Could Reducing Taxes on Bread Create a Hot Potato?

Tennessee’s legislators are faced with a decision—what do they do with a surplus of almost $900 million in recurring revenue? Many will want to spend it on “improving” existing government programs by growing them. Last week I said they could consider using the money to buy some freedom from the federal government. Another possibility getting lots of discussion is to “spend” it by cutting taxes. But if that’s what legislators do, then they better be careful.

The problem I’m envisioning relates to the choices we will be left with when the next economic downturn occurs, and it will occur at some point. I am particularly sensitive to this, since I spent four of my years in the state Senate discussing what to do in an economic downturn when our recurring expenditures were exceeding recurring revenue.

The question then was whether we could cut our way out of the income-expenditure discrepancy. But we ran into problems with that.

I no longer remember the exact percentages, but I know that the amount of the budget we could cut without unwanted or very unpleasant ripple effects was limited, mostly because of federal mandates and the effect a state cut would have on the receipt of matching federal dollars.

For example, a $1 reduction in spending related to TennCare resulted in the loss of $2 in federal matching funds, meaning we had to actually cut TennCare by $3. There were similar problems relative to any number of budget categories, from education to even state parks where federal funds had been received to make park improvements.

So cutting is hard. It is not always as simple as just cutting state spending across the board by some percentage. When you can’t cut some program because of federal mandates and federal matching funds, then those programs that can be cut have to be cut at drastically higher rates.

If you can’t cut your way out, then that leaves a sales tax increase as the alternative. And here is where the problem will come if taxes are now cut the “wrong” way.

If legislators focus their sales tax cuts on one of the most stable parts of the sales tax base, then the amount of sales tax increase needed will have to be higher than it otherwise would be to meet the revenue need. For example, in an economic downturn, people will still buy groceries, but they will put off buying a new car, television, or refrigerator. When that happens, the amount of sales tax revenue drops even more precipitously because fewer items subject to the sales tax are being purchased.

The chart below provides a hypothetical that, for the sake of simplicity, assumes the tax on groceries is eliminated and consumers put off the the purchase of other items while the economy is down.

 Sales Tax Rate  No. of Food Units Subject to Tax  No. of New Cars Subject to Tax  No. of New TVs Subject to Tax  Total Revenue for Units Subject to Tax
 7%  100  100  100  $21
 7%  sales tax on food units eliminated  50  50  $7

 

As you can see, the sales tax rate would have to go up substantially in order to continue generating $21 annually. In fact, the rate would have to increase to 21 percent to generate the same amount of revenue. Of course, when sales pick up, the government will have another revenue windfall.

So if legislators greatly reduce the sales tax on food (or some other relatively stable part of the sales tax base), as is being discussed by some, when the next income downturn comes, they may find themselves in a bigger mess than if they had made an across-the-board cut in the sales tax rate.

Cuts, as explained, will be hard. It will be very unpopular to put the sales tax back on food and it will be equally unpopular to really jack up the sales tax rate on everything still in the tax base, particularly given how high it already is.

While many may think a big cut in the sales tax on groceries would be the best thing since sliced bread, if legislators aren’t careful, they may wind up with a political hot potato in the years to come. I should know; I got caught holding one years ago.


David Fowler served in the Tennessee state Senate for 12 years before joining FACT as President in 2006. Read David’s complete bio.

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Should Tennessee’s Politicians Cut Taxes or ‘Buy’ Some Freedom?

The board that estimates the state’s revenue for the next fiscal year recently estimated that legislators may have as much as $878 million in new recurring revenue to spend or give back to taxpayers through various tax cuts. But should our state politicians think about “buying” some freedom with that money?

Having been in the Legislature, I know how politically popular it is to cut taxes. But, to be honest, Tennessee’s taxes are not that high compared to other states. So, when I read of the revenue surplus, I asked myself if there was anything that could be done with that increased revenue that might militate against just lowering our tax burden even more.

Before you think I’ve lost my conservative mind, think for a moment what value you might place on freeing our state from control by the federal government and the mandates and regulations that come with its money.

Think for a moment about how much educators complain about No Child Left Behind and all the regulations that are imposed on them by the federal Department of Education, a department President Reagan wanted to abolish and even President-elect Trump has said should go.

Think for a moment about the so-called “bathroom bill” last year and the edict that came from the federal government that put at risk federal K-12 funding of $1,114,013,000 if we had the audacity to designate children’s bathrooms and locker room usage based on biological sex.

What if Tennessee had the money to tell the federal government to take a hike? We don’t care what rules and regulations you have for our K-12 schools. We don’t want your mandates, and we now don’t have to have your money.

I understand that $900 million in new revenue won’t replace $1.1 billion in federal funding, but let’s delve a little deeper.

A Heritage Foundation study in 2007 estimated that complying with federal mandates accounts for 41 percent of the administrative compliance burden for the states. If that number is accurate and has remained fairly constant (and there’s not reason to believe administrative compliance costs have gone down), then even a 35-percent reduction in administrative cost could make up the $200 million difference.

