To believe that there is a budget crisis that requires “shared sacrifice” you need to buy into the myth that Delaware tax rates are not competitive with neighboring states. And that, in fact, to be competitive our taxes must be far lower that Pennsylvania and New Jersey’s. Paul Baumbach exposes that myth in this exchange with Carney:
After Carney’s presentation, two fellow Democrats questioned him on the income tax proposal. Rep. Paul Baumbach, D-Newark, asked him why he did not add another, higher tax bracket at the high end of the income scale — Delaware’s current top tax bracket starts at $60,000, which Baumbach called “woefully lower than our neighbors.”
Carney responded that his goal was to keep Delaware economically competitive, citing complaints from business leaders in the years when tax brackets were higher.
Notice how Carney (like some kind of Trump-like Man Baby) goes right back to parroting the the myth as if it has some magic power.
This idea that Delaware taxes must be FAR LOWER that our neighbors was first promoted in Jack Markell’s executive order establishing the DEFAC Advisory Council, and was adopted by Carney as an article of faith after it appeared as the leit motif in the Chamber of Commerce’s “Bipartisan DEFAC Advisory Council on Revenues” final product. In that document Carney’s masters in the State Chamber of Commerce ominously announced our dire need to be “competitive”. Indeed, the some form of the word competitive appears 77 times in a 67 page document. So it is not surprising that Carney was hypnotized by the fake news broken in the report that Delaware was at risk of being non-competitive.
It is surprising, however, that the report writers couldn’t sweep the truth completely under the rug. Delaware, as Baumbach points out is a tax haven compared to its neighbors. On page 10 of the report, the chamber of commerce masters allow the truth to slip through.
Delaware’s tax burden ranks as the 5th lowest in the nation (roughly 17% below the average.)
So the goal, it seems is not to simply be competitive with neighbors, but to run up the score. Like Sallies football versus little Laurel, winning isn’t enough. We have to win by 50 points for some reason. And what is the fake reason undergirding the fake assumption that we need to have a tax rate that is “woefully lower” than our neighbors?
That report addresses that by tossing out a discredited chestnut:
Competitiveness – A second purpose is to ensure that any changes meant to enhance adequacy and stability do not endanger Delaware’s economic growth by discouraging citizens from continuing their residence here or businesses from establishing workplaces and headquarters in Delaware.
This is flatly and completely debunked nonsense. People and businesses do not leave states to chase 2 or 3% tax savings. It is bullshit argument. So it is not at all surprising that there is no footnote supporting the notion that citizens and businesses will leave Delaware unless we are crushing nearby states. There is no citation because it is flatly untrue.
A 2011 study by the Washington, D.C.-based Center on Budget and Policy Priorities concluded that, “The effects of tax increases on migration are, at most, small — so small that states that raise income taxes on the most affluent households can be assured of a substantial net gain in revenue.”
Jon Shure, director of state fiscal studies at the center and one of the authors of the study, recently told The New York Times that tax flight from high rates “is almost entirely bogus. It’s a myth. The anecdotal coverage makes it seem like people are leaving in droves because of high taxes. They’re not. There are a lot of low-tax states, and you don’t see millionaires flocking there.”
Carney needs to stop insulting everyone’s intelligence by cleaving to all these myths and nonsense. There is only a “budget crisis” if you assume that rich people, and wealthy corporations need Delaware to have taxes 17% below the national average.
