution: A Distributive Strategy for Democracy (ebook now available).
He is also a freelance writer and instructional designer. He has designed sales, negotiation, and communication training for some of the top companies in the world. He has written for Daily Kos, HuffingtonPost, Alternet, Popular Resistance, Truthout, The Cincinnati Enquirer, and The Washington Spectator. He currently lives in Cincinnati, OH.
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