Budget Deficits and Taxes

Today I'm writing my own personal statement about taxes. This isn't a student paper.

I'm concerned about the state's budget deficit. Some journalists (including Rich Miller) are reporting that Illinois has a $12 billion dollar deficit for the state budget in the upcoming fiscal year. Evidently there are some representatives in the Illinois General Assembly who aren't interested in solving this problem. Generally, such deficit problems can be solved by raising revenue (hard to do during a recession) and cutting spending (which tends to reduce stimulation of the economy, and is unpleasant to do in a recession). Budget cuts will most be unpopular, and raising additional revenue (raising taxes) will also be unpopular.

This got me to think about some other large states like Illinois and their budget problems. Here is a list of states, followed by their populations (estimated from summer of 2007), their likely state budget deficits in the upcoming fiscal year (taken from newspaper articles published in May of 2009 in the states reporting on state politics and budget problems), and an estimate of the total state budget deficit expressed as a per-capita estimate. Finally, I've included a taxation index, which is my estimate of the total property tax, sales tax, and income tax burden in the state experienced by median income households as a percent of the highest tax burden (California's, which is set to 100%).

California: 36.8 million residents, $21.3 billion deficit, $580 per person, and 100% tax burden.
Texas: 24.3 million residents, $0 deficit, $0 per person, and a 38% tax burden.
New York: 19.5 million residents, $6 billion deficit, $310 per person, and an 83% tax burden.
Florida: 18.3 million residents, $3.4 billion deficit, $186 per person, and a 27% tax burden.
Illinois: 12.9 million residents, $12 billion deficit, $930 per person, and a 61% tax burden.
Pennsylvania: 12.5 million residents, $3 billion deficit, $241 per person, and a 49% tax burden.
Ohio: 11.5 million residents, $3 billion deficit, $261 per person, and a 55% tax burden.
Michigan: 10 million residents, $1.7 billion deficit, $170 per person, and a 62% tax burden.
Georgia: 9.7 million residents, $800 million deficit, $83 per person, and a 62% tax burden.

A couple things grab my attention as I look at these nine largest states. First of all, Texas has a very small state tax burden, and it also has no deficit. So, I suppose Texas must spend far less per person than the other states on this list (although Florida has an even lower tax rate and might spend even less). Is Texas considerably worse in some ways than California and New York because of its low spending? That is, are hospitals, schools, police, roads, and state services far better in California and New York than they are in Texas and Florida? How do poor persons, the unemployed, the chronically mentally ill, and the disabled fare in New York and California compared to Texas and Florida? I'm interested in knowing how Texas keeps its budget balanced while its taxes are so low.

Secondly, I'm impressed that Illinois has the largest state budget deficit (expressed as a per-capita deficit) in the nation (comparing the large states). California is in the news because they have the largest deficit, nearly twice as big as the Illinois deficit, but California has nearly three times as many people as Illinois, so their deficit is actually smaller when expressed as a ratio to the number of people in the state.

Third, I'm interested in the variation in taxes. I calculated the tax burdens by estimating what a resident household would pay in state property taxes if they lived in a median value home, what they would pay in income taxes if they were a two-adult and two-children married-filing-jointly family earning $50,0000, and what they would pay in sales taxes if they spent 30% of the median state household income on things that were taxed at the state sales tax rate. Then, taking the sum of these raw dollar amounts, I converted them into percents of what the highest-taxed household (in California) would pay. I imagined that after combining sales taxes, income taxes, and property taxes, all the states would be close to each other, with "low-tax" states perhaps taxing about a third less than the "high-tax" states. But, it seems Florida taxes at about a quarter what California taxes people. I also thought my state (Illinois is where I live, although I'm a native Californian) would be a "high tax" state, but I see we only tax at about the same as Georgia and Michigan, which is more than a third less than California.

