Multiple taxes support grasping government

"In political arithmetic, two and two do not always make four.'' Alexander Hamilton quoted this old maxim in the Federalist Papers in his discussion of the need for taxes to support the government being proposed by the Federal Convention of 1787. Hamilton contended that a tax on consumption was adequate for all practical purposes which also had the virtue of being almost self regulating in that citizens reduce their spending, and therefore government revenues, if the tax is too high. Of course, Hamilton never heard of what in recent years has been called "supply-side economics," which is based on the idea that high income tax rates are also self defeating. But his reasoning and President Ronald Reagan’s were exactly the same.

Unfortunately, this political wisdom is disregarded in Sacramento and Washington, D.C., as rapacious governments there not only are raising tax rates in pursuit of ever-elusive revenues but are addicted to taxes on almost every conceivable object. I submit that both these tendencies are evidence of incompetence or knavery or both.

Liberal Democrat politicians (and their Republican enablers like Gov. Arnold Schwarzenegger), when they propose tax increases and new taxes to make up the government’s revenue shortage, are acting on the assumption that these measures will actually produce more revenue. But they ignore the depressing effect which their high tax and spending policies have already had on domestic consumption and especially business enterprise.

The best evidence of this effect is the startling discovery, only a month after legislative leaders and the governor agreed to a hodge podge of spending cuts, tax increases and borrowing to cover the $40 billion shortfall, that they were short an additional $8 billion. Now the voters are being offered a six-part package May 17 that includes a two-year extension of the sales and income tax rate increases.

Until control of the government changes to a new, more fiscally conservative political party, we are not likely to see anything but a series of stopgap measures featuring a lot of posturing by political leaders but no permanent solution to the "revenue problem."

In truth, revenue is not the problem; unrestrained spending is. As long as that is the bad habit of those who make our laws and administer the government, there will never—repeat, never–be enough money to support the government. Not only does raising taxes not work but the existence of so many taxes on so many items is evidence that the government’s appetite for revenue is insatiable.

From time to time friends email me lists of the number and variety of taxes which our governments impose these days. They include taxes on income (individuals and corporations), sales, property, fuel, estates and inheritances, liquor, cigarettes, luxuries, telephones, highway usage and much, much more.

Our governments have gone far beyond constitutional limitations. The federal government was authorized to provide for the common defense and to promote the general welfare, which consisted in maintaining armed forces, regulating trade, collecting taxes and enforcing its own laws. State governments had broader powers, but even those originally did not include providing cradle-to-grave security or even public schools.

California government spends upwards of $100 billion each year, and the federal government spends $3 trillion–with no end in sight in either case. No taxes will ever be enough when there is, in principle, no limit to the number and variety of objects on which that money can be spent.

When Americans trade their labor or supply a product in return for money, they are enterprising. When governments increase taxes, they are greedy. Are you as tired as I am of hearing government spokesmen say that people who make lots of money in the marketplace are greedy but that those who tax us heavily are compassionate?

It is not surprising that improvident or unsuccessful individuals and corporations are encouraged to seek bailouts, for that is what our governments do whenever they commandeer more and more of our money. Too often taxes are not intended to defray the costs of legitimate functions but to bail out governments that can’t control their fiscal appetites.

On Wednesday, all across America, citizens are holding TEA (Taxed Enough Already) parties to protest out-of-control taxing and spending by our state and federal governments. You will probably not learn about this in our major media, but then the apologists for the king of England were not interested in the colonists’ complaints either

Public outrage is building, as it ought to, and we will be fortunate if it overturns the modern Leviathan and restores constitutional government to our country.

Other states envy TABOR

(Denver Post, Feb. 15) How dumb do they think we are? The state is in a $600 million hole because Gov. Bill Ritter and Democratic legislators ignored advice from Republicans – and even some fellow Democrats – to restrain spending and save for a rainy day. Now those same spendthrifts want us to remove constitutional guardrails so they can rev the budget again when good times return. Family budgets are breathing easier, after Ritter and former Speaker Andrew Romanoff got spanked by voters on three tax increases last November – Amendments 51, 58, and 59. But we’re taken for suckers on this too. Dem leader Paul Weissmann already talks of “floating an issue back to the voters” that would goose revenues and gut the Taxpayer’s Bill of Rights (TABOR). Meanwhile, a judge has red-flagged the governor for raising property taxes $120 million without taxpayer approval as constitutionally required. The state Supreme Court hasn’t yet ruled on this money grab, but the spending lobby must expect to win. They’re now brazenly planning another evasion of TABOR without citizens’ permission – this time to bust the 6% general fund growth limit. Sue them if you dare.

The Taxpayer’s Bill of Rights, part of the Colorado constitution since 1992, states that “its preferred interpretation shall reasonably restrain most the growth of government.” That means we the people get the benefit of the doubt. Gov. Ritter, Sen. John Morse and other Democrats, Rep. Don Marostica and other Republicans, are all sworn to support the constitution. Have they forgotten?

They give off an air of casualness toward that oath of office, impatience if not scorn for TABOR and its limitations, and ill-concealed disdain for the millions of Coloradans who don’t know what’s good for us in terms of rosy scenarios, free-wheeling fiscal policy, and a “trust me” approach to government. Their track record forfeits our trust.

