Monday, December 11, 2017

A Coordinated Effort To Raise Taxes

Despite mounting resistance from taxpayers, our statist politicians continue to push for their tax hikes. The latest example is a devious proposition from Campbell County Commission chairman Rusty Bell - and he is kind enough to draw our attention to a coordinated effort between state and local lawmakers to raise more than just our state taxes. 

Before we get to it, a quick piece of information that provides a good background. We all know that government produces essential services that we need for a functioning, orderly society and a strong economy. Those services are: 

a) The protection of life, liberty and property: law enforcement, a court system for the resolution of disputes, criminal justice, and fire and rescue services. It is not necessary that these services are operated by government, though contracting out, e.g., criminal-justice functions or fire-and-rescue services has the tendency of creating cronyism and private monopolies. These jack up the cost and can create inefficiencies and undue bias in service provision. 

b) The provision of infrastructure: highways, railroads, airports and seaports, designated flight corridors and seaways, and power grids. The reason why these functions fall under the realm fo government is that they tend to be so-called public goods, where there is no meaningful way to create a market. However, here more than under item (a), private partnerships can make a meaningful contribution. It is, e.g., a good idea to let an airport be run and operated as a non-profit private entity, owned by, say, a local municipality, as opposed to run it as a government agency. Please note the separation between the government-provided infrastructure and those who utilize it, such as the difference between a flight corridor designated by government, and the airline using that flight corridor, or the government-provided power grid and the power plant selling electricity through that grid. 

c) National defense. 

When government goes beyond these essential functions, it wanders into a territory where its contributions are of decreasing economic value, given the resources it uses. There is a rich literature on this, especially on the international level, that shows how higher taxes lead to drops in productivity and mounting inefficiencies. For example, a taxpayer in Sweden gets less than 60 percent of the government services that an American taxpayer gets, for every tax dollar (or equivalent thereof) they pay. Since taxes are about twice as high in Sweden as they are here, this means that their extra taxes they pay are a net loss to the economy, even taking into account the inefficiencies inherent to non-essential government functions.

Closer to home, so to speak, Key Policy Data has recently published a study of government productivity at the state level - and the verdict is not good for Wyoming. Their method starts with replicating some of the data I have reported on the Government Employment Ratio and the Government Compensation Ratio, then moves on to a new form of index for government productivity. According to the Key Policy Data analysis, Wyoming has the third least productive government sector in the country. Their method is overly complicated, putting unnecessary distance between on-the-ground economic activity and the index itself, but it is nevertheless worth a look. Their analysis gives some good reasons for a discussion on whether or not we get what we pay our government employees for.

In other words, not only do we have the largest government workforce in the country, but we also have one of the least productive government workforces. Let us keep this in mind as we get back to Commission Chairman Rusty Bell in Campbell County. From the Gillette News Record:

Local governments will talk next year about whether to make the Optional 1 Percent Sales Tax a permanent fixture. Commission Chairman Rusty Bell said he will bring it up in the coming months. 

Voters in Campbell County just said that they don't want higher taxes. You don't need a Ph.D. to realize that they probably will not want to make this tax permanent either.

Back to the News Record:
He was 3 years old when the tax first passed in 1976, and he’s seen Gillette grow into the city it is today. “A lot of that is because we decided to fund things ourselves with the 1 Percent,” he said. 
Could Commissioner Bell please provide evidence of that? No, it does not suffice to just point at a few buildings constructed with this tax. He will have to show that the activity in those buildings is absolutely essential to the city; basically, the bar of evidence requires that the commissioner proves that this tax has been the difference between the coal industry staying and leaving the area. After all, looking at Gillette from the outside, it seems as though the coal industry is what has grown Gillette into the city it is today, but if Commissioner Bell can prove otherwise, I would be delighted to hear about it.

While we wait for the commissioner's evidence, perhaps we should ask the commissioner to place his tax proposal in the context of what our beloved Joint Revenue Committee is up to. Oh, wait - the News Record already talked to him about that:
In a joint meeting between the county, city of Gillette and town of Wright on Wednesday, he said that anything the Legislature does when it comes to taxes could hinder the ability to renew the tax, not just in Campbell County, but also in the other 18 counties that have the optional tax. Lawmakers know this, and they keep asking counties and cities if they’ve made their optional taxes permanent, Bell said. “The answer is no, we let the voters decide,” Bell said. “And they say, ‘Well, we put that tool in the toolbox for a reason.’ They continually put it back on the counties to at least look at that option. I just want to throw that out there.” 
This is interesting. Apparently, according to Commissioner Bell, with their right hand leading state legislators encourage local governments to permanently raise the sales tax; then, with their left hand, they craft proposals for massive state-level tax increases. 

We have just learned the answer to the question "when is government big enough?" Never. Which is why it is absolutely paramount that every fiscal conservative in this state starts talking to the members of the Joint Revenue Committee, and to their local county commissioners, about the problems with higher taxes. 

Then, as the News Record article continues, Commissioner Bell makes a nice rhetorical somersault:
He said that when the 2018 legislative session is over, he wants “to at least have that conversation about making that 1 Percent tax permanent.” He’s not advocating for its permanency; rather, he just wants everyone to come together and have a civil discussion on its merits and faults. “I think we owe it to the people of Campbell County to have the discussion, if nothing else, to educate people on what (the tax) does for Campbell County,” he said. 
So he is not advocating for the tax, but he wants to have a civilized conversation about all the good things with the tax. 

The commissioner's idea of what a conversation is reminds me of an old joke by Rodney Dangerfield:

"I was having an argument with my wife, and I said 'there are two sides to this argument' and my wife said 'yeah, my mom is coming right over!'"

The News Record continues:
Bell said he wants to hear from all three entities as well as residents, whether they’ve benefited from the tax or would like to see it go away. It may be that a majority of people support the tax, but also like voting on it every four years, he said. If this is the case, then it’ll stay on the ballot. “At least we’ve done that education part of that, and it’s all out there, what we do with that money,” he said. “I think we should have a good conversation, have people talking about it and they can make up their minds.” 
With the risk of being overly pointed: a conversation, Mr. Commissioner, is an interaction where opposing views are contrasted in a mutually respectful manner. An activity that only presents one argument is not a conversation. If a one-side argument is well constructed and thoughtfully executed, it is called "persuasion". If not, it degenerates into "propagation". 


Take your pick, commissioner. Either way, don't try to fool Campbell County voters. They have already said no to higher taxes. They can do it again. 

As for the collusion between state legislators and county commissioners in raising our taxes: it only goes to show how devious, desperate and destructively ignorant many of our elected officials are. Yes, these are harsh words, but they only match the harsh economic reality that will follow if our state is burdened with half-a-billion dollars in higher taxes. 

We must stop Taxmageddon in 2018. End of story.

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