Government Bytes


Smart States Liberalize Regulation, Reap Rewards

by Brandon Greife / /

Deficitsplague all forms of government from the local to the federal level.  A mixture of lower levels of revenue and continuedreckless spending has caused budget fights across the country.  From Wisconsin, where budget negotiationscaused Democrats to flee the capitol, to Minnesota, where the state government hasbeen shutdown, America seems to be at a standstill due to the tax increase vs.spending cuts war.

Atthe federal level, Democrats are insisting that tax increases be part of any debtceiling agreement.  However, historyproves that higher taxes do not necessarily equate to higher revenues.  Another way to increase revenue is todecrease the number of regulations, especially on smaller businesses, which inturn drives sales.

Manystates have done just that this year in an effort to boost tax revenues. While2009 saw many “sin” taxes increase in an attempt to cure budget woes, many Republicanmajorities who recently took office at the state level have taken the smarterpath and reaped the rewards for their constituents.

Tennessee,Washington, California, Michigan, New Jersey andVirginia passed sampling laws, allowing liquor stores or wineries to holdtastings. Many other states have loosened their controlling grip on Sundaysales, either allowing or expanding hours for sales.  Only two states, Texas and Connecticut forbidany sale of alcohol on Sundays. Alcohol sales generate about $41 billiona year for state and local governments according to the Distilled SpiritsCouncil of the United States.

Changesin regulation can have a big effect on sales and subsequently revenue.  “Between 2002 and 2005, 12 states liberalizedtheir laws to permit Sunday sales. According to DISCUS, each state saw anincrease in tax revenue of 5 to 7 percent,” reports Stateline, a state level policy organization.

Thesestates should be applauded for finding creative ways to improve their budgetsituation through free market policies, while avoiding tax increases.