The Shape of the Future

E M Risse


 

Tax Deform

 

So-called reform that just "expands the tax base" sounds like a nice way to pay for public services. But growth in Virginia today is so dysfunctional that it also drives up the cost of government.


 

Whatever the short-term outcome of the current budget/tax crisis in Richmond, there are no comprehensive long-term solutions in anyone's proposals. The "tax debate" will renew as soon as this year's dust settles. Let us consider the alternative to adjustment of taxes and fees: Is expanding the tax base "the answer"? 

 

One result of the current session is an apparent agreement by most on the need for more resources for schools, security, health and safety, mobility and other public services. Anti-tax interests have attempted to make "raising taxes" the third rail in public discussion.  Those who oppose "raising taxes" suggest "the answer" to citizen demands for services is to "expand the tax base." 

 

In the post-2004 legislative confrontations, it will be important to understand to what extent there is validity in the simple answer: "expand the tax base." There are at least three reasons why "expanding the tax base" is no solution. 

 

First, the phrase "expand the tax base" has been co-opted by Business As Usual advocates. For many, "expanding the tax base" is code for "uncontrolled growth." That makes discussion of expanding the tax base as a "solution" into a third rail in the growth/no-growth strategic stalemate.

 

Second, and even more important, "expand the tax base" is not "the answer" because expansion, or development, in the wrong location perpetuates dysfunctional human settlement patterns which are the root cause of rising public and private service costs, especially the cost of mobility and access.

 

The real answer for citizens seeking resources for education, safety, transport and other governance services is much more complex than just raising the tax rate, creating new taxes, expanding the tax base or even "changing the tax structure." It requires fundamental changes to human settlement patterns.

In order to lower costs and expand services, governance practitioners must work to evolve Balanced Communities (aka, Alpha Communities).  Balanced Communities and their components have inherently lower costs for providing goods and services including public services.  Balanced Communities also have lower costs of doing business and lower costs of living.

Balanced Communities generate much higher property values and thus larger tax bases because they improve safety and happiness. Note that, in a Balanced Community, development in the right location does expand the tax base. That is a good thing. (See "Wild Abandonment," September 8, 2003.)

 

Further, creating functional human settlement patterns makes governance restructuring and a fair allocation of costs a logical adjunct to the evolution of Balanced Communities. In addition, Balanced Communities are the places that creative people like to live and work (See Jim Bacon's "Florida Hurricane," February 3, 2003.)

 

Third, and most important, using an enhanced "tax base" to raise more money under the current taxing systems and spending the money for the same old purposes make matters worse. Society must change the way it pays for goods and services to reflect location-dependent differences.

To create and maintain Balanced Communities, citizens, enterprises and agencies must pay the true cost for all location-variable goods and services.

This maxim opens the door to a whole new universe of thinking about the optimum strategies to pay for public and private goods and services.

 

Those who favor a sustainable future must start working toward the creation of Balanced Communities. Specifically, there must evolve:  

  • Functional balance at the Alpha-Cluster, Alpha-Neighborhood and Alpha-Village scales

  • Relative balance at the Alpha-Community scale

  • Sustainable balance at the New Urban Region scale

The nature of the balance in any component of the human settlement pattern -- cluster, neighborhood, village, community, subregion or region -- depends upon the location, intensity and mix of land uses. 

 

Among the key location variables are: 

  • Distance from the centroid of the New Urban Region's core

  • Whether a component is:

     

    1. inside the Clear Edge around the Region's core Urbanside,

    2. outside the Clear Edge (Countryside) or

    3. inside the Clear Edge around one of the disaggregated Urbansides that are within and serve the Countryside. (See "Beyond the Clear Edge," May 26, 2003.)

Among the key intensity and mix variables are:  

  • Scale of the component

  • Scale and type of land use -- jobs/housing/services/recreation/amenity

  • Citizen understanding of the need for component balance

"Expanding the tax base" by continuing Business As Usual without regard to location or creation of Balanced Communities and then spending the new revenue on the same old priorities  is not "the answer." It failed strategy to provide for the common good makes matters worse, not better, in part because it misleads citizens into believing they are doing something to improve conditions when they are not. 

A simplistic bromide of "expanding the tax base" subsidizes those near the tip of the economic pyramid at the expense of the vast majority of citizens. This majority provides the critical mass, balance and stability that allows a market based economy work. In a market-based democracy in which all citizens have access to education, subsidizing those at the apex does not work over the long haul.

 

-- March 15, 2004

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ed Risse, and his wife Linda live inside the "Clear Edge" of the "urban enclave" known as Warrenton, a municipality in the Countryside near the edge of the Washington-Baltimore "New Urban Region."

 

Mr. Risse, the principal of

SYNERGY/Planning, Inc., can be contacted at spirisse@aol.com.

 

See profile.