An article in the Sylva Herald headlines, “Decline in Land Values Likely to Cause Tax Hike.” It begins saying, “Countywide, land values next year are expected to plummet 19 to 20 percent.” While the article only covers the plight of Jackson County, it highlights a fallacy oft-repeated these days. In the off-chance some government bureaucrat, who actually buys the line that it is just to raise taxes on those who are losing money, is reading this, I belabor what should be obvious.
In the private sector, employees (used to) get cost of living adjustments. COLAs are percentage increases in employee wages. Some companies do this out of charity in hard times, but more often than not, they are, roughly speaking, keeping payroll as a certain percentage of corporate income. In liberal-arts terms, the pie is growing, so the employees’ respective pieces are growing, too. Government, however, sees itself as entitled to amounts of its tax base. It is equivalent to saying the pie is shrinking, so government gets a larger percentage of it to keep its slice the same size. Never mind those taxpayers who are losing income and equity. That they cannot keep up with tax demands is an unintended consequence; in government, only arithmetically positive second-order effects are visible. You pay Paul. Period.
