NCPA - National Center for Policy Analysis

Balanced Budget Amendment Will Lead to Higher Taxes

July 16, 2003

With federal budget deficits rising, pressure is on once again to enact a balanced budget amendment to the Constitution. A recent Supreme Court case in Nevada shows more clearly than ever before why this is the case, says Bruce Bartlett.

Like most states, Nevada operates under a constitutional balanced budget requirement. But it also has a provision in its constitution requiring that there be a two-thirds majority in the legislature to raise taxes. When these came into conflict, the state Supreme Court decided last week that the balanced budget provision superceded the two-thirds requirement and ordered that the legislature raise taxes.

  • A tax increase endorsed only by a simple majority can now become law even though it lacks the requisite two-thirds vote, the court decided.
  • Indeed, it is possible that the court itself could impose new or higher taxes on its own, as happened in Kansas City a few years ago, should the legislature fail to act.
  • Apparently, the option of having the court invalidate spending was not seriously considered.

Does anyone think the U.S. Supreme Court would act differently? After all, even with a majority of Republican appointees, the current court has thrown the Constitution out the window whenever some "higher purpose" demanded it, says Bartlett.

According to Bartlett, a balanced budget amendment will mainly lead to higher taxes—whether imposed by Congress or possibly by the courts. The negative effects of the higher taxes will overwhelm whatever conceivable benefits might be achieved by eliminating deficits. A federal balanced budget amendment is a very bad idea that should be rejected.

Source: Bruce Bartlett, "Balanced Budget Amendment Will Lead To Higher Taxes," National Center for Policy Analysis, July 16, 2003.

 

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