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Tax Cuts, Tax Credits And Public Virtue


As the New Year’s Eve midnight clock passed 12:00, Connecticut and the nation entered election year 2022. How does one know one has entered an election year?

“With [Governor Ned] Lamont and the entire legislature up for reelection in November,” a Hartford paper tells us, “the race is on to see which taxes may be cut this year.” Voters tend to respond favorably to tax cuts. The title of the story emblazoned on the paper’s front page read, “State legislators weighing tax cuts.”

“Weighing” is the operative word. Then too, there are important differences between tax cuts and tax credits. A practical discussion implies legislative cordiality and bipartisan agreement. None of the discussions have yet been written in stone.

House Republican leader Vincent Candelora warned that the Republican plan may not be embraced by “liberal Democrats.” However, the very presence of an upcoming election, he noted, “does change people’s behavior.” Candelora and the Republicans, at this early stage in the discussion, want to restore Connecticut’s property tax credit to its previous maximum of $500.

The credit not too long ago had been reduced to a maximum of $200, and cutbacks in eligibility had been engineered to “save money for the state,” Democrat leaders said. Following the progressive change, only senior citizens and those with dependents were eligible for the credit. “Previously, any residential property owner, subject to income limits,” according to the Harford paper, “could claim a dollar for dollar credit for taxes that they paid on their home or car.” The Republican plan would restore the tax credit as it had existed before all the legislative finagling, largely by Democrats bowing to progressive revisionism.

Pleas from Republicans that “the state could cut taxes only until the end of 2022, and then revisit the idea again in 2023” depending upon whether or not the economy improves, have  found favor with House Speaker Matt Ritter. A cut in the state sales tax from 6.35% to 5.99%, starting in February and lasting only through the end of the year, prompted a compliment from Ritter: “I have to give them [Republicans] credit. I thought that [temporary tax credits] was a very interesting concept.”

Actually, temporary tax credits have been standard fare among progressive Connecticut Democrats who favor permanent spending increases, long-term tax increases and easily revocable tax credits that may be effortlessly adjusted up or down. Real long-term tax cuts and real long-term spending increases bear this in common: neither is painlessly adjusted, both require legislators to vote a tax increase or decrease up or down, and both serve different and contradictory purposes.

Republicans traditionally favor reliable, long term tax cuts because past practice has shown marginal tax cuts increase creative industrial productivity. Real long-term tax cuts also boost revenues, state and federal. To put the matter in terms liberal President John F. Kennedy often used, the consequent “rising [economic] tide” occasioned by increased business activity, a by-product of reductions in marginal taxation, “lifts all the boats,” including state revenue infrequently used by progressives to aid the poor.

Progressive Democrats, on the other hand, favor punishing taxes applied to millionaires, and rely upon “fair share” taxes, rarely defined, to pay for often improvident spending, while loftily overlooking mounting state debt. Connecticut’s state debt, among the highest in the nation, presently is cresting at $57 billion.

Democrats this election season will be relying on temporary funding to finance their newest and most expensive spending spree. The federal handouts of the Biden administration are themselves temporary. The Connecticut tax credits mentioned above are likewise temporary. And we all know what happens when temporary revenue enhancements collide with permanent spending increases. Debt piles up and, as fixed costs rise and debt is whittled down, it becomes less and less possible to cope. Conservative Prime Minister Maggie Thatcher once asked socialists in Great Britain what they planned to do once they had “run out of other people’s money.” Having equitized and flat lined wages and assets in the general population, they resort, as all tyrants do, to obvious lies and persuasive naked force.

In countries in which politicians place the common good above their own private good, tyranny will find no foothold. The public virtue celebrated by John Adams – “Our Constitution was made for virtuous people, and no others” – is our surety against force and subversive lies.  

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