Friday June 17, 2005
Opinion
Review & Outlook (A14)
"America's Next Tax Revolt"
Per the article, there are "...20 states... working on a Tax Payer Bill of Rights (Tabor) to cap runaway spending and tax increases."
Tabor laws serve a number of purposes.
1) Requires state government to have a budget cap
2) Requires states to refund tax revenues collected above the budget
In paragraph 4..."The National model here is the Tabor law passed in Colorado 12 years ago. "...In six of the last nine years Coloradans have received tax refunds in the mail exceeding $3.2 billion, or about $3,000 per family over the period."
Paragraph 5 has the most telling fact...."real per capita state spending in Denver has grown more slowly....IOt's probably no coincidence that Colorado has also seen faster growth in personal incomes and population thien any other state over this time period."
MoreThanCorn believes state governments should be guided financially just as individuals, families and companies handle their own finances. What the State brings in, is what the State has to spend. Paragraph 9 & 10 read like this;
"Replubican Governor Bill Ownes who is pro-Tabor, has called for a "five year Tabor time out. Mr Owens complains that during the recent two year downtourn in Colorado actual revenue collections fell. The solution is to allow somewhat larger spending growth in bad economic times. Let the states build up budget rainy day funds during the boom years and then during recessions let them spend down these reserves... [this would] smooth out revenue cycles so state governmentds don't go through boom and bust as economic growth rises or falls. Many states nearly drowned..in the last mild recession because they had gone on a spendiong binge during the tech driven go-go years of the late 1990's."
Governor Owens and the author of the Journal article are trying to fix bad behavior with other bad behavior. It appears they are admitting the mistakes of state governments in the 90's for over spending. Governor Owens wants to end Tabor laws for "five years" (it would be permanent no doubt) and the author makes his own mistake by suggesting the government could keep the excess revenue.
Budgets are necessary to keep. If a single, working mother does not budget her finances, either the rent, electric bill or groceries are sacrificed. If a company does not budget, it's days will be numbered. In boom years everyone from the single mom, to the state government should be working off their current budget. If in mid year a recession begins, the mother may need to redraw her budget, so should the state.
Yes, reductions in social services or other programs are painful. So too is it for the mother and the family. The mother may already be riding the bus to work and have a subscription to the Sunday paper just for the coupons. Finding further reductions in monthly costs is difficult, however I know many families who always seem to find another way to shed cost. Any money the mother does not spend, in good times or hard times, could be saved if desired.
This last point is where the financial paths of the family and private enterprise begin to diverge from the public coffer. All money left over from state taxes each year should be refunded to the taxpayer.
The Heritage Foundation addressed the use of excess tax revenues under Tabor laws; "Budget surpluses could be split automatically between tax rebates and debt reduction." This is appropriate if the state government has debt. However once the debt has been paid down, the state should be held responsible to keep spending in line with the budget. Moving forward, the entire surplus could be refunded to the taxpayer.
Who earned the money? The taxpayer worked to earn their pay. Did the government work hard to earn the tax revenue? It was EFT'd from your paycheck before it ever was deposited. Who knows better how to spend your money? You or the state legislators.
The $3 Billion the Coloradons received back was their hard earned money. They deserve to receive it back. Their own use of the money, whether spending it back into the economy or investing (which is also injected into the economy), will promote further growth and job creation. An increase in per capita wealth will follow causing people to spend/invest more, indirectly spurring the most blessed and wealthiest of our fellow American bourgeoisie to increase their current manufactures or take risks with their extra money into new enterprise. All the above increase tax revenue for the state.
Had the $3 Billion been kept in a State bank account it would either a) spent on other projects or b) sitting in low interest accounts and not really helping the economy.
MoreThanCorn argues the $3 Billion would have increased the economy by not just the original amount, but the ripplies would have a multiplying impact. It can be argued a recession would not have come into existence at all, or at the very least the recession would be brought to a more hasty end.
It is critical the taxpayer understands this is their wealth being taxed away. This money is in addition to your yearly state and federal income tax returns. Those states without Tabor laws are states where the public are complacent with tax codes, ignorant of the economic choices or have been intentionally misinformed.
WORKING MEN OF ALL STATES,
TABOR!
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