Tuesday, April 25, 2017

Tax The Guy Behind The Tree

Don’t tax you. Don’t tax me. Tax that fellow behind the tree -- Russell Long

Connecticut has suffered – precisely the right word – from three massive tax increases.


The first was the 1991 Lowell Weicker Income Tax, which sent a clear message to contiguous states and businesses both inside and outside our borders: Connecticut has surrendered a no income tax hedge that had given it an advantage over bordering states such as New York and Massachusetts; and the state had committed itself to increases in taxation and spending. The Weicker body blow was repeated twice during the administration of Governor Dannel Malloy, approval rating 28 percent. Mr. Malloy, who lame-ducked himself last week, is the author of both the largest and second largest tax increases in state history.

Watching this political tableau through Connecticut’s transparent windows were 1) large businesses in Connecticut with wings on their feet plotting to move out of state, GE being the most conspicuous of the expats; 2) Connecticut taxpayers lashed from the triple tax-thrashing and eyeing North and South Carolina, Florida, Texas and Tennessee as possible safe havens; 3) students fresh out of very expensive Connecticut universities googling states in which job prospects are more plentiful and state politicians less… um… dumb.

Connecticut has become a state that meets Einstein’s definition of insanity: doing the same thing over and over again, while expecting a different result. Got a deficit? Raise taxes. Got another deficit? Raise more taxes.

The left and right ends of the political spectrum meet and agree on one crucial point: whatever you tax, tends to disappear. The gas tax in Connecticut is high because environmental leftists think cars are the enemy of the environment. If the tax you place on gas is high enough, you will discourage the consumption of CO2 producing fuels – because whatever you tax tends to disappear. Punishing taxes may have beneficial consequences: when the cost of using a car has become prohibitively expensive, people will wisely choose other means of public transportation to get from A to B. The  same application of the same principle may be found on the right. If you are a state such as Connecticut, suffering still from a recession that has disappeared everywhere else in the nation, you ought NOT to tax entrepreneurial activity – which produces taxable income, which floods state coffers with needed revenue – because whatever you tax tends to disappear.

Connecticut, fast becoming an administrative state rather than part of a federated republic, wants to be able to tax citizens and use the tax money to pick business winners and losers. Why? Because the anti-republican administrative state most effectively perpetuates itself by replacing Adam Smith’s invisible hand with a mailed fist, the better to direct business activity to its own ends.

The omnipresent administrative state displaces its competition through manipulative tax codes. Benito Mussolini’s definition of fascism was: “Everything in the state; nothing outside the state; nothing above the state.” Direction from above is the hallmark of both God and a centralized administrative state. Hitler, Stalin and Mao were, all of them, men-like-gods; the omnipotent authoritarian is a cheap secularist knock-off of God. Ivan Karamazov warns in “The Grand Inquisitor” section of Feodor Dostoyevsky's The Brothers Karamazov – “If God does not exist, everything is permitted.”

We like to think that two features of our republic are proof against such a state. We have a tripartite government – legislative, judicial and executive, each branch of which exercises different but co-equal powers, a political arrangement that prevents Caesarization, and we are a constitutional republic, a republic of laws, not of men. Both these bulwarks have given way in the late 20th and early 21st centuries. We are on the point of giving over a strong government to strongmen who mold the times and its people into shapes that fit the fancy of overreaching judges, cowardly legislators and tin-pot savior presidents and governors. In the administrative state, only the administrators may govern on behalf of the people, a very different scheme from that proposed by Lincoln when he prayed that government of, by and for the people would not perish from the earth.

Russel Long, certainly more conservative than his father Huey Long, was known for his simplification of tax laws. His often quoted quip “Don’t tax you. Don’t tax me. Tax that fellow behind the tree” was launched against opponents who preferred complex tax laws and undying regulatory legislation that only experts might understand, the better to fool and bedazzle the provider class.

In Connecticut just now, we find Democrats searching frantically for that fellow behind the tree who, of course, exists only in the wayward imaginations of desperate politicians. We are the fellow behind the tree. The extravagant spending of our politicians will not, in the end, be charged to out of state commuters passing through Connecticut’s federally mandated inland tolls or to Greenwich millionaires. The state’s spending bill, much too high, will make its way in time to middle class tax providers. It always has and always will.

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