How Much Tax?

One of those confluences of events merged President Bush's final State of the Union address with news of the Property Tax Reform efforts now underway in the Indiana statehouse. Both brought out the fundamental questions of taxes and government.

How much tax is enough?

How much government is really needed?

The consistent theme on taxes both nationally and locally clearly breaks along party lines. Democrats fret that lower taxes must translate to fewer government services. Republicans maintain that government is bloated and is overdue for some belt-tightening, plus taxpayers who get to keep more of their own money will use it to grow the economy.

Property Taxes went through a reassessment, which increased the tax bill for every property owner. Some poor homeowners were hit with new property tax bills double or even triple their previous obligations. Most everybody else saw increases of about one third. It resulted in a citizen tax revolt, which has driven Indianapolis mayor Bart Peterson out of office and threatens to do the same for a wide range of state and local officials.

So the Indiana legislature is working on a bill proposed by Governor Daniels to cap property tax rates at 1% for homeowners, 2% for landlords, and 3% for businesses. The bill looked like it would sail through until local officials began an impassioned opposition. They checked their budgets and found out their tax revenue would be reduced if this law is passed. That means they would have to cut their budgets.

It seems that those areas in the state hit hardest by the property tax mess were where school boards approved major construction projects without really considering the tax impact of those projects. It's a case of communities spending beyond their means for ostentatious school buildings. Now they're paying for their irresponsible decisions with an outraged citizenry.

Likewise at the national level, President Bush appealed to the congress to make his tax cuts permanent. Even though any serious analysis of the tax cuts has to conclude they were very effective in the very strong economy the country has enjoyed for the past seven years, Democrats made their intentions clear. The Democrats expect to control the government beginning next year, and have made it clear they not only plan to cancel the Bush tax cuts, but also plan to increase taxes.

Government is inherently an inefficient provider of services. The Federal Government consists of huge and cumbersome bureaucracies that would not survive the first month if their services were offered for profit in the private sector. Bureaucrats build empires that accomplish little and are not held accountable for results.

If the government, whether federal or state, really wanted to serve the public, they would eliminate earmarks and political favors and patronage. An even better idea would be to require every social program cooked up by politicians to prove every 5 years that they are meeting their mission, or the program will be defunded.

Maybe instead of spending so much time talking about how much tax should be paid by the "rich", the focus should be more toward what can we accomplish with the limited resources available to government?

If only.