Whenever taxes become the subject of political debate, the goal too often gets boiled down to finding a way for government to be “held harmless.” Proposed tax relief plans have been accompanied by claims that limiting revenue will inevitably mean fewer public services, painful budget cuts, or, in the case of property taxes, reduced local control. But those concerns all obscure a more fundamental truth: the reason taxes are high is because government spending is high. Any serious effort to provide lasting tax relief must begin by addressing the spending that drives the need for higher taxes in the first place, not trying to find a silver bullet solution that will keep government spending unchecked.
Let’s repeat the main point: the reason for high taxes is government spending. Limiting government spending can be an unpopular political decision because the demand for government continues to increase. Too many people look to government to provide whatever they are seeking. From that perspective, it is understandable when politicians believe saying yes to more spending is the easier policy route to take. And once policymakers firmly hold the belief that spending cannot be addressed, they mistakenly believe the only solution is for the economy to “grow” out of the problem.
Economic growth is important, but it is not a substitute for fiscal discipline. In many cases, government spending is growing faster than the economy itself, while the higher taxes needed to support that spending discourage the very growth policymakers hope will solve the problem. Regardless of the type of tax, higher tax burdens reduce incentives to work, invest, and expand. Policymakers cannot simply hope that economic growth will keep pace with ever-increasing spending. If the goal is lasting tax relief, the solution must begin with limiting government spending.
Governor Theodore Christianson of Minnesota, who is largely forgotten in American political history, was known as a budget hawk. He undertook an endless quest to limit government spending, in large part because he understood its impact. “There is a limit to the load the people can bear. In many places that limit has been reached, in some cases it has been passed,” stated Christianson.
Governor Christianson offered a reminder to policymakers at all levels of government that is worth remembering, “… the chief reason for the high cost of government is too much government.”
Christianson, before he was elected Governor, had served in the Minnesota House of Representatives and chaired the Appropriations Committee. He rejected the idea that politicians could not do anything to address spending. “It is idle for politicians to offer the alibi that the cost of government cannot be held down,” argued Christianson. Christianson was not a libertarian in his political philosophy, because he understood that government had priorities, but he did hold the conservative view that government should be limited.
When it came to budgeting and limiting spending, Christianson understood the difficulty and the political opposition that arose. He advised policymakers that high levels of spending and taxation could be the result of any number of factors including: “laxness of executive control, duplication of governmental activities, loose checking of expense accounts, overlooking of payrolls, the selection of employees on a political basis without proper regard for efficiency, the exercise of unnecessary functions: these are a few of the avoidable causes of excessive taxation.”
Further, Christianson argued that government spends too much because it has expanded into too many areas. “There has, of late, been a tendency for governments to extend their activities into many new directions and to assume functions which were never considered as belonging to government,” noted Christianson.
Christianson asked a question which still applies to all levels of government today. “What may a state do to bring about a reduction in taxation,” asked Christianson? The answer, according to Christianson, is simple. “I may be a little old fashioned, but I am ready to support the contention that the only way a state can reduce taxes is to spend less money,” stated Christianson.
Governor Theodore “More Ted, Less Taxes” Christianson understood a lesson that remains just as relevant today as it was a century ago. Tax relief does not begin with finding new revenue streams, hoping for faster economic growth, or promising that government will be “held harmless.” It begins with the discipline to set priorities, distinguish between needs and wants, and recognize that every dollar government spends must first come from the people who earned it. As long as spending continues to rise, the pressure for higher taxes will remain. But when policymakers have the courage to limit spending, lasting tax relief becomes possible. The formula has never changed: if we want lower taxes, government must spend less.
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