Taxes & Spending

In March 2016, one of my constituents had a letter published in the local newspaper critical of my blocking a 75% gas-tax hike. His letter evinces a sentiment unfortunately shared by many politicians in Columbia, that is, if only we took more money from the people, then all our problems could be solved -- roads would be repaired, kids would be better educated, people would be healthier, etc.

But I've learned, through my service in the legislative branch as a state senator and, prior to that, in the executive branch as the governor's chief of staff, that things aren't that simple.  Simply raising taxes to solve a problem isn't the soultion; rather, it is necessary to do the harder thing -- to spend time figuring out why, despite already ever-increasing levels of spending, we aren't getting outcomes people deserve.

 

And when, as is the case with our state's spending on roads and bridges, that inquiry reveals the inner-workings of a system of cronyism and horse-trading, then yes, I am going to insist on reforms to that system and block any proposal that simply increases taxes and dumps more money into it. That's always been the approach I've taken when it comes to spending the people's money, and it always will be.

Another constituent wrote me a letter a few years ago that claimed my desire to cap state-government spending betrays ignorance of the role government plays in the economy. “When the state spends money, that money goes into the economy to pay salaries, purchase goods, pay for services, etc.” he wrote. “It is the same as when I spend money.”

 

Well, of course government spending affects the economy.  And when it spends taxpayers’ money on the essential things only government can do, the affect is positive. But when government decides, as it so often does, to do more, it is a mistake to assume public and private spending are the same. Land, labor, and capital-goods factors are all scarce, and society benefits when they are put to their most-productive use. Private individuals, guided by the free market to produce what consumers need, always spend money more productively than politicians and bureaucrats.