Sunday, April 19, 2009

Robert Robb: No Magic State Budget Fix

Posted By on Sun, Apr 19, 2009 at 1:21 PM

The Arizona Republic's Rob Robb splashes cold water on the idea that it's possible to create a magical taxing system that's immune to downturns:

There are improvements that can be made in Arizona's tax structure that would enhance the prospects for long-term economic growth, which in turn could increase state revenues. But they would not do much to reduce the cyclical fluctuations in such revenues.

As I've written before, and will undoubtedly write many more times so long as the newspaper gives me this forum, there are no countercyclical tax sources. In an economic downturn, they all go down.

There are no unicorns.

Robb is right, although the important part, to us, is changing the tax code to "enhance the prospects for long-term economic growth." We suspect he'd support different changes than we would, but the biggest problem remains: You need a two-thirds majority to increase fees and taxes, which seems politically impossible at the Capitol. And as a result, you have a tax code that's basically designed to follow a late-’80s economy. Does anyone not recognize that the economy has changed dramatically in the last two decades?

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