I hope to start a discussion about tax policy on the local level--county and city/town/village. My first few posts concerned this topic, and I think it should get more play. After all, "all politics is local [attributed Thomas O'Neill, Sr., Tip O'Neill's father]."

I have been teaching a course on tax ethics (no giggling, please), to graduate students for a few years now. One unit deals with how a professional's public expounding of any particular tax policy impacts his or her ethical requirements to the client. While thinking about this topic, I distilled tax policy to this formula--not particularly insightful, but nevertheless ignored by many politicians:

Public Expenditures = revenue + deficit.

I review some elementary algebra, to the effect that one equation with three variables has an infinite number of solutions. Then I break down the variables as follows:

• The deficit equals the amount politically expedient at the time. For state and local situations, the deficit is set by law to equal zero.
• Revenue equals the sum of tax revenue plus fees (and federal or state aid).

I break down tax revenue in terms of public policy regarding the allocation of the tax burden over society.

• Finally, public expenditures are a matter of political compromise and expediency.

Applying these rules, local expenditures must equal local revenues. That's so simple that it seems like a waste of time to type it all out, but it's ignored by politician after politician. I will resume from this point in the next day or so.

--Dean L. Surkin