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Colorado – not missing the point

Paul Marks points out that it is the spending rather than the taxing which is the root of governments woe

People (not just us evil libertarians) often complain about taxation and there have been many attempts to reduce or at least limit it – these attempts have mostly been unsuccessful.

Few governments tax in order to create piles of money in their store houses – governments normally tax to spend. If we are to limit (let alone reduce) taxation it is government spending that we must fight. Limit one tax and the government will increase another – limit them all and government will borrow, ban borrowing and the fight come back to spending – i.e. (in the end) the fight is about government spending.

As far as I know there is only one State in the U.S. which shows (in its’ laws) a clear understanding of this and that State is Colorado. Colorado has many problems and I would not claim it is the most free market State (although it is one of the smaller government States), but I think that its spending based version of a “Taxpayers Bill of Rights” has, over the few years of its’ history, proved to be useful thing.

In Colorado government spending can only be increased in line with an increase in population or an increase in prices (yes I know there are all sorts of problems with the idea of a price index – but I will not go into that here). This would seem to a be a very moderate limitation – but (as far as I know) there is not another State in the Union that has such a limitations. Over the last few years Colorado has reduced the burden of taxation (i.e total taxes as a percentage of income – not reduced one tax and increased another) and balanced the budget.

The key really is government spending. To convince people that if they want some special benefit from government another benefit will have to be abolished (not just the total spending of the government increased).

In the end the fight has to be about spending. Whatever waffle either side comes out with about the “institutions of a just society” what matters is where the money goes. If we allow people to convince others that government spending is a “good thing” then all the anti tax and anti borrowing campaigns in the world will not save us.

Paul Marks

2 comments to Colorado – not missing the point

  • The limits here are not only on spending but on tax rates as well. During the boom times in the late 90’s tax revenues were more than the government was allowed to spend, so each taxpayer was granted a refund, as per the Taxpayers Bill of Rights (TABOR). The state reduced tax rates to better balance income and expenditures, but now tax revenues have declined with the economy, and TABOR will not allow tax rates to be raised without consent of the electorate. The current Republican dominated state government regrets lowering tax rates, they can’t stand having to actually cut spending.
    Douglas Bruce, author and chief proponent of TABOR, tried to run for the state legislature and was defeated in a bitter primary race for the Republican nomination as payback for his tax cutting efforts.

  • Paul Marks

    It is a good thing to read a comment written by someone who clearly knows more about a matter than I do (rather than read a comment written by a member of the waffle brigade). I thank Walter for what he has written.