Arizona needs to take a comprehensive look at the tax code


By Stephen Slivinski

Tax policy is often like looking at a pointillist painting – stare closely at only a section, and you don’t have a sense of the whole picture. But when you back up, the picture comes into a focus.

Governor Brewer recently signed into law HB 2123 which will help policymakers and the public stand back and take a much-needed look at all the elements of the tax code at once.

The law creates a tax reform commission for Arizona that will be required to issue a report by October. The commission will take a look at how well or poorly the current system works overall relative to desired economic outcomes and the need to fund the government.

I know what you’re thinking, “oh good; another government commission.” But, other states, such as Georgia, have convened a similar sort of commission, and in many cases, the committee hearings and the resulting reports have motivated a healthy debate about the best sort of tax system the state should have. And that’s a good thing.

Too often, tax changes are made on an ad hoc basis or by voters at the ballot box based on political whim. Additionally, tinkering in one part of the tax code – usually by making exceptions for certain types of businesses – can lead to unintended consequences and pressures to keep taxes high on other business and industries.

Fundamental tax reform necessarily starts with a broad approach. The piecemeal fashion the Legislature and voters pursue now leads to relatively high tax rates and a narrower tax base. In other words, high taxes on some, low taxes on others, and a growing constituency of beneficiaries – whether it be special interest lobbyists, tax accountants, or legislators hoping to woo a certain type of business or industry – entrenches the current tax system and might even make it worse.

The first step in reforming the tax code is to view it in its entirety. Commissions are a common way to do that and they also help policymakers and the public understand what’s broken and – perhaps most important – whether any taxes should be substantially reformed, reduced, or terminated to help create jobs and raise family incomes.

Stephen Slivinski is senior economist with the Goldwater Institute.

Learn more:

Goldwater Institute: Arizona must choose the right path on tax policy

Goldwater Institute: Unleashing Entrepreneurial Forces: States Can Spark Business Creation, Attract Venture Capital Investment, and Increase Job Growth by Eliminating Taxation of Capital Gains

Goldwater Institute: Investing in Arizona: How the Legislature Can Get Arizona’s Economy Moving Again by Reducing the Barriers to Investment and Job Creation


Comments

  1. Conservative American says:

    And the Goldwater Institute flies it’s elitist colors once again:

    “Too often, tax changes are made on an ad hoc basis or by voters at the ballot box based on political whim.”

    Mr. Slivinski, the “whims” of voters at the ballot box are what is called “democracy in practice”. Furthermore, I think it arrogant to assume that the choices of voters at the ballot box are, in fact, whims. Are you suggesting that we take voters and voting out of the picture and have everything decided by “commissions”? What form of government would that constitute, Mr. Slivinski?

    Unless I’m mistaken, Mr. Slivinski, your expertise is as an economist and not as an expert on democratic processes or our form of government.

    • Mesa Constitutional Conservative says:

      Goodness. You really are ignorant, “Conservative American.”

      Slivinski’s point is that sometimes you have to quit applying duct-tape, bailing wire, and various ad-hoc work-arounds, and do a bigger, more comprehensive rebuild of a tax system, so it makes more sense overall. This is a great point. Sometimes the ripple effects of individual legislation are hard to see, and it gets to be time to look at something like the tax laws as a whole.

      But I’m glad you acknowledge that voters know what they’re doing. If you’re consistent in your logic, I suppose that you now acknowledge that Russell Pearce’s 12-point thrashing was “democracy in practice.” About time.

      • Conservative American says:

        Calling me ignorant is simply a childish insult which offers nothing of value to SA readers.

        Secondly, Russell Pearce is irrelevant to the topic at hand.

        Have a nice day.

  2. Oberserve says:

    This is Goldwater’s next attempt at the tax INCREASE called “broadening the base” to try to tax services and INCREASE over all tax revenues.

    In other words, this is Goldwater attempting to GROW government.

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