RALEIGH – So let me get this straight.

North Carolina’s state government has experienced a fiscal imbalance since 2000. In 2001, 2002, and 2003, legislators enacted budgets that included about $1 billion annually in higher taxes, predominantly on retail sales and individual income. The reason, said the tax-hikers at the time, was that North Carolina’s painful recession and weak recovery had produced lower-than-expected revenues, forcing lawmakers to “enhance state revenues” in order to protect essential state programs.

Now it’s 2005, and state revenues are coming in better than expected. So what has the North Carolina House of Representatives just done? Why, pretty much the same thing as before: impose higher taxes on retail sales, cigarettes, and other consumer purchases. Here’s how Gary Robertson of the Associated Press began his mid-Wednesday story on the House budget:

The House rolled out a $17.1 billion spending plan Wednesday that restores Medicaid cuts made by the Senate and gives state workers a higher pay raise for next year.

An improving revenue picture for North Carolina in part allowed the House’s two-year plan for running state government to propose $154.8 million more in spending than the Senate. Most of the additional spending — around $108 million – was put toward health and human resources programs.

So when revenues are weak, the taxpayers of North Carolina are obligated to make up the difference by surrendering more of their hard-earned money to the government. But when revenues improve, the taxpayers are North Carolina are obligated to “invest” more of their hard-earned money in welfare programs. As I’ve also observed in the context of growth and local finance, it appears that whatever the situation, higher taxes are recommended.

This kind of logic makes sense to those who believe that government is too small and does too little. Many politicians and activists truly believe this. As incomes rise, they believe that taxes paid ought to rise at least as fast – and faster still for upper-income people, whom they believe are primarily the beneficiaries of “life’s lottery” rather than earning their income through highly productive work. Influenced by Keynesian claptrap, they also believe that the economy is sustained primarily by consumer spending. When wealthier people receive income, they are more likely than lower-income folks to save that money rather than spend it, which Keynesians believe hurts the economy. Confiscating this money through “progressive” taxes and redistributing it to cash-strapped consumers is an act of economic development in their eyes.

Their eyesight is really, really bad. This isn’t the 1930s, when people hid their savings in mattresses. Money saved means money invested, through capital markets and increased bank lending, and that means money spent on machinery, equipment, computers, factories, and other capital goods. It is rumored that producing these goods has an economic impact.

In a modern, information-age, free society, rising incomes should be associated with rising tax revenues, but only as a consequence of prosperity. The percentage of the economic pie taken by governments should actually shrink, but the resulting slices will be larger because the pie is larger.

No such luck, taxpaying North Carolinians. Your leaders in Raleigh remain convinced that you are keeping too much of your own money. They plan to rectify that injustice.

Hood is president of the John Locke Foundation.