Looking at my raw dollars of household taxes estimated and the per-capita state budget deficit, I am able to calculate how many dollars more my median household would have to pay to cover the budget deficit. My calculations were that my median Illinois household of four persons would be paying about $5,400 in taxes. (My four-person household paid about $5,500 in such taxes last year, and we make about the median Illinois household income, but that's about $20,000 less than the median Illinois four-person family income, so perhaps my estimates are off and I'm underestimating tax burdens in Illinois, but the source of the difference could be that in my taxes I'm looking at both state and local taxes, and for this exercise I'm trying to just look at state taxes and ignore the extra couple percents of household income that might go to local government). If the median four-person household is paying $5,400 in taxes to the state, and our deficit is about $900 per person, that means you would need to raise taxes on that four-person household by about $3,700, up to $9,100 in total for the household, to cover the state's $12 billion deficit.

If Illinois did have tax rates that high we would be at 111% of the current Californian tax burden. But, I guess California needs to raise its taxes as well (by about $2,000, up from $8,600 per four-person median income household to $10,600 per four-person median income household.

Median incomes for four-person family households in California are about $71,000, so is it fair for families like that to pay a total of about $10,000 to $11,000 in their taxes to support all the California state government services? The median four-person family incomes in Illinois are about $73,000 (over $20,000 more than my household earns in a year). Is it appropriate for families in that situation to pay over $9,000 to the state for Illinois state services?

A common argument (and it's supported by some research) is that if taxes are too high, businesses and hard-working, intelligent people will move to states (or countries) with lower taxes. I suppose that if I had a choice between two states that provided about equal quality and quantity of government services, and one was asking me to pay a total of $11,000 per year in taxes (combined income, sales, property, etc.) and the other was letting me pay $6,000 per year, I would seriously consider moving to the lower-taxing state. But, if the state charging me $11,000 had much better schools and universities, lower crime, no homelessness, low unemployment, excellent roads, fine libraries, and fantastic parks, etc., while the low tax state was generally inferior in every type of government service, then I might be satisifed to pay the extra $5,000 per year to live in the state that gave me value for my tax dollars. If the difference was only $1,000 per year in taxes, I don't think I'd notice and I don't think the taxation difference would have any influence on my decision about where to live. After all I have roots in states where I have lived and worked, and I have preferences in climate, politics, geographical region, and culture that determine where I want to live with greater influence than considerations about taxation.

I suppose after all this consideration, I do hope Illinois increases its taxes, and I hope this covers our budget deficit. Governor Pat Quinn is suggesting a 50% increase in our income tax, from 3% of adjusted gross income remaining after deductions to 4.5% of the same income remainder after deductions. I know there might be a few dozens of millions of dollars the state could cut here and there, but we can't cut a billion dollars, let alone 12 billion dollars, from the state budget, and I'd be glad to pay 1.5% of my household income more than I do now to keep the state's roads, schools, mental health clinics, hospitals, parks, courts, jails, universities, and police & fire stations open and functioning well. I'm upset that representatives in the general assembly won't vote to increase our taxes and cover the budget deficit.

Reduce incarceration. It's too expensive.

Here is a student's paper on incarceration.

The amount of people incarcerated in this country truly astounds me.  In America we currently have more than 2 million people in jails and prisons.  Countless inmates are serving time for minor drug offenses.  I believe that instead of pursuing the “War on Drugs”, which has led to many of these lockups without a doubt, our country should be putting more time, effort, and focus into alternative incarceration programs.  Diversion programs for first time, non-violent offenders have been proven to work well.   

These types of programs not only cost less than jail and prison, but they also help create a job base for social workers.  I believe that if we implemented more programs like these we could alleviate the growing problem of over populated jails and prisons in the U.S., and save taxpayers money as well.  Alternative incarceration programs allow an offender to receive treatment, employment, and even education and training under the supervision of law enforcement officers.  The offender can either be successful and become a reformed member of our society, or the offender can be unsuccessful, and a judge can simply send him back into the prison system.

