This is a guest post from Steve Newton. Sounds like the News Journal turned this down. Wonder why? Read on…
Secretary of Finance Tom Cook’s recent op-ed epitomizes the strategy of hiding things in plain sight. Secretary Cook and Governor Jack Markell’s revenue review panel has concealed among its recommendations for making Delaware tax revenues more “elastic” an ideologically driven agenda of tax cuts for the wealthy and out-of-state corporations at the expense of our state’s middle class, senior citizens and local business owners. That our governor could sanction such recommendations is a prime example of how politics in Delaware has been hollowed out in favor of profit taking.
Let’s first notice that in a era of declining revenues and increasingly challenging budgets to balance Governor Markell’s instructions forbade raising new revenue: “if a recommendation was made that could be expected to generate additional revenue for the state, then a corresponding revenue reduction would also be proposed to offset it.” This means (in English) that Cook’s panel was not interested in providing more money to balance our budget, but in changing who pays the bills.
First, consider the cuts. The panel recommends (in appropriately stealthy language) rolling back previous revenue-generating raises to the corporate franchise fees and reducing the corporate income tax rate. This change benefits primarily huge corporations and large institutional investors. The panel also suggests complete elimination of the Estate Tax, which is pretty much only paid by the wealthiest 1%. Here’s a multiple-choice question (in keeping with Governor Markell’s spirit of relentless standardized testing): Would these recommendations be most likely found in the political platforms of (A) Hillary Clinton; (B) Bernie Sanders; or (C) Donald Trump?
To “offset” the revenues lost from Delaware’s wealthiest citizens and out-of-state corporations, Governor Markell, Secretary Cook, and the panel recommend “the elimination of itemized deductions and a scaling back of elderly tax preferences” from our state income tax.
Itemized deductions are the primary tool that middle-class families use to reduce Delaware’s already high income tax burden; the 1%, whose income derives chiefly from non-salary sources, really don’t care about itemizing. The elderly (nearly one-quarter of Delaware’s population is on Medicare), now there’s a tax cow waiting to be milked. Retirees exist predominantly on fixed incomes, which our governor proposes to fix at a lower level so that the residents of Greenville can keep more of their dividends.
The other “offset” against those corporate income tax reductions is to be Delaware business owners (you know, the people who actually live and work here), who will be gifted with higher business license fees.
Secretary Cook notes that this kind of “prudent” financial management (read: transferring the tax burden from the wealthy to the middle class, local businesses, and the elderly) has benefited Delaware with a AAA bond rating purported to have saved us “$58 million in debt service payments since 2009.” That amount roughly equals what the State wasted in the Fisker deal plus one-year’s worth of subsidies to Bloom Energy, collected through your electric bill as a hidden tax.
Meanwhile, those six years have seen child poverty increase, our roads deteriorate, our streams become more polluted, middle-class incomes decline, and the “fiscally responsible” General Assembly balancing last year’s budget by stealing millions meant for Delaware homeowners who lost everything in the Great Recession.
Recalling Chief Justice John Marshall’s famous dictum that “the power to tax involves the power to destroy,” I read this soulless analysis and wonder why Delaware voters continue, year after year, to return to power the individuals seemingly more interested in destroying our middle class, our elderly, and our local businesses than in finding real solutions for the problems that beset us.