October, 2008
Why Tax Cuts Work
Senator Mike Haridopolis
The idea of change has been a central theme of the 2008 election with both major presidential candidates fighting to appeal to voters’ desire for a new direction. After traveling the state over the past few months talking to Floridians, I do not believe that when people say that they want change, they are asking for more government in their lives. More government offers only higher taxes and less ability for families to make decisions for themselves based on their needs. What our nation needs in tough economic times is a leader who understands the value of tax cuts and new economic opportunities for all Americans, so that our economy can strengthen in the long term.
What Ronald Reagan and John F. Kennedy proved decades ago still holds true today; that when you trust people over government to make decisions with their money, they will create jobs and grow the economy, and everyone benefits. But when families and businesses are concerned about tax increases, uncertainty dominates their financial decisions. This uncertainty always means inaction as it becomes impossible to plan for the future, and investment and the economy slow as a result. When people are not confident about the economy and are fearful of losing their jobs, they do not purchase new items, and the jobs that produce those items will decline as well.
Putting money back into the hands of people, allows them to invest and to create economic opportunities for themselves and those around them. A tax cut for a segment of the population provides an incentive to spend in the short term, however, it does not create economic opportunities for the future. Tax cuts for all taxpayers ensure that not only do people get to keep more of their own money to invest and spend, but more importantly, that there are long term incentives to grow their businesses and create jobs.
Too often, liberal politicians focus on how we can find more revenue for the government. What is really important is that the economy is strong and that good opportunities are available to people. Instead of worrying about how to finance the government, we need to focus on how to grow our economy. When the economy is strong and people are doing well, money will find its way back to the government.
The budget for the State of Florida is a great example of this idea. A few years ago, as the economy was booming and home sales were at an all-time high, the government had no trouble finding money to spend. During the housing boom, state government saw huge increases in revenues. Over the last two years as the economy has taken a downturn, though, the opposite has occurred, and state revenues have declined dramatically.
To get our economy back on track, however, we did not increase taxes, because people cannot afford to pay more. Instead, we prioritized our spending and cut the state budget from $74 billion to $65 billion. When families and businesses are making tough decisions to afford the increasing cost of life with less money, why should government be any different?
Likewise, in the current economic crisis, a tax increase is not what we need to jumpstart our markets. In tough times, the focus must remain on growing our economy. Rather than erect more barriers to financial opportunities for families and businesses, we need to focus on how to expand incentives for them to invest and grow again—and government revenue will take care of itself. By trusting that people can spend their own money smarter than the government can, we can make sure that all Americans have more jobs and economic opportunities ahead.