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Home > Politics
Oppose 2C sales tax increase: Pay for Past Sins; Sin No More
by Bob Powell, 10/26/15
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Submitted to Colorado Springs Independent on 10/26/15, edited and published 10/28/15 with title Different opposition

Summary:

The Initiative 2C sales tax increase should be opposed, not because we should avoid taxes, but because it doesn't tax at all the entities that should be taxed. Everyone must pay for the sins of the past, but going forward it's absolutely necessary for taxes/fees to also be levied on new growth

This article is a "liberal perspective" on why to oppose 2C. It examines the structural problem driving infrastructure backlogs and how to correct its root cause. It illustrates that "liberal" is actually "responsible conservative", instead of the irresponsible, what's-referred-to-as "conservative".

This is an excellent example of why what's called "development" is a scam. Local government, ruled by those who win office using developer campaign contributions, want citizens to pay almost $1 B for a Stormwater Enterprise to fund infrastructure that should have been paid for by developers as growth occurred. Currently all Colorado Springs Utilities customers are paying ~1 B for Southern Delivery System infrastructure to pump water uphill from Pueblo so there's water so developers can do more "development".

What's called "economic development" should be actually be called a "subsidize developers Ponzi scheme".

Edits of the Letter: Text in purple was eliminated; text in green added.

Parts eliminated were about
  • the "growth machine" and its Ponzi scheme,
  • developers controlling the city and funding 2C glossy mailings,
  • the need for offsite infrastructure to support the sale of developers' and homebuilders' products,
  • the need to internalize the costs of growth for market forces to work properly
  • the Initiative not taxing those who profited from growth; instead it taxes everyone,
  • Tax Increment Financing further depleting funds for infrastructure, and
  • Why a sales tax is a bad tax that burdens the buying and selling of goods.
While these are edits for space, they also have this in common: for heaven's sake, don't criticize too explicitly the "powers that be" -- developers and others that profit from growth and control this city.

Related articles

The Growth Facts of Life summarizes the uncomfortable "facts of life" about growth. It describes the structure behind, and how to address, problems with growth.

Those who call themselves "conservative" generally oppose 2C because they oppose increasing taxes; therefore will generally oppose what I explain is needed: taxing developer corporations. They believe corporations should not pay taxes because they do not understand some basic principles of economics and business.

Briefly, corporations should pay taxes, despite the irrelevant fact that ultimately people pay all taxes. Corporations do not necessarily pass on costs to either customers or stockholders. And the costs of government services must be internalized in order for market forces to properly balance supply and demand. If costs are externalized, the public must bear them and *that* is the true theft, not taxes. See: Corporations Should Pay Taxes.

This article is a "liberal perspective" on why to oppose 2C. It examines the structural problem driving infrastructure backlogs and how to correct its root cause. It illustrates that liberal is actually responsible conservative, instead of the irresponsible, what's-referred-to-as "conservative".



Oppose 2C sales tax increase: Pay for Past Sins; Sin No More

Initiative 2C should be opposed, not because we should avoid taxes, but because it doesn't tax at all the entities that should be taxed. Everyone must pay for the sins of the past, but going forward it's absolutely necessary for taxes and/or fees to also be levied on new growth.

I'm torn about advocating against 2C. People actually hit potholes and their homes are flooded through no fault of their own. Many see the civic thing to do is fix it. But leaving out a tax on new growth means we'll be forever digging ourselves into a financial hole.

Colorado Springs has been "conservative" for many decades. Those who promote and profit from growth control the city; they're known as the "growth machine" in the urban growth literature. Their rationale for growth is that lower corporate taxes with growth subsidies, explicit and implicit, will bring jobs, increase the tax base, and make the region more financially sound.

What's obviously true, but politically incorrect to say is: It's a lie.

Look around. It's obvious that promoting growth with so-called "free market" competition among regions creates massive infrastructure backlogs everywhere. It digs financial holes.

The truth. For new development, near-term costs are covered, but as people come in later years, the cost of the extra burden on infrastructure is greater. So, the mentality goes, we need even more growth to pay for that. Call it either addiction to growth or a Ponzi scheme. When growth slows, as now, the Ponzi is exposed.

The region can't sell a product (new growth) at a loss and make it up in volume. But obviously, Mr. Strong Mayor wants to keep trying in service to the growth interests who got him elected. Who do you think is paying for the glossy mailings promoting 2C?

What's necessary: pay for needed infrastructure as growth occurs with taxes and fees to cover any offsite infrastructure necessary to support the sale of developers' and homebuilders' products. That payment must be part of the cost of new residential and commercial properties in order that growth not degrade traffic levels of service, ability to handle drainage, supply water, etc.

The initiative is for a tax increase for 5 years that, Mr. Strong Mayor says 2C revenue"will be used on road improvement and repairs." Does anyone really believe that there won't be potholes after 5 years and infrastructure backlogs, for other infrastructure?. Will the "road improvement" be for new roads and additional capacity to allow even more growth? It should only be for repairs.

We shouldn't be looking back and saying, "Oh yeah, we need to be able to handle stormwater and other infrastructure, but let's not tax those who profited from growth; instead tax everyone." All costs of growth must be "internalized" for market forces to function properly and allow valid market decisions.

It'll be even worse in the future because the growth machine now wants Tax Increment Financing (TIF), meaning that additional new taxes generated from growth go back to the developers. That's even less tax dollars to handle the needed widespread infrastructure load.

Plus, a sales tax is the worst kind of tax because it puts "resistance" in the exchange of goods "circuit" of buying and selling. It burdens economic activity.

We got a "strong mayor" in 2010 supposedly because, as the Strong Mayor Project stated: "Colorado Springs' government is clearly broken, And it's costing us dearly."

As I wrote then in A Broken Region (CS Indy, 11/11/10): "The region is broken, not just government. Our fiscal problems are a wake up call, one not to ignore. The Strong Mayor "solution" won, but it can put us back to sleep, making things worse." 

It did.

Robert Powell
Colorado Springs

URL: http://www.exponentialimprovement.com/cms/sinnomore.shtml

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