Even if the amount of saved administrative costs doesn’t come up to the full $200 million, we have to keep in mind that $200 million is only 4 percent of the total amount of state tax dollars we spend on education.

Unfortunately, I don’t have access to the information that would allow me to nail all these numbers down, but is it not worth some consideration? Is it not worth our legislators asking for the numbers?

Isn’t it worth asking education bureaucrats if they really hate the federal government control of their classrooms enough to reduce the size of the central office? Who knows? If nothing else, we might find out if the size of the central office is more important than the classroom.

Sure, I’d like to see the sales tax rate drop. And I understand the federal government will take the money it would have given to us and just give it to someone else; it won’t cut its own tax burden or borrow less money to cover its deficits just because Tennessee refuses its money.

I guess I just wanted to ask if freedom from federal government control over the education of our children was worth anything to anybody.


David Fowler served in the Tennessee state Senate for 12 years before joining FACT as President in 2006. Read David’s complete bio.

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Will We Go Into the New Year With Jesus Still in the Manger?

As I thought about heading into the New Year and leaving the Christmas season behind, it struck me that it is, indeed, easy to “leave Christmas behind.” That thought brought to mind an old Larnelle Harris song that describes a son helping his father put away the Christmas stuff. The son asks, “Do we store away Jesus, too?” A cute question posed in childlike innocence, but it prompted me to ask myself a related question as I head into the New Year.

The related question is this: “Will I go into the New Year having left Jesus in the manger?” Let me explain.

Of course, we Christians don’t believe that Jesus really remained in the manger. We believe He grew up, died, was resurrected, and ascended to Heaven where He now sits at the right hand of God the Father Almighty. This assertion is at the heart of the Apostle’s Creed, which rests on Scriptures that affirm this proposition.

What I realized, however, is that when we focus on the Advent without remembering the subsequent corresponding Ascension, we can be guilty of leaving Jesus in the manger. How do we do this?

We leave Jesus in the manger whenever we think of Him as only the Savior of our eternal souls and forget that Scripture says the ascended Christ Child is the presently reigning Lord over all things, including human government, and that He is in the process of bringing all things back under His rightful rule. Not to confess this or to try to soften its expression so as not to offend those who do not believe what we believe is another way to leave Jesus in the manger.

Given the work I do, I most often see Jesus left in the manger when Christians disengage from politics, as if civil government is somehow not subject to God. I see Jesus still lying in the manger when Christians in politics tell me that something they really know is wrong is “just politics,” as if that makes it all right or understandable. I see Jesus left in the manger when Christians allow civil government to curtail religious liberty without massive resistance.

To be honest, when it comes to politics, it’s easy to leave Jesus in the manger. Christian engagement in politics is messy and difficult. It can lose you friends and curtail your influence with the influential. To even come close to doing it right requires a great measure of Scripture study, prayer, and perseverance. It requires a very real trust in the goodness of God’s eternal provision when the world crushes down on us, as it will inevitably seek to do. The world likes a Jesus that stays in the manger, and they like the Christians who are willing to leave Him there.

As I head into the New Year, I know there will be moments and situations in which I will be tempted to disengage, when I’ll be tempted to go along just to get along, and I will need to ask myself, “Am I leaving Jesus in the manger?”

In those moments, I’ll need to remember not to leave Jesus where I found Him at Christmas. If you’re a Christian, I hope you’ll not leave Him there either.


David Fowler served in the Tennessee state Senate for 12 years before joining FACT as President in 2006. Read David’s complete bio.

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The Forgotten Part of the Christmas Story

Most Americans think they know the whole “Christmas story,” much like many Americans think of Thanksgiving as simply a time when the Pilgrims and Indians celebrated a good harvest season. They know Christmas celebrates Jesus being born in a manger, and many know that Jesus is God in some form or fashion. But it’s more than that, more than I even realized. Here is the rest of the Christmas story.

The theological word for what happened at Christmas is the Incarnation. Over time, the meaning of the Incarnation was fully fleshed out (pun intended). It meant that Jesus was both fully God, begotten from the Father, and fully man, taking His flesh and human nature from the Virgin Mary.

Most people, including me, tend to think of the Incarnation as an expression of God’s saving love for us. God came through the Gates of Splendor to earth that we might escape the Gates of Hell. In other words, we think of Jesus in terms of an individual’s personal redemption. Jesus being our personal Savior is part of the Christmas story, but just not all of it.

Until this Christmas season, I didn’t really appreciate the significance of the following statement in “Mary’s Song” to God in anticipation of Jesus’ birth: “He has scattered those who were proud in the thoughts of their heart. He has brought down rulers from their thrones, and has exalted those who were humble” (Luke 1:51-52 NASB).

Huh? What does this have to do with the Christmas story, and what on earth—literally—does this mean?

I believe it ties into one of the great philosophical questions of all time, “Is the universe we experience all there is?” Philosophers might put the question this way, “Is the universe a closed system?” Namely, is all that there is in the “box of the universe” and nothing outside the box exists?