Just to give an example of the amount of money that could be saved by creating programs like these, I looked up some statistics.  In New York it costs about $62,595 to house an inmate yearly.  The average cost to put that same inmate through an alternative program would be about $1,400 to $13,000 according to eHow.com.  That’s a minimum savings of $49,595!  In our current economic downturn taxpayers could really use a break like this.  It’s not a dollar amount to be laughed at by most Americans.  I don’t know a person who would say "no" if asked if they wanted to save $50,000. 

Some other benefits of alternative incarceration can be seen within communities.  Because offenders are trying to be a valued part of our society, foster care, shelter, welfare, and child support costs can be managed easier.  Alternative programs also have a significant effect on felon’s illegal drug usage.  It typically falls from 80% to 42% in those participating in the programs.  This is because the social and financial burdens of rehab are now placed back onto the family and community.  [see this 2.6 MB pdf file for more information]

To lend even more support to these programs is the fact that a study conducted by the New York Criminal Justice Agency found that offenders participating in programs like these were less likely to be arrested a second time than offenders who were put in a traditional jail or prison.  This suggests that programs like these are producing results of less crime and fewer repeat offenders.       

Overall, the benefits of alternative incarceration programs can clearly be seen.  Not only do they save money, but they also help reduce crime and repeat offenders as well.  If all states could follow New York’s example, America could regain control over our maxed out capacity jails and prisons, and at the same time fight crime and greatly reduce the enormous cost of housing inmates.  

G.I. Bill Improvement

(Here is one student's policy suggestion.)

After a person leaves active military duty they have many resources available, especially when it comes to college. The VA will pay tuition and books, and even offers a minimum of $1,300 a month stipend from the GI bill. But the GI bill is only available to veterans for 10 years after they end active duty. It's my belief that if a veteran is planning on going to school part time, they should be able to get the GI bill no matter how long they've been out of active duty. Many times other factors get in the way and keep a person from going to college right away. Even if a person is aged 60 and fought in a war decades and decades ago (or even if they did't fight in an actual war), they should have that GI bill available to them if they're willing to become enrolled in college full time.

Typically, I'm not supportive of people getting to go to school for free, just based on the fact that I can't go to school for free, so I'm negatively biased towards the whole thing. And while I don't support the war we're in now or some of the wars we've been in in the past, I do believe that if someone is willing to put their life on the line for our country's safety they should be allowed to go to college for free and get that stipend regardless of how long ago they were enlisted in active duty.

Medicaid

Here is a student editorial in support of Medicaid.

I am writing today in regards to our Medicaid program.  People who are qualified to receive Medicaid include, but are not limited to:  Mothers with children 18 or younger, children under the age of 18, foster children, and some non-U.S. citizens.  The program was added to the Social Security Act in 1965, but is run through state governments.  There are many requirements in order to become eligible for Medicaid.  

The main requirement for eligibility is the family’s income.  This varies based on the children’s age.  For example, for children under the age of one, the family’s income must not exceed 200% of the federal poverty level.  For children 18 and younger, the family’s income must not exceed 133% of the federal poverty level.  For foster children, the child is automatically covered under the state until the child reaches the age of 18.  

Medicaid not only provides health care for at-risk families, but also helps to provide food and assists mothers with collection of child support.  This is a wonderful program that is designed to help our women and children in poverty.  The program will not allow people to live their lives in luxury, but rather help to provide some basic necessities of life.  

I am a full supporter of women and children who need to use this resource.  I believe that not enough people take advantage of this program.  Our society places a negative feeling regarding Medicaid.  Our nation was designed to help out those who are less fortunate, but people do not respond well to others who are utilizing this resource.  I think that our schools and media should educate people on what Medicaid is and what the qualifications are to receive benefits.  I believe that if our society was more informed on this criteria, they would not cast judgment on the people who need to use the program.

