Taxes Cause Deficits

Taxes cause deficits. Believe it or not, that is a historical reality. Every time taxes are raised, the state, or country that raised those taxes has increased its margin of loss.

Don't believe me? Let's take a look at my own state, Nevada. During the 2005 legislative session our “Democrat” Governor, Kenny "tax 'em till they weep" Quinn put forth a bill to raise taxes by almost a billion dollars. That may seem small potatoes to some of you, but for a state with only two cities of decent size, this was a backbreaker. Nearly every business, from mom and pop up to large corporations, was affected; except for the sacrosanct gaming industry. He even went as far as violating the state constitution by taxing business and private properties at different levels. The constitution has an equality clause stating that you can’t do that. However, Kenny never allowed the law to get in the way of adding some cash to his coffers. He called himself a Republican, but a lot of people do in this state…what they really are is crooks. A real conservative follows the constitution, even if doing so costs them.

Two years later he had a, supposed 300 million surplus and the legislature nearly went to war over deciding where those dollars went. Eventually some of it went back to the taxpayers, but they got back considerably less than what they had put in. It is not an attractive investment program. The problem came when all those businesses being charged higher taxes began to pass them along to their customers, adding an addition cushion for the administration costs. This means prices went up. The customers responded as they always do, they bought less and the sales tax revenues went down. Those corporations with the financial power to do so began hiding more of their assets and instead of adding to the state treasury, the level of contribution dropped. In a very short time the surplus had become a shortfall. If the tax raise had not occurred, the economy would have remained somewhat stable and no “surplus” would have been distributed. Shoppers would have continued to shop and the sales and corporate tax revenues would have remained stable. Sure, some of Kenny’s pet projects would have gone unrealized, but not one of them was even close to being a necessity.

Let’s look at the east coast. New Jersey was at one time a state that enjoyed the problem of having to deal with a treasury surplus year after year. Governor Jon Corzine took over a state that had taxed and spent itself into a combined deficit exceeding 30 billion dollars. Now, New Jersey is a state with negative growth and Governor Corzine refuses to consider any solution that does not include a “revenue enhancement”. It was those enhancements and all that socialistic spending that put his state into the morass it is currently in. Raising taxes, especially on those businesses that create jobs always hurts you in the long run. You don’t grow when you whack of the head of the golden goose, you wait for those eggs to be laid.

If we want to get out of this current headlong slide into depression, we have to make a few hard choices. One of those is that we have to immediately reduce taxes on the producers and eliminate some. The inheritance tax is a good place to start. Property taxes are another one. If we put more money into the hands of the people who earn it, history shows that they always reinvest at numbers large enough to grow the economy. If we punish achievement, we punish ourselves.