Democrats’ golden goose tax policy

Of all the fairy tales that liberal politicians seem to believe — such as man-made global warming or that more government health care spending will reduce the deficit — there one fable they seem unable to comprehend: “The Goose That Laid the Golden Egg.”

Most will recall the story of the couple blessed by a goose that each day produced one golden egg and made them rich. Not content with their good fortune, the couple decided to cut the goose open and collect the bevy of golden eggs inside.

Instead, they found that, like other geese, their goose produced just one egg a day, and so by killing her, they failed to realize a bonanza of golden eggs and, or course, killed their goose.

In Colorado, we see the same short-sighted thinking, demonstrated by a legislature and governor who, in order to balance government’s budget, chose to impose $130 million in higher taxes on the very businesses whose success is vital to a strong economy.

When minority Republicans argued that raising taxes on business during a recession is counterproductive, they were assailed by Speaker of the House Terrance Carroll, a Denver Democrat, who unfurled this blazing display of pious myopia:

“We’re asking big business to pay their fair share so that we don’t have to keep balancing the budget on the backs of teachers, police officers and firefighters, senior citizens and the neediest who depend on our safety net.”

Speaker Carroll wasn’t finished: “It’s only the GOP and their special-interest cronies who have been complaining because we’re rolling back corporate welfare and special interest tax loopholes.”

If sanctimony and economic illiteracy were currency, the Speaker could buy his favorite professional sports franchise.

Where, pray tell, does he think the $7.5 billion in the state’s general fund comes from? Overwhelmingly, it comes from businesses that make a profit, pay taxes and employ workers (who also pay taxes) only if they can produce something that consumers will buy. Contrast that with government, which produces nothing that people willingly purchase. That’s why government must raise money through taxes and fees.

The state has less money to spend because business receipts are down. When business is booming, businesses pay more in taxes — happily — because sales volume and profits increase. When receipts are down, business not only pays less in taxes, but it spends less on payroll and production.

When government raises taxes during a recession, businesses have no choice but to cut costs further by reducing payroll and other investments that would have generated tax revenue. It’s a vicious cycle, and short-sighted tax hikes inevitably backfire on legislators who view protecting government as their first priority.
Speaker Carroll and so many of his colleagues seem to believe that Colorado is a government that supports an economy, rather than an economy that supports a government.

Perhaps if the Speaker had ever met a payroll, he would understand why these policies — and his rhetoric — are disastrous.

That’s a problem — dearth of business experience — that increasingly afflicts the Democrat caucuses at the State Capitol, hence their view of business as just another “special interest.” Democrat legislators’ work experience comes predominately from government or non-profit fields that don’t rely on their ability to efficiently produce goods or services but on the tax dollars or generosity of those who must.

In the House, 70 percent of Democrats come from government or non-profit fields; in the Senate, it’s 57 percent. Among Republicans, only 26 percent of representatives and 28 percent of senators come from a government or non-profit background. (Incidentally, that’s counting all attorneys in both parties as private-sector producers.)

Democrat legislators and Gov. Ritter landed in this predicament because they worship at the altar of government. That’s why they can’t resist spending every dollar they take in during good times, rather than setting some aside for hard times.

That’s why, for the past two years, they’ve ignored pleas to budget cautiously and have made promises to schools and to seniors that they cannot keep. That’s why they are willing to see just how much abuse the golden goose can take.

Centennial Fellow Mark Hillman was previously senate majority leader and state treasurer. To read more or comment, go to www.MarkHillman.com.

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