Monday, February 20, 2006

Will There be a Tax Refund?

LaVarr Webb has a reprise here (scroll down to Publishers Opinion) of his call for a modest tax cut (see my previous post). Webb cites polls as well as State Senator Tom Hatch of Panguich (from the right wing of the conservative wing of the Utah Republican Party) to bolster his position in favor of a tax cut “around $100 million,” which would still rival any previous cut. I wish to express three concerns.

My primary concern is that in our exuberance to give every state agency everything on its wish list, we may be setting ourselves up for future California-style financial problems. It is irrational to put all of this money into ongoing funding, because we can be relatively certain that our current revenue level will not be sustained over the long run. Therefore, it makes sense to put a significant chunk of the surplus into one-time expenditures. California has discovered that it is nearly impossible to cut spending once agencies are used to bigger budgets. Can you say, “tax increase,” children?

My next concern is whether a tax cut will be forthcoming in any amount this year. Rep. Steve Urquhart’s post here doesn’t sound very promising. I believe that it’s still likely that the House and Senate will eventually hammer out some kind of tax cut, probably in line with LaVarr’s suggestion. At least I hope so. Although polls don’t show much clamoring for a tax cut, I guarantee that a lot of the grass roots Republicans (that comprise a significant force in state politics prior to Election Day in November) will be looking to extract a pound of flesh if the Legislature can’t figure out a way to enact a meaningful tax cut when they’ve got the largest budget surplus in state history.

My final concern is what will happen next year. LaVarr suggests doing the food tax cut over two years. Maybe that will happen. Given our economy, it’s possible that our revenue next year will be at least as much as this year. Will we then find ourselves still wanting to grow government rather than giving the money back to those that have been overcharged? There will always be lots of reasons for government to spend every dime it can get its paws on. That's the nature of the beast. It's the job of citizens and their representatives to keep that beast on a short leash.

1 comment:

steve u. said...

It looks like the tax cut will come in around $160 million. And there is one clear reason it is not less -- Speaker Greg Curtis. In my short 6 years in government, I've never seen anyone fight harder for anything than he did for repeal of the food tax and for the House's position of a $230 million tax cut. In the end, we didn't hold either of those positions -- but it's not because the Speaker moved. He was ready to walk. And, as a result of his strength, we will take a first step on removing the food tax and in delivering a decent overall tax cut.