It’s time for some serious tax cutting — at the state level.
The Cato Institute’s January “Tax & Budget Bulletin” by Chris Edwards is an eye-opener. Lots of states are doing well, reallywell. According to Edwards, “state and local tax revenues soared 8.1 percent in 2004 and an estimated 7.6 percent in 2005 . . ..”
Moreover, “By 2005, tax revenues for the 50 states were up 18 percent over the pre-recession peak of 2001. Also note that federal aid to the states has grown at more than 7 percent annually since 2000.”
Some states are making out like bandits. Below are listed some of the state tax revenue increases between 2002 and 2005:
- Alaska: 115%
- Florida: 49%
- Nevada: 56%
- South Carolina: 41%
- Vermont: 39%
- Wyoming: 74%
Most states appear to be in the 15 percent to 25 percent range. Only one state saw revenues decline in that time period: Michigan. It’s revenues are down by 3 percent, but not because Michigan Governor Jennifer Granholm was a tax cutter.
We’re glad the states are coming back; but isn’t it time to give some of that money back to the taxpayers? Millions of families saw their paychecks frozen or even reduced in the economic downturn. Lots of families were downsized or lost their health insurance or other benefits.
If the states keep that money, along with the future increases created by a strong economy (though you wouldn’t know that from most of the media stories you read), they will just grow the size of government. Better to return that money in the form of tax cuts. Or, better yet, implement a Taxpayer’s Bill of Rights (TABOR) that automatically returns any budget surplus to the public.
Colorado — which, incidentally had a 16 percent revenue increase between 2002 and 2005, according to Cato — has a TABOR, or had one until it gutted it last year.
States will moan that they need those funds. But the truth is that the taxpayers need the money more — and will put it to better use.