There is a crucial reality that pro-business, anti-government conservatives ignore: a modern economy cannot function without a robust public sector that provides the environment for businesses to thrive.

A top-notch education system up through the university level that produces highly skilled workers and cutting-edge research; a sound infrastructure of roads, bridges, airports and mass transit that allows for swift flow of goods and easy movement of employees; a safety net for dislocated workers and impoverished people to avoid social turmoil; courts, prosecutors, police and regulators to keep the economic playing field free of crime, corruption and exploitation – these and many other services of government are vital elements in our economic system. And yet, it is precisely those programs that are suffering at the hands of the budget cutters.

In Washington State, for example, state support of higher education has dropped during the last four years and, once the current budget is approved, the reduction is likely to reach an obscene 50 percent. At the state’s premier institution, the University of Washington – a place enlightened business leaders recognize as a prime engine of economic growth for the region – tuition will shoot up, limits on admissions will slam the door on many of the best local students and world class programs will be jeopardized.

This is happening in a city and state flush with multi-millionaires and major corporations, from Bill Gates and Microsoft on down. Yet, when Bill Gates’ father, the elder Bill Gates, helped put an initiative on the ballot last year to institute a strictly limited income tax to tap into that great wealth, anti-tax zealots scared voters into shooting it down.

America is in the grip of an anti-tax fallacy that is blocking a rational discussion of reforms that could make our tax system more fair and effective. The result is that our very rich country grows more shabby and parsimonious by the day.

Across this broad land, governors, legislators, councilmen and mayors are gutting public programs to balance the books. The hits are falling like bombs in Libya, raining destruction on state universities, public schools, parks, pensions, roads, health initiatives and housing for the poor.

Yes, the big slump in the national economy is partly to blame, but things would not be nearly so bad were more of the country’s vast wealth available to sustain public services through hard times. And why is so much wealth off the table? Because, contrary to the popular myth that governments do nothing but hike taxes, the opposite is true.

Over the last 30 years, as 40 percent of the nation’s wealth has shifted to the top one percent of the population, less and less of it has been liable to taxation. The highest income tax rate, 55 percent in 1965, is 32 percent today. Taxes on capital gains and dividends have been slashed as well. Meanwhile, corporations have won a wide array of tax exemptions or have moved profits offshore.

Most of this tax cutting was done on the theory it would boost the economy, create new jobs and, thereby, increase tax revenue. Over the last decade, that theory has proven false. The benefits of growth have gone to the very rich, middle class jobs and incomes have stagnated and public revenue has plummeted.

And yet, in the face of gaping budget shortfalls, Republicans in state after state are handing out hundreds of millions of dollars in additional tax breaks as if they are magic beans that will sprout a gigantic beanstalk of growth.

A McClatchy Newspapers report details how tax cuts and tax breaks for corporations have failed to do what they were supposed to do – stimulate jobs and economic growth. In Ohio, for instance, where the corporate income tax and a business property tax were eliminated in 2005, the economy got no boost and jobs were not created, But, as McClatchy detailed, the tax cuts did “cost Ohio more than $2 billion a year in lost tax revenue – money that would go a long way toward closing the state’s $8 billion budget gap for fiscal year 2012.”

But is newly elected Republican Gov. John Kasich proposing to reclaim some of the lost money? Or is he thinking of doing away with any of the 128 tax exemptions, deductions or credits that take away more than $7 billion in revenue from the state every year?

No, Kasich is proposing an extension of a 21 percent state income tax cut that was part of the 2005 tax reduction package. Why? To boost the economy, of course – even though the same tax policy failed to have that effect from 2005 to 2011.

Governors in seven other states with budget problems are also proposing tax reductions that will make their deficits deeper. Even in states where Democrats are in charge, very few voices are being raised to suggest even modest tax increases. Instead, draconian cuts are considered the only politically viable option because much of the public has also bought into the tax cut fantasy.

There is evidence to suggest that the states that lowered taxes the most in the 1990s actually fared worse when the economy slumped in 2001. Jobs disappeared and state budgets went into deficit. Nevertheless, Republicans cling faithfully to their belief in a supply-side Santa who will magically appear and bring the gift of rising revenue if more and more taxes can be done away with.

It’s a fairy tale and we are certainly not going to live happily ever after.