10/25/2006

John Tester, Populist

One thing John Tester had going for him was his role as a political outsider. The notion of the outsider as "one of us" has a strong appeal in politics: He's not like those dirty b*stards in Washington, he's like me! Hell, I think Conrad Burns even ran on this 'platform' way back when.

And in Montana, "one of us" seems to have a unique flavor. We, more than other states, seem to have the sense that people from Montana are good and decent, straight shootin' folks who work hard and squint their weathered faces at that 'East Coast BS." (Although one might suspect, as I do, that we have just as many crooks and politicians, a mutually exclusive classification if I ever saw one, as any other state.)

Tester's straight shooter schtick is one reason why his campaign ads about taxes caught my ear. Since I wrote the original piece, I've learned more about the whole situation.

First, let's talk about the business equipment tax that John Tester and Brian Schweitzer claim to have "eliminated for 13,000 small businesses." According to the Tribune:

Tester and the Great Falls Democrats said the Republican-controlled Legislature passed a bill in 1999 that gradually would lower and then eliminate the business equipment tax when triggered by certain growth factors in the state economy.

By a close vote, the 2005 Legislature changed the earlier law. SB48, supported by Tester as Senate president, froze the business equipment tax at 3 percent rather than allowing it to shrink. Republicans contend that 16,000 businesses are paying more because the tax rate wasn't allowed to fall to zero percent.

But Tester and the Democratic legislators said that they froze the tax rate, which is different from increasing it. Furthermore, they raised the exemption on the business equipment tax from $5,000 to $20,000, which eliminated the tax for 13,000 small businesses, Tester said.

Ok, let's see if I understand this. So, the Republicans passed a bill that was phasing out a tax, the tax paid on business equipment. In other words, it was going to be -0- percent. But then Tester froze the bill at 3 percent, rather than letting it drop to -0-. Hmmmm.

But wait, says Tester. While we did freeze the bill at 3 percent, we also raised the exemption from $5,000 to $20,000, so that now the people with equipment worth $5,001 to $20,000 don't have to pay the tax at all.

But wait, says Gee Guy. If you hadn't frozen the tax rate at 3 percent, all taxpayers would have paid -0- percent, right? The tax was going to be eliminated.

So the businesses with equipment worth $0 to $20,000 saw their taxes go from $0 (taxed phased out) to $0 (greater exemption) because of Tester's actions. And the folks with equipment worth $20,001 + saw their taxes go from $0 (tax phased out) to 3 percent (no exemption).

Gosh, Mr. Tester, I'm just a good ole' Montana boy but...where's that tax cut again?

Tester also refers to Conrad Burns' "sales tax plan." Well, according to the Tribune, Conrad Burns answered a questionnaire indicating that he would support a national flat tax in favor of eliminating all other taxes. Now Tester may or may not favor a national flat tax, but is it really honest to call this Burns' "sales tax plan?" No, it isn't.

So two of Tester's reasons to vote for him are false. He didn't really cut taxes on 13,000 Montana businesses, they were already cut. And as far as being a straight shooter, well, it sounds to me like Tester did what any pol does, he took a poll, found out that the tax issues resonate with many people, and then crafted his message, disingenuously it turns out, to meet that issue.

So, we have two politicians running for office, at least one of whom is willing to dissemble to get elected. The other one wields significant political clout for our small state.

It's fun to support the underdog, hell I even root for the Bobcats sometimes (ok, now I'm dissembling). Leave your John Tester bumper sticker on your car if you want, but when you get into the voting booth vote for your own interests, vote for Conrad Burns.

7 comments:

allen said...

When it comes to my ideas of governance, I am a traditional conservative. I almost always vote Republican. I have always voted for Conrad before. I believe I may have contributed to his campaigns financially in the past.

But you know, there's only so much "support me, Conrad Burns, and I will vote Montana values and keep those filthy homos from marrying" I can take.

GeeGuy said...

Did he say that? I don't remember that...

And it didn't stop you!

(That was a joke.)

atticus said...

Ok, but that's no more misleading than Burns saying Tester raised taxes.

Tester made sure small businesses got a tax cut, but the larger businesses still have to pay 3%. That sounds like good policy.

Maybe those businesses should have hired Abramoff. That's how I like my Senators to vote.

GeeGuy said...

Let's see, atticus, "Tester made sure small businesses got a tax cut?" How, exactly? By not repealing an earlier cut?

And you imply that a business with $20,000.00 in equipment is a "larger business?" Riiiiight.

Tester absolutely favored a policy whereby a significant number of businesses would pay a higher tax than if his policy was not adopted. I call that a tax increase.

