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State and Local Government / Budget and Spending

Post-Dispatch Still Wrong On Taxes And Growth

By Patrick Ishmael on Oct 18, 2012

Last week, I wrote about a St. Louis Post-Dispatch editorial that suggested tax rates are ultimately immaterial to whether an economy grows. That is a questionable assertion on its own, but too often it seems like the paper’s primary objective has less to do with resolving problems of economic growth than about raising state revenues.

Of course, the paper’s institutional impulse for greater government spending is not an isolated one. Last month, the liberal-leaning Missouri Budget Project (MBP) produced a report bemoaning the fact that state spending had not grown at the same rate as the state economy in recent years. Assuming the state government tried to raise its share of the economy, as the MBP seems to prefer, that would mean millions, if not billions, of dollars in new spending that would have to be funded somehow, likely through tax hikes. As the newspaper noted, there is a pretty robust bipartisan consensus of “no new taxes” in Missouri, and nationally the president was clear on a similar question, way back in 2009: “You don’t raise taxes in a recession.” Pretty straightforward, I think.

Like MBP and the Post-Dispatch, we all want the neediest among us to be supported and our schools to be properly funded, but I strongly disagree with the suggestion that the “if only” here is “more spending.” “Spending” is not a sufficient answer to fix the state’s problems. And as to what the size of the state budget should be? Perhaps Missourians prefer having more money in their pockets rather than less. Perhaps they believe they can spend their money better than the government. Policymakers should respect this revealed preference and concentrate on reforms, not raising revenue.

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About the author

Patrick Ishmael

Director of Government Accountability

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