High Taxes = Wealthy Communities

One of the paradoxes progressives use to challenge libertarian ideals and conservative tax policies is that the wealthiest communities and cities have some of the highest local tax rates in the nation. Cities like New York and San Francisco are obvious examples, as are the suburban areas around Chicago, Los Angeles, and Washington, D.C. (also known for its concentration of Super Zips).

High local taxes usually correspond to school spending, which is funded in most states through property taxes. Local schools are almost private academies in many states and counties, particularly in areas without a history of private schools.

My wife and I are an example of this high-tax and wealth paradox, made worse by the natural sorting that occurs among classes. And, because wealth is generationally transmitted through culture, education, and property, this also contributes to racial sorting in most nations (as seen by studies of "egalitarian" Europe).

We live in a single-entrance, cul-de-sac neighborhood without a single connected loop. You have to turn around at a dead end to return to the entrance. It's a neighborhood of larger homes, and generous lots, in a "township" (a small subsection of a borough) with its own police, fire, and exclusive schools. The local county park has a gun range, two equestrian arenas, ice-rink, year-round tennis, and much more.

A third of our neighbors, maybe more, work for the schools, police, fire, hospitals, and so on. We are willing to pay higher taxes the same way we also pay a homeowners' association fee (which I still detest on principle, since the community provides most services). The taxes and fees we pay ensure the area maintains its high quality of life.

That high quality of life increases property values, making our neighborhood yet more exclusive. Our self-imposed taxes, therefore, support the things that maintain the "wealth" in our houses. Our wealth and our taxes are intertwined, because schools, parks, and public services make our township desirable.

This happens on the county city, county, and even the state level. Minnesota is a prime example of this on the large scale, like the Scandinavian countries from which many of its residents trace their roots.

Yet, Minnesota is also rated as one of the worst places to be low-income and, by no coincidence, African-American. The wealthy have segregated into beautiful urban neighborhoods in the Twin Cities, while North Minneapolis and parts of St. Paul are allowed to deteriorate. High taxes at the state level go to the parks, museums, and other cultural quality-of-life items.

When my wife and I lived in Minnesota, we enjoyed the parks, the museums, and the state arboretum. These are not the things residents of North Minneapolis enjoyed.

Living in a bubble, it is easy to forget that "higher taxes" that directly benefit you and protect your wealth, are a struggle for much of the middle class. The poor and lower-middle class cannot increase their own taxes enough to revive their failing schools. They cannot magically create beautiful parks with tree-lined trails and ice rinks.

Increasing taxes or wages seems like a no-brainer when you're a progressive in a wealthy community. But those taxes and wages might not work in a disadvantaged community.

Now, some will point out this is why we need federal programs. But, we forget that most tax and spending decisions affecting daily life are at the state and local levels. For a classical liberal like myself, that's generally a good thing. I want more say over how my community operates. But, this also reinforces a problem and continues inequality.

My solution is to decouple the key to wealth from local taxes: education. Education funding should be equalized as much as possible, so schools in my community, with its full-slate of AP and honors offerings, are not unique to the wealthier suburbs. Education correlates to future success, but it is funded in a way that almost ensures generational lock, reducing income mobility.

Yet, Democrats and Republicans alike resist ways to equalize schools, championing "local control" and "local support" because both business leaders and teachers unions like this current model.

For now, wealth and taxes are a feedback loop in our communities. We tax ourselves, willingly, and sometimes seek to impose these high taxes on people unable to afford them.

For this reason, I do support state-level control of education funding. Not federal control, but state-level funding equalization and standards.

Comments

Popular posts from this blog

The 90% Tax Rate Myth

Election Depression

Lousy Choices