Robert A. Teegarden's Blog

May 8, 2010

Arizona’s Proposition 100: To Tax or Not to Tax—That Is the Question

 

There are a lot of ideas captured in this debate.  Should we add 18% to the state sales tax?  It might raise an additional $900 million; it will probably increase the deficit by $1 billion.  We’re told that if the tax increase fails, a lot of programs could be cut.  There’s great theater in the airways. Citizens are smothered in hyperbole and extremes.  But peel back the onion and things start to look simpler and simpler.  Remove the layers of scorched-earth politics, remove the fencing and jousting over importance and public prominence. Remove the fear-mongering.  Clarity is what we need. It comes down to simple things.

 Einstein once said, ‘The definition of insanity is doing the same thing over and over again and expecting different results.’ In 1985 the voters approved a temporary transportation tax (Prop. 300).  Guess what? “Temporary” extended through 2009.  We were asked in 1998 to approve a two-year tax to help fund jails. This “temporary” tax has been extended until 2022. That was Proposition 411 in 2002. We’re told that this cannot happen this time because it’s a Constitutional mandate. We’re told…

 There are two sides to any budget: income and outgo, income and expenditures, assets and liabilities. There are only two ways to do a budget (assuming you do one):

  1. Match your revenues with your projected expenditures; or
  2. Match your expenditures with your projected revenues.

It comes down to: “Here’s what you’ve got to spend.” Or, “Here’s what you’ve got to earn.” The important question is where do you start: income or expenses?  A healthy budget has a balance between determined expenditures and anticipated revenues. Hidden in the deep recesses of any budget, however, is a nagging question.  Should I spend what I make or save some for a rainy day?  And if so, how much?  Does the word surplus exist in your budget?  Should I ever spend more thanI make?  On what items should I ever borrow?

 Economics 101: 

  1. The Government cannot make money.  They can print it and they can spend it, but they cannot make it.
  2. Government develops revenue through taxes. 
  3. All tax revenues come from the private sector.
  4. If the government marginalizes the private sector by adding more taxes, it cuts into the very source of revenues that could be taxed.  It cuts into its own income.

What would the schools do if we went to a flat tax?  They would have to develop an actual budget that demonstrated planned costs.  Their plans would be a function of funds available—that, incidentally, is exactly where they are in this debate—especially if Proposition 100 fails.  

It’s been revealed in the Proposition 100 debates that government agencies spend more than $9 million of our tax monies to lobby the government. If we already said these services are important and they have officers and agents that can make their case before the legislature, then by do we pay government lobbyists to lobby government legislators?  Here’s a $9 million savings.

The bigger problem is that the Prop. 100 debate is only a band-aid on a bleeding femoral artery.  What happens when 2013 rolls around and the changes necessary have not been implemented?  We all know that repeating an action is far less difficult that doing it the first time.  Heck, it’s almost a habit by then. The passage of Proposition 100 only delays the inevitable argument for another two or three years.  Systemic remedies are needed in the mean time.

Lincoln once said:  “You cannot bring about prosperity by discouraging thrift.”  It seems that Lincoln’s common sense and thrift is what we’ve needed for years.  Look where their lack has lead us.  Common sense says “No” to raising taxes during a recession/depression.  Common sense says “Do with less.”

The pro-Proposition 100 campaign says we need to “Protect Education and Public Safety”.  Protect them from what?  Will some threat level suddenly rise in the absence of Prop. 100 revenues?  For kids in Arizona’s government/union schools, how could it get any worse? One out of three won’t make it to 12th grade.  If they do get to 12th grade with Bs and As and try to go on to college, 50% of them will have to take remedial courses just to stay in college. 60% of the students applying at community colleges will have to take remediation courses.  More money has never been the solution in education.  In fact, it’s more money that’s got them where they are today.

All in all, Proposition 100 is the wrong idea at the wrong time.

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2 Comments »

  1. This is a very good summary of the reasons why I am not in favor of Prop 100. I just think it is postponing the inevitable and will just band-aid a very dysfunctional educational system for a few years in order for it to become more dysfunctional. Will Prop 100 put our classes back to reasonable sizes, get rid of the four years of math and three years of science requirement for graduation, or restore a liberal arts curriculum that will minister to the needs of more of our students? I doubt it. You are right – Prop 100 is not protecting anything. What will protect us is new elected leaders with creative and common-sense solutions to our problems.

    Comment by Chuck Sedgwick — May 9, 2010 @ 9:26 am |Reply

  2. Very interesting post. Honestly..

    Comment by Erik Bravo — May 28, 2010 @ 9:33 am |Reply


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