Sunday, November 11, 2007

A Conservative’s Viewpoint
- Increasing Taxes - The People Have Spoken

Article by Bob Steinburg
- Edenton, North Carolina: Cradle of the Colony

Off-year elections sadly often seem so ho-hum. They focus primarily on local and county candidates and referendums. Voter turnout is frequently low and mandates seldom established. Recent results on tax referendums in 33 North Carolina counties may suggest otherwise.

State lawmakers this year gave counties the right to ask voters to approve a land transfer tax or raise the sales taxes by a quarter of a cent. This would help counties offset the one half cent of local sales tax now going into state coffers in return for the state picking up the counties share of Medicaid, estimated in fiscal 2008 to be $571 million. This benefits rural counties who have low sales tax revenue and growing Medicaid participants. Larger counties with significant sales tax revenue will not necessarily benefit from this swap. They will however be reimbursed by the state for any money lost. This will be phased in over a three year period. The counties share of Medicaid was reduced from 15 percent to 11.25 percent this year and in July 2008 reduced further to 7.5 percent, with elimination in July 2009. Each county will also receive a minimum of $500,000 each year from Raleigh. Allowing for adjustments to current local revenue streams the total net positive cash flow for counties should exceed $100 million in the first year. No wonder voters are casting a wary eye toward tax increases.

Swain, Macon, Henderson, Union, Hoke, Moore, Chatham, Brunswick, Pender, Washington, and Gates counties all defeated the transfer tax by huge margins. On increasing the sales tax, Greene, Lenoir, Cumberland, Robeson, Hertford and Columbus counties all said no. Voters in Graham, Rutherford, Davie, Harnett and Johnston counties said no to a sales tax increase and no to the transfer tax. Only in Catawba, Surry, Sampson, Pitt and Martin counties did voters approve a sales tax increase. Mecklenburg voted no on repealing an existing sales tax.

Many North Carolinians voters have had enough. The Tar-Heel state is the 14th highest taxed state in the nation and increasing the burden would not necessarily be in their best interests. Yet, some county commissioners and county managers don’t get it.

In Chatham County, the transfer tax was opposed by 69 percent of voters. Yet District 1 Commissioner Patrick Barnes suggested if someone couldn’t afford to pay a $400 transfer tax they shouldn’t be buying a home. In Washington County, 71 percent opposed the transfer tax. Washington County officials said they’ll get the money through increased property taxes. Billy Corey, chairman of the Board of Commissioners, told the Washington Daily News: “If people would rather see it (an increase) in property taxes so be it.” And County Manager David Peebles, who earlier said the county had to stop living beyond their means, after the election acknowledged that “without additional revenue we will be forced to raise property taxes.” This is either hubris or an unwillingness to seek alternative solutions. Certainly their voters have weighed in; now they need to be listened to.

These gentlemen are not unique in thinking that increasing taxes is the fix for everything. Legislators have operated under that mindset for years. Fiscal responsibility seems foreign to many of them. They don’t understand that reducing taxes, improving schools, lowering crime rates, and making “necessary” infrastructure improvements significantly improves keeping existing business while attracting new ventures. Raising taxes is not necessary. What is needed is prioritized spending and a thorough examination of every budgetary item. Trim the fat and eliminate the waste. Building a new community pool is nice but not a necessary capital expenditure.

Voters need renewed fiscal accountability from their elected officials. Budgets at home require us to live within our means. So too should elected officials entrusted with managing our hard earned tax dollars.

Was this vote a mandate or an aberration? When 27 of 33 counties say no to new taxes and no to increasing existing ones [then] logic, says mandate. A change is in the wind. Our elected officials might consider resetting their sails for a more fiscally conservative course, or risk voters replacing them with folks who will.

There are three components to effective government; avoiding any increase of government that destroys freedom instead of increasing it, taxes no higher than necessary for the government that is necessary, and careful expenditure of the funds authorized to assure there is no waste or corruption.

Because greed and self interest sometimes blinds people to the destruction of freedom implicit in government taking on new functions, Republicans have given up fighting the battle on that front and focused their energies on reducing taxes. It is one way to stop the increase in government tyranny, but it can lead to passing on the costs to the next generation. What has been missed for a couple of generations is a serious fight to reduce the waste.

I think that Republicans need to return to a campaign that includes three components, reduce taxes yes, but also reduce tyranny and reduce waste. A three pronged approach will more effectively lead to effective government. A program to improve the effectiveness of government is a much more positive and productive campaign that simply being opposed to taxes.

Bob is right. Right now people are opposed to taxes. In many cases it is because they see government as abusing our citizens and wasting money and they want to reduce the power of bureaucrats to do either.


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