Legislative Republicans have some ideas about state tax reform that warrant serious consideration.
A legislative commission is studying how to align state taxes with the 21st-century economy. The current system is based on the pre-World War II economy, with adjustments made in intervening decades.
The central reform would be a broadening of the sales-tax base. Today, sales tax is charged almost entirely on goods. Much of today's economy, however, involves the sale of services -- services as diverse as legal advice or a home-cleaning visit. To tax the entire economy, therefore, the state would have to expand into the taxing of services.
Republican legislative leaders say they support modernization. But they fear that "reform" will become another word for "tax increase." Over the past decade, the Democrats who have urged reform have repeatedly promised to make it revenue neutral. By broadening the taxable base of economic transactions, the state should also be able to reduce the sales-tax rate. The current combined local and state sales tax is 7.75 percent in 91 counties and higher elsewhere.
The Republicans suggest two major options.
They propose a constitutional amendment to limit the state sales tax to 3 percent and local sales taxes to another 3 percent.
Or they want the constitution to require a two-thirds legislative vote to raise taxes.
The first is the better idea.
The state constitution already says quite a bit about taxes and tax legislation. So, putting a limit on the total rate does not break new ground. And a combined rate of 6 percent on an expanded tax base should give future legislators plenty of room for emergency tax increases when needed.
The 6 percent barrier would also create pressure for the new sales-tax base to be as wide as possible. Many special interests are lobbying hard to protect their own services from taxation. A cap would create the need for wider distribution of the tax, and that is fairer.
On the other hand, requiring a two-thirds majority for a tax increase is inherently undemocratic. Super-majority requirements hand the minority a veto they did not earn at the ballot box. In times of emergency, such as this year, tax increases are needed simply to keep essential services operating.
Republican legislators have a good ancillary idea, too. They want tax bills stripped from the budget and voted on separately. This should make it politically more difficult to both raise taxes and pass tax breaks for special interests.
Legislative Democrats rarely heed the ideas of their political opponents, but in this case they should. There are two good ideas in this package.
Email
Facebook
Google
Twitter
Favorites
More
Advertisement