Taxes Will Be The Issue

Despite the multitude of issues that will be debated during the presidential campaign, all others will pale in comparison to taxes.

In these tough economic times, the last thing any of us need is the burden of increasing taxes. Tax increases will do nothing more than strain already strained household budgets. The two Democrats have already told Americans they will raise taxes, but only on the “rich”. The problem with this is their definition of rich. For far too many years the Democrats have defined rich as anyone with a job. That means you and me, folks.

They somehow have the belief the American people will stand still for that, not realizing the backlash against continually rising taxes has already started.

Mr. [Bart] Peterson was, until recently, the popular Democratic mayor of [Indianapolis]. Then voters went to the polls in November and threw him out in favor of an unknown and underfunded Republican. It was among last year's biggest political upsets, and marked the first time in 40 years Indianapolis voters had canned a sitting mayor. The source of their anger? Taxes.

In particular, the county's income tax rate, which Mr. Peterson raised to 1.65% from 1%. Coming into an election year with a 75% approval rating and a mountain of campaign cash, Mr. Peterson thought he could risk the tax-hiker label. He felt further bolstered by his argument that the tax was earmarked for crime fighting. He squeaked his levy through in July; by November he'd been washed out on a tide of outrage.

Indiana isn't alone in its tax discontent. As the economy has slowed and home values have slipped, state and local governments have been raising taxes to cover revenue shortfalls. This has squeezed middle-class households, just as surely as higher gas and food prices, or rising medical costs. Voters last year responded by shooting down tax-and-spend proposals in Oregon, New Jersey, Iowa, Washington and North Carolina.

Include New Hampshire on that list, at least when it comes to municipal taxes and budgets. Unfortunately at the state and county level the message about holding the line on spending and taxes has been ignored. The state legislature increased the biennial state budget by 17.5%, flawed and seriously out of balance. They overestimated the expected tax and fee revenues at a time when just about everyone else realized a slowdown in the economy was just starting to make itself felt. Housing sales and values were falling, and with it, revenues. Some of the counties in the state were no better, increasing their budgets while ignoring the calls by the towns within their borders to keep spending in check. Ironically, the county commissions are made up of the same representatives serving in the state legislature. That means the same people that worked to increase state spending are doing the same thing at the county level. It's obvious some changes need to take place and I think many of these representatives will find themselves out bag and baggage, asking themselves “What happened?”

With few exceptions the towns and cities in the state held the line on spending, keeping budgets flat or even slightly declining, knowing the taxpayers could not afford increases in their property taxes. Even so, property taxes will go up because of the actions at the county level.

The same thing is happening in other states. It all comes down to taxpayers being very unhappy with their elected representatives. And when the taxpayers are unhappy, tax and spend candidates tend to find themselves on the losing side of an election. That's what happened in Congress in 2006 and why so many Republicans found themselves replaced by Democrats. In 2008, the freshmen Democrats in Congress and a number of state legislatures may find themselves replaced in turn. They have to learn that the people are not ATMs to be tapped for funds whenever government overspends. Instead they have to learn that when times are tough they have to cut back on spending, just like everyone else does under those circumstances. Until they do, our wallets and bank accounts are in peril. It's up to us to teach them that their actions have consequences. In this case the lesson is this:

If they burden us with more taxes, we'll be more than happy to help them join the ranks of the unemployed.

'Nuff said.

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