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Thomson: Cut taxes now and everyone will win
Charlie Crist's proposed tax cuts deserve a good look outside the narrow box of: "How will we pay for them?" In case the 25 years of growth since Reagan wasn't enough, Alabama shows the way.
There is never a bad time to cut taxes, because it is always a good time to grow the economy. We've seen since the 1980s that tax cuts generate more investment by companies and individuals, more expendable income in households and thus an overall stronger economy with more tax revenues in government coffers.
With the economy spinning off mixed signals on its future strength, this is an excellent time to cut taxes and better ensure our economic vitality.
And so it is particularly baffling to see some Florida Republicans having cold feet about Charlie Crist's tax-cut proposals - and the reasons for their aversion. I'm pretty sure that businesses and Floridians in general have no such reluctance about reduced tax burdens.
What our political leaders seem to have is the infection known as government tunnel vision - seeing only programs that "need" funding while still, inexplicably, perceiving tax revenues as a zero-sum game, where a tax cut equals a revenue cut. People, and thus the economy and tax revenues, just aren't that static. These Republican leaders need to smell the morning brew - cutting taxes equals a growing economy equals more tax revenues.
This is true on less than a national scale.
Alabama Republican Gov. Bob Riley made headlines three years ago by pushing for a $1.2 billion tax hike to cover a $675 million budget gap, calling it a "Christian duty". But voters did not perceive such a biblical mandate and smacked it down by a 2-1 margin, opting instead for lower taxes and spending restraint.
In what should be a surprise only to the dinosaurs of economic yesteryear, the Alabama economy has been booming since then and this year's budget boasts a $1 billion surplus. That's right, they kept taxes low, prioritized spending and - voila! - a deficit turned into a surplus. Gov. Riley learned the lesson and has converted to the well-documented supply-side economics formula. Even some leading Alabama Democrats are seeing the light and supporting tax cuts.
If only Florida's supposedly conservative leadership could get out of the little government-program box and learn this lesson the easy way.
Crist is proposing several tax cuts, among them:
• Doubling the homestead exemption from $25,000 to $50,000. It's been a rather paltry $25,000 for decades. It will "cost" $2 billion, spread around the state's 67 counties - most of whom are swimming in new revenues from the explosion in taxable property values in recent years.
• Creating portability for the tax-saving "Save Our Homes" cap, which would allow Florida residents to take their accrued tax savings with them to their next house and remove the tax shock that is keeping people from moving within our communities.
But Crist's proposal doesn't go far enough. We should expand the cap to all properties - snowbirds to businesses. There is one sure way to stop entrenched government bureaucrats and politicians from spending ever more money: Choke off the supply. They are incapable of doing it themselves. They need help.
A fully expanded "Save Our Homes" cap would raise a great mourning cry from the government-ites who are addicted to ever more money, but it would force prioritization and spending restraint and there would still be more money every year. And it would amount to a growing tax savings for businesses, who would be free to re-invest that money, further spurring the economy.
• Making permanent the sales tax "holidays" approved each year for school and hurricane supplies and cutting the telecommunications tax.
Unfortunately, Crist gets some things wrong. He also is proposing tax credits for businesses that hire Florida college graduates, which is the type of targeted, government-engineering of tax cuts that we don't need.
He also is looking at new spending - as if Florida's government needs to get bigger - in areas that are just flat politically calculated. Bonuses for teachers (teacher pay and education in general are a county-level responsibility), pay raises for law enforcement (most of whom are local sheriff and police) and a mom-and-applie-pie entitled "Anti-Murder Act" that would require prison time for violent felons who violate probation.
But there has not been a rush to criticize ever more spending, just mostly the tax cuts.
For instance, Rep. Joe Pickens, the Palatka Republican who heads the House Education Appropriations Committee, said Crist's cuts can only work if the state finds another source to replace the "lost revenues."
Has Pickens been asleep since Ronald Reagan's first term? Perhaps he should pick up the phone and call Gov. Riley for a wake-up call.
Rod Thomson can be reached a [email protected].
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