Medicaid is an important part of the current national health care policy. It covers medical care for disabled persons such as the blind as well as non-disabled poor persons. Both of my sons were born under Medicaid coverage. Over 50 million Americans and  residents of the USA are insured though Medicaid. Medicaid costs are scary.  If you check out the Federal Budget (see table S-3 in this big pdf from the White House) you can marvel at the rising costs: $201 billion in 2008, $262 billion in 2009, and $290 billion in 2010. 

Student asks governor to legalize same sex marriage

One of our class assignments was to write a paper describing a policy to a government person, either an elected representative or executive, or else to an agency head or administrator. Many students wrote advocacy letters.  This is an example of a student writing to the new governor asking him to support same-sex marriage in Illinois.

I am a social work major at University of Illinois at Springfield.  I am writing to you today regarding an important matter that needs your attention.  I am urging you to implement a policy regarding same-sex marriage.  Currently, there are five states which have this policy already in place.  I would propose to you that this is not a matter of personal belief, but rather a matter of a basic civil right.

In Loving vs. Virginia in 1967, the Supreme Court ruled that interracial marriages must be allowed.  Today, we, as a society, would find it unbelievable that people, of different ethnic backgrounds, were unable to marry.  However, we still do not allow people of the same sex to marry.  Because gays are not allowed to marry, they are not subject to many of the amenities that heterosexual couples get to enjoy.  Among these are the right to inherit property, tax benefits, medical benefits, and retirement benefits.

If this policy is implemented, there will be many people who oppose it.  For example, many church organizations believe that being gay goes against God. They argue that it is in the Bible that man should not marry man, but man should marry woman.  I would like to remind you that similar arguments were made by the church when Americans sought to create equal rights for African Americans.  The Bible is frequently quoted when it comes to civil rights.  Another argument presented by the Church is that legalizing same-sex marriage will ruin the institution of marriage.  They propose that legalizing this type of marriage will eventually lead to legalizing marrying animals.  This is a weak claim, and clearly they are grasping for straws.

I firmly believe that the proponents outweigh the opposition.  If this policy is presented as a matter of civil rights, most Illinois residents will be in favor.  Not only are most Illinois residents compassionate, but also reasonable.  I do not believe that they would oppose this policy if presented in the correct manner.  Thank you for your time and consideration.

Student suggests regulations for SSDI recipients

Here is a student's suggestion for a policy related to SSDI.

The policy that I would like to be implemented would be to put regulations on SSDI recipients.  This is especially important, as many SSDI people are going without their medications.  In this policy, SSDI recipients would be assigned a social worker to help them manage their medications, money, etc. I feel that this is especially important because there are many people who receive SSDI that are homeless.  This policy would help to ensure the mental health of these people.  Many people who are currently receiving SSDI are doing so because of mental health reasons.  

Through this policy, I believe that homelessness will decrease.  It is essential for these people to be taken care of.  They have been diagnosed by a doctor in order to receive SSDI, but are not closely monitored to make sure that they are staying current with doctor visits and medications.   

labeling theory, an anecdote and reaction

In a couple classes we talked about labeling and how people might conform to expectations or roles.  This is relevant in issues of crime and deviance, and also in the process of illness and mental illness. Here is a student’s reflection on her own family’s experience with labeling, and my comments follow the anecdote in this purple font.

For the second reaction paper, I’m going to write about the labeling theory.  When we talked about this in class, I was very interested and wanted to know more.  I have always thought that my brother was a product of labeling.  He was always labeled as a problem child.  

Growing up, my brother was always overweight.  My father constantly made references to his weight problem.  My parents would chastise him for eating too much at dinner and would compare him to me.  I tended to be very small and I know it bothered him that he wasn’t thinner.  Not only did he have a weight problem, but he also had problems in school.  This led to yet another comparison between him and I because I always excelled in academics.

In school, my brother was always labeled as the slacker who ran with the wrong crowd.  He never received good grades and felt that his teachers labeled him as someone who was never going to amount to anything.  He claimed that his teachers knew about him before he was even their student.  Because he felt this way, my parents took him out of Mt. Zion schools and paid out of area tuition to send him to Macon schools.