“Trust me” became California’s fiscal motto back in the ‘80s, after their voter-approved tax and spending limit was undone by education mandates. (Sound familiar?) The state is now $42 billion in the red and Gov. Schwarzenegger has ordered furloughs. He has wished aloud for something like TABOR to stop the madness.

Taxpayers in many other states share Arnold’s wish, as I recently confirmed with an hour of phoning. Budget analysts from Tempe to Kennebunkport, unless they’ve drunk the big-government Koolaid, endorse the wisdom of a population-plus-inflation growth formula, tempered with flexibility and recession reserves. They say people here should realize how fortunate we are.

“Watch out, Colorado. Without TABOR you could end up like Ohio,” warns David Hansen of the Buckeye Institute in Columbus. He describes a “generation-long spending spree” that has turned their low-tax, high-growth state into one with high taxes and no growth, “totally uncompetitive in the 21st century.”

Reports are similar from neighboring Pennsylvania and distant Arizona. Spending grew twice as fast as population plus inflation in both states since 2002, leaving them today with deficits far worse than Colorado’s. Absent fiscal guardrails, politicians “rode the revenue roller coaster sky-high, then crashed with it,” citizen lobbyist Tom Jenney told me from Phoenix.

TABOR may pass this year in Maine, polls suggest, after Democrats spent recklessly following defeat of a 2006 proposal. Oklahoma fiscal reformers have similar complaints and hopes. Ken Braun of the Mackinac Center observes that spending limits and rainy-day provisions after 1995 would have spared poor Michigan its budget agonies since 2002.

How irresponsible for Colorado’s philosopher kings to propose trading our prudent discipline for these nightmares. Delivered from temptation, a character in Bunyan exclaims: “Then it came burning hot into my mind, whatever he said, and however he flattered, when he got me home to his house, he would sell me for a slave.” Nothing personal, but we should likewise hotly distrust the TABOR-busters.

Paul Weyrich, Genius of the Right

Paul Weyrich, conservative organizer par excellence, died today at his home in Washington DC after a long and painful illness which he bore with heroic good cheer. He was just 66. A tribute is here. History will recognize him as a giant of the American right. The vaunted successes of the Democracy Alliance for liberal goals in recent elections are really just a mirror of the way Weyrich's visionary institution-building and networking since the early 1970s set the stage for Reagan's presidency in 1980 and Gingrich's takeover of Congress in 1994.

Paul helped found both the Heritage Foundation and the Free Congress Foundation. He pioneered the weekly center-right coalition gatherings that continue to wield vast influence in the form of Grover Norquist's Wednesday Meeting. He was among the earliest players in conservatism's move into cable television, demonstrating the potential for what is now Fox News Channel.

We could not have created the Independence Institute in 1985 as a force in Colorado policy and politics, simultaneous with similar state startups in Illinois, Washington, and South Carolina, without the national template for think tanks that Paul Weyrich and Edwin Feulner -- financially backed by Joe Coors -- provided a decade earlier at Heritage and Free Congress.

So it can be said that State Policy Network, now encompassing free-market institutes in some 45 states, also owes its existence to Weyrich's genius, drive, and hard work. Conservatives in the Colorado General Assembly, as in state legislatures across the country, also benefit from his legacy as one of the founders of the American Legislative Exchange Council (ALEC). The Republican Study Committee of Colorado, a legislators caucus, imitates yet another brainchild of his, the House Republican Study Committee in DC.

I was honored to know Paul as a friend for many years. He was a mentor to me as to countless others. As a devoted follower of Jesus Christ, he anticipated celebration with the angels when death finally came. I trust that's what this faithful servant is experiencing right now -- an early Christmas in heaven. But we on earth will sorely miss him.

Colorado pension plan in trouble

As some of you may have heard, PERA, Colorado's Public Employee Retirement program, has got a little problem. At latest report, its obligations were down to being about 60% funded, a couple of decadesout, down from 80%, which is considered fully-funded. This is before taking into account paper losses from real estate and other non-equity investments.

The reason that being underfunded 30 years out is a problem is that there are still bills to pay today, and that at some point you start paying out money faster than it can grow. One day, you wake up, and the seed corn is gone and the retirees are at the door.

Yesterday's Denver Post cites a 2004 State AG's report to the effect that there may be some legal limitations to what PERA can do. In all likelihood, benefits to current retirees are sacrosanct, barring a constitutional amendment (aren't you now glad that we rejected Referendum O?) to permit a reduction of benefits.

New hires should be put into the 401(k) without even the option of a defined-benefit plan. Those at or approaching retirement age should probably not have their benefits tinkered with. But some combination of higher contributions by employees, lower benefits, and a higher retirement age (really, who gets to retire on full bennies at 57?) will probably be required.

PERA's Board may have to show to a court's satisfaction that all this is necessary to prevent major street corners from being overrun by former state employees and the inevitable tin cup shortage. At the same time, there's no question that PERA has been operating under one of those unspoken assumptions that the taxpayers will always be there to bail them out, if necessary. Thus the somewhat rosy 8.5% growth assumptions underlying their projections.

We'll probably have to await the 2008 Annual Report to see exactly how bad things are, but there's no question that the sooner we deal with this the better. After all, better to ask public employees now to contribute more to their own financial security than to ask you, 15 years down the road and a few years away from your own golden years, to work for a few more years.