Friday, June 29, 2018

For a Fiscal Neutrality Amendment

Against the dogmatic ignorance of a proposed amendment to the US constitution mandating a balanced budget, I propose an alternative, a fiscal neutrality amendment:
“No unit of government within the United States may establish voting or other decision procedures that embody a bias in favor of either higher or lower tax rates and revenues.  The federal government may not adopt voting or procedural restrictions that bias decision-making in favor of either larger or smaller fiscal deficits.  Fiscal policies should be assessed on their merits according to neutral procedures.”
Requirements for supermajorities to raise taxes but not lower them should be unconstitutional.  Restrictions on property tax rates or government revenues as a proportion of aggregate income or some other benchmark should be unconstitutional as well.  Nor should the federal government be encumbered in its choice of appropriate fiscal policy.  The historical record shows policy errors have been made in all directions; there is no reasonable basis for biasing policy away from one set of mistakes only to bias it toward another.

A parallel agreement to replace the EU’s (In)Stability and (De)Growth Pact would also be desirable.


Anonymous said...

Please describe the proposed amendment further. I do not understand, after several readings.

Peter Dorman said...

It means you can't have supermajority requirements for raising taxes or laws mandating that revenues not exceed a certain percentage of total income, or that revenues can't increase beyond some stipulated rate, or (at the federal level) rules that increased spending on item A has to be matched by decreased spending on item B. Arguably, even the debt ceiling procedure would violate this amendment. The rules and voting requirements should not be biased in any direction with respect to fiscal policy.

Anonymous said...

I appreciate the explanation; I find this important.