Thursday, April 23, 2009

Goldwater Institute: Tax hike now will not mean tax cut later

voellerby Steve Voeller
A recent article in the Wall Street Journal cites Arizona as one of 10 states looking to raise taxes. If policymakers hope to grow our way out of this recession by luring businesses to Arizona, stories like that don't help.

taxWe all know that taxes matter, yet there's a convoluted discussion currently taking place at the state capitol about when taxes should go up and when they should go down. Some supporters of a temporary billion dollar-a-year tax increase purport to endorse a tax cut a few years down the road. The theory behind this is that taxes need to be raised now to balance the budget and cut later to spur economic growth. So, the tax hikers of today are really the supply-siders of tomorrow?

Those who wish to raise taxes wish to maintain a level of spending that we otherwise can't afford. Therefore, if spending is maintained at a level that can only be supported by an increase in taxes, then what are the chances that any tax increase will be temporary?

Proponents of new taxes today say that in a few years the economy will rebound and the tax hike will no longer be necessary. This requires a healthy economic rebound in the middle of a major tax increase. The odds of this occurring aren't good if history is any guide.

The budget should not be addressed without regard for its effect on the economy. It's tough to argue what's right for the economy in the future when you advocate what is wrong for the economy today.
Steve Voeller is president of the Arizona Free Enterprise Club, a non-profit organization whose mission is to advance policies that promote a strong and vibrant Arizona economy.

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