TABOR: The enduring success story empowering Colorado taxpayers

As an economist Promote soft landing For the U.S. economy, Americans are facing sticker shock at grocery stores, gas stations, fast food restaurants, and more.

After a long game double digit inflation, no different from the 1970s. We have learned once again that unrestrained increases in federal spending, financed by borrowing and easy monetary policy, ultimately lead to high inflation.

In response to stagflation in the 1970s, Congress enacted statutory fiscal rules designed to balance the budget and stabilize debt. The Fed also sought to tighten monetary policy to stabilize prices. In the era called the 1990s, “Great Moderation” The federal government has achieved sustainable debt levels and low inflation rates.

Unfortunately, over the past two decades, the federal government has largely abandoned these fiscal and monetary policies. federal spending growth far exceeds the growth in national income, federal debt It is growing at an unsustainable rate. Statutory fiscal rules designed to rein in federal spending are routinely circumvented and suspended.

of federal reserve Monetary policy was once again used to respond to these fiscal policies, resulting in large fluctuations in the inflation rate. It is difficult to claim that we are experiencing a soft landing and that all is well. A more realistic prediction is that stagflation will occur again in the next decade.

However, there is a silver lining in this bleak outlook.

In response to stagflation in the 1970s, citizens revolted against state and local taxes.start from California property tax limits, the public began to challenge wasteful fiscal policies at the state and local level. Using this initiative and referendum, the people enacted tax and spending limits to restrain fiscal policy.

Citizens learned important lessons from early efforts, as politicians and special interests found ways to circumvent and halt new fiscal rules at the state and local level, just as they had done at the federal level. A good example is Colorado, which was one of the first states to enact statutory tax and spending limits. In the 1970s, this measure limited state spending, and for several years citizens received tax rebates on surplus income above tax and spending limits. However, by the early 1980s, politicians exempted much state spending from restrictions. Therefore, state expenditures again grew faster than state revenues.

This sparked a new tax revolt in Colorado. In 1992, citizens took the initiative and passed the law. Taxpayer Bill of Rights (TABOR) AmendmentsIt is one of the most effective tax and spending limits enacted by any state.

The key to TABOR’s success is that it is a constitutional fiscal rule developed by a national taxpayer body. Over the years, politicians and special interest groups have attempted to weaken or eliminate TABOR, but its key provisions remain in place. TABOR imposes strict limits on state spending growth related to inflation and population growth rates. Any surplus revenue over the limit must be returned to taxpayers through rebates. And if Colorado’s government wants to increase taxes or revenue, issue new debt, or spend surplus revenue, it must first get approval from residents.

TABOR was enacted when Colorado was a solid red state. Since then, Colorado has become a blue state, with Democrats now in control of Congress and most major state governments. However, TABOR persisted under both Republican and Democratic administrations. Whatever their political persuasion, Colorado residents have learned to live by constitutional fiscal rules and are not willing to abandon these constraints on fiscal policy. TABOR allows citizens to decide how much government they want and how much they are willing to pay.

TABOR gives Coloradans the power to choose how their tax dollars are spent. Hundreds of ballot proposals have been submitted to taxpayers that seek to increase taxes and debt, and to spend surplus revenue rather than give tax refunds. Citizens express their wishes at the ballot box and often approve these measures at the local level. However, most of the state’s voting bills were defeated. Citizens not only choose how their tax dollars are spent, but they also choose to prioritize local government spending over spending at the state level.

When citizens express their choices at the ballot box, they are effectively telling politicians to live within their budget constraints, just as many Americans save to live within their budgets. I will give instructions.

With TABOR, Coloradans imposed severe budget constraints on state and local governments. People are telling politicians that if you have to live within your household budget, you should learn how to live within your budget. Whatever their political persuasion, the public values ​​fiscal rules that impose budgetary constraints on politicians. TABOR makes clear that we are all fiscal conservatives and that people of all political stripes can take away the choice of overspending from politicians.

Barry W. Paulson Professor Emeritus of Economics at the University of Colorado He is also a policy advisor for the Heartland Institute.