HIgh-Tax Republicans Risk New Conservative Revolt

Monday, Dec. 2, 2002 WASHINGTON -- A new tax revolt may be in the works. Only this time, the "bad guys" are Republicans. Taxpayers in several states are complaining the GOP politicians they put in office are acting like Democrats when it comes to spending their hard-earned dollars.

Nevada is a case study, a microcosm of the political minefield now facing states from coast to coast.

Gambling is no longer Nevada's "silver bullet," Nevada Taxpayers Association President Carole Ann Vilardo tells NewsMax.com. And so, a Governor's Task Force (so named even though it was actually created by the legislature) has recommended sweeping tax increases, supposedly to fill its deficit. Critics contend the proposals are larded with big government spending because the panel did not even consider spending cuts.

The voters of the state, who have just increased the state legislature's conservative ranks, face the prospect of a "gross receipts" tax that Steven Miller's Nevada Policy Research Institute defines as "a de facto income tax on Nevadans."

Recently, the Republican Governors Association at a three-day conference here in Washington, spoke in terms of cautions optimism despite "the difficult challenges" many states face in the coming year.

This state-level knee jerk reaction to raise taxes as the only solution to meet revenue shortfalls has been building for several years. The GOP has enjoyed dominance in state governorships for about a decade.

Fiscal conservatives have long said the acid test of conservative governance is the willingness "to treat taxpayers' money as you would treat your family budget and not live beyond your means." A spot check of state government activity around the country finds some GOP politicians spending or proposing to spend big time. Then they have turned around and used their own huge spending hikes as an excuse to raise taxes, even though the voters had fired Democrats who did the same thing.

Outgoing term-limited Tennessee Governor Don Sundquist made himself monumentally unpopular by doing exactly that: excoriating the Democrats for raising taxes and then raising taxes himself.

A few years ago, current Republican National Chairman Marc Racicot thought his popularity as governor of Montana enabled him to "walk on water," so to speak. So he thought he could ram through a costly bureaucratic Hillary-like health care program. Wrong! The rugged individualists in "Big Sky Country" didn't buy it.

There is little evidence that taxpayers around the country feel any better about being socked in the wallet by someone with an R after his name than by a politician who sports a D. In some cases, high-spending governors have survived the rough political waters better than their contemporaries elsewhere.

The GOP high-spending story has repeated itself in such varied locations as New York, Pennsylvania, Connecticut, Pennsylvania, Arizona, and with GOP state legislators in Oregon.

In New York City, Republican Mayor Michael Bloomberg has proposed hikes in commuter and property taxes that are so onerous that he may end up with a net loss in the city coffers simply because many businesses and individuals will simply vote with their feet and leave. Surrounding areas offer sharp competition in their efforts lure entrepreneurs to their locations.

Now comes the state of Nevada whose gaming industry once enjoyed a nationwide monopoly, but in recent years has faced competition from Indian reservation gambling in the surrounding states of California and Arizona, and even in far-off Atlantic City, New Jersey. However, noting that gaming is up everywhere, critics of the Governors' Task Force reject the new out-of-state competition as a catch-all excuse to direct a new hit on the wallets of hard-working Nevada taxpayers.

Republican Governor Kenny Guinn, after being re-elected by a landslide, is set to impose the largest increase in Nevada history, "shoveling ever more of your money into the state bureaucracy's maw," to quote a Nov. 24 editorial in the Las Vegas Review-Journal, the dominant newspaper in the city and largest in the state.

"The state must have more money and lots of it," thunders Las Vegas Sun columnist Jon Ralston, "nearly $5billion in the next eight years just to keep services at current levels." The pundit opines that "most folks don't understand.. that a $300 million hole must be closed just to balance the budget which will drain the Rainy Day fund.."

Not so fast, say opponents. The "hole," they argue, was created by Governor Guinn's growth of programs in his first term in the statehouse in Carson City. Further, they allege, he grew government faster than revenues could support it. He now wants to boost bloated government, they complain, and also to raise taxes even more.

