Raising Arizona Taxesby Art Jacobson on Mar. 10, 2010, under Politics
A story was posted in yesterday’s AZ Daily Star and then disappeared (temporarily) from the site. Oddly, it is not listed in yesterday’s ‘all headlines’ link. I captured a link to it Tuesday and that link still works. I recommend it.
The article is an op-ed piece by Alberta Charney and Marshal Vest that states the obvious solution to Arizona’s budget fiasco: We’ll have to raise taxes; spending cuts along won’t work.
The authors point out something that I’ve mentioned more than once here. The populist notion that cutting taxes is the only way to stimulate the economy is not true.
Here, in a nutshell, is the source of our current problems:
“The Legislature has made 42 tax cuts to the three major general-fund revenue sources (sales, income and corporate income taxes) since 1992, and it has also eliminated statewide property taxes that accrued to the general fund. Tax cuts imposed since the mid-1990s are the equivalent of cutting $2.6 billion annually from today’s revenues, after adjusting for the cost of living and population growth.
“The series of tax cuts did not make the economy stronger. Rather, the surpluses that were created during Arizona’s cyclical upswings allowed the Legislature to cut taxes – precisely the reverse of populist thinking about cause and effect.”
So what is to be done? The authors suggest two immediate actions. First, impose the suggested one percent sales tax, which will raise $1 Billion. This, in itself, will not be enough so further steps must be taken:
The state also should roll back some of the prior cuts to the individual income tax and impose a state property tax.
Will the legislature have the courage, or wisdom, to do that? Probably not.
Read the Op-Ed piece here.