Many of the same people who express concern for a “sustainable” energy policy are also advocates of more government spending, especially on social programs. But they have a fatal blind spot when it comes to economic sustainability.
Government spending has a finite limit, too. Balancing the budget is impossible if spending exceeds our tax capacity. Blithely assuming that ever higher tax rates will automatically produce the hoped-for windfall of revenues is a liberal delusion. A society can’t tax itself rich. It can only produce itself rich, and there’s a limit to how much you can soak the “rich” before you drown them in economic disincentives to the detriment of all.
This caution will doubtless fall on deaf ears to the folks at the Colorado Center on Law and Policy, another member of the hive that forms Colorado’s activist “progressive” network. The group has a plan to close the state’s looming, billion-dollar budget deficit. Not surprisingly, it doesn’t include spending cuts. It would accommodate and expand our spending excesses with a selective tax increase of $1.5 billion. After a similar attempt was derailed in 2010, they’re back with a new brew of ballot initiatives they’ve christened “A Fair Income Tax System” that would impose a graduated income tax on rich and not-so-rich Coloradans.
Taxes are much more than a source of revenue for this crowd. They’re a means of achieving “economic justice” in the socialist sense, and fairness is code for redistribution of income.
Their “fair tax” would replace our current flat tax of 4.63 percent with an accelerating schedule of tax brackets, and also increase the 4.63 percent corporate income tax rate to 7 percent. Joint returns, for example, with incomes under $50,000 would see the tax rate drop to 4.2 percent while everyone else’s goes up. The marginal rate on incomes between $50,000 and $100,000 would increase to 6.5 percent; then 7 percent between $100,000 and $200,000; 8 percent between $200,000 and $500,000; 9 percent between $500,000 and $1,000,000; and millionaires would be soaked at a marginal rate of 9.5, more than double the current rate.
This, of course, is over and above the top federal rate of 35 percent that Barack Obama and the Democrats want to hike to 39.6 percent along with the elimination of the ceiling on Social Security taxes, which would add another 12.4 percent payroll tax on incomes over $106,800.
Predictably, these progressives hope to seduce a majority of voters with a beggar-thy- neighbor appeal, claiming that 60 percent of Coloradans would pay the same or less than they do now. This assumes that their scheme won’t have overall negative economic consequences. The fact that the bottom 50 percent on the income ladder currently pays less than 3 percent of federal income taxes while the top 10 percent carries 70 percent of the burden is ample proof that income taxes are already plenty progressive enough. Their corporate tax increase also ignores the reality that corporations don’t really pay income taxes; they just collect them. Like all other business costs, they must ultimately be recovered from their customers. Only people pay taxes.
The progressives were apparently inspired by Rahm Emanuel’s dictum, “You never want a serious crisis to go to waste.” Hence, Colorado’s budget deficit is a convenient excuse to do what progressives want to do when economic times are good, bad or mediocre: raise taxes on the rich (and middle class, in this case) and pass the goodies around. Their ploy will reward government profligacy, penalize productive enterprise and make Colorado a less attractive place to do business, driving away jobs.
California is an object lesson in this kind of folly that’s unwise to imitate. Let’s hope a majority of rational Coloradans have the good sense to reject this exercise in self- destructive “fairness.”
Mike Rosen’s radio show airs weekdays from 9 a.m. to noon on 850-KOA.