The above-mentioned gross receipts tax appears to be at the centerpiece of the heated debate over Nevada's proposed tax hikes. The Review-Journal points out that "it would be assessed on businesses with no thought to bottom-line profit. Those companies with skinny bottom lines will pay just as much as those with similar gross revenues from fat bottom lines."

Steven Miller-the Nevada Policy Research Institute (NPRI) analyst-says the people who will pay through the nose are 1/virtually every Nevadan who earns a wage or salary, 2/Nevadans who own land and rent it out, and 3/Nevadans who save and invest. "All, by and large, will have their incomes reduced," he adds.

Currently, Washington State is "virtually the only state in the country that has such an onerous tax," Miller tells Newsmax.com. If "you're actually running in the red, you still owe a tax," he says.

The gross receipts tax "is regressive and unfair" the Las Vegas Chamber of Commerce believes. Carole Vilardo of the Taxpayers Association expressed her group's opposition. In fact, she tells Newsmax, every retail group except the gaming industry opposes it.

A November 27 Review-Journal editorial says those who question the wisdom of this tax proposal are told in effect to "Shut Up and Pay Up"

Opposition to the gross receipts tax is already so vehement that by the time the new legislature meets early next year, the measure may be dead on arrival. It may so galvanize anti-tax activists as to bring down other tax hikes that are envisioned.

Miller of NPRI listed several anti-tax arguments for NewsMax and in policy papers he has publicized in NPRI's website:

In the first place, the resolution that created Governor's Task Force "restrained and prevented" the new panel "from even looking at the issue of expenditures." In other words, the panelists were under orders to start out with a closed mind on the matter of budget cuts. "A political coup," for spenders, says Miller.

"Another big problem here in this state," the policy analyst claims, "is that public employees, i.e. tax consumers, hold all the levers of power in our lower house. We are speaking here of legislators whose regular day jobs-aside from their part-time status as lawmakers-are in the public sector (44 percent of them in the 1999 session, Miller says)." A built-in "conflict of interest," considering they hold considerable sway over how government dollars are spent, Miller believes.

Nevadans "do not want their taxes raised for the purposes the governor and Democratic hawks in the Assembly say they want to raise them," he argues. The panel proposes hikes on gaming taxes, property taxes, corporate filing fees, passive revenue generators, business licensing fees, cigarette taxes, and liquor taxes.

One can make the vase that liquor and cigarettes are ripe candidates for "sin taxes," but in a state largely dependent on the entertainment industry and tourists "out for a good time," imposing "sin taxes" can be counter-productive to the economy. Curiously, the panel advocates a tax hike for tobacco that is more than three times the size of the liquor tax hike. If you want to impose "a sin tax," what makes alcohol less "sinful" than tobacco, other than the brand of "political correctness" currently in vogue?

The fiscal policy prepared by the Task Force, reviewed by Newsmax.com, makes some interesting, and at times questionable projections.

It forecasts that in ten years, state government spending will increase by more than a third. For total constitutional agencies, a one third increase is anticipated. For education, spending is projected to double. Detractors call that pure speculation, but (again) the Task Force is under orders to keep possible spending cuts off the table.

The argument in Governor Guinn's "We must raise taxes" plea is that the state's deficit is due to a simple drop in revenues, not an increase in spending. Critics say that is questionable at best, and arguably the other way around.

Douglas French, executive Vice President of a southern Nevada bank, and a policy fellow at Miller's NPRI, points out that when the economy slows, businesses don't raise the price of their goods, and assume customers will pay more so the businesses can keep the doors open. Instead, they cut back on expenses, delay plans for expansion, and discontinue unprofitable ventures.

The public sector equivalent of that statement would be that raising taxes does not boost the economy, and when revenues go down, some prioritizing is in order on the spending side before tax hikes are even considered.

In a few days, NPRI will release its own plan for dealing with Nevada's deficit without raising taxes. In so doing, it may offer some ideas for high-tax Republicans in other states to ponder

There is a risk that moderate-to-liberal Republicans will split their state parties over tax-and-spend policies and bring back Democrats to power in closely-divided states.

