Thursday, December 26, 2013

News-Sentinel Argues Its Never a Bad Time to Talk About Cutting Taxes

From the Fort Wayne News-Sentinel:

Remember the old story about the man who always found an excuse not to fix the roof? When it was sunny, there was no need to make the repairs. And who would ask someone to get up on the roof when it was raining?

Tax reform and fiscal overhauls are a lot like that. When a state’s economy is strong, there is no pressing need to make changes. And when the economy is tanking, why risk changes that might make things even worse?

Those who never met a status quo they didn’t like are busy these days urging Gov. Mike Pence use the “it’s raining” excuse and back off from his “overly ambitious” legislative agenda, which includes some expensive projects in education and other areas and the elimination of the business personal property tax. The tax now sends about $1 billion to local Hoosier governments.

And with the mixed signals the state is now getting on the economy, say critics, a $1 billion gamble is just too big a bet. Indiana still has a $2 billion surplus, but declining revenues have forced some cutbacks, and forecasters say the state will collect $298 million less that expected over the next two years. Employment has been rising steadily but feebly.

The idea that Pence should hold off until the economy is solid is pure nonsense. Like the procrastinator with the leaky roof, the pessimists would just say the strength proved there was no need to change.

It is true that the governor’s agenda might be a trifle overpacked. Certainly this is a difficult time to create expensive new projects. This is also the every-other-year short legislative session, which is supposed to be reserved for budget fixes and other emergencies. The governor might consider trimming his list a little.

But it’s never a bad time to discuss the possibility of eliminating a tax. If the eliminating encourages economic growth, governments will get some of that $1 billion back. The rest can be made up with a combination of new taxes (diversifying revenue sources is a good idea anyway) and good old-fashioned thrift. Who among us thinks government has been spending too little? Who even things they should be doing everything they do?

If the results of getting rid of the tax aren’t quite what we expect, how hard would it be to take corrective action? Government programs tend to last forever, but tax cuts tend to have a short shelf life.

The economic news is mixed, remember, not dismal, so it could go either way in the coming months. That means it might be about to rain. Isn’t that the best time of all to fix the roof?