My latest column is up at Disclosure News, check it out.
Whether it is to fund road repair and construction, local jails, or supplement public school funding, politicians in Illinois seem to be enamored with sales taxes. A penny here and a penny there taken from the pockets of consumers, they argue, cannot be that harmful. Yet there are compelling arguments that sales taxes have a depressive effect on the economy, disproportionately affect the poor, and are not a reliable source of revenue. Far too often, politicians use deceptive tactics to get sales tax increases approved. Before voting on any sales tax increase, voters deserve to consider the following reasons why sales taxes should be rejected.
1. Sales taxes punish consumer spending and hurt the local economy. It is generally understood that taxes influence behavior, and that we get less of a behavior when it is taxed. That is why activists demand high taxes on cigarette and alcohol sales. Their goal is to make those products more expensive so that less people will be inclined to purchase them. Why then do we tax consumer spending in general? For every increase in the sales tax, that is less money in a person’s pocket to spend at stores, gas stations, and restaurants. In turn, those businesses have less revenue with which to hire more employees or expand.
My latest column has been posted at the Rock River Times, check it out:
To many people, it seems natural to think that an elite group of central planners can accomplish more than free people pursuing their own interests. When there is a problem in the economy, they reason, government action is the best way to solve it. This is often called Keynesian economics, after the economist John Maynard Keynes, who believed that government should spend tax dollars to stimulate the economy. More than that, this belief embraces the notion that a very small number of politically-connected individuals know where, when, and how the rest of us should spend our money as well.
Economist F.A. Hayek called this notion a “fatal conceit,” because no one person or group of people can ever hope to manage the complexities of a modern economy. Unfortunately, the predictable results of government intervention in the economy is that government grows even larger than before, a few well-connected people get rich, public debt increases, and the average citizen is left out of the process. More unfortunate still is the fact that the Rockford political class, and politicians in Winnebago County generally, seem to be enamored with this top-down approach.
Read the entire column at the Rock River Times