Tax Guru – Ker$tetter Letter

Helping real people win the tax game.

Posted by taxguru on October 31, 2002

Debate Recap

The debate at North Arkansas College in Harrison went well today. It was taped by the local television station, Channel 8. We are still trying to find out when it will be broadcast. The publisher of the local newspaper sat in the front row, taking a lot of notes and photos. That should be in their paper soon.

My fears of a hostile group were unfounded. The students and administrative staff were very courteous. My name tag is to the right.

The biggest arguments against our proposal to eliminate the sales tax on food and medicine have to do with fears of the unknown. The fact that the measure doesn’t specify exactly where the money will come from to replace the lost sales tax revenue scares people and they worry about what other taxes or fees will be raised as a result. This sounds like the old “the devil you know is better than the one you don’t” dilemma that stymies any attempt at change. It’s part of the problem Bush is having convincing other nations to oust Saddam.

There is also a great deal of fear of the greatly misunderstood Libertarian Party. You would think the Chamber of Commerce’s Executive Director, Layne Wheeler, was describing a cult of of evil Satan worshippers when she described the LP’s goals of smaller government and lower taxes.

In the face of accusations of being irresponsible for omitting details on replacement revenues, I explained that wasn’t the purpose of this initiative. It was difficult enough to get it onto the ballot just addressing the one side of the equation. To micro-manage how our rulers adapt to the situation would not be fair and would very definitely excite other opposition groups. There is simply no tax that is universally liked by every group. The rulers in Little Rock have known that the little people have been upset about this issue and demanding a change for well over 21 years. They chose to sweep it under the rug. The LP simply stepped in to do what the other parties refused to. If this measure passes, it will bring the matter up front and center into their radar. They will have to make the appropriate adjustments.

While I long ago learned that the locals here hate to hear stories about how things were done in the PRC, I still think that the Proposition 13 property tax revolt in 1978 is a direct parallel to this sales tax issue. It rolled back property tax rates and cut the revenues to local governments by a considerable amount. It also did not specify how the revenues were to be made up. Each government entity had to do whatever it took to adjust, including cutting services and personnel. I have every confidence that the managers here in Arkansas will be just as capable in adapting to the situation they will face with the slightly lower sales tax funds. Some people in the audience expressed heavy skepticism over this faith in our leader to deal with matters. One person even called it an oxymoron to have any such faith in politicians (his words, not mine). I had to remind the audience that, if passed, the actual change in the sales tax rules won’t take effect until July 4, 2003, giving everyone plenty of time to take appropriate action.

I heard that just this morning the Arkansas Supreme Court again refused the request by the government bureaucrats to toss this matter off of the ballot; so it is looking more and more likely that we will actually be able to vote on it next Tuesday. I’m sure this weekend will be filled with ads by the opposition with their phony numbers and horror stories about how terrible life will be in Arkansas if this measure passes.


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