I doubt that giving government a budget surplus is quite the right thing to do. What’s so great about putting more money in the hands of an entity that will only spend it for no net positive gain?
Government consumes overhead dollars, and as a non-profit entity makes no positive contribution to net goods and services. Government builds no new investment capital to fund economic growth. Everything government has and spends is either taken or borrowed from the private sector.
The goal should be to minimize the value of government, not maximize it. The goal should be to starve it of funds, not feed it. When investors in the stock market sense that a company is profitable and a good return on investment, they buy that stock, the value of the stock goes up, the company has more capital it can use to do more of what people like, the investors’ equity value goes up, and everyone wins.
But governments don’t have to do something better or more valuable to make money. Government can just make regulations, enact fees, collect taxes, and impose fines. There is no objective market to evaluate government and rein it in based on how well it performs.
Lincoln County is touted by the Left for having a budget surplus from tax money it charges to owners of capital equipment such as windmills on wind farms. Meanwhile, the Left also complain that Elbert County does not have such a tax and is missing a tax opportunity.
While it’s difficult to look at either one of these counties’ economies and conclude much good about them, compared to each other, a few numbers stand out. In addition to enjoying revenue streams from wind farm capital equipment taxes, Lincoln County’s retail sales per capita is over 7 times that of Elbert County. Neither Lincoln nor Elbert County have a significant manufacturing base, so on that basis the two counties are roughly equal.
But apparently a budget surplus isn’t all that it’s cracked up to be.
Lincoln County’s population is in decline. Elbert County’s population is increasing, albeit slowly. Lincoln County’s home ownership rate is 20% less than Elbert County’s. Lincoln County’s per capita and household income are less than 60% of Elbert County’s. Lincoln County’s poverty rate is double that of Elbert County. Lincoln County’s average home value is less than a third of Elbert County’s. Lincoln County does have more jobs per capita than Elbert County, but they pay a lot less.
Looking at property taxes, in 2012 Lincoln County took $4.3M for a per capita rate of almost $800. In that same period Elbert County took $7.2M for a per capita rate just over $300. So not only does Lincoln County take money from those who install capital equipment there, they take over twice as much property tax money per capita than Elbert County does.
If a big fat well-funded government with “full coffers” were such a good thing, Lincoln County should be looking a lot better than Elbert County. But that’s not the case now, is it?
The reality is that when you put more money into government, not only do you remove that money off-line from the profit centered private economy — effectively taking it out of the capital formation cycle, but whatever that government decides to do with it, assuming that it is something desirable (and that’s a BIG assumption when it comes to government), potentially crowds out a private sector alternative that might have made a profit. And it is those private profit making opportunities that enable citizens to live, grow, have families, and prosper.
The opportunity cost – what was forfeited by choosing one path – rarely gets discussed when it comes to government taxing and spending. The folks in Lincoln County might want to reconsider those “full coffers” doing nothing for them.
And, as is the case with most of the public policy effluvia issuing from the well intentioned boys and girls at New Plains, always check the numbers before accepting one of their claims.
B_Imperial