KICK 'EM WHILE THEIR DOWN
Beware of state lawmakers increasing taxes during this now-official recession

A punk economy is doing what Bob Beers and Jim Gibbons could never do: shrink Nevada�s state government. Two years ago, the Economic Forum gave the Gang of 63 a checking account with $6.8 billion to waste over two years for �vital� services and securing votes. Now, it turns out, there may only be $5.4 to $5.8 billion to throw around. So while the bad news is that many in the private sector are losing their jobs � the Nevada unemployment rate will hit 9 percent in 2009 according to Global Insights, reports Ed Vogel with the Las Vegas Review-Journal � the great news is that the Carson City Crew has less money to spend. 

The 2009 Legislature could change all of that and use their overwhelming, gerrymandered Democrat majorities in both the Senate and House to raise existing tax rates and create new ones. After all, economic knowledge has always been in short supply in the Silver State�s capital and may now border on zero, given the aforementioned Beers being made an honest man again on election day. 

Increasing the tax burden during a recession is a direct declaration of war against taxpayers when they are most vulnerable. With gaming, tourism, retail sales and the real estate market all in the tank, elected officials surely aren�t stupid enough to pile on with more taxes. Or are they? The unelected chancellor Jim Rogers says, �I want a check.� 

And according to an R-J editorial, Nevada democrats are listening. The shameless Rogers is even proposing that the Silver State should get out its tin cup and beg for $3 billion in TARP or TALF or TWP (this week�s program) money from the federal government: to be freshly printed out of nowhere by a Federal Reserve that has doubled in size this winter and just getting started with its monetary �shock & awe� if you can believe Ben Bernanke. 

Of course, that�s the difference between Nevada�s budget and the federal one. Nevada government can only spend what it overtly takes from its citizens in taxes and fees. It cannot create fiat money out of thin air to pay it�s bills. The federal government has the Fed at its disposal to create money and subversively tax people by making their money worth less. 

History shows that people get angry when you kick them while they are down. During the last great depression there were tax strikes. Property owners created more than 1,000 different taxpayer leagues around the country, �which voiced outrage over what were perceived as needless government expenditures in a time of severe economic hardship,� economist David T. Beito writes in his book Taxpayers in Revolt: Tax Resistance during the Great Depression. 

Many taxpayers just couldn�t pay at the depth of the depression and others wouldn�t pay for ideological reasons, believing that government should suffer along with taxpayers. The tax revolt movement attracted 30,000 members in Chicago alone, and the Windy City�s government was faced with financial collapse as property owners stopped paying. 

The movement had such momentum that the federal government resorted to a national �pay your taxes campaign.� Chicago teachers were even enlisted to chant �Pay Your Taxes!� at rallies around the city. Municipal and government workers, along with academics tried to sell the virtues of a more active state on the radio in a nationwide series called �You and Your Government� that ran from 1932 to 1936. 

�The taxpayers� revolt of the 1930s should not be dismissed as a fluke, aberration or simple response to the stimulus of the depression,� explains Beito. �Tax revolts in American society, including that of the 1930s, have often reflected, and continue to reflect, persistent suspicions of expansive government, entrenched bureaucracy and domination of political institutions by experts.� 

Democrats, despite having big majorities in both chambers and being predisposed to increase taxes, may want to tread lightly. Beito points out that the tax rebellions in the 1930s appealed to the masses and average voters. It would be no different today. Taxpayers struggling to make ends meet, would likely join the revolt, if taxes are raised to keep paying firemen $200,000 a year and fund the construction of fancy buildings at UNR and UNLV for rich college kids.