Fellow Fox and Hounds contributor Joe Mathews took me to task yesterday claiming my stand on a spending limit was wrong because initiatives rarely work out as planned. He wrote: “Why should Fox, or anyone else, think that a spending limit would be a limit on spending?”
The answer to that question is contained in his piece. He refers to the Gann Spending Limit law on the books in California, which he points out stands so far above actual spending that it has no real meaning.
The limit, named after taxpayer advocate Paul Gann, who placed the initiative measure on the special election ballot in 1979 (supported by then Governor Jerry Brown), is so far above actual spending because at one time it worked as designed. The current Gann Limit was reached after amendments were made to the original plan.
Supporters of more spending championed changes to the law, and were successful in changing it after the limit, well, limited spending, of all things. In fact, during the Deukmejian administration, a billion dollars was returned to taxpayers under the provisions of the spending limit.
A spending limit did work in California at one time. It can work again.
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A number of national groups supported by some economists, actors and others have proposed a tax on Wall Street and stock transactions. They call their approach the Robin Hood tax. Without getting into a deep discussion about the pros or cons of the tax, using Robin Hood’s name in this context is a misnomer.
As usual, the simple explanation for the use of the Robin Hood tax is proponents want to “take from the rich and give to the poor.” But, look a little deeper into what the Robin Hood legend was all about.
The rich that Robin Hood collected from were associated with the government. The chief villains in the story are Prince John, the head of the national government, and the Sheriff of Nottingham, a leader of the local government and the chief tax collector. They were made rich by collecting taxes. Paying the taxes made the villagers poor. Robin Hood returned the unfairly raised tax money to its rightful owners.
The new tax proposals on stock trades is a way to move more money to government. Wall Street bankers are nominally the targets of the tax but, apparently, if a small investor makes a trade he or she would be taxed as well.
At least, unlike the taxes levied in Robin Hood’s England, the tax is not mandatory. It only happens when trades are made. But how will the tax effect stock trades and ripple through the economy?
Economists will debate this issue. For now, let’s not mistake what Robin Hood stood for. The legend says his actions were against an oppressive government that overtaxed.