A Republican candidate for Governor of Arkansas, Asa Hutchinson, is advocating reducing personal state income tax. In a widely publicized retort, the lone Democrat candidate so far, Mike Ross, asks the proverbial question, where is Asa going to raise taxes to make up for the revenue loss to the state? As a candidate for governor several years ago I also received the same question. It is not an inquiry that can be responded to with a sound bite. Even the long answer is not something most liberals can understand.
I’m not going to talk about T. Boone Pickens who became a billionaire by taking over underperforming companies, but rather I want to highlight the success of Robert Townsend. Robert was a World War II veteran who was hired by American Express and moved up to Senior Vice President by 1962. At that time a group of people bought Avis, a struggling auto rental company that had never made a profit during its entire 16 year existence. One of the partners convinced Townsend to leave American Express and become CEO of Avis. So what did Townsend do, raise rates, build a new marble headquarters, buy a bigger jet aircraft?
Robert Townsend got rid of the perquisites straight away. He sold the company airplane, downsized his staff to one secretary and even did away with his own office. Yes, for an extended time he didn’t even have an office. He wore the same blazer that his employees wore and he would visit employees and ask this question, “what would it take for you to be able to perform your job a lot better?” Guess what, they told him and he listened. Agents told him the rental agreement was too long and took too much time to fill out. His bean counters had a fit but he removed everything from the form that was not absolutely necessary. They told him his advertising was not effective. Townsend spoke to William Murphy, CEO of Campbell Soup who recommended the advertising agency they used. Murphy told Townsend how they had increased sales dramatically. Once Murphy asked the advertising agency why they never promoted Campbell Tomato soup. The head of the agency told him it is because their tomato soup was terrible. He said if you change the recipe we’ll advertise it. Murphy sampled the soup and agreed it was terrible. He changed the recipe and the advertising agency promoted it. It became their best selling soup.
The advertising agency developed the advertising campaign for Avis that proved to be a winner. The phrase “We Try Harder” has gone down in advertising history as one of the longest-lasting and most respected taglines. The origination of the slogan was not to create a cute, gimmick, but instead it was – and is — a business philosophy that every Avis employee holds true. “We Try Harder” has helped Avis earn a reputation as one of the most admired businesses in the world.
One day Robert’s secretary told him she needed some of his time first thing every morning to get organized. She told him if he would come in next morning at 7 she would meet with him. He told her he came in at 8. She said at 8 there will be a line of people waiting to see him. He came in at 7 and together they organized his day and were both on the same page. By listening, he became much more effective as a leader. Senior managers are not the only people with good ideas. It was Robert Townsend who turned Avis around and began showing a profit for the first time. I know that real leadership is in short supply today but I have always been able to find it.
Not long ago the Arkansas governor could not figure out how to cut one red cent out of the budget for the state crime lab. The state even taxes charity bingo conducted by churches, veterans organizations, volunteer fire departments, schools, food banks and Parent Teacher Associations. The parks and recreation areas built with tax money when I was a child, now charge entrance fees. Back then they were open year-round, now many close after labor day but nobody is laid off. I am positive that I could find a competent leader for every state agency who could do quite nicely with 25% less funding. With tons of money, any bureaucrat can manage.
In 1967 Winthrop Rockefeller was elected the first Republican Governor of Arkansas since Elisha Baxter left office in 1874. Governor Rockefeller and his Lieutenant Governor, Medal of Honor recipient “Footsie” Britt, left Arkansas with a considerable budget surplus after they left office four years later. When Dale Bumpers took office he called a special session of the legislature to figure out how to spend that surplus. That’s what Democrats are good at, spending taxpayer money. It didn’t take long to figure out how to squander that surplus and an additional amount on top of the surplus. I imagine every legislator was able to find some pork barrel project in his or her district to throw money at. That Democrat big government tax and spend culture is starting to irritate Arkansas voters like fingernails scratching a chalk board.
So here is my answer for Mike Ross, the Democrat candidate endorsed by Governor Beebe, you don’t need additional taxes if you are willing to lead and manage. There is enough fat and pork to cut as the state income tax goes away. You don’t need to scare state employees either, the number of state employees can be brought into line by a hiring freeze and retirements. Arkansas does not really need all those automobiles and marble buildings either. Oh yes, those companies that visit Arkansas and then locate in Texas, maybe they will stay in Arkansas. Those billionaires and millionaires who moved away like our previous governor, maybe they will move back? Those retirees who retire in Texas and Florida, maybe they’ll retire in Arkansas?
The seven states with no state income tax and the two additional states that only tax dividend and interest income are doing just fine with a lower per capita tax than Arkansas. Can we compete with them? The path of least resistance is to go the way of the high tax cities and states; the path taken by Detroit, Chicago, California and New York.
I know there is a nucleus of legislators with Robert Townsend like mindsets in the Arkansas Legislature. I watched them and testified before them this year. With the right governor, Arkansas can become a low tax state responsive to tax payers again. If Asa Hutchinson wants my support, he must be truly committed to eliminating our state income tax and the supporting bureaucracy. I think Arkansas needs a new culture where excellence and hard work are celebrated and inefficiency and slothfulness are shunned. I believe in Arkansas, I believe we can compete, will we? Your comments are appreciated.