Thursday, July 4, 2013

What’s the Half-Life of a “Temporary” Tax Increase?

Milton Friedman famously noted that, “Nothing is so permanent as a temporary government program”and Ronald Reagan sagely observed that “a government bureau is the nearest thing to eternal life we’ll ever see on this earth.”
They’re both right, but they should have included the other half of the fiscal equation. Repealing a tax, even a “temporary tax,” is just as difficult as getting rid of wasteful spending.
Simply stated, once politicians get access to a source of additional revenue, it’s feeding time at the zoo and good luck getting them to give the money back. Here’s a sobering example from Philadelphia.

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