Thursday, March 15, 2007

Voodoo Economics, Emporia Style

“The difference between death and taxes is death doesn't get worse every time Congress meets.”

- Will Rogers

In just about any forum during this election season Emporians have had questions about basic services. Some ask, “Why can’t we get our streets plowed when it snows?” Others ask, “Why do we have so many stray dogs roaming the streets?” There are lots of questions. “Why can’t firemen and policemen get merit raises?” “Why aren’t livability codes enforced?” The questions go on and on. In each case the response of the incumbents like Bobbie Agler and Tom Myers as well as newcomers like Kevin Nelson and Jeff Longbine is, “If the people of Emporia want these things they need to realize that there will be an increased cost for municipal government to provide them.” In layman’s terms, stripped of political nicety, it means HIGHER TAXES!

I strongly disagree with that general assumption. In fact, I believe that one of the first things the city of Emporia needs to do to generate revenue is to LOWER TAXES on both residential and commercial interests!

Back in the eighties people laughed Ronald Reagan to scorn when he said that as President he would lower taxes. After two terms in office, with taxes cut and government revenues actually increasing, “Dutch” had the last laugh.

You’d think that the message would have gotten through here in thoroughly Republican Emporia by now. But, about as creative as some candidates can get is, “Open your wallets and I’ll give you all you want.” In the eighties Reaganomics (or supply side economics) was derided as “voodoo economics.” When I see Emporia’s current reality, with the rattling of the municipal saber of improved services equals increased taxes, I realize what “voodoo economics” is really all about. That’s Emporia’s current reality.

I believe the people of this good city have had enough of the zero sum games the city is playing. They’ve had enough of the high taxes. Many are voting with their feet, leaving town. Our median household incomes and high poverty rates are proof of that. I’ve talked to Emporians who say they’re now ready to leave, that they’ve had enough. I read almost daily of businesses that would like to expand here, but must go elsewhere because the high taxes have bled much of the disposable income from purchasers of goods and services. That must change, and it must change soon!

Some economists say that it’s almost impossible to craft a Laffer curve for a local government. I can tell you what the people of Emporia know all too well. We’re being taxed well beyond the prohibitive range indicated in my introductory graphic. In fact, if there were a place in the graphic for an obscene scale, Emporia’s current tax model would be in that range. Hence, the city is in a downward economic spiral caused in good part by an upward spiral in taxes. This needs to be reversed!

Reducing taxes is the right thing to do. As economists Thomas A. Garrett and John C. Leatherman have noted:

“Because of the inverse relationship between tax rates and tax bases, generating additional revenues may not always be obtained by simply increasing tax rates. A continual increase in tax rates by state and local officials may not guarantee an increase in tax revenues - beyond some point tax rate revenues will actually begin to fall. Thus, within the context of the Leviathan view of government, although governments will attempt to generate as much revenue as possible, additional revenue is not always had by a simple increase in the tax rate.”

To keep increasing taxes and expecting improvement in this city’s economic condition is foolhardy. It’s nothing more than voodoo economics. We can and must do better!

1 comment:

James Fletcher Baxter said...

Since every Intelligence Test is a test of one's ability to make choices, the members of the city council, and the public, should be very careful how they justify their rejection of your presentation of Reagan's successful lower tax policy.

Those policies were, and are, based on a superior perception of the natural laws of freedom 'supply side' economics, in league with human nature.

semper fidelis