Elections have Consequences
Although the degree is debatable, voters on November 6 chose control over freedom, central planning over free markets, security over liberty, equalitarianism over growth and the collective over the individual. Exit polls showed a double digit margin of voters preferring less rather than more government. Nevertheless decades of culture and communication control by the left prevented the political expression of limited government, a core traditional American value.
Assuming the political trend is obstinately entrenched it seems prudent to not only extrapolate but to envision probable solutions to ongoing problems within the context of the times.
Change is never easy. It is particularly more difficult as one acquires years. But change we must. As I discarded my stash of shoe polish in the basement after finding pre-scuffed new shoes for sale at a fashionable store, I will adapt.
Given the inescapable trends and their logical outcomes I will over time, within the constraints of the ‘statist’ viewpoint, speculate about logical solutions on a variety of issues. Here I wish to examine population movement.
Voters in Illinois, in addition to California among some other states, chose to double down on the status quo. With Illinois in more dire financial straits two years after a 67% income tax increase, the voters not only approved, but increased the majority’s margins in the legislature. The solution is obvious-more taxes.
The reality of the “law of diminishing returns” renders the revenue generated by a tax increase considerably less than the product of economic activity times the tax increase. A simple example is the cigarette tax. If an entity increases the tax one dollar per pack on an expected volume of one million packs, the tax does not generate one million dollars. Some people will chose to purchase their cigarettes elsewhere and others will quit smoking. In the case of the cigarette tax at least it will encourage some people to adapt a healthier lifestyle. While other tax increases will discourage beneficial behavior, i.e. sales tax increases discourage spending and income tax increases discourage productivity, each hampering growth.
In a society where local cultural differences have declined, technology allows a choice of location and mobility is the norm, businesses and people migrating from high-tax, low-opportunity states to more friendly environments is the ultimate quandary states such as Illinois face.
Giving tax breaks to large, government connected and politically invested companies to keep them in the state has limits. Some businesses and individuals must pay accordingly more. If a small business or individual leaves the state, the loss does not generate alarming publicity and political fallout, but the effects are cumulative.
The crux of the dilemma is: how does a state pay for politically demanded services plus large numbers of highly paid government employees when businesses and people have the freedom to flee? With productive tax-paying people fleeing who ultimately will pay the bill?
President Obama won the election. In remarks at a campaign event he said, “You didn’t build that” referring to business owners. While the remark may have been taken out of the context of the sentence or paragraph, it was certainly within the context of his remarks. Senator-elect Elizabeth Warren, the ideological source of his-you didn’t build that remark- recently won a straw poll of progressives as their choice for President in 2016. This is the new direction of the country?
WARNING—BE PREPARED, YOU WILL LIKELY HEAR THIS ARGUMENT
Businesses and individuals have benefited by using state services including fire, police and environmental protections. Can one enter a clothing store, pillage and steal the merchandise without paying? Most businesses have prospered as a direct result of state investment in the education of their employees. They have an obligation to the state. How does this obligation differ from the lien a bank has on the business for providing capital? Can you avoid mortgage payments by moving? It only differs because the state has failed to legally secure its investment. This must change.
Right or not, the outdated constitution has implied guarantees of the right to relocate within the country. But that needn’t eliminate the responsibility to compensate a state for its investment.
Therefore, as both a practical matter of enhancing revenue and because of basic fairness issues, the state should implement an exit tax on businesses and individuals choosing to duck and leave their obligations behind. The former host’s state income tax should remain in effect for a period of five years after a business or individual leaves the state. The state should also consider a punitive 50% surcharge on businesses and individuals moving to a state without a state income tax.
Without such practical policies the state will continue to lose its revenue base and unfairly place more burdens upon those who recognize their community responsibilities.
We are all in this together. We succeed when we all pull together for the common good.
Have a fulfilling and profitable day—–SCRATCH THAT CLOSING
To the State from which all wealth and human advancement flow,
W C (Bill) Augustine, www.atlasrising.tateauthor.com