TENN: TABOR plan would let taxpayers call shots

The Commercial Appeal ^ | 12/22/02 | BILL HOBBS

[GailA]

TABOR plan would let taxpayers call shots

Guest columnist Bill Hobbs, a Nashville journalist, publishes a Web site of political commentary at: www.hobbsonline.blogspot.com

December 22, 2002

The arrival in Nashville next month of a new governor and a legislature full of new faces will dispel some of the lingering mistrust built up by the outgoing Sundquist administration during the rancorous four-year battle over a state income tax. But it won't be enough to clear the way for tax reform.

Put aside for a moment counting how many income tax supporters and opponents were defeated or elected last month, and consider a deeper problem that faces almost any lawmaker who proposes reforming the state tax code: Tennesseans have much reason to distrust their government.

Several recent studies by good-government groups lead to the reasonable conclusion that many Tennessee elected officials are more beholden to their own interests, or to the influence of special-interest lobbyists who fund their campaigns, than they are to the interests of the average taxpayer. Locking taxpayers out of the Capitol during the income tax debate, and saying the state open meetings law doesn't apply to lawmakers, didn't help.

Even if the legislature were to pass tough new ethics laws, though, that still would not be enough to restore public confidence and persuade skeptical Tennesseans to accept tax reform. But there is a way: Combine real reform with a "taxpayers bill of rights" amendment to the state Constitution similar to Colorado's, and put the latter on the ballot.

A Taxpayers Bill of Rights (TABOR) would limit the growth of government spending from state tax revenue to the combined rate of inflation and population growth. It would return surplus revenue to taxpayers via across-the-board tax rate reductions, unless voters approve spending the surplus on specific projects proposed by the legislature. And it would require voter approval of tax rate increases and new taxes.

Martin McBride, who is leading an effort to enact a local TABOR in Oak Ridge, told me he considers himself an optimist, "yet I find I have very little trust left to give my government in the tax arena.

"I see the advancing experience level of American citizens as the single greatest reason why so many tax increases are being currently turned back across the country - good, old-fashioned lack of citizen trust in government," he said.

Income tax proponents tried to impose a new tax on top of a system Tennesseans don't like, run by a legislature they don't trust. Imagine if they had proposed a constitutional amendment that would replace permanently the state's sales tax, franchise and excise taxes, investment income tax and "death tax" on inheritances and estates with a simple, flat-rate 4 percent income tax that would bring in about the same amount of revenue.

Such a plan would make Tennessee the most business-friendly state in the nation. Employers would flock here and entrepreneurs would flourish, creating abundant jobs.

The state would see revenue swell, as more people had jobs and incomes rose. Local governments in border counties would see a surge in their sales tax revenue, as Tennessee became a retail magnet for consumers in surrounding states.

Now imagine such a constitutional amendment also included a TABOR provision. I believe voters would approve it - and it would boost public trust in government in two important ways.

Voters will trust what they can control, and TABOR would give them more control over taxes and spending. And a TABOR-ized tax system would force lawmakers to tell entrenched Nashville special interests the feeding trough is closed.

Lawmakers could no longer promise new spending to narrow interest groups in exchange for generous campaign donations, because TABOR would put surplus revenue off-limits without voter approval. Taxpayers would become the most powerful special interest, and ordinary citizens would be the most powerful lobbyists.

This isn't pie in the sky. It's happened in Colorado.

The Denver-Rocky Mountain News urged Colorado voters to reject the TABOR amendment when it was on the ballot in 1992. Seven years later, the newspaper urged voters in Washington state to enact a similar measure, saying TABOR "strengthens the political process rather than (destroying) it."

The newspaper added that "shifting responsibility for taxes from politicians to the public hasn't resulted in automatic rejection of every spending plan." In fact, Colorado voters have approved most tax increases and surplus spending in Colorado over the past decade, according to the Colorado Municipal League.

The newspaper editorialized: "But while TABOR hasn't straitjacketed government, it has accomplished a number of good things. It has heightened interest in elections and government policy; it has given public officials mandates they otherwise would have lacked; it has shrunk voters' sense of helplessness over the use of their hard-earned taxes; and last, but hardly least, it has strengthened the fiscal responsibility of state and local government."

Having a legislature that ranks near the bottom on the integrity scale pass new ethics laws it won't live by or enforce won't engender public trust in state government. A TABOR-ized tax system in Tennessee - with or without an income tax - would.

[GailA]

Read more excellent articles by Bill Hobbs @ Hobbs

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No matter how much Tennessee voters dislike their current tax structure they'd dislike an income tax even more, with or without a Taxpayers' Bill of Rights.