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Pa. GOP should not raise taxes

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By Lowman Henry
Thursday, June 26, 2014, 8:55 p.m.
 

With the state budget over a billion dollars out of balance and elections approaching, the pressure is on the governing Republican majority in Harrisburg to raise taxes. They should not. To do so would be bad public policy, bad politics and an abandonment of promise and principle.

Gov. Tom Corbett has followed a pro-growth path to restoring the economy of Penn's Wood, battered by the lackluster economic recovery and a fiscal mess left by his predecessor. He has delivered in that regard, with unemployment in the state slipping to a five-year low of 5.6 percent. Much of that drop can be attributed to the economic boom brought about by the Marcellus shale industry, which has thrived precisely because Corbett has refused to enact a job-crippling severance tax.

It has been proven that as taxes go higher, economic activity decreases and tax revenue declines, and cutting taxes attracts investment, which leads to economic expansion that creates more jobs and ultimately results in more tax revenue.

President Calvin Coolidge and his Secretary of the Treasury Andrew Mellon pioneered the policy of keeping government expenditures low, cutting tax rates and thus reaping more tax revenue triggered by economic prosperity. The Coolidge-Mellon plan worked. President John F. Kennedy followed their example in the early 1960s, as did Ronald Reagan in the 1980s and to a lesser extent George W. Bush early in his administration. In each case the lower tax rates bolstered the economy and increased tax revenue.

As the governor and the Legislature battle calls from the spending interests to raise taxes, they would be wise to heed both the lessons of history and the current improving economy by resisting raising taxes and instead focusing, as the governor has suggested, on the cost drivers in the state budget.

Not only is increasing taxes bad public policy, it is bad politics. Of course Democrats, along with left-wing pressure groups and liberal voices in the news media, want the GOP to raise taxes. To do so would be to fund the various constituent groups beholden to the Democratic Party while leaving Republicans — who hold majorities in both houses of the General Assembly and the governor's office — solely blamed by the working families, senior citizens and small businesses that must pay the tab. Worse, if taxes are raised, Democrats and their allies will take credit for “forcing” the GOP to raise taxes, energizing their core constituencies in the run-up to November's elections.

The social conservative wing of the Republican Party is already disillusioned. If the GOP caves on taxes, it will likewise depress economic conservatives. The end result will be lackluster Republican turnout at the polls in November. And anybody who thinks such a move will entice independents and Democrats to vote Republican probably also believes if you like your health insurance you can keep your health insurance.

As we approach the constitutionally mandated budget deadline, pressure will mount on the governor and the Legislature to give in and raise taxes. The voices urging them to do so will continue to feed at the government trough while the GOP pays the political price and the productive sector pays the economic price. It is a course of action they would be wise to avoid.

Lowman Henry is chairman and CEO of the Lincoln Institute and host of the weekly “Lincoln Radio Journal.”

 

 
 


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