I have to admit that I was a bit confused when I saw the headline “Massachusetts RAISES TAXES ON DOGS” on the Drudge Report Twitter feed– my initial thought was “How can Massachusetts raise a tax that as far as I know doesn’t exist in the first place?” Apparently I have a contraband pooch:
(He was hiding from the law, obviously.)
State Republicans are howling mad over yet another tax hike being slipped through the Legislature that would slap an annual $3 state surcharge on municipal licensing fees canine owners pay for their pet pooches.
Annual license fees range from $6 a year in Boston for neutered or spayed canines (and $17 for unfixed dogs) to a flat $20 in Plymouth. Angry GOP senators are pushing to name the bill “Toby’s Law,” after Gov. Deval Patrick’s wriggling Labrador puppy.
Ah, so it’s technically a licensing fee rather than a tax. (Whee, semantics.) The article continues:
But state Sen. Pat Jehlen (D-Somerville) argued the fee is necessary to fund a state spay-and-neutering plan meant to snip the state’s out-of-control problem with strays.
(I would argue that the real out-of-control problem is the overuse of bad puns in this article.)
Okay, so let’s discuss some incentives here, both good and bad. On the good side, I like that Boston has a lower fee for spayed or neutered dogs, since an incentive for making it so your dog can’t knock up another dog (or get knocked up) and potentially have the puppies end up in a shelter is a decent thing. Furthermore, having some sort of official dog registry doesn’t seem like a terrible thing, and the fee doesn’t seem to be prohibitively high.
BUT…the higher licensing fee isn’t a total win. For one thing, it’s going to discourage people from registering their dogs. (Before you start with the “but it’s only $3” action, consider that at some point $3 has to tip the scale between consuming and not consuming- otherwise you’re like the frog in the boiling water and end up paying $1,000,000 for a dog license or something equally absurd.) If there are benefits to the cities to having a high percentage of dogs registered, it should push back on the state using the license as a source of revenue, since the city wouldn’t see the extra revenue but it would bear the cost of the reduction in the number of registered dogs. In fact, the cities would see less revenue than before because of the reduction in the number of registered dogs. If the city then had to cut licensing benefits as a result, it would likely see a further reduction in the number of licenses and so on and so on, creating a vicious cycle.
In addition, economists are very careful to point out that there need not be a coincidence between the market that is taxed and what that tax revenue is used for. For example, while it may make sense that cigarette taxes are used to fund anti-smoking programs (you could argue that smokers encourage other people to smoke, which is a “bad” activity), a lot of markets don’t have this sort of match. What *should* alcohol taxes be spent on? Property taxes? See, it’s not always clear. It’s also the case that a lot of taxes just end up in a general pool for spending rather than being earmarked for a particular program or project. (Some project funding is like ground beef in that way- it comes from a lot of different places.)
Economists would argue that if you’re going to tax a market, you should spend the tax revenue on projects that are most needed. Again, these most needed projects may not “match” with the market being taxed, but it’s poltically popular nonetheless to match things up taxation and spending in this way. Unfortunately, sometimes this matching goes awry and even results in perverse incentives. Let’s think about the situation above: Somebody adopts a dog, which means that that dog is taken out of a shelter. This is a good thing, since the dog gets a home and there is now a lower burden on the shelter. This dog surcharge, rather than rewarding the dog adopter for doing a good thing, charges the dog owner instead. The proponents of the surcharge then argue that it’s important to provide for the animals in the shelters (and to spay and neuter them, though if they are in a shelter I would hope that they aren’t getting their groove on even if they could), which is arguably true. But why charge exactly those people who are already doing their part to help? Logically speaking, wouldn’t you want to impose a surcharge on everyone who hasn’t adopted a dog, since they are technically one reason that the shelters are full?
I’m not suggesting that this actually happen, but it would at least be in a more logical direction than what is actually on the table. I can’t tell whether policymakers don’t think enough about the laws that the propose or if they just hope that other people don’t think enough about them.