On state government taking and spending too much
“When a government takes more, it spends more, and as a result, it grows,” David J. Sanders
There seems to be some confusion at the state Capitol these days. I thought for a while that we were making progress, but it seems that both the governor and (some) lawmakers have things backwards — Beebe & Co. believe the Arkansas economy’s primary function is to supply the “needed” revenue for whatever new programs they can dream up.
Why else would anyone seek a tax increase of roughly $100 million last year to fund new health programs at a time when the state’s coffers were flush with cash — around $300 million to be exact?
Their belief in the pre-eminence of the state is derived from the flawed idea that government rather than private sector growth — that necessary evil known as the market economy — is a better provider of opportunity.
Quite frankly this kind of thinking isn’t new; this statist attitude has dominated in these parts for many years. This, of course, isn’t the only view of the state’s economy.
The purpose of the movement of goods and services within our state’s borders is to provide for jobs and the flow of commerce for the people of this state. Those who create jobs for a living actually embrace this view of the economy.
Furthermore, in terms of the relationship between the people and their government, they hold to the conviction that state’s tax code should be an engine that encourages economic growth and investment.
The problem is that there are too few lawmakers who share a general antagonism toward confiscatory policies that impede freedom — economic freedom — or the belief in the unfortunate truth: When a government takes more, it spends more, and as a result, it grows.
Over time, the state’s tax code has become riddled with loopholes and exemptions to benefit the few, while income and capital gains tax rates have grown to the highest in the region. These high tax rates have had a detrimental effect on capital formation, high-wage job growth and productivity.
Not only are Arkansas’ tax rates high when compared to neighboring states, but objective measurements of the taxes Arkansans pay as a percentage their incomes show that the state’s citizens are working a lot of hours to pay their tax bill. Growing wages and lowering the tax burden is the answer.
Higher taxes are not only a drag on the state’s citizens and the broader economy, but they mask the state’s economic condition by making things appear rosy when they’re not. For instance, the major accepted measurement of economic weakness or strength is state government’s revenue reports.
Arkansas’ per capita income ranks near the bottom of the country because the state’s economy lacks high-wage jobs. For his part, the governor has tried to recruit business, but giving handouts – the governor’s preferred method of luring businesses to the state — will not solve our economic woes.
Simply putting more dollars in the governor’s “quick-action closing fund” is not the answer, although it and other incentive programs have become necessary evils for recruiting business.
We need more pro-growth policies that will make Arkansas the most appealing place in the region for capital investment. But don’t look for anything like that out of this government. Instead the prevailing mentality is tax more, spend more and grow state government.
