Letter: City should not tax residents for its own financial failures
In endorsing the proposed East Lansing income tax on the Nov. 7 ballot, The State News Editorial Board vastly oversimplified the issue to the point of distortion and I’m honestly shocked at how easily it fell into the false narrative pushed forward by our financially incompetent city council.
East Lansing has been in dire financial straits for years now and it has, for the most part, caused most of its own problems. I’ve long thought local city governments were the most incompetent of legislative bodies and this proposed income tax does little to ease my concerns.
The city claims only those making $5,000 and above will face the tax, but this is only partly true. The university has announced in a letter sent by Vice President and Secretary of the Board of Trustees Bill Beekman that it would be forced to withhold the city income tax from employees’ paychecks regardless of their end-of-year income. Even if a student does not make more than $5,000, the money would still be withheld, immediately reducing income by all East Lansing workers by 0.5 to one percent. Students would then have to claim the refund at the end of the year.
What’s worse is that this tax does not appear to be bracketed, meaning that even $1 over the $5,000 max and taxes will be levied on your entire income. Making $1 more can literally cost $50, which is the worst way a tax system can possibly be constructed. Having that tax apply only to income over $5,000 would greatly alleviate my issue with this.
Even the $5,000 minimum isn’t set in stone. In Beekman’s letter, he wrote that that number is not being voted on and can be changed at any time (even before the tax takes effect). They could easily raise this minimum in the future after realizing their tax is merely a sloppy Band-Aid solution on a complex and multigenerational problem.
What makes the situation worse is what exactly East Lansing will be spending the money on. Annually, according to The State News, it will raise $5 million with $3 million going to pensions, $1 million to infrastructure and $1 million to city operations. On the issue of pensions, the city would be robbing its residents of their earned money in order to fix its own bad financial decisions.
Pensions are retirement funds for former city employees – and they are going broke, primarily due to a simple basic economic fact that the City of East Lansing and governments across the country have refused to recognize. There are simply too many retirees on pension systems and not enough workers paying into them.
When demographic trends changed and birth rates started to decline in the 1960s, partly as a result of the end of the baby boom but also later as a result of increases in contraceptive use, a higher life expectancy and access to legal abortion, the City of East Lansing (and, honestly, many other local and state governments and the federal government) should have thought ahead. It should have understood that a declining birth rate and higher life expectancy means there would be less people paying taxes in the future and more people to support from those taxes, and adjusted accordingly in incremental steps in order to avoid a financial pitfall.
Instead, it kicked the issue down the road for decades, refusing to reform their system in any meaningful way and waiting until the point they were teetering on a total financial meltdown before they introduce a tax on its residents to bail itself out. The editorial’s claim that that tax money will be used for police forces and other public services ignores that the city should have been smart enough to plan to pay for those in the future instead of letting its financial situation get to this point.
Many other cities have seen the same financial pitfall and raising taxes on its population makes capital flight a very real possibility. Taxes do not spur economic growth and they make your city less desirable to move to. East Lansing will be no different, especially if they want non-students to move here and former students to stay here.
Now, I also have to point out a bizarre argument style present in the editorial. The State News, staffed by students, is arguing for a tax that they claim won’t affect the majority of students. It’s really noble to advocate a tax on others, especially when most students do not stay in East Lansing after graduating. It does little to endear the student body to permanent residents, who likely make significantly more than even a higher earning student. According to MLive, the median household income in Ingham County in 2016 was $49,139, meaning a resident making that amount would pay almost $500 in taxes just to the city, not even including federal and state. These start to add up.
Do not give the city money for its own incompetence. Do not reward them for failing to fix its financial issues. Do not be lured into a false idea that this tax is going to turn their situation around. They need to take a deep look at their finances and make deep cuts into things that simply are not necessary to the operations of a local government. Raising taxes is easy to do and, frankly, it’s the coward’s solution.
Often it’s popular to blame the past recession for local woes, a concern I am not ignorant to, and often it’s claimed it’s up to all of us to contribute to the betterment of our city through taxes. But that recession was a decade ago and if the city is still facing the effects of a recession then you can be sure its residents are too.
The editorial published by The State News failed to explain to its readers how a significant amount of the blame for the city’s problems lays on the city itself. It failed to put the issue in a context and distorted the issue that could be very dire for our city’s economic future.
Cameron Macko is a senior at Michigan State University studying history. He is a former employee of The State News. His opinion does not reflect that of The State News.