Stimulating the Economy or Rewarding the Economy

This legislative session has revealed stark differences between Republicans and Democrats regarding business and the economy. Colorado does provide significant tax credits to business and individuals for various purposes. The basic economic concept is that when businesses have more money available it encourages expansion, new jobs and business activity which in turn creates more sales and income taxes paid by individuals and businesses, thereby benefitting state revenues as well.

The current Democrat majority reflect in words and actions the view that tax credits are provided to businesses as a reward or benefit when the economy is strong and the tax revenues are sufficient to cover all the government programs. As a result they believe that in a recession businesses need to provide more money to the state to cover the cost of government. This government first approach is a significant issue and philosophical difference in economic policy that impacts legislative actions.

As one of my colleagues commented, the actions of the majority party communicate that a government job is more important than a private sector job. Now that’s something which has significant ramifications in moving Colorado forward in trying times.  The bottom line,  when the economy grows, government is rewarded with tax revenues to provide necessary services. Somehow that basic concept of economics 101 has been pushed aside.

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