Why the Taxpayer Protection Initiative is a bad idea

5 minute read

Recently Wordbones blogged about a proposed Taxpayer Protection Initiative that Howard County Republicans would like to put on the November ballot. The basic proposal (as outlined in a Baltimore Sun story) is to change the Howard County charter to require a supermajority of four county council members (out of five) to approve any county tax increases. (By the way, does the Howard County Republican party have its own page to explain and promote this initiative? I couldn’t find one on its web site, and Google was no help.)

I happen to think this is a bad idea for several reasons, and rather snarkily unloaded on Howard County Republicans in the comments section of the post. I’ll be nicer in this post, and limit myself to presenting some reasons why this initiative should be rejected. I’ll start with some lesser concerns and then continue with more fundamental flaws.

The first issue was raised in the Sun story, namely that the proposed initiative addresses only taxes and not user fees. This omission is disingenuous: It’s perfectly reasonable for the county to charge user fees in cases where the fee can be tied directly to a service and bears a reasonable relation to the cost for the county to provide that service. However if we make it more difficult to raise taxes then it’s going to be tempting for the county council to instead institute more and more new fees, to significantly increase existing fees, and to have high fees substitute more and more for general tax revenue.

At that point such user fees will in effect be special-purpose taxes under another name. This may allow politicians to boast about not raising taxes (strictly defined) but the overall monetary burden to county residents and businesses will be the same as if the revenue had been raised through taxes in the traditional way. And we’ll be likely left with a complex and relative arbitrary system of user fees, and like a complex tax code it would be likely be rife with disparities and unfairnesses driven by special interest lobbying.

Second, the proposed supermajority requirement applies only to tax increases and not to other tax-related legislation, including tax cuts. (I’m presuming here that the Sun story is correct and that Wordbones’s reference to tax measures in general is incorrect.) Proponents of the initiative presumably want to limit the potential for a council majority to impose onerous ta increases. Fair enough, but what about limiting the potential for a council majority to enact drastic tax cuts that might affect the county’s fiscal solvency and AAA bond rating and saddle county taxpayers with increased interest payments on county bonds? Why shouldn’t we have a supermajority requirement to address that scenario?

Finally, and most importantly, the initiative doesn’t address spending measures at all. If you make it difficult to raise taxes, but put no such restriction on increasing spending, then you run the risk of politicians resorting to accounting tricks and growing deficits to fund what in many cases are essential public services and/or spending obligations that can’t be avoided (e.g., snow removal last winter).

In this regard I think the starve the beast theory, i.e., that tax cuts will force spending cuts, is pretty much bogus and disproven by history. Certainly the last Republican administration was quite willing to take on spending obligations well in excess of what tax revenue might justify.

Now to a more fundamental question: Why is this initiative really needed? Since it would be a major change to the county charter, I think the burden is on its proponents to justify why we need to make this relatively radical change to the status quo.

As noted in the Sun story, the county is already restricted in how much it can raise the county-directed portion of the state income tax. And as Wordbones noted, the 4-to-1 Democratic majority on the council hasn’t exactly been going crazy with enacting new tax increases. So what problem is this initiative actually supposed to solve?

Some might complain (as did a commenter on Wordbones’s post) that the Howard County tax burden on businesses is higher than in other jurisdictions. That may or may not be the case; the commenter presented no evidence to this effect, though others are welcome to. (Make sure you include user fees as well though, as noted above.)

To the extent that the Howard County tax burden is higher, at least two responses are possible. First, this is an affluent jurisdiction with arguably better potential for businesses than other less wealthy jurisdictions. A business would be silly to complain that it costs more to rent space in a mall than in a strip shopping center; similarly businesses operating in Howard County have access to a potentially more lucrative customer base than elsewhere, even factoring in the increased costs due to taxes and government fees.

It may also be that in other cases Howard County does indeed have a higher tax burden than other jurisdictions of comparable wealth and population. In that case businesses are free to make specific proposals to the electorate as to how exactly that burden could be reduced, and exactly what spending cuts should be made. (And remember, the county has an annual budget on the order of a billion dollars, so to make even a 1% reduction requires spending cuts on the order of ten million dollars or so.) If you’re just griping about taxes in general and not making specific concrete proposals then I feel perfectly justified in ignoring you.

So, if you can make clear and compelling arguments for this initiative then you’re welcome to do so (but see my note below), and I’ll gladly consider their merits. In the meantime I’ll stand by my current opinion: That the Taxpayer Protection Initiative is basically a political stunt by Howard County Republicans with two primary purposes: to try to boost Republican turnout this November by trying to tap into (somewhat unfocused) popular discontent with governments, and (if successful) to compensate for Republican failure to gain a majority on the county council by making it easier for a Republican minority to pursue a strategy of blanket opposition to tax increases and hold the council majority hostage to their demands.

NOTE: Feel free to add your comments below, but be aware that I dislike anonymous commenters and will summarily delete the comments of anyone who doesn’t comment under a unique name of some sort, real or fictional. I do this not because I care about people’s real-life identities; rather I want to be able to know that the person (whoever that might be) who makes a particular comment is the same person making a later comment, whether to this post or to future one. That way we can better gauge the consistency of your arguments and the accuracy of your predictions.