Is Liberty Driven by Economics or Economics Driven by Liberty?

As we enter the final days leading up to the repudiation of the last version of “hope and change” sold to the country, it’s interesting to read newspaper endorsements of the various candidates and issues on the ballot.  As I read both sets of endorsements, for or against, it makes me wonder how much real research has gone into them. Here at United for Missouri, we don’t endorse or support candidates but we have taken a keen interest in several of the proposals on the ballot.

On the candidate side, it is very interesting to see the endorsement of candidates whose views are more in line with the Keynesian approach that has proven a failure every time it’s been tried.  The only appearance of success the Keynesian approach has had is when it is being replaced by something that works, like free markets!

FDR’s New Deal is an excellent case in point.  The country had already experienced times of increasing government intrusion and over regulation, and FDR thought we needed more!  The New Deal took it to a new high.  Price controls, salary controls, bigger and bigger government ad nauseum.

A number of studies show that none of the Keynesian approaches worked and that had it not been for World War II, the depression would have lasted for another 10 years thanks to government attempts to help the economy “recover.”  Big government “economics” always involves a loss of Liberty.  A loss of Liberty always results in less than desirable, and sometimes catastrophic, results for the economy.  Owebama’s policies are the number one example today!

We see some of the same in regards to the ballot propositions.  Perhaps the most puzzling are endorsements opposing Proposition A – Let Voters Decide.   It is obvious that some have not studied the issue beyond the campaign literature.  Proposition A does only two things:

  1. Requires the cities of Kansas City and St. Louis to place before their voters every 5 years the opportunity to decide to retain or phase out over 10 years the existing earnings tax.
  2. Places into statute the prohibition that no location may enact an earnings tax that doesn’t already have one.

The first item is a common sense approach to protecting Liberty.  It’s one that does cause consternation to many who make a living from the largesse of big government at the expense of taxpayers.  If We the People were actually given the choice to tell our governments not to be so generous with our tax money, they might actually have to be responsive to We the People. That’s what the first item listed above accomplishes.

Sunsets on taxes are not new.  They are in many locations.  I haven’t actually done a count, but it appears that the Kansas City area is home to more taxes that sunset on a regular basis than any other location in the state.  The taxes subject to sunset are voted on prior to their sunset date.  The taxing entity makes the case for how the money is spent, how the money will be spent if renewed and then asks voters to renew the tax.  Voters exercise their liberty to allow taxes for these purposes by renewing or sunsetting them.

That’s all Proposition A – Let Voters Decide does in Kansas City and St. Louis. It doesn’t eliminate the tax. It doesn’t end the world as we know it despite what those with their hands in the taxpayers’ pockets tell you.

The second item places into statute that no additional earnings taxes are authorized.  For those of you who think this is a local control issue, I ask that you read Proposition A – Let Voters Decide: A Local Government Primer.  You will discover that there is no local control that exists today in regards to an earnings tax.

Today, an earnings tax can be authorized merely by “adding” a section or two to the existing statute.  It’s easy for legislators to vote to do so because they aren’t “enacting” the tax.  Proposition A – Let Voters Decide actually adds language to the statute to prohibit new earnings taxes.  The legislature can still add one if they choose to do so but they will have to do two things:

  • They will have to change language in the statute, and not simply insert language.
  • The change in statute language will be language We the People placed there.

If legislators choose to ignore We the People by changing the language we put into place, then they should be prepared to answer for it at the polls.

The best summary endorsement of Proposition A can be found in the St. Joseph News Press.

‘Yes’ to Proposition A

We recommend a “yes” vote on Proposition A, which would require local elections every five years in Kansas City and St. Louis on keeping the 1 percent earnings tax each currently levies.

This proposition also would remove the earnings tax as an option for St. Joseph, the only other city currently authorized to levy the tax if it chose. St. Joseph residents voted down the tax four times prior to 1990; it has not been on the ballot in recent years.

Opponents have said approving this proposition could put $200 million in annual tax collections at risk in Kansas City, and about $140 million in St. Louis. Proponents of the measure say they do not wish to cripple those governments, only require them to be more accountable to voters.

Our view is this proposal is a reasonable modification of existing law. Both Kansas City and St. Louis could continue to levy an earnings tax — on both wages and net business profits — as long as they can demonstrate to voters every five years the revenue is needed and is used wisely.

The parallel for St. Joseph residents is our Capital Improvements Program. The half-cent CIP sales tax raises about $5 million annually and has been renewed by voters every five years, usually with strong majorities, thanks to a successful public-private partnership that details exactly how the money will be spent and then keeps track.

The editorial captures the essence of Proposition A – Let Voters Decide.  It clearly gets the fact that giving citizens the right to vote on sunsets is a good thing.  It provides a local example of a tax that has been successfully renewed because those in government showed those paying for it how it was used and how it would continue to be used.

The answer to the title of this blog post is really a trick question.  Liberty of the citizenry drives economics in a sustainable, long-lasting fashion.  When government seeks to drive economics by infringing on Liberty, the results are never as good and often far worse than letting voters decide!  The more liberty we have, the better our economy!

Carl Bearden
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