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| Friedman -- Bloomberg |
Omnibus Budget Bill Consideration
All the members of the state’s General Assembly, both
Democrat and Republican, should have at least a few days to analyze and digest a
final budget bill before voting upon it. Ample time is now devoted to public
headings within the various committees in the General Assembly charged with
refining the state budget. However, the refined final budget usually is
presented for an up or down vote in the General Assembly hours before a vote on
the final product is tallied.
The Queen of Hearts proclaims in Lewis Carol’s Through the Looking Glass, “First the
verdict, then the trial!” Lovers of justice may instantly denounce the perverse
reversion. Present conditions in voting budgets up or down – first the vote on
a finalized budget, then an analytical consideration of the proposed budget in
the absence of public hearings -- should be intolerable in any representative
system of governance.
A Flat Rate Negative Income Tax
Governor Lowell Weicker’s new 1991 state income tax was
supposed to be a flat rate tax that everyone, corporations and individuals
alike, would not hesitate to pay because paying a flat rate would be less onerous
and economically burdensome than hiring forensic accountants to provide
progressive tax detours. Weicker probably understood that complexity opens a
window to political skullduggery and corruption.
Once progressive laid their hands on Weicker’s new income
tax, the flat rate became more and more progressively steep and in due course Weicker’s
fleeting budget surpluses disappeared, like the infirm promises of politicians
who have their eyes fixed on reelection rather than the efficacy of their
economic reforms.
Governor Ned Lamont’s budget director, Jeffrey Beckham, recently reminded us that Connecticut’s state income tax presently is
highly progressive: “Most households making less than $40,000 per year have
little or no state income tax liability, and the administration says that the
governor’s new proposals would push that threshold to about $50,000,” according
to a recent piece in CTMirror.
Milton Friedman decades ago championed a flat rate tax with
a negative income tax
feature that would reverse-flow taxes from rich to poor and eliminate the tax
burden of those who fell below a specified poverty level. Everyone – poor, middle class and rich –
would pay the same flat tax rate because it is always useful for the entire tax
dependent population to be equally invested in government. Ideally, tax payers
should know each fiscal year what their tax bill is, but the complexity of tax
codes provide safe havens for self-interested politicians and the rich, who can
well afford to escape a tax hanging.
The negative
income tax in Friedman’s scheme would return taxes to those falling
below a preset poverty floor, and the negative feature of the flat tax could be
used to eliminate or substantially reduce a costly state employee apparatus
charged with transferring tax receipts from the haves to those in Connecticut
who now pay little in the way of taxes.
The beauty of a negative income tax is that it leaps over a
costly administrative network and provides direct payments through the tax code
to those falling below a poverty level – eliminating or severely reducing an
increasingly unaffordable middleman.
That middleman, a complex network of private and public
organizations and budget influencers, has become both unsustainable and
clamorous for massive increases in spending. The Democrat Party in Connecticut,
as well as an uncritical state media that does not wish to alienate a growing
government from which it receives its news and marching orders, has continually
winked at unsupportable increases in spending.
Spending, Bonding and Revenue Guardrails
Governor Lamont has just presented his two year, $50.5
billion budget to the General Assembly. The tax cuts provided in the budget
“for the middle class” are progressive; what else is new? And the governor was
at pains to stress that “guardrails” previously installed by a rare bipartisan
legislature should survive ten years into the future. The governor credits the guardrails – caps on spending, bonding
and tax revenue -- with producing the state’s first major surplus since the
Weicker income tax. Taxpayers in Connecticut may gauge the rapid pace of state
spending by comparing the last pre-Weicker budget, about $7.5 billion, with the
current $50.5 billion biennial budget, a threefold yearly increase.
The number of times the words “spending cut” – other than to
denounce spending cuts -- has affirmatively appeared in news broadcasts in
Connecticut is nearly zero. State debt at $53 billion is unsupportable. And
the progressive Democrat legislature, a few days after Lamont had stressed to
legislators the importance of a “guardrail” covenant limiting raids on
surpluses and so called “lockboxes,” has now dismantled half of the much
praised guardrails, reducing from ten to five years an extension of the
guardrail covenant that Lamont praised extravagantly as “one of the smartest
actions the General Assembly has taken over the past decade.” The guardrails, he
said, “have provided predictability and stability to our budget process” and
“ended the era of wishful budgeting and the so called fiscal process.”
Alas, the progressive General Assembly’s wishful budgeting is the governor’s
command.
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