Wednesday, July 9, 2014

Sure, Governor Daugaard. Go Ahead And Consider Indexing Fuel Taxes To Inflation. Now Please Explain Why You Won't Index Minimum Wages For The Same Reason.

      Couldn't help noticing all the recent discussion about how federal and state highway taxes aren't keeping up with the cost of maintaining and building our highways.  That the situation has been turning into a crisis is getting obvious, with studies noting that the gas tax now buys only about half the concrete, steel and other materials that it did 20 years ago.  The problem is that the gasoline tax is set at cents per gallon, and with the steady increases in gasoline prices over the years, the rate, or percentage, of the gas tax has been moving steadily downward.  Meanwhile all other costs associated with maintaining the roads with the money raised by the gas tax have been going up.
     The situation at the state level is much the same, with South Dakota's gas tax of 22 cents a gallon having been in place since 1999.  Other taxes, which are set at a percentage of sales, automatically increase with inflation, generally keeping up with the rising costs of government services, so on this front, at least, they aren't much of an issue.  But the unique situation with gas taxes has caught Governor Daugaard's attention, so much so that a few weeks back he said he'd consider raising gas taxes in order to restore the purchasing power those taxes had when they were last set 15 years ago.  Daugaard has noted that this is consistent with his promise not to raise taxes, saying that all he's considering is getting those taxes in line with inflation.
     I think this is kind of a rhetorical dance myself, as a tax increase is a tax increase is a tax increase--regardless of its reason for being.  I don't particularly fault the Governor for seeking to restore the funds that have been lost to inflation this way.  Fact is, roads are such a vital aspect of government services that they need to be funded to whatever level necessary in order to keep them maintained.  No doubt the Governor and his aides, along with the legislature's people, will look for every means possible to get highway funding where it needs to be, short of raising gas taxes.  But if that's the only option, I believe it's a bullet we have to bite.
     My beef about all this isn't the gas tax, per se. I'm just dismayed by the notion that cost-of-living increases need to be considered when pencilling in the price of government services but are to be ignored when it comes considering raises in the minimum wage.  If Daugaard  believes that jacking up gas taxes doesn't amount to a tax increase, just a restoration of buying power, then shouldn't that same principle be applied to minimum wages?  Applying the Governor's own reasoning, raising minimum wages isn't the same as increasing them, it's just a matter of restoring their buying power.  Yet Daugaard has effectively ignored this logic and withheld his support for the cost-of-living increase (with its built-in adjustment for inflation) that will appear on November's ballot.
     It all looks to me like Daugaard believes state government should consider getting a cost-of-living increase but working people shouldn't.  I don't like this.  It's illogical. It's inconsistent--and it comes across as institutionalized cognitive dissonance.  

8 comments:

  1. John, I hate to be the one to break it to you, but this illogical, inconsistent, institutionalized cognitive dissonance is what the republican party has become. This is exactly the sort of thing that turned me to a democrat. As pubs continue to turn farther and farther to the right, it will only get worse.

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    1. Thanks for breaking it to me gently, Tim :-). I think this initiative stands a pretty good chance of passage. Bringing in the economic perspective of a Republican will only help those chances.

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    2. I hope you are right John, personally I don't think it goes far enough, but you have to start someplace. Just think how much of a better place this would be to live if the majority of people made a decent living, and actually had money to spend on more than just the necessities, I believe we would see economic growth that Daugaard isn't capable of dreaming about.

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    3. Agreed, Tim. Penny-pinching with the minimum wage is just another way of perpetuating a status quo that leaves much to be desired in so many ways.

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  2. John, I have been gone for a few days so am late to this article. You wrote, "I'm just dismayed by the notion that cost-of-living increases need to be considered when pencilling in the price of government services but are to be ignored when it comes considering raises in the minimum wage."

    Isn't teaching our youth, a government service? For years that increase has been 3% or the rate of inflation whichever is least. That is until Governor Daugaard's first budget when it was a 6.5% cut after he suggested a 10% cut. If South Dakota reelects this guy in November, it says more about its voters than it does about DD.

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  3. I think the principle that raising taxes, teacher salaries, minimum wages in order to maintain purchasing power should be an across-the-board consideration of all public planners and officials. It's ridiculous that some areas of concern get this consideration while others don't. Daugaard himself laid out the principle, now he should follow through.

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  4. John,

    I know that you and I have a disagreement regarding the burning of coal. I have an economic development PDF from 2008 chaired by none other than Hunter Roberts in which they admit that we have ample wind but no means of transmission, but also say that we have ample electricity, which of course is true since we are a net exporter of electricity. But they show no interest in developing the wind power. All the development has been done by outside sources with no help from the State. I would like to send you this PDF. If you are interested, please email me at lannys9@sio.midco.net Thanks, Lanny

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    1. Would love to see it Lanny. Check your email.

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