Tea Party and the Right

How 'Small Government' Conservatives Raise Your Taxes Through Stealthy Back-Door Fees

From drivers' licenses to public schools, state and local governments are raising money any way they can--all while cutting taxes on the rich.

Here's a simple fact the Right would like you to ignore: cutting public spending doesn't lead to fewer dollars being “taken out of your pocket” for the services government provides; it merely shifts those costs around, and often increases them.

When conservatives say, “I'm for lower taxes and fiscal responsibility,” what they really mean is that they favor cutting top marginal tax rates – those paid by a relatively wealthy few – capital gains taxes on investments, inheritance taxes and taxes on corporations. And to make up for those revenue losses, they are happy to run higher deficits and very quick to raise taxes on the rest of us.

At the federal level, they can and do finance some of the tax cuts they hand out to their patrons through deficit spending. That's why Ronald Reagan increased the national debt by almost 14 percent per year, both Bushes upped it by around 10 percent annually and yet under Bill Clinton it increased by just 4.2 percent per year.

But the states – and local communities – can't run deficits. Whether dealing with a massive drop in tax revenues as a result of a recession, or gaps they created by pandering to voters with endless tax cuts, they have three ways to go. They can: a) cut services, which is politically unpopular and also can lead to situations such as in Texas, most of which is on fire after it slashed firefighting budgets; b) make up the gap with federal funds, as so many conservative governors who rail about federal spending are happy to do; or c) hike the fees their citizens pay for government services – fees for everything from motor vehicle registration to hunting licenses and user fees for recreational areas.

This last option has proven appeal with conservative politicians because they can say, with only technical accuracy, that they didn't raise your taxes. Across the country, state and local governments are squeezing ordinary people for every penny they can lay their hands on, and the burden these fee increases can put on ordinary families is often significant. Make no mistake: these fees are completely regressive -- it costs a billionaire the same amount to renew his or her driver's license as it does a pauper. 

There isn't much in the way of 50-state data on fees for services. But whether you know it or not, significant fee hikes are nickle and dime-ing you pretty much wherever you might live. USA Today reported that, across the country, “state and local governments are turning to user fees to raise quick cash — from increases on hunting licenses to fees for enrolling in the Little League. One town is considering charging accident victims who need to be extricated from their cars.”

Consider a few examples of how we're being gouged, day in and day out, in order to keep our “taxes low,” at least on paper.

In May, the Wall Street Journal reported that “public schools across the country... are shifting costs to students and their parents by imposing or boosting fees for everything from enrolling in honors English to riding the bus.”

Though public schools have long charged for extras such as driver's education and field trips, many are now asking parents to pay for supplies needed to take core classes—from biology-lab safety goggles to algebra workbooks to the printer ink used to run off grammar exercises in language arts. In some schools, each class comes with a price tag, to be paid at registration. Some schools offer installment plans for payment. Others accept credit cards—for a processing fee.

And it's not just K-12. The United States is the only advanced country in which the federal government isn't directly involved in higher education. Tight state budgets have helped drive dramatic increases in the average cost of a college education for more than a generation. In 1957, for example, a full-time student at the University of Minnesota paid $111 per year in tuition, which, in today’s dollars, is about $750. During the 2005–2006 school year, in-state tuition at the University of Minnesota was $8,040. As education writer Naomi Rockler-Gladen noted, that’s an inflation-adjusted increase of 1,000 percent. At more than $7,000 in average yearly costs (in 2009), a public university education in the United States is something that saddles students with almost as much debt as opportunity.

Colorado, Connecticut, Hawaii, Massachusetts, Florida, California, Oklahoma, New Jersey, New Hampshire and Pennsylvania have all raised motor vehicle fees enough to create a backlash. Fees for hunting and fishing licenses have been hiked in Connecticut, Florida and elsewhere. Washington is one of several states that are charging new fees to use state parks. The Hawaiian legislature proposed 22 new fees or fee hikes this year.

Have a cell phone? According to the Tax Foundation, the average user pays 11 percent of their cell phone bills in fees and taxes to state and local governments – far more than the 5 percent or so the federal government charges.

