Marshall Vest repeated his warning that the state budget is “unsolvable” during a talk with Arizona Illustrated’s Bill Buckmaster. Watch the segment after the jump.
I spoke to Vest earlier today as part of a legislative preview piece I’m working on for next month. He threw cold water on the proposal to just cut more taxes and wait for the economy to rebound. That economic plan has been floated by some House Republicans, including Rep. Frank Antenori, and gubernatorial candidates John Munger and Vernon Parker, who are opposed to Gov. Jan Brewer’s proposal to raise sales taxes.
“The argument is that if you could only cut taxes, you could stimulate the economy,” Vest says. “But the fact is that tax cuts do not pay for themselves. If you cut a dollar out of your taxes, you might get a nickel back.”
Vest says the state needs to increase taxes—whether sales, income or property—because the state can’t cut its way out of the problem.
“In fact, our tax burden is not high,” Vest told me. “The state doesn’t ask very much of its taxpayers…. We’re not going to ruin the economy by raising taxes here.”
Vest expands on that thought in his interview with Buckmaster. Watch it after the jump.
This article appears in Dec 17-23, 2009.
Professor Vest offers some interesting conclusions, but not much in the way of explanations or proposals. Raising revenue/taxes only becomes interesting when you know which taxes you are talking about. The AZ income tax is higher than Illinois, our real property property taxes are higher than California, clearly we have a sales tax where Delaware has none. So who is benefiting from low taxes, and what are the AZ taxes that the good professor wants to raise. Make the income tax more progressive? eliminate deductions? Higher property taxes on commercial and industrial property? Higher sales taxes which would burden the rich relatively less? or broaden the base to include more services such as legal and medical? A head tax on each individual (the founders might like that). What is the over all state and local tax burden in AZ and how does it compare to other states? It’s nice to sit on the top of your stele and not have to be more specific. But of course with the Maricopa state legislature, there may never be a need to be more specific.
Scarpia, those are good questions. I’ll be exploring them in the aforementioned feature, but in a nutshell: Vest believes that the best tax system is as broad as possible at the lowest possible rate. That way, you don’t create incentives to avoid taxes by moving your money in unnatural ways and distort the market. He told me yesterday that he’d look at increasing income and property taxes and expanding the sales tax to services while lowering the overall rate, although he added that he hadn’t run the numbers on that sales-tax shift.
Nintz, (or should I call you Skinny), thank you for the courtesy of the reply. These are tough, very tough questions. After a little research, I saw that AZ’s state and local tax burden at 8.5% of gross was less than the national average of 9.7%. ( FYI, NM@8.6,UT@9.6, CO@9.0). So there is realistically some room for additional tax revenue. The broadest lowest tax would be a head tax, the original provision of the US constitution that taxes were to be apportioned among the several states on the basis of population would indicated that the framers thought a head tax or a head tax equivalent was the fairest way to allocate the costs of central government. A noble goal. But that was then, this is now (other then in Phoenix), we really are not talking about a central government, and taxes are now thought have a social component. What is “right?” a progressive income tax, is it right to tax food and clothing, the necessities of life, should we continue to tax books and newspapers (which I always thought reflected AZ values), are the extractive industries, which are literally consuming the state paying enough (Alaska and Texas live off their extractive industries i.e. oil). I look forward to you feature. I don’t think the legislature as the intellectual firepower to handle these issues. Guns in schools is about their limit. Thanks again,
Nintz, when are we going to see the aforementioned feature?
Hey Scarp, it’ll be later this month. I’m on Christmas vacation!