Despite a $6.4 billion increase in projected revenues over last Session’s budget, there remain calls in the Capitol for additional monies to fund increased spending in education, health and human services, and other programs. Those monies, obviously, would have to come directly or indirectly from the taxpayer.
The political Left has wasted no time in demanding more money for causes big and small. In the religious pantheon of modern liberalism, no problem exists that cannot be somehow solved by simply burying it in taxpayer cash.
Last Session, the Legislature overcame a $10 billion, two-year budget shortfall (modest, compared to other states, such as California’s $35 billion one-year problem) without a tax increase. But it wasn’t by accident. The 78th Legislature made a series of conscious decisions to promote the health of Texas’ economy over increases in government programs.
A poll commissioned by the Tower Institute earlier this year found “sixty-seven percent (of Texans) believe the Legislature made the right decision to focus on spending cuts, instead of tax increases, to balance the budget during the last regular session.”
Indeed, a Scripps Howard poll released just this past week demonstrated that while Texans see education funding as a priority, and want more money devoted to student learning – Texans are categorically opposed to increasing the tax burden. And with very good reason.
The state’s economic growth rests almost entirely on our ability to remain a low-tax state. As Professor Richard Vedder noted several years ago, “…the higher the level of taxation, the lower the rate of economic growth” for states around the country. Worse: the difference between high-tax and low-tax states has grown increasingly slim. States like Massachusetts have reduced (comparatively) their tax burden in an effort to compete with Texas.
It is true most legislators are today talking about “shifting” taxes. But an unfortunate side-effect of many “shifts” is an overall increase in the tax burden borne by all Texans. By flirting with tax hikes – even hikes on “unpopular” things like business activity, smoking and wealth – the 79th Legislature of Texas risks doing grave damage to the economic well being of our state.
Even when lawmakers have good intentions, taxpayers see through the smokescreen of tax shifting. No one whose taxes are lowered by the shift believes the cut is permanent. And everyone whose tax burden increases is furious at the political leadership that delivered it.
But everyone knows what a casual review of taxes in the several states clearly demonstrates: shifting taxes raises everyone’s burden. States that have implemented new taxes, such as an income tax, have seen their total tax burden grow far, far faster than states that have not. Not a single state has lowered the average tax burden by implementing a new tax. It has simply never happened.
For reasons economic, popular and political, the wise lawmaker will continue the trend established in 2003: avoiding the increase of taxes, or the imposition of new ones, will prove the right course for Texas.
Michael Quinn Sullivan is vice president of the Texas Public Policy Foundation, a non-profit research institute based in Austin.