State governments are always complaining they don’t have enough money. They face tremendous pressure not to expand sales tax and other flat taxes, as they should. There are alternatives. Here are three suggestions.
1) Tax a kind of property mostly held by wealthy people, “intangible” property. What is “intangible” property? It’s chiefly stocks and bonds. When I was VP of the state affiliate of the American Federation of Teachers in the early 1980’s in Connecticut we did a study about property holdings in the state, particularly “intangible” property. We found (as we expected) enormous money held in few hands.
We reasoned that if a house or car could be taxed as property so should a million dollars in stock. A state senator introduced a bill for our union that included a tax on intangibles. To prevent the lobbyists from investment companies from bringing out the violins and telling us about the pitiful stories of widow and orphans surviving on a few thousand in stocks the bill excluded taxes on the first $100,000 or $200,000 of such property (I can’t remember exactly). So only the very wealthy would pay. The bill included a tax reduction on the sales tax. We held a press conference, got substantial media attention and did some education with our local units. Teachers responded pretty well to the idea.
Some legislators criticized us for wanting to drive the rich people out of CT. Boo hoo. We countered that Florida had a tax on “intangibles” and no one noticed Palm Beach becoming a ghost town. The intangibles tax in that state lasted for over 40 years. It excluded the first $250,000 in property! (It was only repealed in 2006 when Jeb Bush was governor. A report in 2007 about it is here.)
Found this article about people considering a tax on intangibles in 2011 in WA state
Can the 1% afford it? Don’t make me laugh. As Trumps tax bill takes effect they won’t be rolling in dough, they’ll be swimming in it.
2) There’s another source of money states can get, but it takes some pump priming. It would save states millions and millions in health care costs. It would also preserve many lives.
It involves a lawsuit that was won in the ‘90’s. Back then a whole bunch of state attorney generals sued Big Tobacco for damages. States were paying enormous health care costs for people who had been hooked on smoking. The suit was settled for a bit of money, $246 billion over 25 years. Yeah, $246 billion, no misprint. My state, CT, received $519 million in income from this suit for 2017 alone.
A 2015 study for Connecticut Department of Health explained on page 7 that for every buck spent in prevention $2.48 was saved later on. Other states saved more. Programs in Washington state saved $5 in state hospitalizations for every $1 spent on tobacco prevention.
It sounds like a no-brainer way to make money (not to speak of the preventing the misery of those who slowly die of lung cancer, emphysema, heart disease, etc.). Yet the states don’t take advantage of it. Take Connecticut for example. The CDC recommends we spend $32 million a year. In the “fiscal” years 2017 and 2018 according to the excellent site of project “Tobacco Free Kids) the state of CT will spend $0. That’s right, nothing, nada. Connecticut is dead last in using the smoking settlement money for prevention, but others states aren’t much better, spending on average half of what the CDC recommends (a modest 6% of their yearly payment).
3) Public enterprise. Open state owned business run to make money for the state Treasury. It would put state residents directly to work. One big advantage for public enterprise is that its companies are not going to run away the first time they smell more profit overseas. The could be set up as cooperatives with workers having a real say in working conditions.
For starters a state could start with a bank. North Dakota has one (the fruit of years of work by socialists 100 years ago). During the great recession when banks were going belly up right and left the Bank of North Dakota just sailed on. Then there are other needs. Don’t know if you’ve noticed but there’s a climate emergency. We have a short time control carbon gases that are cooking the planet. We have to get off carbon in a decade or so before we go past the tipping points that would cause feedback loops that make warming out of control. The federal government is in the thrall of science deniers so it’s up to the states to take action, to completely get out of fossil fuel and go to solar, wind, tidal, etc. They should set up money making businesses to do it, public enterprises.
For Connecticut I have a modest proposal. Take the $100 million plus it has invested in apartheid Israel and use it to start CT Public Enterprise.