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Sunday, March 24, 2013
Knee-Jerk Reaction Leads to Just More Money
By Lowell L Kalapa @ 6:01 AM :: 5080 Views :: Taxes

Knee-Jerk Reaction Leads to Just More Money

by Lowell L. Kalapa, Tax Foundation of Hawaii
Much of the woes portrayed as far as sequestration goes go back to the question of just how much is too much when it comes to spending on government programs.
If you had the opportunity to sit in legislative hearings at the state capitol or listen to broadcasts of debates on the Congressional floors of the House and the Senate in Washington, D.C. over the past forty years, more often than not one would hear officials whine that they are short-staffed. They would say if they only had a little more money they could solve the problem, or this is an emerging issue that must be addressed with more resources also known as more money. Each year administrators or program managers supplicate themselves before policymakers, both at the federal as well as the state and county levels, to beg that their budgets be increased.
The problem has been that both elected officials, as well as administrators, have come to believe that they must meet every request made of them by a growing vocal public. Discover a problem or issue and go ask for more money to expand the reach of the programs in your department. As a result, it becomes a knee-jerk reaction in the public sector rather than a carefully thought out strategy on how to address an issue without the necessity of establishing yet another new program or hiring more employees. But over the past forty-plus years, it has been just that, new issue or new complaint, let’s create a new office or program to address that issue and let’s ask for money to fund it.
Instead of establishing yet another office of this or that or a program, policymakers should first ask, “Is this something the private sector could do better or more efficiently than government?” If it is something that the private sector cannot undertake on its own, the question should be, “Is this something that the public sector can partner with the private sector that could effectively address this issue or need?” Ah, but it is so easy to say that government will do it, for this generation of taxpayers has been ingrained with the idea that government can do it all and that they pay taxes anyway, so government should be the entity that should address these problems and issues which come before policymakers.
However, when it comes to the issue of raising taxes or adding new fees and user charges, these very taxpayers cannot put two and two together and realize that they are the cause of the problem as the demands they make of their elected officials and government administrators result in a call for more funding. Whether or not more funding is actually needed, officials cite the public demand as reason enough to ask for more or higher appropriations. Like the cartoon character “Pogo” observed: “We have met the enemy and the enemy is us!”
The problem is that people are not willing to pay more or higher taxes, at the least the vast majority would like to believe that they are already overburdened and that somebody else should pay for all of these services, but certainly not the great “middle class” nor can the poor be asked to pay. So, naturally, taxpayers and elected officials turn their sights to the “rich” who surely have the means to pay more taxes.  
It is not so much that the “rich” need defending as they already pay the lion’s share of income taxes both at the federal and the state level, as much as elected officials have pandered to the much larger portion of their voting constituent base of the great “middle class” by adopting all sorts of tax relief measures or reduction of tax rates. The real problem is that when one is absolved of paying for anything, they naturally “want more from wherever that came from.” In other words, if one doesn’t have to pay for something, then surely the people who gave out those free favors can afford to give even more. 
However, as the old saying goes, “There is no such thing as a free lunch,” eventually someone has to pay. At the federal level, the price of that free lunch has been to “kick the can down the road” by running up a national debt of nearly $17 trillion most of which is held by foreign countries. Here in Hawaii, state policymakers just can’t borrow the money to pay for operating costs nor, like the federal government, do they have the ability to just print more money. Thus, in the last few years lawmakers have turned up the heat on the tax and fee burner although they have tried to mask major increases in the two most obvious tax sources, the personal income tax and the general excise tax.
It is well past time that local lawmakers control that knee-jerk reaction to just raise more money to address issues and problems that could be better addressed in ways that don’t require more and new taxes.
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