Give Liberty a Chance!

God has given to men all that is necessary for them to accomplish their destinies…

And now that the legislators and do-gooders have so futilely inflicted so many systems upon society, may they finally end where they should have begun: May they reject all systems, and try liberty; for liberty is an acknowledgement of faith in God and His works.

- Frederic Bastiat, The Law, 1850

Friday, March 14, 2008

Feel Good Economics

Apparently, Congress is unaware of the economy that you and I live in. Just yesterday (March 13, 2008) Congress passed a non-binding budget resolution that ends the tax cuts from earlier this decade to pay for questionable pork barrel projects (which poses another question: why can’t Congress do anything for the people of this land that IS binding?).

Since when do tax increases help a struggling economy? How can Congress talk about economic “stimulus” packages out of one side of their mouth and job killing tax increases out of the other? Why does Congress want us to believe that a one-time tax rebate is good for us, but a permanent tax cut it is not? Is Congress more concerned with central planning of the economy, than the prosperity of its citizens?

Missouri’s constitution does not allow for deficit spending and requires the General Assembly to pass a balanced budget each and every year for the protection of taxpayers. Unfortunately, we have no such protection from Congress.

Politicians in Washington have opted for a politically expedient “stimulus” package that will do little, if anything, to stimulate the economy, but may be enough to stimulate their re-election campaigns. When the rebate becomes available, take it – it may be the only thing you’ll get from Congress, unless you have a personal “earmark”.

What is a state to do?

The General Assembly is already working on legislation to curb illegal immigration – a job that belongs to the federal government. The General Assembly is working to provide better access and affordability in our health care markets, but the federal government has put up barriers that stifle innovation and our ability to do so. The General Assembly is working to improve public education, but again the federal No Child Left Behind Act has too many strings attached.

Once again, what is a state to do? How can Missouri compete on the national and global playing field when Washington fails?

To add insult to injury, an old adage tells us that high tax rates don’t redistribute income as much as they redistribute people. In the next census, it is expected that Missouri will lose a congressional seat. These seats are apportioned by population and this would indicate that Missouri is not growing as fast as other states. This loss of a congressional seat will reduce Missouri’s representation and ability to influence Washington.

Where do people go? Over 20,000 people a day are relocating from one state to another. Americans are leaving the Northeast and the Midwest in favor of Southern and Western states. While a number of factors come into play like climate, quality of life, and housing prices to name a few, it is also true that taxes are a motivating factor.

Of the 12 top states netting new residents, eight of them do not have a state income tax. Those on the Left would tell us that people are willing to pay more taxes to get better government services, but the migration patterns strongly suggest otherwise. Interestingly, the people who tend to be the most mobile tend to be the most educated and motivated, or to put it bluntly, are taxpayers – tax them too much and they may not be here in the future to tax at all.

Missouri should take steps to reverse this trend by reducing our state income tax burden. One proposal (
HB1340) would phase in the full deductibility of our federal income tax liability from our state income taxes. There is also a bill (HB2112) which requires the state to develop a way to replace the state income tax with a state sales tax. Another proposal, to be introduced by the end of the month, will reduce the top state income tax by up to 15% providing real tax relief for Missourians, especially the middle class.

These proposals are intended to allow people keep more of their own money, to allow them to make decisions for themselves and their families, to give individuals more liberty in their consumption, savings, and debt retirement.

By contrast, House Democrats have introduced a bill (
HB2131) this year that will deny citizens more liberty in their consumption, savings, and debt retirement. This bill increases income taxes by up to 50% for middle class families in a time when families need to keep more of their hard-earned income, not less. Apparently, some believe government knows how best to spend your money than you do.

If we continue to ignore the long-term benefits of lower taxes and instead, embrace the “feel good economics” of Washington where Americans are baited into a $600 tax rebate check while imposing a tax increase roughly twice that size, not only will Missouri continue lose representation in Washington, but the individual liberty of each Missourian will be eroded. Let’s be thankful, as Will Rogers observed that we are not getting all of the government we are paying for.

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