Governor Markell Should Tax the Rich and Create a State Property Tax

The prognosticated budget deficit for Delaware's government is $606 million. That's 20% of the state's $3 billion budget. Governor Jack Markell is under no illusions about what that means:

Gov. Jack Markell wants to make sure everyone understands: The state's $606 million budget deficit is massive, and it's going to take painful cuts to close the gap....

Markell wants to articulate just how much $606 million equals -- for example, the entire state Medicaid program, or the cost of all the state's teachers and support staff, or 75 percent of all state personnel costs.

But he wants to be clear, he has no intention to ax Medicaid or lay off most of the state's employees....

He wants people to know that cutting the budget will require reviewing options that were previously untouchable -- looking at duplication of services at the county and municipal level, reworking state employee benefit packages or ending some programs entirely.

Whatever measures Governor Markell takes, he should follow the principle that it is best to cause the least amount of suffering possible.

Accordingly, I recommend that he increase the income taxes on the wealthiest Delawareans and create a graduated modest state property tax. Some cuts will still be necessary, but they won't need to be nearly as draconian as cuts would be without increasing the revenue stream.

That increasing the income tax on the wealthiest Delawareans would cause the least amount of suffering is self evident to all except those who have a knee-jerk (i.e., ideological) aversion against any tax increases per se. Such people are irresponsible participants in public discussions about financing government during hard times and don't deserve more than polite attention. Given the desperate tenor of the times, they cannot be taken seriously.

A graduated modest state property tax, however, would cause a modicum of discomfort, especially for those with modest income levels. But basing the graduated tax on property value should reduce the discomfort to a more than tolerable level. Besides, other states employ state property taxes, so the idea is not without precedence. Delaware should do the same.
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