Should Federal Disaster Aid Be Tied To Some Minimum Levels Of State Taxation
Let me state right off the bat that I support a clean bill for emergency relief for Harvey, Irma, and, if it comes to that, the recently formed hurricane Jose. These are disasters and it is up to all Americans to help those areas hit by this misfortune to help out. That is most efficiently done using tax dollars from the federal government.
But there is an interesting twist on how that emergency aid should be delivered, especially in the case of Texas, that was expressed in an op-ed piece by Peter A. Barnes and H. David Rosenbloom in the Washington Post. Their logic is not based on the fact that a majority of the Texas delegation voted against providing aid for the victims of Sandy and playing tit-for-tat. Instead, they make the case that Texas should be forced to repay some of this emergency federal aid simply because that aid would be what they call a “handout” for a low tax state.
According to Barnes and Rosenbloom, “Texas is avowedly a low-tax state. There is no personal income tax. There is no corporate income tax (although there is a surrogate tax on corporate receipts). There is no state-level tax on estates or inheritances. Texas ranks No. 46 out of the 50 states in state and local tax burden per capita, according to recent data from the Tax Foundation. It ranks 43rd in state tax revenue per capita…Unless Texas is willing to bear a reasonable share of the Harvey costs through increased state and local taxes, then the rest of the United States would just be giving Texas a handout. Better for the federal government to offer Texas a ‘hand-up’ in the form of immediate cash support with the requirement that Texas generate tax revenue to repay that help.” This seems especially relevant in that the state’s notoriously lax regulation of chemical, oil, and gas plants have clearly increased the environmental damage in Southeast Texas that will need to be cleaned up.
In so many ways, this is similar to the way the federal government supports the workers employed by low-wage companies, essentially providing them with a subsidy to underpay workers. In 2015, it was estimated that government spends over $150 billion dollars a year to subsidize low wage workers, which, in turn, amounts to billions of dollars in subsidized profits for the companies that pay those low wages. Over half of public assistance spending goes to working families in the form of food stamps, Medicaid, and support for essential needs.
As I said at the top, I personally do not think this is the time to put Barnes’ and Rosenbloom’s idea into effect. But, as with the problem of subsidizing firms that pay low wages, the federal government should also not be bailing out states that refuse to provide the proper services for their own citizens. Barnes and Rosenbloom propose some kind of repayment system but I’m not really sure that’s the way to go. Perhaps each state should be required to hold some minimal amount of disaster funding based on income.