The Arizona legislature just passed legislation that will allow prisons to charge family members for visits. Legal scholar Jonathan Turley notes that the fees are being justified as a “background check fee...but staffers admit that it is an effort to increase revenue at the expense of these families.”

That's just for visiting. Prisons and jails across the country grab all manner of fees from the inmates themselves – fees that are also usually shouldered by family members outside. In Florida, inmates are charged a $4 monthly administrative fee. According to its website, the Polk County jail has a whole range of fees:

1) $30 one-time administrative per diem fee when they are booked into the jail

2) Medical co-payment fees: $10 to see a nurse, $15 to see a doctor, $10 pharmacy co-pay, and $75 for off-site transportation for medical visits

3) Weekend inmate work program administration fee: $20 per day ($40 for the weekend)

4) Weekday inmate work program administration fee: $8 per day ($40 per work week)

5) $9 hygiene kit/underwear fee ($1.50 for hygiene kit and $7.50 for five pair of underwear) charged to inmates assigned to housing

These fees are common. A Department of Justice study (PDF) found, “the charging of inmate fees is both prevalent and increasing.” Among the 100 law enforcement agencies the DOJ surveyed, only 23 “neither collect fees from jail inmates nor are planning to do so.”

Inmates also get ripped off. In 2004, the Gainesville Sun found that “a Snickers candy bar that costs 48 cents at Wal-Mart or 65 cents at Eckerd costs 75 cents inside a state prison. A tube of Colgate toothpaste that costs $1.58 at Wal-Mart and $2.29 at Eckerd costs $2.77 at a prison canteen. A pack of Marlboro cigarettes costs $2.72 at Wal-Mart, $3.10 at Eckerd and $5.87 at a prison canteen. A Scrabble board game that costs $10.97 at Wal-Mart costs $18.92 from a prison canteen.”

The rates prisoners in many facilities are charged for phone calls are often nothing short of scandalous.

These fees aren't technically taxes – they're stealthier. It's just another reason why “limited government” is a grift, plain and simple.

That conservatives actually favor “limited government” and low taxes remains a central myth in our political discourse – one that most Americans, and virtually all of the legacy media buy into. But the reality is that they may have an ideological preference for smaller government, but, like all politicians, they really like getting elected. And, as pollsters and political scientists have long known, Americans only find the idea of “limited government” appealing as an abstract idea. When you get into the specific services the government performs – putting out fires, patrolling the streets, inspecting our food, educating our kids, keeping polluters from trashing the environment and a thousand other things – people really like most, if not all, of what the government does.

This well-known truth is why, political rhetoric aside, the share of our economy represented by government spending has varied by only very small margins since the 1950s, regardless of which party held Congress or the White House. When conservatives push tax cuts for high earners and corporations, they're effectively raising taxes – and fees – on the rest of us.

Most of those hikes are reflected in changes in the tax code. Look at individual income taxes, for example. A person making $250,000 in taxable income today would pay 47 percent less to Uncle Sam than someone making the same (inflation-adjusted) income in 1981, when Ronald Reagan took office. But if you make only $15,000, then your taxes would have spiked by 51 percent over the same time.

Or consider the burden borne by corporations. In the 1940s, they paid 43 percent of all the federal income taxes collected in this country. In the 1950s, they picked up the tab for 39 percent. But by the time the 1990s rolled around, corporations were paying just 18.9 percent of federal income taxes, and working people picked up that difference.

And because so many Americans have drunk deeply of the “limited government” Kool-Aid, we also end up picking up more costs out-of-pocket – we don't get the same bang for our dollar as do citizens of other wealthy countries. In 2007, we paid 7.5 percent of our economic output less in taxes than the average of OECD countries, but citizens of the other wealthy countries got a lot more for their tax dollars than we did – free or very low-cost health care, college educations, better unemployment benefits, job training and the list goes on.

In the United States, we paid the equivalent of 8.2 percent of our economy more in social spending out of our own pockets than the people in other rich countries did that year. So the savings we enjoyed on our tax bills were more than offset by what we paid for those things our counterparts bought with their taxes.

When private and public spending on our social welfare are added together, Americans pay just a little bit more than the other citizens of the world's leading economic powers. “Limited government” is nothing more than a grift.