Tax Collections Rise Without Taxes Rising

A letter printed in the January 1, 2009 Wichita Eagle, written by a Christopher Brooks of Wichita, argues that political advocacy groups that ask legislators to sign a pledge to not raise taxes are engaging in “economic blackmail.” This process, Mr. Brooks writes, is “unfair to those who have a different viewpoint on spending but also tantamount to having a legislator on a string.”

Mentioned by this author as groups that ask legislators to sign these purportedly harmful pledges are Kansas Taxpayers Network and Americans for Prosperity — Kansas. These two groups are merging.

I think this author may not realize that by simply doing nothing, tax revenues rise. Naturally, government spending rises in response.

Government doesn’t have to “raise taxes” in order to generate more revenue. Many taxes are based on a tax rate multiplied by some level of economic activity. That’s the case with the sales tax. As people spend more — either because their wealth is increasing and they desire to consume more, or maybe simply because inflation has caused prices to rise — sales tax receipts rise. The same goes for income taxes, although with this tax there’s the additional danger that as your income rises, you may move into a higher tax bracket, where the additional money you earn beyond some level is taxed at a higher rate.

Property taxes are different, as the simple act of owning property is sufficient to attract the attention of the tax collector. These taxes rise pretty much automatically too, when the appraiser decides that your property is worth more.

This is important to understand: tax revenues rise without the government raising taxes. When running for Sedgwick County Commissioner last year, Karl Peterjohn campaigned on a platform that included the requirement of voter approval for tax increases. His opponent asked if we wanted to hold expensive special elections whenever the county government needed more revenue, implying that these elections would need to be held frequently. But as I’ve shown, revenue rises without tax increases.

Mr. Brooks also writes that some people may “have a different viewpoint on spending.” That’s one of the biggest problems with government: Many people and legislators are full of ideas of how to spend someone else’s money.