Democrats acknowledge benefits of tax cuts
Tax holiday bill acknowledges that lower taxes improve the economy

By Jason Mercier, Evergreen Freedom Foundation

We would like to welcome the state’s Democrats in their budding conversion to the tried-and-true principles of the free market. With the country and state experiencing a recession, Senator Patty Murray has co-sponsored a bill that would grant a ten-day "tax holiday" at the start of the Christmas shopping season to encourage consumer spending and bolster the economy.

Sen. Murray explained the need for her bill by stating, "Consumer confidence is everything. This gives people a reason to go out and kick-start the economy and get something out of it. . . . This is my kick-the-bad-mood bill. I’m going shopping."

Other Democratic leaders are also touting the bill. Gov. Locke has even said he’d call a special session to enact the bill (granted that the federal government reimburse Washington for lost revenue).

State Senate Majority Leader Sid Snyder had good things to say about the bill, "I think it would help consumer spending, and that’s what’s going to get us out of this economic decline."

Governor Locke’s Office of Financial Management Assistant Director Irv Lefberg stressed the effect the "tax holiday" would have on our economy: "Consumer spending is two-thirds of our economic activity. So when there’s a big change in consumer confidence, and it starts going up or going down, it actually has a big effect."

Have the Democrats converted to a "supply side" model for growing our economy? It appears they have. What this bill and its supporters have implicitly acknowledged is that high taxes are an impediment to consumer confidence and spending. By lowering (or in this case temporarily eliminating) taxes, consumers will have more to spend, which will stimulate the economy. This leads to the creation of more jobs and ultimately increases the tax base, generating more revenue than government was collecting through the higher tax rates.

This prompts us to a question for our state leaders: Since lower taxes will spur the economy, why give only a "holiday?" Why not stimulate our economy and improve the purchasing power of consumers permanently? Temporarily relief is less effective. If enacted, this bill will create a drop-off in spending until it goes into effect, temporarily hurting our already anemic economy. Once the "tax holiday" ends, consumer confidence will again falter.

We challenge our state leaders to embrace common sense free market principles. By enacting permanent tax reductions, more can be done in the short and long term to recover our economic potential. This ultimately will boost consumer confidence by allowing taxpayers to spend more of their own "hard earned" money.

Jason Mercier is Deputy Communications Director for the Olympia-based Evergreen Freedom Foundation. He can be reached at (360) 956-3482 or jmercier@effwa.org.

Evergreen Freedom Foundation P.O. Box 552, Olympia, WA 98507 Phone: (360) 956-3482, Fax: (360) 352-1874 Email: effwa@effwa.org