Pathfinder, Volume 11, Number 1, December 1988 Page: 1
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December 1988Volume 11, Number 1
TEXAS SELECT COMMITTEE ON TAX EQUITY
The mandate of the Texas Select Committee
on Tax Equity is to search for a new tax system
that would more accurately reflect the changing
base of Texas economy and raise enough reve-
nues to finance public expenditures. In our judg-
ment, the Select Committee will inadvertently,
but predictably, end up being a vehicle for tax
increases.
The government of Texas is barking up the
wrong tree. Instead of looking for new tax instru-
ments, the Select Committee should have been
asked to develop a set of constitutional rules that
would define the size of the public sector in
Texas. The real issue is the level of public spend-
ing. Even if the Select Committee could come
up with an optimal set of instruments (whatever
"optimal" means), this would only enhance the
right of politicians to continuously negotiate and
determine the level of public spending. Every
day, they remind us about an entire range of pub-
lic "needs." We need more highways, more
schools, more hospitals, more welfare, more sub-
sidies for stagnating industries, less unemploy-
ment and less poverty. The point is that we could
satisfy some of those needs only by giving up
other things that also are important. To say we
need something begs the question: what things
do we have less need for? It is deceptive to
speak of fulfilling any specific need without rec-
ognizing that some people will have to make do
with less of something else.
One might ask why elected politicians consis-
tently want to increase government spending.
Aren't they elected to carry out the wishes of the
people? The answer is, obviously, yes; but every
expenditure is desired by some people. Thesepoliticians are, therefore, constantly under pres-
sure by one group or another to increase spend-
ing on some project or another. Just like the rest
of us, politicians are motivated by their own self-
interest.
A number of reputable scholars, including No-
bel Laureates Stigler and Buchanan, have devel-
oped a theory of the various ways politicians can
turn government powers into private ends. The
theory demonstrates how private groups bargain
with politicians to seek the gains and to avoid
the losses from a range of government actions,
and how politicians gain from exchange by for-
bearing-for a price-from using their power to
impose costs.
Craig Stubblebine from Claremont Men's Col-
lege wrote: "Early in my association with the Cali-
fornia legislature, I came across the concept of
'milker bills."'
Writing in The Wall Street Journal, B. Jackson
said, "House Republican leaders are sending a
vaguely threatening message to business politi-
cal action committees: give us more or we may
do something rash" and "members of the tax-
writing committees nearly tripled their take from
PACs during the first six months of [1985]."
Fred McChesney wrote that "their ability to im-
pose costs enables politicians to credibly de-
mand payments not to do so."
And, finally, George Stigler said, "With its pow-
er to prohibit or compel, to take or give money,
the state can and does selectively help or hurt a
vast number of industries."
The outcome is, as we know so well, that pub-
lic spending is biased upward. Tax reform is then
a political decision about who will pay how much
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Texas A & M University. Center for Education and Research in Free Enterprise. Pathfinder, Volume 11, Number 1, December 1988, periodical, December 1988; Austin, Texas. (https://texashistory.unt.edu/ark:/67531/metapth1031902/m1/1/: accessed July 8, 2024), University of North Texas Libraries, The Portal to Texas History, https://texashistory.unt.edu.; crediting UNT Libraries Government Documents Department.