The atheist says there is nothing outside the box. Others might concede that there may be a god outside the box, but the box is sealed off; that god doesn’t or cannot enter into the box. In our culture, awash in evolutionary thinking, that is the predominate view.

But if this view is true, then whatever power or authority we find in our experience—whether it’s the authority of a parent over a child, an employer over an employee, or rulers over the ruled—it comes from us. In the governmental realm, this belief gave rise to the notion that earthly rulers were divine, certainly a belief system at the time Jesus was born.

Jesus’ birth was a divine statement that this belief—that authority is found in man—was not true. There is a God “outside” the box of the universe and God can and has entered our existence.

It is in that sense that the Incarnation “scattered those who were proud,” proud in thinking that power and authority were found in themselves. And with respect to those “rulers” who took that proud thinking into positions of civil government, the Incarnation “brought them down” to size.

The Incarnation is God’s visible statement to us (the Word made flesh!) that there is a Presence among us, a God who transcends us and has authority over us.

Thus, the Incarnation gives meaning to the statement in Isaiah 9 that the “government will rest on the shoulders” of the “child” who would “be born to us.” It gives depth and breadth to the statement that “there will be no end to the increase of His government.”

The Incarnation explains why the Psalmist wrote:

I will surely tell of the decree of the LORD; He said to me, “You are My Son, Today I have begotten You. ‘Ask of Me, and I will surely give the nations as Your inheritance and the very ends of the earth as Your possession’” (Psalm 2:7-8 NASB).

And the Psalmist’s conclusion? “Now therefore, O kings, show discernment; Take warning, O judges of the earth. Worship the LORD with reverence, and rejoice with trembling. Do homage to the Son, that He not become angry, and you perish in the way” (Psalm 2:10-12a NASB).

That fearsome message is not what we think of when we think of the Christ child, tender and mild, lying in a manger, come to save us from our sins. It’s the forgotten part of the Christmas story.

And, in a day in which many in the Church believe Christians and pastors should abstain from politics for the sake of the Gospel, perhaps it is because they, too, have forgotten this part of the Christmas story.


David Fowler served in the Tennessee state Senate for 12 years before joining FACT as President in 2006. Read David’s complete bio.

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The Virgin Birth and the Modern Birth Certificate Problem

I doubt Bethlehem issued a birth certificate when Jesus was born, but His virgin birth might have presented a problem to some state’s health departments. In fact, the problem came to a head in court last week.

State laws, like Tennessee’s, require that a child’s birth certificate name the child’s biological “mother” and “father.” Given the virginal nature of Jesus’ conception, common sense would indicate that states should leave the “father” line in the birth certificate form blank.

But common sense isn’t so common anymore. Lesbians are now asking courts to change the meaning of the word “father” in state birth certificate statutes to “keep up with the times” now that marriage has been redefined. Last week, the Arkansas Supreme Court decided a case on this very point, and I am involved in a similar case now winding its way through Tennessee’s court system.

In Arkansas, one of the women in a lesbian marriage had a child by artificial insemination. While not virginal, the child was certainly “fatherless” if one looks at the child’s ancestry as between the two women.

The question was whether birth certificate statutes must now be interpreted to include a second “mother” who is not biologically related to the child. It would be akin to Joseph arguing that he must be listed as the “father” of Jesus.

According to the lesbian couple, they were being denied equal protection under the law because they weren’t being treated the same as a heterosexual married couple who, if they produced a child together by means of copulation, would have had both of their names on the birth certificate. Of course, they were overlooking the biological reality that they did not produce a child together by means of copulation.

To liberals, biological realities are not real realities, but social constructs and conventions. It’s like saying, as many do for purposes of bathrooms and locker rooms, that a boy is a girl if he thinks he’s a girl.

But laws “discriminate” between different classes of people all the time. So is it now really an unconstitutional form of discrimination for the law to distinguish between two people who can copulate and produce a child and two people who can’t?

Thankfully, the Arkansas Supreme Court said, “No.” The Court said, “It does not violate equal protection to acknowledge basic biological truths.” Then it quoted the U.S. Supreme Court, which said as recently as 2001:

[T]o fail to acknowledge even our most basic biological differences . . . risks making the guarantee of equal protection superficial, and so disserving it. Mechanistic classification of all our differences as stereotypes would operate to obscure those misconceptions and prejudices that are real. . . . The difference between men and women in relation to the birth process is a real one.

In other words, sex and biology are real things, and when we treat distinctions that are real as mere “stereotypes”—things that are unreal, artificial and made-up, we are no longer able to rightly decry distinctions based on real prejudices that are wrong. Everything becomes “wrong” to somebody. Prejudices can and will be made up if all differences are made up, too.

Yes, the Supreme Court can say a square peg is the same thing as a round hole, and that’s what they did relative to marriage. But when it comes to putting together the pieces of the family law puzzle they’ve strewn about, particularly when it comes to who is a mother and a father under state law, the old saying applies—you can’t put a square peg in a round hole.


David Fowler served in the Tennessee state Senate for 12 years before joining FACT as President in 2006. Read David’s complete bio.

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