January 8, 2003

Bubba Likes Taxpayers Rights

South Knox Bubba says he didn't favor a state income tax, and has lots of nice things to say about my recent Memphis Commercial-Appeal column advocating a Taxpayers Bill of Rights be part of any Tennessee tax reform plan.

In the article, [Hobbs] also suggests that instituting a 4% flat income tax, eliminating the Hall Tax on "unearned income" (which actually taxes earned income in some cases, like mine), lowering franchise and excise tax, eliminating inheritance taxes, and lowering the sales tax would generate more state revenues and make Tennessee a business Mecca. Now, the idea of an income tax in any form is about the last thing I would expect from Bill Hobbs, nor would I have expected to find myself agreeing with such an idea. But this is a simple, straightforward proposal that would work, and the only fair way to impose an income tax. The only problem with this idea is that the extreme left liberals will want a graduated tax so the wealthy pay more and they pay less. Hey, any good tax plan has to have a little wealth redistribution, right?

And there would have to be a constitutional amendment to allow it. Bill's idea of attaching a Taxpayers Bill of Rights to any such income tax amendment would be an outstanding way to protect taxpayers of Tennessee from money drunk politicians. A Taxpayer Bill of Rights also addresses one of the problems at the core of the budget debates in Tennessee - mistrust of our elected officials due to their history of wasteful spending and misrepresentations about the budget. Getting back to Dave Goetz, it is interesting that this is one of the main points in his Tennessee Prosperity Project agenda on taxes. In fact, their agenda on taxes very closely resembles Bill's Taxpayer Bill of Rights.

So maybe it's time to push for what seems like a pretty good idea. We have a new Commissioner of Finance and Administration who seems to agree with the principles of a Taxpayers Bill of Rights, and a Governor who ran on exactly these types of promises to get himself elected.

UPDATE: Bubba says the Tennessee Prosperity Project's agenda on taxation including items similar to the Taxpayers Bill of Rights I've been pushing. So I checked the TPP's "Road Map to Prosperity," basically a political wish list, and sure enough, it has some provisions that are similar in basic concept to the Taxpayers Bill of Rights.

The TPP would like to see tax reform that would "cap spending growth in state funds at the growth in the state’s economy and not allow simple legislative override, but instead require either reserving or rebating funds above that rate, and also "require stability and consistency in tax policy, prohibiting retroactive taxation," and "measure the proportion of total citizens’ income that the state may collect, with a suggested maximum of 6 percent."

TABOR, as I've outlined it, would limit the state to annual revenue growth equal to inflation plus population growth, and mandate surplus revenue be rebated to taxpayers. Colorado allows for that rebate via rate cuts or direct payments. I would prefer an automatic across-the-board rate cut. Colorado's TABOR also controls the growth of spending by requiring the legislature to go to the people and ask permission in a referendum in order to spend surplus funds on a specific list of projects and programs, rather than rebate the surplus. And the legislature must get permission from voters in order to raise taxes. Colorado's TABOR does allow for a sensible state reserve fund.

What's worth noting here is that there is room for common ground on tax reform. I'm a Republican, Bubba's a Democrat, but we both agree that a TABOR-ized tax system would be better than the runaway tax-and-spend system we have now, in which there are no effective controls on the growth of either taxes or spending. And we will soon have a governor committed to better fiscal management, and an F&A commissioner who supports an agenda similar to TABOR.