Arizona to adopt a low flat tax in 2012?

See the Arizona Daily Star's article on the budget compromise at the House. I don't have time right now to read the myriad documents floating around about this or to make the phone calls needed to find out what's going on. A vote won't happen until Monday; we'll likely hear in the days to come about the backroom dealing that made this happen.

Major tax reform seems like a nonsequitur response to the State's budget woes. The House seems to be counting on the coming tax reductions to be offset by an influx of economic refugee businesses from high tax states, something think-tank whitepapers have been promoting heavily. While that's possible, it's not a sure thing. Modern, high-tech business clustered in (e.g.) Austin and Silicon Valley in part because those are areas where highly skilled employees will want to live. In the latter case, the presence of one of the world's top universities helps. Social climate, largely intangible, can often trump regulatory climate. Engineers, scientists, highly educated and highly intelligent people tend to like the company of their own and tend not to like when their foreign or homosexual colleagues are subject to constant hostility from the neighbors. And Arizona never attracted any major educational institutions at all; its land-grant university is the closest approximation. Tax code simplifications and rate cuts will bring business here at the margin, but it's doubtful that Arizona's (already low and relatively simple) taxes are what's keeping Californian business from coming here.

This isn't to say that the Democrats are any better. Perhaps they're worse. See (House Minority Leader) Lujan's nutty remark in the Star article: "Certainly we want to help to incentivize businesses to be successful, but we also need to make sure we are preventing this huge economic crisis we're going through now from occurring in the future." It's possible in principle for a "huge economic crisis" to be caused by underprovision or mis-provision of public goods by government, and possible in theory for underprovision of public goods to be caused by taxes being too low. But the idea that the current recession is caused by underprovision of public goods is ridiculous. Arizona's low taxes didn't cause moral hazard at Fannie Mae and Freddie Mac, didn't induce overleveraging, didn't create the systemic risk problem in the credit default swaps market, and didn't cause the money market to seize up. Taking it to still be Saturday at the current hour (a stretch), I'll say that David Lujan's remark is the most ridiculous thing I've read all week. And Friday I was helping an (unnamed) state Libertarian Party executive director get over some of his misconceptions about climate science, so I've read some pretty silly things.

The Tucson Rent Tax Initiative

In response to the Tucson City Council including a double tax on renters in their budget, three of the area's most prominent "good government" activists, Jerry Juliani, Richard Bayse, and John Kromko, are circulating petitions to amend the city charter by initiative. The text is as follows:

Official Title: Enough Tax

Amending Chapter 13 of the Tucson City Charter by adding a new section called "Prohibited Taxes" providing for the prohibition of certain taxes.

Text of proposed Amendment

Be it enacted by the people of the City of Tucson:

Chapter 13 of the Tucson City Charter is amended by adding a new section, to read:

PROHIBITED TAXES

The City of Tucson shall not impose any tax on the rental or lease of residential property, nor on the proceeds of such rental or lease.

For the purposes of this section, residential property includes unaffixed manufactured homes and residential ground leases. It does not include any rentals or leases for less than thirty days.

Any such tax in effect on the effective date of this act is hereby repealed.

I've given John Kromko a bit of grief on this 'blog, but this time around, he seems much more "on the ball", moreover, the initiative is much better written.

That renters will oppose the rent tax is almost a sure thing. It's mere anecdotal evidence, but even the pro-tax, unlimited government types around the office are against the rent tax. I think if we play up that this is unfair, unnecessary, and regressive, we can count on enough of the homeowner vote to win. (It actually helps here that Kromko is an old-school left-liberal.) It'll help, too, if students actually show up to the polls when there isn't a charismatic sloganist ("transformational candidate") to inspire them to take up voting as a means of self-expression.

Those seeking more information or petitions should visit EnoughTax.org. More on Tuesday's city council meeting to follow.

Tucson Ciy Council proposes double taxation of renters; 700 turn out to protest

Like the State of Arizona, the City of Tucson created new spending programs and padded old ones during the construction boom. Now that the boom has went bust, they're predictably trying to raise taxes to balance the budget, when they should instead be cutting programs. (Talk to an opponent of spending cuts sometime. It's amusing. If we can't eliminate programs without sliding into some sort of Third World conditions, why don't I remember it being so bad before they existed?)

Among the tax increase schemes under consideration is a 2% rent tax, as reported in the Tucson Citizen and Arizona Daily Star. Over 700 people turned out last night to protest this proposal, with well over 100 requesting to speak.

The issue was mostly framed as being whether or not renters are able to pay the increase. That's a silly way to discuss taxation, it would have nearly any small tax increase being OK. Harms come at the margin. The questions that should be asked are: should the additional money be the City's? Why? And is the tax fair?

Councilwoman Karin Uhlich, according to Daily Star commentator Josh Brodesky, has renters paying less than their fair share. As this is ridiculous, Uhlich should be voted out of office. Renters do not directly pay property taxes; their rent instead reflects the level of property tax that must be paid by their landlords. They pay rent, the landlord pays the property tax, thus they're already paying for city services just as homeowners and business property owners do. A rent tax would amount to double taxation of a particular class of people, a balancing of the budget at renters' expense to the benefit of homeowners and business property owners.

The rental tax is the brainchild of Uhlich (D-Ward 3), Regina Romero (D-Ward 1) and Rodney Glassman (D-Fraternity Row). When it comes time for a vote, I'll let readers know who was in favor and who was against. Those who voted in favor ought to be evicted from their offices when the time comes--both double taxation and taxation of peculiar classes ought be simply unacceptable. Tucsonans often give their officials a free pass. The presence of over 700 angry members of the Geritol Set at last night's meeting means that this may not be the case. Opponents of rent taxes are getting organized, having launched a (lowbrow) website. Word is that John Kromko, Mr. Ballot Initiative, is considering launching a referendum effort to repeal the rent tax if the Council approves it. Kromko's ability to get things done has waned in recent years, but here's hoping he has one more success in him.

A further hearing will be held on Tuesday, 5 May at 5:30 PM. I'll be able to attend this one, and will keep readers up to date on further developments.

A drink with bread and jam: thousands turn out for tea parties.

I salute those who turned out for the over eighteen "tea parties" across the state. It isn't that I think very highly of demonstrations, but it pleases me to see people going out of their way for the limited-government cause. And, importantly, you caught the press's attention.

The Tucson Citizen reports over three thousand in attendance in Tucson; Phoenix's event starts in about twenty minutes.

Remember that raising one's voice is not political action. Follow this up with organization and with a push for change. Consider reviving Axe the Tax, and let's make sure we pass the next Freedom of Choice in Health Care Act.

Much shame on David Safier "AZ Blue Meanie" of Blog For Arizona for calling the protests "racist." "Socialist" isn't a substitute for "nigger". It's a term the less educated use for politicians who support redistribution of wealth, who stir up class envy, and who can't imagine a solution to problems like those we're facing in health care that involve getting a market working. It's technically inaccurate as a descriptor of policy--Obama at his worst is more of a Social Democrat or New Dealer--but it's accurate as a descriptor of values. Anyone who takes the time to try to understand his opponents would understand this. But not Safier "Blue Meanie", nor one "Jill Tubman" who he echoes.