The Unbroken Window

A very good friend of mine, John Barry, has penned this fantastic letter in support of Question 1. Question 1 will appear on Massachusetts election ballots (in poorly worded form) asking voters if they wish to repeal the state income tax in Massachusetts. Similar proposals have garnered nearly 50% support in the past, and even initiatives that have passed have been summarily ignore by the thugs on Beacon Hill. Perhaps the current economic slide, and bailout by the Federal government of the Wall Street elite, will ignite a fire under the butts of all of the folks on Main Street, who stand on the sideline working hard while Hank and Ben and Georgie and Barney run the mother of all hedge funds with our hard earned money. I reprint the entire letter in full below the fold.

In December 1773, angry colonists braved a cold New England winter to defy their King and Parliament. Storming the ship Liberty, they dumped several crates of tea belonging to the British East India Company into Boston harbor, protesting taxation without representation.

There is growing sentiment among Massachusetts residents, 235 years later, that taxation with representation isn’t much of an improvement, and that the time has come, once again, to take matters into their own hands. On November 4 voters will have the chance to circumvent a duly elected but imperious Legislature by voting in favor of Question 1, which would repeal the state income tax entirely.

In 1989 the state Legislature began a long and curious battle with its own constituents when it increased the income tax from 5.0 percent to 5.95 percent. Dire economic circumstances were cited as reason for the increase, and we were assured that this imposition would be reversed when the storm had passed.

That pledge was somehow forgotten during the booming 1990s as legislators went on a spending spree while cutting the tax rate a mere pittance, to only 5.8 percent. When the entire state budget is considered, total spending leapt from $20.3 billion 1991 to $38.6 billion in 2000. This increase, from $3,374 to $6,079 on a per capita basis, represents an annualized growth rate of 6.1 percent, over twice the 2.8 percent annual rate of price inflation that prevailed during over the same period.

But the voters would not be ignored, and in 2000 passed a ballot initiative to roll the rate back, incrementally, to 5 percent. Inconvenienced by the masses, the Legislature brazenly defied voters in 2002 by eliminating the final phase of that rollback and freezing the rate at 5.3 percent.

But those nettlesome voters were not done. In 2002, irate taxpayers mounted an aggressive grass roots campaign and despite limited campaign funding, nearly passed, with 45.3 percent of the vote, a ballot initiative that would have eliminated the income tax, root and branch. The close vote is said to have come as a shock to the entrenched Beacon Hill elite; if so it has done nothing to affect their behavior. Over the next six years our legislators allowed total expenditures to climb by a staggering $1.46 billion per year, based on a conservative estimate of $47.3 for fiscal year 2008 total spending.

Question 1 puts the ball back in the taxpayers’ court. Those who hope to cast an informed vote would do well to step back and consider the nature of taxation and the role of government.

Most transactions we enter into are made freely. When we engage in voluntary exchange for goods or services, both buyer and seller are made better off; if that were not the case no exchange would take place. The founders recognized the potential of this simple but powerful truth and through the Constitution established the rule of law, which would protect our freedom to engage freely in trade and ensure unprecedented prosperity for the next 200 plus years.

But many transactions are not voluntary. Many are coerced, in which case one party benefits at the expense of another. A thief, for example, benefits while his victim suffers. Government is the only entity that can coerce lawfully, through mechanisms such as taxation and regulation.

The income we earn is compensation for value we have created for the benefit of society. An income tax is an involuntary transaction that confiscates a portion of that value under threat of imprisonment. As such it approaches a form of violence that should only be imposed in order to provide those goods or services that voluntary exchange cannot provide effectively, and that are absolutely essential to the maintenance of a civil society. Such public goods are few and far between. National defense, police, and a court system are examples that clearly qualify. Government exists first and foremost to protect individual liberties from our enemies, foreign and domestic, and to ensure the rule of law.

A moral government will reject any proposal that would expropriate our income to fund goods or services that are not utterly indispensable and which the private sector cannot provide through voluntary exchange. Our elected representatives should reject any spending measure that fails to meet this enormous burden of proof.

Why then, is the state confiscating my income to help fund a $22 million movie theatre in Pittsfield? Has the private sector failed to provide us with adequate video entertainment alternatives? Why am I taxed to provide thousands in state grants to the likes of Tanglewood? Is there a compelling societal need to ensure its wealthy and upper middle class clientele will not be deprived of Mozart? Is a modern art museum in North Adams so essential that the state must seize my earnings to fund it? If our relatively powerless Berkshire delegation can manage to bring home this type of pork, we should hardly be surprised at the magnitude of needless expenditures that occur in the east. We will never see a rebate of our income lost to the waste and corruption of the Big Dig.
Opponents to Question 1 simply refuse to acknowledge these and countless other boondoggles. Public sector unions are spending millions to convince voters that passage will necessitate draconian cuts to local police and fire protection, roads and education funding. This argument is tough to swallow considering that during fiscal year 2008 the state raked in $12.5 billion from taxpayers through the income tax, yet distributed only $5 billion to cities and towns. Is there no fat to be cut from the $7.5 billion spent elsewhere?
Indeed the unions’ fear-mongering is lost on private sector workers, who have little time to parse budget line items but who have two eyes to see. As we travel past construction sites on our way to work, we wonder how it is that Massachusetts, unlike any other state, has managed for years to pay police exorbitantly to direct traffic at construction sites, and how it is that unskilled toll booth workers have managed to earn $70,000 per year. We wonder how many other state employees, in less visible positions, are similarly compensated, and what work they perform.

Are we to take seriously the claim that tax dollars allocated to education cannot possibly be spent more wisely? Despite spending $40 billion in Chapter 70 aid to local schools since 1993 (on top of $11 billion in School Building Assistance and $40 billion spent by localities through their foundation budgets) we learned just this week that 828 schools across the Commonwealth have failed to meet “adequate yearly progress” based on 2008 MCAS scores. Why must our income be taken to fund a monopoly model that rewards the worst performing schools with the largest state subsidies when private schools operate with far smaller budgets yet consistently produce higher achieving students? Why do our representatives throw more money at a failing system while undermining cost-saving alternatives such as charter schools, private management, and interdistrict choice?
As recession looms, there is no better time to eliminate this burden and put money back in our pockets to the tune of roughly $3,700 per taxpayer. Opponents steadfastly refuse to acknowledge the obvious, that Question 1 stands to increase other state revenues by spurring economic growth. They estimate, simplistically, that passage of Question 1 would “cost” the state the $12.8 billion generated in fiscal year 2008. They fail to account for the fact that workers will either spend or invest that $3,700. If the income tax is eliminated and other state tax rates are frozen, it is reasonable to expect that revenues generated through those myriad other taxes will increase, especially sales tax revenues.
Question 1 poses no threat to cities or towns, and certainly not to taxpayers. It does however create a crisis for our legislators, who will finally be held accountable. So be it. We have been ignored for too long. Let’s pass Question 1.

Tags: democracy