What do New Hampshire, Tennessee and North Carolina have in common, other than being members of our national Union? Within the last few months, the citizens of these three states have actively resisted tax increases suggested by their legislatures. Encouragingly, they have been successful.
In New Hampshire, the legislature converted a “temporary” property tax to permanency. The tax had been enacted to correct some inadequacies in the public schools and was to disappear when those problems were resolved. The wealthier towns along the seacoast were designated as “donors” and forced to shoulder a disproportionate share of the burden for the less wealthy communities.
Feeling they had been reduced to financial milk cows for the rest of the state, the citizens of “donor” areas are fighting mad. Some paid their taxes into an escrow account rather than surrender the money to the state. There is even some chance that these heavily taxed areas will secede from the state of New Hampshire and join Maine, an option that their constitution apparently allows.
Two suggestions for the angry Yankees: (1) don’t secede — we’ve already tried that and it didn’t work well, (2) never again believe there is such a thing as a temporary tax — it’s an oxymoron.
Moving now to our neighbors in Tennessee, we find some more hostile taxpayers. Tennessee does not have a state income tax and it worries the politicians to death. Every year for the past three years, legislators have considered imposing one. And every year they’ve been met by street demonstrations.
Recently, tax opponents got even more raucous than usual. The Associated Press reported that as many as 2,000 demonstrators broke windows, chanted and banged on the locked doors of the Senate chamber to protest the proposed state income tax. As quickly as possible, the legislature passed a state income “taxless” budget and fled until 2002.
You didn’t know that local tax issues could be so interesting, did you?
Moving now to North Carolina, we find more tax protesters, perhaps inspired by the rowdy Tennesseans. The tarheels rained tea bags down on legislators who were considering $440 million worth of tax hikes to remind them of another, more famous, tea chunking that took place in Boston during the formative years of our country.
Tax increases are always unpopular with the taxpayers. Additionally, they are a detriment to the economy. The John Locke Foundation’s Carolina Journal reported that an analysis of the impact of the proposed tax increases indicate that more than 20,000 jobs would be lost in North Carolina.
As widely dispersed as these uprisings are, they feature common roots. In Tennessee and North Carolina, taxpayers reject government officials’ demands for more revenue; they suggest instead that government spend less. New Hampshire’s coastal Yankees complain as much about the equity of the system as the size of the burden. They see no reason why they should have to subsidize neighboring towns.
In all three states, protests erupted locally, organized by residents of the community. And in all three states, the protests offer clear indications that many of the citizens believe that taxes are too high.
Is there a solution to the problem? Of course there is. Taxpayers are willing to sacrifice to enjoy the benefits of government. However, there is a limit to how much they are willing to sacrifice. There is, unfortunately, no limit on the amount of money government can spend.
Government budgets should be set based on the revenue produced by reasonable taxation of the citizenry and no more. It is a mistake to approach government budgeting by allowing bureaucrats to determine how much they can justify spending and then look for the funds. There is literally no limit to how much entrenched bureaucracy can spend.
At the same time, citizens should be fair about their expectations of government. The more services we demand, the higher the cost. The only rational conclusion is to limit government tax revenue until the majority of taxpayers cry out for more services and offer the taxes necessary to provide them. Don’t hold your breath in anticipation of either happening.
Thought for the Moment — Trust in the Lord with all your heart and lean not on your own understanding; in all your ways acknowledge him, and he will make your paths straight. — Proverbs 3:5
Joe D. Jones, CPA, is publisher of the Mississippi Business Journal. Contact him at firstname.lastname@example.org.