When Good News Is Bad News

By Gus Tyler

Published February 24, 2006, issue of May 19, 2006.

Across the country, the value of homes has been on the rise. That’s the good news. As the worth of homes rises in value, so, too, do taxes. That’s the bad news. How does this all work out?

Let’s consider today’s most dramatic case — namely California, the most populous state in the union.

The value of land skyrocketed, especially the value of the land that was being put to use in profitable undertakings. The state legislators recognized the impact on homeowners, who were their constituents. But they also felt that the increased taxes on homes were serving a noble purpose: the financing of education.

But a large number of those Californians who owned homes felt that their tax burden was intolerable; they decided to do an end-run around legislature and use a popular referendum to set limits on tax increases.

The consequences were drastic limits on what was available for education. Deprived of needed income, the educational system in California has been suffering at all levels.

California is not the only state, however, that has been hit by rising taxes on real estate; Pennsylvania’s legislature was faced with an outcry. The legislature turned to legalizing slot machines and using the proceeds to finance education. But three-fourths of the state schools refused to accept the dirty money.

Horror stories abound. Charlotte Snow of Boise, Idaho, lives hand to mouth in a barn on a rundown farm. But she was not spared. The erstwhile barn, now her “home,” was taxed. “I never intended to live like this,” she told The New York Times. “But I don’t have enough to pay my property tax bill.”

It is abundantly evident that if this problem is left to the states, then — as in the past — the states will not be able to devise a tax system that would provide the funds necessary to offer citizens the educational and medical services they need.

This is not the first time that the United States has learned that to “leave it to the states” won’t work. Wisconsin enacted an unemployment insurance law. It soon discovered that employers left the state to go to nearby localities where they did not have to pay taxes to carry the program. The federal government enacted protections for the jobless .

Some states enacted insurance for medical care. In New York, Governor Nelson Rockefeller led the movement for Medicaid. In a few brief years, Medicaid became a national program.

But where is the federal government at this moment, when the states’ burden in the matter of education and health care is breaking their backs? We don’t have to guess.

Our President Bush, after giving away trillions of dollars to the wealthiest in the land, has now decided to reduce the federal debt by cutting back on the very programs that need federal aid most.



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