While attending Macon, my brother once again felt that his teachers singled him out and didn’t like him.  He never felt that his grades were the ones that he deserved but rather, punishments for his teachers’ dislike.  He was frequently absent and our parents stated that he was just not trying hard enough.  They got into many fights over his lack of achievement which later led to him transferring to yet another school.  He attended this school, but was kicked out for lack of attendance.  Eventually, he received his GED on his first try without classes.

My brother got into drugs heavily and we later found out that it started when he was 13.  My parents struggled to help him overcome his addiction and often wondered where they went wrong with their parenting.  In fact, they bickered so much about him and his well-being that they eventually divorced.

I firmly believe that my brother became his label.  Growing up, my parents made constant references to his weight.  This did not encourage him to lose weight, but actually discouraged him.  To this day, he remains overweight.  He was also labeled a problem child early on.  These labels became a stigma to him.  He never felt like he was smart enough, thin enough, or good enough.

My brother and I are very different people.  I would argue that I am also a product of labeling.  I am several years younger than my brother.  I saw the problems that labeling caused my brother, so I became everything opposite.  I never had a weight problem, always excelled at school, and chose not to do drugs.  I didn’t want my parents to be disappointed in me the way they were with my brother.

As a social worker, I believe that it is our duty to help end this cycle.  We need to teach our youth self-confidence. It should also be taught that it is okay to make mistakes.  We need not dwell on them, but find a way to make sure that we learn from them.  High expectations from parents are a fact of life.  However, there is a point when they are not expectations, but stigmas placed on them.

Your personal story brings to mind a few critical ideas I want to comment upon.

First, if we see something bad going on, it’s imported to describe it as a specific situation in a specific context, and help people see how the situation or context was involved with the problem behavior or failure. For example, a parent might say, “You ate a tremendous amount of food today, you must have been feeling really hungry today. I’ll try to serve you less food tomorrow so you won’t overeat, do you think that would help you?” This would be better than saying, “You always overeat, and you’re getting fat. A fat person like you shouldn’t eat so much.”  In the first example, the parent is commenting on the overeating as a specific one-time event, and is also suggesting a solution, and is offering to be part of the solution (by serving less food).  The parent is also asking the child to be engaged in the change in behavior by asking, “do you think that would help you?”  It might be even better to just ask an open-ended question to let the child say something about their eating behavior on that specific day and what might help change behaviors at future meals.

Second, your story reminds me of the importance of holding high expectations of everyone while at the same time having a realistic understanding that people won’t reach your expectations. If teachers have low expectations and assume the worst of their students, the students will be “allowed” by the teacher’s expectations to perform at the level the teacher had signaled them to perform to. If a teacher holds all students to high expectations, students will attempt to achieve those higher expectations. Yet, when holding high expectations, I think it’s important to allow failure, and let students know that high expectations must be coupled with patience, support, and a high tolerance for people not achieving the highest marks. When we have high expectations and show too much disappointment or displeasure when people can’t achieve what we asked of them, then we will tend to encourage frustration and discouragement. The correct way to apply high expectations is to keep up an optimistic and accepting attitude.  “Oh well, you didn’t quite reach the mark this time, but you came pretty far toward it and you tried hard. Let’s see what you can do next time, and what I can do to help you get closer to the mark we’re striving to reach. I’m confident you’ll eventually get it.” 

When we’re disappointed with ourselves, or with our spouse or a child, we can communicate our disappointment, but we need to make the feeling related to a specific instance of behavior, and not raise issues of a person “always” doing something we don’t like, or “being” the wrong type of person. In the present instant of time we can’t do something about a problem that is “always” going on, can we?  We can only modify what we are doing in the present instant.  And, it’s hardly fair to blame us for being wrong. We can only control what we do, not what we are.