Saturday, April 16, 2016

How To Raise Taxes Without Moving Your Lips

Long ago in the post-Camelot era, President George Bush The Greater was indiscreet enough to promise during a presidential campaign, “Read my lips – no new taxes,” after which Mr. Bush proceeded to raise taxes. It was one of those moments that delighted gold-plated opposition research fellows in the Washington D.C. Wonderland. After the deed was done, Mr. Bush – and later, low tax Republicans – was kicked around the block for decades whenever a deficit raised its horned head in the beltway.

Life went on. The federal debt increased at a rapid pace under both Presidents Bush The Lesser and Barack Obama. Mr. Obama has in seven years added $6.463 trillion to the national debt, at 55.4% the largest debt increase of the three presidents. By the end of his term in office, George W. Bush had doubled the debt passed along to him by the Clinton administration, adding $5.849 trillion to Clinton’s $5.8 trillion.

Here in Connecticut, Governor Dannel Malloy promised, shortly after he had instituted the highest tax increase in state history, not to repeat his politically painful performance. Mr. Malloy’s first tax increase was, everyone was led to believe, a one-time whipping. However, the one-off tax increase was soon followed by the second highest tax increase in Connecticut’s history, and unsurprisingly Connecticut’s economy has taken a long term tumble during the Malloy years. We are the only state in the union that has not yet recovered from what has been called The Great Recession, and we are the only state in the union that has lost population during the reign of Barack the Munificent and “no tax increase” Malloy.

General Electric only recently departed for Boston Massachusetts, and the general feeling in the state is that the door has been left open, allowing other companies fleeing high taxes, high energy costs, burdensome state regulations and a dunderheaded Democrat dominated General Assembly, to bolt whenever propitious opportunities are dangled before them by out-of-state poachers. In addition, Mr. Malloy has inaugurated his legacy project, a gold plated 20 year $30 billion infrastructure repair program. The spendthrift General Assembly is desperately in search of a slush fund from which they might draw from time to time to discharge continuing deficits, and the sweetest money pot is one that can be charged to future generations: Connecticut citizens yet unborn are unable to register a NO vote on projects created long before their emergence from the birth canal.

The root of Connecticut’s problem is, of course, declining revenues, which are dipping in the state for a host of reasons. Connecticut is heavily dependent for its revenue on financial operatives, hedge fund managers and the like whipped and scorned this political season by Democrat Socialist candidate for President Bernie Sanders; these would be the same redundantly rich, upper middle class workers who contribute about 40 percent of Connecticut’s revenue to state coffers -- and loads of loot, Mr. Sanders continues to remind us, to Hillary Clinton’s presidential ambitions. Donald Trump, the leading Republican candidate for President, is a self-financing financier, and Mr. Sanders, a millionaire, is financed by the proletariat.
 
For years, Democrats in Connecticut, along with a compliant media, have operated under two false premises: 1) that the state was suffering continuing deficits because it had a revenue problem, not a spending problem; and 2) that, given enough time, revenue contributions in the state would return to “normal” levels, and never mind the causal connection between high regulatory bars, ever higher spending levels and diminishing revenues. Higher business costs lead ineluctable to reduced revenues. Businesses move away from high costs pretty much in the way Mr. Sanders’ campaign has moved away from ordered thought. Mrs. Clinton has not yet mentioned in her primary struggles with Mr. Sanders that Venezuela, once the Paris of Latin America, is now suffering from a shortage of toilet paper after having adopted Socialist solutions to economic problems during the reigns of two autocratic socialist Presidents, the late Hugo Chavez and his successor President Nicolás Maduro, formerly a bus driver.

Leftists Chavezistas in Connecticut’s increasingly progressive General Assembly want to adjust the state’s income tax to make it more progressive, but their efforts have been thwarted – so far – by Mr. Malloy, querulous Democrats in the legislature and pretty much the entire Republican Party contingent in the General Assembly. But surely some way, other than increasing marginal taxes on the rich, may be found to fill depleted tax coffers.

How can left of center politician raise taxes without moving their lips?

Of course! The trick is done by reducing state payments to “rich” towns: A reduction of money sent by the state to a town amounts to a tax increase – because the “rich” municipality must levy additional taxes to fill its own depleted town treasury.

Republicans in the General Assembly, who have been waiting for the trap to be sprung, are sadly disappointed but not surprised by the move. And Carol Liebau, President of the indispensable Yankee Institute, as well as State Rep. Gail Lavielle, have  asked the right question following the destructive Democratic hat trick:  “If Hartford imposes cuts to municipalities rather than reforming state worker compensation,” shouldn’t it reduce costly mandates at the same time?


Democrats in the General Assembly should – but they won’t.
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