Friday, March 27, 2009

Vocabulary of Lies

When someone resorts to euphemism and ambiguous terminology, or leaves out important information, you know they're trying to manipulate you--or outright lie. So it is in the March 2009 issue of California Educator in their explanation of Proposition 1c, the so-called Lottery Modernization Act, which will be voted on in a special election this May. Here's what they say about it:

Prop. 1C will increase the performance and accountability of the state lottery and bring immediate funding to the state without raising taxes. By modernizing the lottery, Prop. 1C will immediately raise $5 billion in new revenues to immediately help with this year’s budget deficit. The measure also guarantees that public schools will receive the same amount of funds they currently receive from the lottery. In fact, Prop. 1C takes education funding out of future lottery proceeds and places that money under the Prop. 98 minimum school funding guarantee. So schools will actually receive more money in future years due to cost-of-living increases. If Prop. 1C fails, there will be a $5 billion hole in the state budget, meaning schools and other programs could face additional cuts.

How will it increase performance and accountability? How will it "immediately raise $5 billion in new revenues" without raising taxes? Since lottery money was supposed to line our school hallways will gold, why should we believe this law will solve our problems when the last one didn't?

I thought perhaps I should look elsewhere and see what 1c actually does. The union rag doesn't give us the whole story:

Proposition 1C
• Authorizes the state to borrow $5 billion against future California Lottery profits.
• Gives the California Lottery more flexibility to increase the amount of money returned to players as prizes.

Ah, so it "immediately" raises money by borrowing.

In a page 30 story, ole Si Se Puede himself commends the governor and legislative "leaders" for "having the courage to support revenue increases". It doesn't take"courage" to support revenue increases; heck, I support revenue increases. What I don't support is tax increases, which is what Si Se Puede really meant. The new budget includes a 1 percentage point sales tax increase (almost a 14% increase), almost doubles the vehicle license fee, and tacks on a .25% "surcharge" to the state income tax and a .15% tax to pay for more law enforcement. That is the "revenue increase" of which he spoke. It takes no courage, even and especially in California, to raise taxes.

But it should. It should be pitchfork time.


Anonymous said...

To say the sales tax is increased by 1% misrepresents the truth. It is being increased at the state level to 8.25%, and the one cent increase per dollar is equal to a 13.79% increase in the tax. I wish, in particular, that the media would stop parroting the "one percentage point increase" language that Sacramento has fed them, and tell the whole truth on this.

Darren said...

Good point--one I've made before, but failed to do here. Thanks for the correction, which I'll make now.

maxutils said...

We should also probably note that the rate of the sales tax is interesting as a curiosity, but not the relevant measure. The tax rate that matters is (total of all taxes paid)/total income. Increasing the sales tax only increases your taxes by the difference in the sales tax rate times purchases of things other than food and medicine. Therefore, it's less than 1%.

That said, when I teach taxes in econ, I can have a rational conversation with people who believe that all people should be taxed at the same rate; or that the rich should be taxed at a higher rate. The people I can't figure out are the occasional ones who believe that the poor should be taxed at a higher rate than the rich. It makes no practical or ethical sense to me.

So, why does our union consistently back taxes that do just this? The lottery, the increase in cigarette taxes, the increase in the sales tax, and the vehicle licensing fee increase are all examples of taxes which hit the poor proportionally worse than the rich.

A guess: those who do have either the inability or the desire to figure it out.

maxutils said...

Oh, and another thing . . .

Only in California would we finally recognize that earmarked taxes like the cigarette tax and the lottery make it hard to budget, and guarantee either over or under-funding for specific programs, then attempt to correct the problem by voting in more restrictions. Why not a proposition that removes all restrictions, and kicks all revenues into the general fund?

And only in California would we think it a good idea to fund a school system not on what it needs to operate, but on 'about half of whatever taxes are collected.' (Prop 98)

Darren said...

Daniel, the lottery is *not* a tax. That it preys on the dreams and fantasies of the great unwashed doesn't change that fact.

Anonymous said...

Actually, one of my favorite sayings is that the lottery is a special tax on those who are bad at mathematics.

And regarding the prior two posts, in my view-- given that the tax burden here in CA is distributed in such a "progressive" fashion-- the only silver lining in the sales tax increase is that it is not progressive.

maxutils said...

Po-ta-to, po-tah-to. I assume you mean that it isn't a tax, because people volunteer to buy lottery tickets. By that logic, the cigarette tax isn't a tax, because people volunteer to buy those, too. Any time government collects money, it's a tax . . . they can call it whatever they want, but the result is the same.