AMID RECESSION, LEGISLATURE DEBATES HOW LARGE A TAX HIKE

With the Missouri legislature debating precisely how large should be the largest tax increase in state history $400-, $500-, $600- or even $800-million the subject of taxes remains on everyone's mind. Friday's mail brought a release from the Missouri Retailers Association stating a position they share with the National Federation of Independent Business (NFIB). Together, the two organizations oppose another bill in the legislature that would establish what the retailers call "a lucrative retirement plan for county employees."

The Missouri Senate has already passed a version of the bill, which will raise the local merchants' license fee from $5.00 to $15.00 to fund the retirement plan. (Left unanswered is the question of why the hard-pressed retailers of Missouri should bear the costs of this retirement plan for county employees).

According to Randy Scherr, state director of the NFIB, "County officials are asking state legislators to do what they don't want to go back home and do for themselves, which is deciding to join LAGERS, the Missouri Local Government Employees' Retirement System." The news release continues, "With the gift of a new retirement package from the General Assembly plus LAGERS and social security, some elected officials would retire with more money than they earned while in office."

This reminds us that the inevitable tendency of government at all levels is, like crabgrass in August, growth, spreading growth and more growth: Steady. Inexorable. Accelerating. The principal reason Ronald Reagan's Presidency and career remain so controversial is that he was genuinely dedicated to slowing, even reversing, this trend toward statism. Much of the continuing, desperate effort to blacken the glittering Reagan legacy of economic prosperity and achievement should be seen in this light. The advocates of Big Government are legion. Although few of them if any have ever met a payroll, they are articulate verbalists; their well-placed allies in the news media are as common as blackberries; and woe unto any who dares challenge them.

It's quite possible to forget what a radical departure Big Government is from the sound traditions of our republic. It was, after all, that Democratic President, historian Woodrow Wilson, who reminded us that the history of liberty is the history of placing restraints on the power of government. This includes taxes.

We constantly hear we don't pay enough taxes. Reflect, then, on the fact that the entire state budget was about four billion dollars less than a decade ago; today, nearly all in Jefferson City can be heard whining because that same budget is only nine billion. Thus, a state budget that everyone "knows" is "revenue-starved" has more than doubled in less than ten years.

Anything the legislature passes will be before the voters for approval in November. Samuel Guze of The Heartland Institute has some important observations that deserve to be part of this debate:

"... We Missourians have benefited from our thrift and low taxes. We should be very cautious about abandoning these policies.

"Low or falling taxes encourage economic growth. Not only does Missouri's experience bear this statement out, but it is supported by sound theory and numerous econometric and statistical studies. In 1984, Victor Canto and his associates published a comprehensive study of state tax policy and economic growth from 1967 to 1977. They discovered that: Virtually every state that has increased its relative tax burden experienced below average growth. During this period, 34 states reduced their relative tax burden. Of these, 27 experienced above average growth.

"Earlier this year, the Heartland Institute completed a study of the relationship between state tax policy and economic growth from 1975 to 1987. It found that 17 of the 21 states that lowered their taxes during this period grew faster than the national average. Twenty-five of the 28 states that raised taxes grew slower than the national average. All seven states that did not fit this pattern pattern had kept their tax burdens stable relative to other states, and grew at approximately the national average rate.

"Missouri's experience is a striking confirmation that keeping taxes low and falling helps promote economic growth. From 1983 through 1986, our tax burden relative to other states fell every year. These changes were followed by strong economic growth throughout the second half of the decade.

"Missouri's solid performance during this period is cited by the Civic Progress report. For example, the report finds that in 1988 our personal income per capita was higher than seven out of 10 competing states and in 1989 our unemployment rate was lower than in eight out of 10 states.

"... Should we pay higher taxes in Missouri? The evidence says no.

"Our tax burden has been rising rapidly since 1986. In that year, the legislature created an enormous personal income tax increase by taking advantage of changes in the federal tax law. Just last year, they increased sales taxes and corporate income taxes to fund refunds for federal pension recipients.

"Missouri is already in an economic slowdown caused at least in part by these tax changes. To increase our tax burden even further at this time when the whole country is sliding into a recession, and major job losses at McDonnell Douglas and Chrysler threaten us would be extremely risky.

"We must remember that economic growth is in everybody's interest, while more government spending benefits only a few. As the economy grows, so does our personal income. With more income, we can afford better food, better housing, better health care, more education and more recreation.

"Economic growth means less unemployment and makes it possible for those already working to earn higher wages, find better jobs or advance in jobs they already have. Economic growth also makes it possible for our children to find jobs when they are ready to join the work force.

"... In 1987, more than two-thirds of Missouri's general revenue budget went for education, welfare and health care. How much less would have been needed in these areas if personal income had been faster and unemployment was less common? And how many of the services that are currently tax-financed and publicly provided could be delivered better and less expensively by private schools, private charities and private hospitals?

"Other states and many of the nations of Eastern Europe are aggressively pursuing these alternatives to cut government spending and lower taxes.

"It would be foolish for Missouri to abandon its pro-growth policies just as other states (and nations) are starting to follow our lead.

"We should instead pursue policies that are supported by common sense, available research and the decisions of our competitor states and nations.

"Less government spending and lower taxes are the best ways for Missouri the thrifty to remain Missouri the prosperous."