When it comes to balancing the state budget, most Democrats agree with Republicans about one thing: tax hikes are off the table.
Raising taxes is the idea that dare not speak its name in this state, at least if you’re a politician. But since I’ve already outed myself as a proud tax-and-spend liberal with no political aspirations, I can speak without fear of retribution.
Arizona hasn’t spent itself into debt as Republicans want you to believe. A state that’s 49th in the nation in education funding can’t be called a big spender. What we’ve done is cut taxes over the past two decades and slashed our state revenue relative to the size of our population.
We had a string of tax cuts when Fife Symington was governor in the 1990s, followed by a 10 percent cut in 2006 during Napolitano’s tenure. In 1991, our state and local tax rates were 25th in the nation. Today we’re 41st. We kept paying our bills – barely — so long as the economy was expanding, but right now, we’re facing the worst budgetary crisis in the nation.
We need to increase tax revenues if we don’t want to see things like education and health care dwindle until we reach third world status. I’m not sure this is the right moment to do it. Even liberal economists are wary of raising taxes until the economy improves. But now is the time to start putting plans in place.
Here are a few suggestions for ways to put more revenue in the state coffers, now or in the near future.
Right now, we can restore the school equalization property tax that was suspended in 2006 when the legislature decided, foolishly, that we could live without it. We need the money now, desperately. This would be a tax restoration, not a tax hike, and it would cost the average homeowner about $7 a month.
Also right now, we can eliminate tax credits for private and public schools without costing taxpayers an extra penny. The money will simply go to the state in the form of taxes rather than to the schools. When we can’t pay our bills, we certainly can’t afford to give money to private schools, and as for public school credits, they flow disproportionately to schools with wealthier parents. Better to take all the tax credit dollars and distribute them equitably among public schools across the state.
One tax hike we should consider very seriously is an incremental raise in our gas tax, which is currently lower than in most states. Rep. Phil Lopes (D-Tucson) is planning to propose legislation to add a 4 cents a gallon tax for three successive years beginning in 2010. That would put our tax at or near the national average. It’s a sensible idea, especially when you think that gas is half the price it was a short while ago. The few extra dollars per fill up would be a whole lot less than the additional $20 to $50 we were paying when gas was $4 a gallon.
If we decide to increase income taxes, it should be on those who can most afford it. It’s not class warfare to state the obvious: the rich are getting richer while the middle class is shrinking. The wealthiest among us can pay more in taxes and remain wealthy. Our children can’t afford to have their education cut to shreds.
Sales and property tax hikes have to be considered, though they should be approached with caution at a moment when people are losing their jobs and their homes. Right now, both of these taxes could unduly burden people who can least afford it.
The notion of raising taxes can no longer be a political taboo. It’s time to open the discussion and come up with plans to restore the state’s fiscal health with responsible, realistic tax policies.