Opinion: Governors have so much extra money they’re giving it away


As America emerges from the deepest depths of our pandemic crisis, state governments are left with a happy problem: too much cash. Aided by federal Covid relief dollars and now facing rising revenues from both a rapidly growing economy and inflation, states have more money than they can currently spend. Say Mirabile.

Then comes the question of what politicians do when they have too much money, a rare coincidence indeed.

Some states are now just giving the money back to the taxpayers – simply, so loudly. Georgia Governor Brian Kemp, facing a tough election year, very publicly signed a bill this week authorizing the sending of hundreds of dollars in income tax refunds to state residents who filed returns in 2020 and 2021, just as they file their federal taxes.
Leaving aside for a moment the response of 2018 Democratic candidate Stacey Abrams, Abrams being Kemp’s likely opponent in the next election: “I want us to remember that it was not who put his name on the cards but who bought the gift. a name K on the card, it was Biden and Warnock who got the money here.” It makes sense, but what does logic have to do with it?

There is, after all, something a little goofy – in a technical and economic sense – about collecting money through taxes and then returning some of it to the same people who paid it.

The taxes remain in place, as a deterrent for people to work in the first place. There is no redistribution here; it’s not about giving money back to different, low-income people. People are likely to see a one-time check for $300 as a gift card, as Abrams suggested. This will likely lead to modest consumer splurges – a bad thing to encourage at a time when we are facing inflation.

What could we do instead? We could return the money, but in a more targeted way. Targeted on what? What about how the war in Ukraine has affected consumer prices, which now means gasoline and maybe soon bread prices?
Why could we do this? Because the war and its sanctions have led to particular price increases, especially for gas. Gasoline taxes, at the state and federal levels, are added to the price. Not only are rising gas prices causing immediate and short-term damage to consumers, but they could also undermine support for aiding Ukraine in the war if they persist. Rather than just giving taxpayers money back, why not lower the prices they face at the pump? California, with a Democratic governor, is trying to do that.

Why wouldn’t Governor Kemp and all the other governors follow suit, to help the Americans and Ukraine? Maybe because they can sign the checks now, and maybe they don’t care so much about higher gas prices later when voters are in the voting booth.

Again, the basics apply: good policy makes bad policy. And we all suffer from our divisions.


cnn

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