Limiting Taxation and Expenditures

A while back, it was announced that Jim Petro has come out with his own version of a “taxation and expenditure limitation” (TEL) amendment. Both Ohio Republican gubernatorial candidates have proposals to put the reins on the outrageous explosion of government largess, as has occurred under many, many years of an out-of-control Republican Party that has dominated our State government. Since 1994 alone, the state government has expanded 71 percent, and is on pace to double every 13 years.

(I’ll pause to let you Fry Guys who think the Republican Party is interested in your small government ideas to reflect on that.)

Blackwell’s amendment, Tax Expenditure Limitation (TEL), limits state spending to 3.5 percent or the rate of inflation, plus the increase in population.

But then, Jean Pierce, Blackwell’s campaign manager goes on to say:

“We’re not shutting government down, we’re just saying it shouldn’t grow faster than the ability to pay.”

Now…if that were really the case, then why does the Blackwell version have an escape clause to allow for the continuation of government growth, if "inflation+population" amounts to less than 3.5%? Why not leave the TEL at inflation plus population change? In real terms, that would do more to keep government at a constant size, relative to “the ability to pay” than anything else.

In fact, the Libertarian Party of Ohio endorsed just such a TEL about a year ago. The original plan , created by the Buckeye Institute for Public Policy Solutions , called for:

- Limiting state and local government spending to the inflation rate plus population growth;
- Requiring the state legislature to rebate any surplus revenue to taxpayers;
- Requiring voter approval for new tax increases extending an expiring tax or approving a tax policy change the increases net revenues for government;
- Requiring voter approval for spending above the limits set by the TEL

So why does Blackwell want an escape hatch to continue to grow government? The only answer I can come up with is that he is insincere in his desire to limit government. He still wants the ability to loot honest, hardworking Ohioans, for the benefit of he and is cronies.

Petro’s amendment, Citizens’ Amendment for Prosperity (CAP), limits the amount of general fund revenues the state may collect to 5.5 percent of the total personal income earned in the state.

Petro’s amendment isn’t any better than Blackwell’s. Focusing on a budgetary constraint that has a set relationship to the amount of income Ohioans are earning, it does seem, intuitively at least, to constrain government growth to an ability to pay. However, the devil is in the details.

If revenue collections exceed the revenue limit by more than 2.5 percent, the CAP requires the state to return that money to taxpayers in the form of an income tax credit. For example, if revenue exceeds estimates by 4.5 percent, the first 2.5 percent would be placed in a rainy day fund and the remaining 2 percent be returned as a tax credit.

So, if the limit is 5.5% of personal income…then how come an amount above that can still be collected, and rediverted to a “rainy day fund”? Furthermore, do we REALLY trust policitians – Republican politicians, who have demonstrated ZERO lack of fiscal responsibility – to really set that money aside for a “rainy day”?

Besides… Government is NOT a bank. The State should not be taking money and hoarding it for future use on political pet projects and other largesse. Petro seems to think that that idle money sitting in a “rainy day fund” is being more productive than if left in the hands of private citizens and businesses to use in supporting themselves and their families.

If either candidate had any sense whatsoever, they’d be looking for REAL solutions to our economic problems, which can be summed up in two words: Government Spending. Last year, the Buckeye Institute published the 2005 Piglet Book , which identified $3.5 BILLION of unnecessary State spending. That’s $3.5 billion dollars that could be cut from the budget, and not affect any core functions of government, nor any of the “big ticket” areas of the State bureaucracy, like education, healthcare, and criminal justice.

Libertarian Candidate Bill Peirce , an economist by profession, has a much more comprehensive plan to untie Ohio’s economy. Instead of trying to pick between two lawyers, I’d rather vote for someone who has spent his life studying economic issues. Granted, Peirce’s proposals is far from the libertarian “ideal”, but his platform shows a remarkable maturity and pragmatic approach to moving the State government back towards responsibility and discipline than either of the Republican candidates. Libertarians have heard for years that many of their proposals were “too radical”, “unrealistic”, and that “you can’t turn the ship around without slowing it down first”. Well, what exactly is so “radical” about Peirce’s proposals? They seem to be very palatable to me, and for as “hardcore” as some have charged me, I can honestly say that Peirce is someone I can vote for.

There is nothing wrong with taking “baby steps”, as long as the steps are truly in the right direction. The direction I see the Republican proposals are still in the same (wrong) direction.

So…Set aside the whole “wasted vote” myth, and evaluate the proposals. Ask yourself, are Libertarians trying to earn your vote? Are they offering you more of what you want? Or will you continue to vote for the scaremongers in the R and D parties who want to carry on business as usual?