Tax Cuts at Whose Cost?
Monsignor Edward J. Ryle, Executive Director
Arizona Catholic Conference
Over the past six years Arizona has cut taxes quite vigorously. Cuts in the most recent legislative sessions add up to nearly $776 million for the current fiscal year and to over $1 billion for next year.1 The cumulative total since former Governor Symington took office in 1991 is almost $2.6 billion.2
Politically, cutting taxes has a venerable history. "A ruler," Paul Veynes wrote of the Roman Emperors, "could win the gratitude of his subjects in no better way than by abolishing a tax, reducing temporarily the fiscal burden of a province, or remitting taxpayers' arrears of payments due to the Fiscus."3 Nero, Julian the Apostate, and Hadrian are among Veynes' examples. Nero, for example, a lover of Greece, granted it "independence and immunity from taxation" when it was facing hard times.
Certainly, one can agree with those Roman Emperors who eased taxes on provinces that were experiencing hard times, or, as Veynes puts it, on the need "to avoid shearing the sheep too closely, lest they be flayed alive...."
But there are other ways of looking at the matter. Taxpayers in the U.S. and in Arizona are a long way from being flayed alive. And, sheep can also be harmed by neglect and indifference. Young lambs are even more vulnerable. Arizona's treatment of its poorest mothers and children exemplifies such neglect.
The maximum TANF payment for a family of three today is $347 per month, 36 percent of the 1992 poverty line. This is an element in the fact that poverty in Arizona increased from 1993 to 1995 and continues to rise now, while it declines nationally.
From Fiscal Year 1993 through FY 1998, the state's refusal to honor its legislative commitment to mothers and children on Aid to Families with Dependent Children (AFDC, now Temporary Assistance for Needy Families or TANF) to provide them cash assistance at 36 percent of the federal poverty line has contributed $45 million to the $2.6 billion in tax cuts. The maximum TANF payment for a family of three today is $347 per month, 36 percent of the 1992 poverty line. This is an element in the fact that poverty in Arizona increased from 1993 to 1995 and continues to rise now, while it declines nationally.
In a press conference on September 5, 1991, Governor Symington said that Arizona "cannot tolerate a 5 percent decrease in the AFDC benefits for the poorest of the poor." He made good on his word, calling a special session of the legislature to see that AFDC benefits did not fall below 36 percent of the poverty line. The legislature agreed with him. Since then, neither the governor nor the legislature have been unwilling to tolerate the subsequent erosion of the purchasing power of welfare payments by inflation.
Arizona's refusal to increase cash-welfare assistance as it cuts taxes exuberantly reflects the same pattern we have seen in Washington in the past 12 months. The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 reduced spending for current welfare services by $55 billion over six years, with $23 billion coming from food-stamp cut backs, $23.8 billion from restricting benefits for legal immigrants, as much as $6 billion from SSI benefits, and the remainder from various other sources. The Urban Institute has estimated that welfare reform will add 1.1 million children and 1.5 million adults to the ranks of the poor.
The July 1997 budget agreement between Congress and the White House reduces taxes some $85 billion over the next five years. Seventy-eight percent of the cuts go to the top 20 percent of households, and 32.3 percent to the top 1 percent. The poorest quintile may see a slight increase in its taxes.
While the budget agreement restores some SSI and Medicaid benefits to legal immigrants and offers help for some 18 to 50 year old food stamp recipients, it does not significantly change the direction of the recent policy directions in Washington, cuts in cash assistance for the poor and tax cuts for the rich.
Since Arizona set out on this path before Washington, perhaps it is blazing a trail, one in the wrong direction if Dr. James Gilligan is correct. He writes that one of 11 policies that lead to crime and violence is:
Manipulating the tax laws and other economic policies so as to increase the disparity in income and wealth between the rich and the poor, for that also stimulates crime and violence, by maximizing the degree to which the poor are subjected to experiences and feelings of being shamed, humiliated and made to feel inferior.4
Reducing violence is not the highest motivation. I would prefer to build a case for decent cash assistance for poor mothers and children and for the indigent, disabled Arizonans who have been denied General Assistance the past few years by the legislature along the lines of the medieval canonist, Joannes Andreae, who said that "Poverty is not a type of crime." But that argument is not easy to make in a brief article, nor might it have much political efficacy today.
1. Joint Legislative Budget Committee, Budget Status Report, FY 1997, FY 1998, FY 1999 and FY 2000, Joint Legislative Budget Committee, State of Arizona, July 1997, p. 27.
2. News release, Office of the Governor, Fife Symington, Governor, August 12, 1997.
3. Paul Veynes, Bread and Circuses, (London: Allen Lane the Penguin Press, 1990), p. 359.
4. James Gilligan, Violence: Our Deadly Epidemic and Its Causes, (New York: G.P. Putnam's Sons, 1996), p. 188.
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