Friday, February 8, 2013

Malloy’s Second Budget

Governor Dannel Malloy likes to tinker with the language: He prefers “budget shortfalls” to “deficits” and quibbles over “tax increases.”

If you extend a tax due to expire, have you “increased taxes?”

As a general rule, most taxpayers would agree that if the net amount of taxes due the government is larger in year 2 than it was in year 1, they have experienced a tax increase. Governors who plan to run for re-election naturally would prefer softer, more ambiguous language; so, deficits become“shortfalls” and a jump in tax payments from year 1 to 2 becomes a reinstitution of a tax due to expire, certainly not a tax increase.

Companies and tax payers fleeing the state in search of other low tax, low regulatory environments are not likely to pause over these nice distinctions – if they can escape ever increasing taxes and regulations. Their goal is to decrease the amount of money they shell out in taxes from year 1 to 2.

People and businesses in Connecticut have not been able to accomplish that goal since 1991, the year former Governor Lowell Weicker saved state government the necessity of cutting spending and trimming back Connecticut’s regulatory brambles by forcing an income tax through the General Assembly’s compliant, Democrat dominated legislature.

Since 1991 Connecticut has increased spending and taxes threefold; as a consequence of rampant spending, the state has not, to put it charitably, robustly increased jobs. It is only a slight overstatement to say that Connecticut has produced no net jobs since Mr. Weicker’s income tax. Mr. Malloy’s first budget, heavily reliant on the largest tax increase in state history, repeated the mistakes the General Assembly never learned from its recent history.

There is dawning awareness among some liberal Democrats not yet pickled in the doctrines of progressivism that taxes are harmful for a whole host of reasons. All taxes move dollars from an entrepreneurial theatre in which wealth is created to distributive government organs that then uses the dollars for political purposes – to reward supporters and punish enemies, which is the very essence of a crony capitalism flirting with fascism.

During Mr. Malloy’s first budget, the governor attempted to hold municipalities harmless through broad based tax increases that did not penetrate the protective membrane that surrounded municipalities and “held towns harmless” from the sometimes pernicious effects of aggressive taxation.

It is so common these days in the national legislature to use tax proceeds to encourage some favored businesses – those that rely on green energy rather than fossil fuels, to cite but one instance -- that the process of deciding who shall win and lose in what remains of a free enterprise system, extremely destructive in its effects, hardly registers on the public consciousness.

Here in Connecticut, Mr. Malloy, who has for all practical purposes become a tax broker, has it in mind to re-create Connecticut as a hub for medical research. To this end, Mr. Malloy is pulling tax dollars from the entrepreneurial pool and “investing them” in the utopian future he has in mind for the state. And, of course, the governor has also used tax dollars as polite bribes to prevent mega-rich companies from pulling up stakes in regulation and tax rich Connecticut and moving to states that have carefully prepared the economic soil to receive them. This ruinous mode of operation is more than a slippery slope: These “good intentions” are the stones that pave the road to economic hell.

In Mr. Malloy’s second budget, municipalities in the state have not been held harmless. The Malloy budget proposes a reduction in car property taxes, a meddlesome threat that now rests like a crown of thorns on the brows of mayors and municipal officers in the state’s federated system of government. The proposal is an egregious violation of the bedrock principle of subsidiarity, which holds that political matters ought to be handled by the smallest, lowest, or least centralized authority capable of addressing the matter effectively. The entire governmental structure of the United States rests, now uneasily, on the “mind your own business” principle of subsidiarity. The federal government should not do what states may do better; the states should not do what county government may do better; county governments should not do what municipal governments may do better; municipal governments should not do what private helping organizations may do better; and private helping organizations should not do what a healthy and vibrant family may do better.

Why should Mr. Malloy or the General Assembly deprive towns in Connecticut of the resources they need to accomplish their economic and political ends? No possible good can come from a state government blind to a principle best celebrated by Alexis de Tocqueville, who peeked into the American soul more than 75 years ago and, paying tribute both to the genius of the American founding and the character of the American people, noted in words that ring like a tolling bell down the centuries:
“The American Republic will endure until the day Congress discovers that it can bribe the public with the public's money … Democracy extends the sphere of individual freedom, socialism restricts it. Democracy attaches all possible value to each man; socialism makes each man a mere agent, a mere number. Democracy and socialism have nothing in common but one word: equality. But notice the difference: while democracy seeks equality in liberty, socialism seeks equality in restraint and servitude.”

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