The headlines in local newspapers tell a story that’s often obscured by the white hot voter anger directed at Washington these days.
“County supervisors to raise taxes…again”; “City council approves (another!) tax hike”; “Declining revenues cited for boost in taxes” — in metropolitan areas and small towns alike, it’s the same story. The recession has caused sharp drops in tax revenues from virtually every key source, and to maintain the services the public expects, governments are enacting tax hikes.
Though the actions that resulted in the financial meltdown took place in big city money centers, the repercussions, like ripples in a pond, have spread throughout the country.
Millions of foreclosed homes, millions of people unemployed, the stock market gone to pot — all have an impact on sectors and activities that generate tax revenue.
Many local governments have slashed budgets, laid off employees, reduced or eliminated services, and taken other measures to cut costs, but often there’s still a shortfall and the solution is a tax increase.
Billions of dollars from the federal economic stimulus program helped keep many state and local governments afloat through 2009 and into fiscal 2010, but those funds are disappearing, and budget cuts for fiscal 2011-2012 foretell major pain.
Unlike the federal government, which can rev up the money printing presses and rack up huge deficits, most state governments are required to have balanced budgets and can’t compensate for revenue declines by running deficits.
So, they turn to taxes. And while Washington is the target of most of the voter ire about spending, thus far the spending hasn’t been accompanied by increased taxes. It’s at the state and local level that taxpayers are feeling the heat.
With several million people unemployed, underemployed, or coping with wage/benefit cuts, critics have decried Washington’s inability to create more jobs.
Conveniently overlooked is that major corporations are now sitting on some $3 trillion (that’s trillion) in cash, while squeezing ever more productivity out of fewer employees, offering minimal or no salary increases, requiring unpaid leave and/or forgoing vacation time, and cutting other benefits such as health insurance and 401(k)s.
These cash-rich outfits, which should be leading the way to recovery by hiring new employees, aren’t. Rather, they’ve found that even in a dismal economy, they can fatten profits by reducing work force and pushing remaining employees to do even more.
For which they have been amply rewarded: A survey from the Institute of Policy Studies found that CEOs of the 50 firms that laid off the most workers since 2008 got 42 percent more pay than their peers at other companies.
Further, the Society for Human Resource Management says many employers have implemented salary reductions without a reduction in employee hours worked. Fear of losing their jobs has kept workers from protesting.
In today’s economic quagmire, all the blame for the mess we’re in doesn’t lie with Washington.