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Commentary

A New Tax Revolt is Spreading Across the Land


     
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Despite President Clinton’s “New Covenant” of “fairness” and “sacrifice” (read: taxes for the rich and working class alike), American taxpayers need not necessarily fear. Setting an example for people in all states, Colorado taxpayers have responded to their state’s financial crises with a new tax revolt that has changed the rules of the fiscal policy game, placing government on the defensive. This new tax revolt, expressed through citizen initiative and referendum, has returned tax decisions to Colorado taxpayers, a lesson all American taxpayers should take to heart.

In the last election, Coloradans rejected a referendum that would have raised state sales taxes by 1 percent to finance K-12 education. The message sent to the public school lobby and other would-be tax raisers was that the days of growth in taxation without popular consent had ended.

To press the point home, Coloradans also voted into the state constitution the Tabor Amendment, which imposes more stringent tax and expenditure limits on fiscal policy at both the state and local level.

In designing and implementing Tabor, Colorado taxpayers created new and comprehensive fiscal rules demanding voter approval —for any new tax, tax rate increase, any emergency tax spending, or any tax policy change that causes a tax revenue increase or creates more debt.

Tabor also imposes a state spending limit defined in terms of the rate of growth of inflation and population, and limits the growth in local government spending to the rate of inflation and the change in the value of local property. Revenues collected in excess of these limits must also be refunded to taxpayers, and legal recourse is provided to taxpayers when those limits are violated.

Tabor’s welcome effects are already being felt throughout Colorado:

Politicians are finally coming to grips with the state budget deficit. They are also finally making the tough choices required by a real budget constraint, and setting priorities and realistic budget goals that can only be financed with available revenue.
No longer can politicians at the state level promise to increase spending for interest groups as they have in the past. If politicians now want to increase spending beyond the limits imposed by Tabor, they must first convince all Coloradans that the programs to be financed justify increasing taxes.

And no longer are Colorado taxpayers willing to let go unchallenged the state’s tax-raising special interests. Colorado taxpayers have established a new foundation to pay for the legal costs to those taxpayers seeking legal recourse against politicians and bureaucrats who violate the new fiscal laws.

Colorado taxpayers have already dealt one embarrassing blow to tax-and-spend special interests. The president of the University of Colorado was successfully challenged for violating state election laws for using university resources — taxpayer money — to oppose the Tabor Amendment.

Tabor has set a precedent. Effective restraints on the growth of government can be imposed by citizens.

Many are obviously listening. Just as activists in other states were quick to copy Colorado’s term limitation measure, taxpayers are busy drafting Tabor-like proposals in California, Oregon, Washington, Wyoming, Ohio and Florida.

For instance, a proposal in Oregon would join Colorado’s voter approval requirement to Arizona’s recently-passed Proposition 108’s two-thirds vote in the legislature for state tax increases, making it very difficult for the state government to raise taxes. And in Wyoming, a state senator has proposed a referendum calling for spending limits linked, like Tabor, to inflation and population growth.

Another 10 to 15 states will have ballot initiatives modeled after Colorado’s Tabor and Arizona’s Proposition 108 by 1994. Critics say such movements constrain representative government. Precisely; the new tax revolt is about reining in politicians who promise not to raise taxes to get elected (for example, George Bush and Bill Clinton) and then raise taxes once in office.

Imagine the potential — beyond keeping candidates honest — in the new tax revolt: its final campaign may well end in a march on Capitol Hill, with a constitutional convention introducing Tabor-like reforms to the federal government. That would be real change.


Barry W. Poulson is a research fellow at the Independent Insititute in Oakland, CA and teaches economics at the University of Colorado.






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