January 2008

No New Taxes: Are 2007 Actions A Prophecy for 2008?

By John Hendrickson

In the November 2007 off-year elections voters in several states voted against the tax and spend agenda. In fact, the National Taxpayers Union (NTU) stated that the “results show a clear tilt toward limited government.”[1] This is indeed good news as the 2008 elections loom closer. As taxpayers are faced with the reality of increasing demands at all levels of government, citizens are becoming more aware of how it disrespects their wallets and purses.

Pete Sepp, Vice President for Policy and Communications for NTU, stated: “Whether they (voters) were asked to pay higher cigarette taxes for children’s health programs or higher sales taxes for mass transit, the resounding answer from voters this fall was ‘no’.”[2] Some of the victories for limited government and economic liberty include:

  • Washingtonians opted to strengthen the state’s requirement of a two-third’s legislative ‘supermajority’ or voter approval of higher taxes and called for the creation of a constitutional rainy day fund.
  • Texans approved four separate measures affecting property taxes, including a limit on homestead assessments and an exemption for vehicles used partly for business purposes.[3]

The results of the 2007 elections did not consist entirely of good news for advocates of economic liberty. The biggest loss occurred in Utah where voters rejected a statewide school voucher plan, which was designed on the policy ideas of the late economist Milton Freidman. Utah’s education system took a step back, not only in improving the overall quality of education, but also in saving taxpayers more money.

The taxpayer’s response in 2007 is further proof of a growing grassroots approach to fight against tax increases and government spending. Many states are also seeing debates on restructuring or even eliminating property taxes. “Current property tax discontent is reminiscent of the late 1970s and early 1980s, when property tax caps, including California’s Proposition 13 and similar measures, were debated and passed in many states.”[4]  In addition, budget transparency and governmental accountability reforms have seen an increase in support.

At the Federal level, taxpayers have witnessed increasing government spending. David M. Walker, Comptroller General of the United States, has been on a public relations campaign to bring awareness to the reality of the fiscal dangers ahead. In a report titled, A Call for Stewardship: Enhancing the Federal Government’s Ability to Address Key Fiscal and other 21st Century Challenges, Walker writes that “without meaningful action, by 2040 our government could only have the resources to do little more than mail out Social Security checks and pay interest on the massive growing national debt.”[5]

Comptroller Walker is referring to massive entitlement programs of Social Security, Medicare, and Medicaid—all of which are in danger of collapsing. Congressman Ron Paul, who serves on the Joint Economic Committee, wrote that “the fact is we have huge trade imbalances, massive deficits, and a $9 trillion national debt, which balloons to $60 trillion if unfunded liabilities in Social Security and other promises we have made to Americans are included.”[6]

If entitlement reform is ignored then the Federal government will be doomed to carry a heavy chain in order to fulfill the entitlement obligations, which would include tax increases. Entitlement programs, which are not constitutional programs, will also be in direct competition with constitutional responsibilities that the federal government must meet, such as defense. History, even recent history, has shown that the federal government cannot serve both an aggressive domestic and foreign policy agenda. President Lyndon Johnson learned this lesson trying to fight the Vietnam War and implementing his Great Society at home.

“We are at a crucial point in history right now. We must think very carefully about our next moves,” wrote Congressman Ron Paul.[7] Perhaps the 2007 state and local anti-tax victories will be an early prophesy that taxpayers understand the looming crisis America is headed for and will begin to demand fiscal accountability from elected officials regardless of political affiliation. Avoiding the New Deal mentality will be difficult, but America’s future rests on returning to constitutional principles.

Taxpayers will have to take the leadership on this issue if any significant change is to occur. The 2008 elections will be a major indicator to see what direction taxpayers want the nation to move. The challenge that faces taxpayers is monumental, not only because they must hold politicians accountable, but also change the very nature of our political culture. “We must rethink the very role of government in our society. Anything less, any tinkering or ‘reform,’ won’t cut it,” wrote Congressman Paul.[8]

John R. Hendrickson is a Research Analyst at Public Interest Institute.

The views expressed herein are those of the author and not necessarily those of Public Interest Institute or Tax Education Foundation. They are brought to you in the interest of a better-informed citizenry.

[1] Kristina Rasmussen, “Voters Send Strong Anti-Tax Message in November Elections,” Budget & Tax News, January 2008, <http://www.heartland.org/Article.cfm?artId=22439> (December 17, 2007).

[2] Ibid.

[3] Ibid.

[4] Tonya Barr, “State Property tax Debates Heating Up,” Budget & Tax News, January 2008,     <http://www.heartland.org/Article.cfm?artId=22444> (December 17, 2007).

[5] David M. Walker, A Call for Stewardship: Enhancing the Federal Government’s Ability to Address     Key Fiscal and Other 21st Century Challenges, Government Accountability Office, GAO-08-93SP, iii.

[6] Ron Paul, “The Importance of Fiscal Responsibility in Government,” Texas Straight Talk: A Weekly Column, December 16, 2007 < http://www.house.gov/paul/tst/tst2007/tst121607.htm>    (December 17, 2007).

[7] Ibid.

[8] Ron Paul, “The Coming Entitlement Meltdown,” Texas Straight Talk: A Weekly Column, March 5, 2007, < http://www.house.gov/paul/tst/tst2007/tst030507.htm> (December 17, 2007).