The truth about taxes

I once rented a car in Asunción, Paraguay, and was astonished to discover that its tires were so underinflated they bulged at the sides. But I soon understood why that was: The streets and roads were so pitted that a car with fully inflated tires would shake so violently it would fall apart in a matter of weeks.

Paraguay is a country where the government is starved of revenue. The many poor people can’t afford to pay taxes, and the oligarchic rich at the top have rigged the system so they don’t have to pay them. Basic services like roads, schools and health care are either lacking or of poor quality. That’s a major reason why Paraguay remains a third-world country.

Our cover story this week, “Tax myths and tall tales,” by Pulitzer Prize-winning tax writer David Cay Johnston, is about America’s changing attitude toward taxes. After World War II, there was consensus that it was important for Americans to tax themselves sufficiently to invest in the future—by building the interstate highways, for example, or, as occurred in California, by investing in a great college and university system. The idea was that investment produced prosperity—and it proved to be correct.

For the last three decades, however, since Ronald Reagan became president, a different view—called supply-side economics—has prevailed. It holds that taxes are an impediment to prosperity, and that lowering them automatically frees business to create more jobs and, as a result, greater prosperity. That argument continues to exert powerful influence in the halls of Congress and state capitols across the country.

But, as Johnston shows using irrefutable data, it hasn’t worked out that way, except for the wealthy. They’ve flourished, while the rest of us have floundered.

Johnston’s article is sponsored by the Association of Alternative Newsweeklies, of which the CN&R is a member, and is appearing in dozens of AAN publications this week, when federal and state tax returns are due.

More on the Pugh mural: Last week in this space I touched on the controversy surrounding Academe, the John Pugh mural on the eastern wall of the soon-to-be-demolished Taylor Hall at Chico State. On Friday, university President Paul Zingg entered the fray, laying out his position via a campuswide e-mail message.

At issue is whether the mural can be preserved in situ, as historic-preservation advocates prefer. No, Zingg writes, explaining that “our facilities planning team and other construction and structural engineering experts tell us it will cost several million dollars to secure it in place while we build around it.”

The money for that isn’t in the budget, and waiting on a fundraising drive would delay construction of a new arts and humanities building and risk loss of current funding at a time when few projects statewide are moving forward.

Zingg said he’s willing to move the mural to another campus site and/or commission Pugh to repaint the mural on the new building. The artist, he writes, “prefers to do this and fully supports the University’s approach to this matter.”