And, rather than vague references, please tell me why it is "good policy" that the businessman with $25,000.00 in equipment lose the tax cut that he had planned on?

Oh yeah, and the Abramoff thing? That's about as relevant to this discussion as Jon Tester's belly: Not at all.

VELVETINDUPONTCRACKAWHORE said...

Burns is just embarressing. Ever seen him on C-SPAN addressing the senate? He's about as articulate and smart as George, curiously. I can't help but feel like I'm from an ignorant redneck state everytime he opens his mouth.

The issues you bring up are a draw, (3% is negligable), so why not collect it from those who can easily afford it? In the end, they still get to pay less then they were paying.

The main thing is that most folks surveyed put voted their priorities this way:
1. Iraq resolved
2. The Economy
3. Health Care
4. War on Terror
5. Immigration
6. Energy

and it's obvoius that the administration and the Rep party have been making the #4 issue their top priority, while virtually ignoring the rest of the list. It's clear they are out of touch with what our priorities are.

On the other hand, Dems tend to concentrate on things that are important to us. Tax arguments are rediculious; collectively, they rarely are reduced, just redescribed and reassigned to other issues or other demographics. I can never remember paying "less" cumulative tax, and the amount spent both statewide and nationally just grows every year as needs naturally arise, and it's us footing the bill, no matter which party has a majority.

atticus said...

Abramoff is not relevant to which discussion? The one titled "John Tester: Populist? Riiiiight.

I suppose I shouldn't have expected much after the title, since you don't know how to spell his name. (hint: it's Jon).

But that's neither here nor there. As you mentioned above, the business equipment tax was in the process of being phased out. That means businesses were still paying the tax as it was reduced. When the 20,000 exception was passed, it accelerated the tax cut for "smaller" businesses, and they paid less in taxes. That's probably not a huge cut, but a cut it is.

As opposed to the business with over 20,000 in equipment, which are, as a general matter, "larger" than business with less equipment. That's not to be confused with "large" businesses like Walmart. Kind of like an ant is "larger" than an atom, but both are small. Or like how your article is "better" than your response about Abramoff, but neither are very good.

Unfortunately, taxes need to be paid both by people and businesses. It makes sense to have larger businesses pay more than smaller ones. The rationale is based on ability to pay and marginal value. Typically, larger businesses have a higher ability to pay and each dollar they make has a decreasing marginal value. That has resulted in progressive tax brackets which constitute, in the opinion of most reasonable people, good policy.

Moreover, the business equipment tax dropped from 9% to 3%. The general consensus in the Legislature was that if the tax was completely cut, the State would eventually have to raise property taxes to compensate. Again, I think it's good policy to tax businesses rather than property owners.

Tester's version of good policy, at least, Burns' version of good policy would be: (1) whatever Abramoff paid for; (2) taking away the tuition credit; (3) [Fill in the blank any number of Burns misguided positions].

(Sorry for the cheap shots in this message. I think that both Republican and Democrats have reasonable views. I also thought it was "John" Tester, and took a snarky tone for no good reason. I think the negative campaign ads have gotten to me.)

GeeGuy said...

Ok, atticus, you made me smile with that last part. I think sometimes that it's a combination of the printed word and the anonymity that makes us a little 'snarkier' than we might otherwise be.

We both understand what Tester did on the equipment tax, and we can disagree on whether it is good policy, but don't you think it is even a teensy bit disingenuous to claim he gave tax cuts to businesses that were going have a zero tax even without his action?

Now, with all due respect, I think your argument stems from a false premise: "Typically, larger businesses have a higher ability to pay and each dollar they make has a decreasing marginal value." In this context you are using "larger" to describe businesses with a higher value of their fixed assets, right?

So, your argument stems from the premise that as a business grows its fixed assets, its rate of return on those assets grows. That is a false premise. Basic economic theory will tell you that most industries will settle into a 'reasonable' rate of return on fixed assets. (If businesses are earning better than the 'reasonable' rate, more businesses will enter the industry until competition brings the rate of return down to 'reasonable.' If businesses are earning less than the 'reasonable' rate, more businesses will leave the industry.)

The problem with your premise, then, is this. A farmer with $500,000.00 in personal property does not necessarily have more money to pay personal property taxes than a law firm with $15,000.00 in personal property. Because, you see, despite your marginal dollar theory, and despite the fact that the tax is assessed against the value of the fixed assets, the businesses will pay the tax out of the return on the capital. (Unless you are suggesting that the assets themselves should be consumed to pay the tax, and I don't even think Tester supports that!)