Flat tax no fair tax | Arkansas Blog

Tuesday, January 12, 2010

Flat tax no fair tax

Posted By on Tue, Jan 12, 2010 at 6:38 AM

John Brummett begins the exploration process of a proposed constitutional amendment arising in Fort Smith to repeal all taxes levied by the legislature and replace it with a super sales tax, probably in the 20 percent range (though backers, unpersuasively, claim otherwise).

The theory is that the utter simplicity would be a virtue. It’s that people would be taxed not as they got richer or acquired more assets, thus partaking in the American dream, but only when they chose to make purchases.

The problem, the unfairness, is that the low-income working man doesn’t exactly choose to make purchases. Sometimes the old car quits running. Sometimes the refrigerator goes out. Sometimes the kid outgrows shoes.

Punitive taxes on a poor man's groceries and appliances would send Arkansas shoppers scurrying to other states to buy goods, among other crazy consequences. Medical services would be taxed. That's progressive?

Ernest Dumas has written a column on this topic this week as well. I'll post it later. He details the sloppy and contradictory language of the proposal (some taxes would likely survive should the measure make the ballot). He says it was made worse by the attorney general's tinkering with the ballot title. Here's a note from him on the crazy quilt list of taxes likely repealed by the measure:

As I read it, the amendment would repeal these taxes:

Real estate transfer tax

Estate tax (already phased out)

Amusement machine tax

Timberlands tax

Timber severance tax

Severance tax on all minerals other natural resources

Oil severance tax for the oil and brine museum at Smackover

Brine tax for museum

Insurance premium tax (which would undermine firemen’s and policemen’s pensions)

Corporate franchise tax

Gasoline taxes

LP gas taxes

Diesel taxes

Alternate fuels tax

Cigarettes

Tobacco products

Soft drinks

Individual income taxes

Corporate income taxes

2  pct tourism tax

sales tax

short term rental tax

residential moving tax

rental vehicle tax

long term rental vehicle tax

use tax (legislature couldn’t impose a use tax to match the new sales tax) 

I count about 110 taxes in all; this would repeal 26 of them under Title 26, and Huck’s constitutional conservation tax.

It kills cigarette taxes but not liquor taxes or parimutuel taxes as far as I can tell.

What about the state’s lottery takeout for scholarships? Is that a tax? If so, it repeals it.



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