In fact, the foregoing is pretty much what happened in TN in 2002. Liberal (formerly conservative) Governor Don Sundquist proposed a state income tax to underwrite his tax-and-spend policies. Sundquist's policies led to the narrow defeat of the conservative Republican gubernatorial nominee, outgoing Congressman Van Hilleary, to the Al Gore booster, Mayor Phil Bredesen of Nashville.

There is a risk that moderate-to-liberal Republicans will split their state parties over tax-and-spend policies and bring back Democrats to power in closely-divided states.

Just happened in Kansas. It does'nt matter though, as the Kansas RINO's are not even fiscally conservative or responsible.

You should be careful about posting stuff like this. The professional Republicans will not brook any criticism of their deities, even if they campaing as Ronald Reagan and govern like Nelson Rockefeller. What, are you trying to help Democrats win?

Of course, the fact that many of these Republicans are no better than Democrats when it comnes to taxes and many other issues is no reason to look for conservative alternatives. After all, it's much better to let the GOP drive us off the cliff than elect Democrats to do it (or conservatives to turn things around.)

big government spending because the panel did not even consider spending cuts.

That has been the story here in TN for the past 8 years.

I had to read "tax on receipts" three times before I grasped this meant taxes on REVENUE not INCOME. This should be the same as a SALES tax, in that it will be tacked on to the price and passed on to consumers. Sales taxes are regressive, since they hurt the poor more than the rich.

So what is so important on the state budget that it can't be cut? I'm always astonished that politicians don't even CONSIDER cutting programs or salaries or even hiring freezes.

Dirty little secret why states are facing massive deficits: Public education and health-care spending.

Here in WI taxpayers pay for BadgerCare, SeniorCare, as well as paying the state share of Medicaid.

We spend billions on public education from sky-high property taxes.

"the GOP politicians they put in office are acting like Democrats"

They can lie to us....they can raise our taxes....they can lie to us about not raising taxes.

Without a hint of backbone, there still remains a multitude that insist we bend over and feel the comraderie of being a Republican.

They can put away the lubricant. The sheep they seek are already slippery.

Yes, KS elected a Democrat daughter of a former liberal governor of OH. Democrats rebounded in part due to Republican divisions in TN, OK, WI, and perhaps WY as well. WY elected a clintoid governor -- a former U.S. attorney under AR Bill. Can some of the WY Freepers tell us more about the GOP defeat there?

Don't forget the roll the lamestream media played in getting weasel phil elected. The barely mentioned Van in there LOVE FEST for the weasel. Then you had spendquist saying hateful things about Van and working behind his back to make sure he wasn't elected. Weasel phil had to run to the right of center to get elected. Pro-gun anti-income tax. Abortion was NEVER mentioned.

Why did Tommy Thompson's brother help to sabotage the Republican gubernatorial campaign? What kind of governor has McCallum been -- liberal??? Didn't McCallum run to the left of William Proxmire years ago for the Senate?

Bump....

Of course, the fact that many of these Republicans are no better than Democrats when it comnes to taxes and many other issues is no reason to look for conservative alternatives. After all, it's much better to let the GOP drive us off the cliff than elect Democrats to do it (or conservatives to turn things around.)

When - not if - the GOP faces a revolt among its own, it will be over social issues, not taxes. Things like immigration, quotas, and "free trade" hurt far more conservatives in the only region Bush won than high taxes ever will.

This state-level knee jerk reaction to raise taxes as the only solution to meet revenue shortfalls has been building for several years.

Why don't they just borrow the money. That way you can cut taxes and increase spending. Its simple and is working for the federal government. Fiscal responsibility is so out.

Why didn't Hilleary bring up abortion -- did he buy into the liberal line that abortion costs Republicans as much support as it brings them?

There is a risk that moderate-to-liberal Republicans will split their state parties over tax-and-spend policies and bring back Democrats to power in closely-divided states.

What's the risk? That Dems will be elected and raise taxes? LOL

It does not matter who is in office - Democrats or Republicans. It is the nature of every politician to increase spending. Can anyone think of ANY Republican majority government anywhere - federal govt, state govt, city council - where spending decreased? I cannot.

I cannot.

Me either. Doesn't seem to be a big distinction between then does it?

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