By Phil Schoggen

It’s about time we introduce some commonsense into the discussion about how to stimulate the economy. Whether we’re talking about the state or national economy, the worn-out mantra seems to be the same -- to stimulate the economy, we need to cut taxes. But such short-sighted action is likely to do more harm than good to both the economy and the common good.

The argument that taxes are simply bad for the economy is based on the false assumption that, somehow, after these taxes are collected, the money just magically vaporizes into thin air. But it’s not that simple, because there’s another side of the coin that gets ignored in this anti-tax narrative.

The money that is collected through our tax system gets invested in things like healthy kids and seniors, new schools, retaining good teachers, stocking libraries, improving roads, expanding mass transit, building parks, and paying our hard-working police officers just to name a few. These are things that we as a community have decided are important investments for us to make in order to strengthen the common good and the communities we live in.

At the same time these public investments help to stimulate the economy. That’s right. When we build a school, there are construction jobs created and building materials purchased, which helps to stimulate the economy. When the teachers and support staff are hired to work in that school, jobs are created in the community, and these jobholders do what? They buy things that further stimulate the economy.

Now here’s the real payoff. In the end, we get more than a short-term economic shot in the arm. We get the added benefit of a generation of young people who are better able to face the rigorous demands of the 21st century economy. That stimulates the economy over the long-term.

That’s very different than just trying to stimulate the economy with tax cuts. In many cases, money from tax cuts ends up going to overseas factories to supply our consumer demands, whether that’s clothing from Pakistan or plastic toys from China. That may help stimulate the economy, just not ours.

It’s not just schools either. Strengthening the health care safety net creates jobs while also reducing expensive emergency room costs. When we invest in mass transit, someone has to drive the bus. When police and fire departments are paid a competitive salary, the economy is stronger. The rising concern over global warming and energy independence offers new opportunities to advance the common good and make our nation stronger, while creating jobs and stimulating the economy, all at the same time.

Leaders from both sides of the aisle are beginning to recognize this. President-elect Obama is proposing a nationwide initiative to put people back to work with major investments in infrastructure for an energy independent and greener economy.

Gov. Schwarzenegger, Mayor Bloomberg, and Gov. Rendell (a Republican, an Independent, and a Democrat) are leading a coalition calling for billions to be invested in rebuilding our nation’s deteriorating infrastructure network, from bridges to mass transit, as a way to stimulate the economy. In fact, according to Building America’s Future, for every $1 billion invested in public infrastructure, 47,500 jobs are created. Gov. Easley of neighboring North Carolina is joining the call by fast tracking $700 million in public investments to help jump start the economy.

Here in Tennessee though, we’re talking instead about cutting public investments by hundreds of millions, and possibly $1 billion. Such an action will cause severe job losses and worsen an already bad economic situation. Meanwhile, Tennessee will slip even further behind in education, health care, and environmental protection.

Ironically, as we slash these vital public investments here at home, we’re allowing corporate tax loopholes to be used to send profits out of Tennessee and into Delaware and Nevada…and ultimately to Wall Street. Tennessee doesn’t need to do provide an “economic stimulus” package for Wall Street bankers by allowing these loopholes to stay on the books. They already got theirs. Tennessee’s priority should be to stimulate the economy right here at home.

Let’s stop, or at least reduce, the budget cuts being proposed in Nashville, by closing senseless tax loopholes. We need a stimulus package for Tennessee, not Wall Street.


Schoggen is a Tennesseans for Fair Taxation board member.


Copyright (C) 2008 by the Tennessee Editorial Forum. 12/08


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