‘A solemn duty’ to spend that money carefully

December 19, 2011

Some Oklahomans are arguing that we can’t phase out the state income tax because it’s imperative that we “maintain core services.” I’ve addressed this topic elsewhere, and in OCPA’s forthcoming budget book my colleague Jonathan Small highlights more than $568 million in annual waste, inefficiency, and spending on non-core services. (You’ll have to wait for the book to come out, but I don’t mind telling you now that my personal faves are earmarks for a roping contest and subsidies for losses at state-owned golf courses.)

We’re also told that it would be unwise to phase out the income tax because a constitutional provision (SQ 640) makes it very difficult to raise taxes. If only it were so! The reality is that just this year the most conservative Legislature in state history passed a multimillion-dollar tax increase and a center-right governor signed it into law. If they want to raise taxes, they’ll raise taxes.

But let’s turn our attention to the spending side of the equation. We recently learned that in at least one state Medicaid payments go to dead people. And of the Medicaid spending devoted to living people, up to 30 percent of it nationwide is wasted. This revelation comes to us not from The Heritage Foundation or the Cato Institute, but from the former Medicaid chief himself, a liberal Harvard professor appointed by President Obama to oversee the program.

Now if all this money came from Santa Claus, perhaps we could afford to turn a blind eye to the waste. But since it comes from Oklahoma families, policymakers have “a solemn duty” (Indiana Gov. Mitch Daniels’ words) to spend it wisely:

Never take a dollar from a free citizen through the coercion of taxation without a very legitimate purpose. We have a solemn duty to spend that dollar as carefully as possible, because when we took it we diminished that person’s freedom.

Given that the provider tax signed into law this year will expire on December 31, 2014, policymakers would be wise to get started now on meaningful Medicaid reform. By spending our money carefully, they will find that phasing out the state income tax is altogether possible.