Tuesday, March 25, 2008

More Taxes Please

Four big city mayors in Connecticut, hungry for tax dollars, got together and decided it might be a good idea if shoppers in their area would spend 16% more in sales tax for items bought in their cities.

And no, this is not the beginning of a joke.

This push to increase urban taxes produced a mini brouhaha in one newspaper that ran the item. It was the closest thing to a tax revolt seen in the state since former Governor Lowell Weicker, by political chicanery, imposed an income tax on his beloved state. Weicker has since moved to Virginia, his new beloved state.

“Great idea guys,” said “Snaggletooth,” his tongue buried deep in his cheek. “Also you should consider a tax on office rents and tolls on the roads into towns. Perhaps a special tax on food at restaurants and maybe a higher gas tax. That'll help.”

“When will Democrats learn,” asked “Tax This,” from New York, “that cutting taxes stimulates economic activity and in turn raises the revenues that government receives for their idiotic socialist giveaways? It saddens me that our leaders are this stupid. Teach Economics in the schools so we don't have another generation of economic illiterates like we do now...”

Of course, “Tax This” is right. The cities are not suffering from low taxes; they are suffering from a shrinking tax base, which will only shrink further as taxes in cities rise relative to taxes in the suburbs. Like water, people and businesses both flow from high tax ground to low tax ground. Regulations, like taxes, force businesses to raise the cost of their products. Realizing that they are competing in a world market and seeking to recover such costs, businesses will flee to states where taxes and the cost of labor are less punishing. When they flee, businesses take jobs, opportunities and tax revenue with them, leaving high regulatory, high tax states like Connecticut holding a mostly empty bag.

Indeed, the exodus already has begun. People in Connecticut this year cut their Easter hams and broke bread across a table that included many young nephews, brothers or sisters who had fled the state looking for greener, unparched pastures. The young people are getting out while the getting is still good. With the harebrained schemes offered by Connecticut’s urban mayors, the getting, for them, is certain to get better.

It is almost impossible to believe that the mayors – and the legislators who will seriously consider their proposal – are so dead to elemental laws of finance that they do not know what is happening in their state.

They know.

The proposal probably has been brought forward to advance goals other than prosperity. Democrats, having reached for the last jar of peanut butter in an empty kitchen cabinet, have been looking for some time to other untapped sources of revenue, without which they will not be able to continue a spending spree that began with the institution of a state inc0me tax.

They cannot reduce spending without alienating those battalions in the Democrat barracks they have in the past called upon for votes and political succor. Other “gimme more” groupies – Connecticut’s crying mayors conspicuous among them – are working the same corner of the barracks. A good many Republicans share the same objective, which may be summed up in Huey Long’s immortal phrase, “Don’t tax you, don’t tax me, tax the guy behind the tree.”

Connecticut is running out of trees.

The mayors proposal is designed to discomfort the comfortable, one sortie in a never ending battle to find someone else to pay for improvident spending. Quasi-socialist Mayor John DeStefano has his eyes squarely fixed on the prize -- the bulging pockets of the state’s Gold Coast millionaires. What the boys want is a steeply progressive millionaire’s tax, so that more money can be shuttled to interests that support them.

But millionaires outside the state, entrepreneurs looking for low tax, low regulatory states – who might invest in a state that has not doubled its tax burden within the space of three governors, two of them Republicans and the third now a citizen of Virginia – are not likely to be mesmerized by the scam. They will continue to settle in the green pastures of South Carolina, to mention just one low regulatory state, where labor is less expensive, the attorney general is not considered a revenue producing official for a state close to beggary and the skies are not cloudy all day.

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