Bestinau got that-
As America emerges from the deepest depths of our pandemic crisis, state governments find themselves with a happy problem: too much cash on hand. Aided by federal Covid aid dollars and now faced with rising revenues due to both a booming economy and inflation, states have more money than they can currently spend. Spoken miracles†
Then comes the question of what politicians do when they have too much money, a rare fluke.
Some states are now just giving the money back to taxpayers — plainly, albeit loudly. Georgia Governor Brian Kemp, who is facing a difficult election year, very publicly signed a bill this week that would allow hundreds of dollars to be returned as income taxes to state residents who filed returns in 2020 and 2021, right around the time that they will file their federal taxes.
Let’s put aside the 2018 Democratic nominee Stacey Abrams reaction, with Abrams being Kemp’s likely opponent in the upcoming election: “I want us to remember that it’s not who put their name on the cards, it’s who bought the gift. a K name on the card, it’s Biden and Warnock who got the money here.” That makes sense, but what does logic have to do with it?
After all, there’s something crazy — in a technical-economic sense — about raising money through taxes and then just giving some of the money back to the same people who paid it.
The taxes remain in effect, as a deterrent for people to work in the first place. There is no redistribution here; the point is not to give money back to other lower-income people. People will probably see a $300 one-time check as a gift card, as Abrams suggested. This is likely to lead to modest consumer excesses – a bad thing to encourage at a time when we are dealing with inflation.
What could we do instead? We could return the money, but in a more targeted way. Aimed at what? What about the way the war in Ukraine affected consumer prices, now gasoline and maybe soon bread prices?
Why could we do this? Because the war and its sanctions have led to extraordinary price increases, especially for gas. Gas taxes, both at the state and federal levels, add to the price. Not only do rising gas prices cause immediate, short-term harm to consumers, they could also undermine support for aid to Ukraine in the war if they persist. Instead of just giving money back to taxpayers, why not lower the prices they have to pay at the pump? California, with a Democratic governor, is trying to do this.
Why shouldn’t Governor Kemp and all the other governors follow suit, to help Americans and Ukraine? Maybe because they get to sign the checks now, and later, when voters are in the voting booth, they might not care so much about higher gas prices.
Again, the basics apply: good politics makes for bad policy. And we all suffer from our divisions.