The Legislature has only a limited amount of time to enact tax reform before politics overtake the issue and makes meaningful reform almost impossible.
That’s because several elements of a reform package can easily be exploited by political candidates looking to ingratiate themselves with various segments of voters. It will take just a few gubernatorial and legislative candidates to say, “This is a tax increase,” and the chances of achieving necessary, but difficult, reform will evaporate.
The Legislature’s Tax Restructuring and Equalization Task Force has recently held several public meetings across the state to explain the need for tax reform and to hear comments and suggestions from the public.
With that phase complete, the task force now beginning the “study phase,” where lawmakers and others “will further examine the challenges, explore options and review possible solutions to address the structural imbalance the state budget is facing,” according to a press release
The first study phase meeting will be Monday, Aug. 19, at 4:30 p.m. in House Building, room 30. Following the study phase, it is assumed lawmakers and staff will being drafting legislation to be considered in a fall special session or in the general session starting in January.
However, it’s likely the general session will be too late. Political campaigns will be going strong by then, and tax reform will become a political hot potato.
Any gubernatorial candidate should hope tax reform is achieved before the next governor takes office, because it will solve the difficult problem of structural imbalance in the tax system. The next governor might oppose reform during the campaign, but will be grateful if it passes.
Candidates will be tempted to exploit tax reform because some of the solutions will be unpalatable to some individuals and interest groups.
If lawmakers apply the sales tax to some services, some candidates will oppose it as a “tax increase”, even if the rate is lowered to actually provide a tax cut. If lawmakers propose to eliminate the income tax education earmark, some candidates will say education funding will be diminished. If lawmakers try to see that highway users pay more for transportation infrastructure, while reducing other taxes, candidates will call it a tax increase.
It could be especially difficult for Lt. Gov. Spencer Cox, who is running for governor. His current administration is championing some of these reforms. He had better hope the hard work gets done in a special session as soon as possible.
Lawmakers really need a strong communications campaign framing the entire process as an opportunity for a significant tax cut. That’s a good message, but some candidates will still take advantage of voter confusion over specific parts of the package.
Tax reform needs to occur ASAP.