Be prepared; your taxes will go up

Ready or not, it’s 2006.

Time for everyone, everywhere, to engage in that perennial pastime called “guess what the future holds.” It’s a simple game that both children and economists with Ph.D.’s can play.

I’m no economist, but I’m making three predictions this year since it’s so much easier than making resolutions.

The first: Taxes will go up.

How could that be, you ask? What about all the retail growth in the Valley, all those new strip malls and our very own, one-of-a-kind Hooters?

It’s true; the city gets a portion of all sales taxes however they’re generated. Whether it’s from selling overpriced athletic shoes or cantaloupes-on-parade in front of drooling men, the city gets a slice.

But there’s a rub. While every dollar the city gets from sales taxes is a dollar you don’t have to pay in property tax, our illustrious City Council persons must still wrestle daily with an economic principle rooted deep in the distant past.

Translations dating back to King James read “no matter how much revenue hath been generated from taxes, local government will verily want more.” Modern versions are less ambiguous: “a city’s revenue will never equal what it wants to spend.”

So why not just raise taxes on businesses and leave us little guys alone, you may ask?

I heard Ronald Reagan give a really great answer to that question in the late 1960s, when he was governor of California: because you can’t tax a business.

Businesses pay all their taxes, including the state B&O tax, from the sale of goods and services – even when cantaloupes are out of season.

When business taxes get too high, so do prices. Then employers are forced to close up shop or relocate to exotic and cheaper places – places such as India or North Idaho.

If we all want to keep our jobs, we can’t dump the entire cost of government on local business. Unless, that is, you really want to move to Idaho.

So that’s why I’m predicting a tax increase.

Now, on to my second prediction: Someone will be unhappy with the comprehensive plan.

If you like trees and wide-open spaces, you’re probably wondering why we can’t have nice houses and good-paying jobs while still maintaining the rural feeling that brought you to the Valley in the first place.

You long for the way things were 25 or more years ago. You despair over what has happened to the Highway 95 corridor between Coeur d’Alene and Hayden.

You might even say, “Just look what they did to Shelley Lake!”

So why, I can hear you ask, is the city allowing all the open areas of the Valley to be turned into housing tracts and apartment complexes?

Turning again to that fount of Republican wisdom, Ronald Reagan, the answer is … because trees cause smog.

My slightly more serious answer would be “because trees don’t pay taxes.”

The simple fact is that the more houses that get built, the more taxes the city collects; and cities always need more taxes.

And as land goes up in value, housing lots get smaller and smaller. High-density neighborhoods are built for us regular folks and low-density developments are built for people who can afford the annual fuel cost of a Hummer and think “sale” is a nautical term.

This is reflected in another elegant, but unknown, economic principle which, put in layman’s terms, simply states, “if you buy a really expensive house, your dog will keep his business in your yard; if you buy an ‘affordable’ house you, your dog and your neighbor will need to go into business together.”

Put another way, the problem with wide-open spaces is this: Where do we put all those big retail stores and fast-food restaurants we love so much?

And where are all the employees supposed to live – the Rathdrum Prairie?

Well, I’m running out of space here, so let’s move on to my third prediction: a local writer or politician will be sure to say something dumb.

I guarantee it.