Flat Tax Plan Falls Flat in Ohio
This week Ohio Gubernatorial candidate Ken Blackwell unveiled a plan to introduce a flat rate income tax. So far Blackwell and his staff are speaking only in vague terms about the proposal. However, a new Policy Matters Ohio report delves into the harmful repercussions of a similar plan. As presented, this fiscally irresponsible proposal would raise taxes on the middle class and cut taxes on the wealthiest Ohioans while simultaneously creating a huge budget hole.
Tax Measures To Appear on the Ballot in Several States
The upcoming November vote will be a key battle for progressive tax policy in several states where measures are on the ballot that would make state tax codes more regressive. Maine, Nebraska, Oregon and possibly Montana all will decide on measures modeled after Colorado's so-called Taxpayer Bill of Rights (TABOR) which has caused such a disaster in Colorado the voters decided to suspend the strict tax and budget limits that it entails. Legal challenges may keep TABOR off the ballot in Montana and Nebraska. TABOR seems extremely appealing to many voters on the surface, but as a new report from the Center on Budget and Policy Priorities points out, it can lead to drastic cuts in services and increases in local property taxes. Four states may raise their cigarette tax, which is a regressive move even if it funds laudable purposes. Arizona would raise its cigarette tax from $1.18 to $1.98, California would raise its cigarette tax from $.87 to $3.47, Missouri from 17 cents to 97 cents, and South Dakota from 53 cents to $1.53. Voters around the nation will also pass judgment on estate tax repeal (Washington), property tax caps (South Dakota) and income tax complication (Oregon). A new report from the Ballot Initiative Strategy Center gives a helpful overview of these and other issues on the November ballot around the nation.
Lawmakers Take Aim at Model School Funding Stream
Vermont is one of a growing number of states that have moved away from a purely local property tax toward a statewide tax that shares revenue between poor and wealthy taxing districts. This is a good move for those seeking to make the property tax a more equitable funding source. But property taxes are as unpopular in Vermont as in many other states, and a number of anti-tax lawmakers are proposing to repeal the statewide tax-- with no replacement funding source. The Vermont League of Cities, taking a slightly more responsible tack, announced this week that it also favors repeal of the statewide property tax, but endorses replacing at least some of the lost revenue with an increase in the personal income tax. Meanwhile, the property tax debate has spilled over into the gubernatorial election, with incumbent Governor Jim Douglas proposing a cap on local budget growth. A helpful overview of the Vermont property tax debate is here.
New Hampshire Legislators Seek to Stop Courts from Considering Education Funding
For advocates seeking equitable funding of K-12 education, state court decisions have been crucial for over a quarter century. From Arkansas to New York, many states have improved their education funding systems, in part, because state supreme courts have told them they have to. (Unlike the US Constitution, virtually every state constitution includes language guaranteeing a basic education to its residents — and many states have failed to comply with this basic guarantee.) In the states, as in Washington DC, this is exactly what courts are supposed to do: rap lawmakers on the knuckles when they pass laws that violate fundamental rights enshrined in the constitution.
But some New Hampshire lawmakers don't see it that way. Senate President Ted Gatsas has introduced a constitutional amendment that would actually prevent state courts from determining whether New Hampshire is living up to its constitutional responsibility to adequately fund schools. In a series of court decisions collectively known as the Claremont cases, New Hampshire courts have ruled that the state does have a constitutional obligation to adequately fund schools — and that the state is not currently doing so. Four Republican ex-governors got together last week to voice their support for "return[ing] control of education policy to the legislature."
The cause of the latest ruckus? A September court decision ruling that the state must take steps to determine what an "adequate" education really means. If the legislature fails to act by next summer, the court has said it may step in. Constitutions are generally thought of as sets of rules that legislators cannot violate, in order to protect citizens, so it's peculiar that the interpretation of these rules would be given to the legislators. No word yet on whether the state legislature would be in charge of safeguarding all other fundamental rights in the Granite State.
The Golden Years?
Local officials in North Andover, Massachusetts have come up with a property tax break straight out of a Charles Dickens novel. A new tax break program allows 20 seniors (chosen by lottery) to work 100 hours a year for the city in exchange for a $600 break in their homeowner property taxes. Winners of the lottery will work part-time in various municipal offices and schools.
For the "lucky" 20 winners, the tax break will offer needed relief. But a primary goal of a properly functioning property tax should be to ensure that fixed-income seniors don't face onerous property taxes to begin with. A "circuit breaker" property tax credit introduced several years ago by Massachusetts lawmakers is an important first step toward this goal — but expanding this credit to provide more meaningful tax breaks for low-income seniors would avoid the spectre of Bay State retirees working off their tax bills.
JOB OPENING AT ITEP
The Institute on Taxation and Economic Policy has an opening for a policy analyst. See the online posting for more information.
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