This Bill is a Big Deal

From Greg Patterson at Espresso Pundit. He’s right about this.

‘God, I thank you that I am not like other men—robbers, evildoers, adulterers—or even like this tax collector.
from Arizona’s Own Espresso Pundit by Greg Patterson

You don’t have to read Luke 18:11 to know that the most despised person in Biblical times was the Tax Collector, yet few people understand why. We tend to think of Tax Collectors as IRS agents and since no one likes the IRS, we tend to equate that with the Biblical version.

However, first century tax collectors were vastly different from modern IRS agents. Ancient tax collectors were ordinary citizens who contracted with the Roman government. They assessed taxes and kept a percentage–and if you refused to pay…well, let’s just say that Rome had ways of making you pay.

Tax collectors were despised because the people understood that the system was fundamentally unfair. After all, there was always some room for interpretation so merchants had to decide if it was worth fighting over an assessment that was too high. And since the Tax Collector collected a percentage of the overage, the assessment was always too high.

In modern times, we measure the amount of corruption in government by the degree that the functionaries’ benefit from the regulations they enforce. And we long ago learned that we don’t sell tax collection franchises to private individuals and let them assess the tax and keep a cut. Well, at least we used to know that.

The Arizona League of Cities and Towns has entered into a partnership with a private company with the Orwellian name of “Revenue Discovery Services.” Under this arrangement*, RDS would have access to the private salses tax records of individual businesses and conduct private “audits” in order to assess these small businesses additional tax liability. The businesses would then be forced to either hire a lawyer in order to appeal the assessment, or write a check to RDS. RDS then takes its cut and forwards the rest to the city. Frankly, I can’t think of a more destructive tax system. Nothing drives away business faster than a third world tax structure.

The scheme is obviously illegal to implement, after all, A.R.S. 42-2003 prohibits a city from distributing confidential tax information to a private party–and the arrangement won’t work if the city isn’t allowed to transfer the information.

Here’s where the story gets interesting. Rather than go straight to court, those who opposed the scheme sponsored a bill that would make the partnership illegal on its face. That seems like a no brainer. It’s a feel good bill that protects taxpayer’s personal information and prevents a private party from shaking them down for profit. The bill, HB 2512, failed in the House–twice.

Supporters then tried to pass the bill in the Senate and the amendment that added the language failed on 4-4 tie with Repubicans Ron Gould and Barbara Leff voting with the Democrats to kill the provision. Frankly, if anyone understands the abuse of power that the government can wield through tax code enforcement it should be Gould.

And Leff? Frankly, I’m baffled. After a career of advocating for economic development how could she vote to kill a bill that would have prevented such an anti-business scheme? Leff is running for State Treasurer and after fumbling such a basic issue many will question her fitness for the office. In fact, someone with a decent budget could define her entire career by that one vote.

Is there a solution? Well, the obvious answer is for business advocates to seek an injunction in order to prevent confidential information from being turned over to a private company.

How about a legislative solution? Since the bill failed three times–twice in the House and once in the Senate–it seems unlikely that the Legislature is willing to step up and address this issue. Ironically, one of the priorities for the House is HB 2550, which is an economic development package dubbed the “Jobs Bill.” Well, there’s nothing that will kill jobs faster than a banana republic taxation scheme. Come to think of it, the Anti-tax collector bill is germane to the Jobs Bill… Hmm, Maybe the legislative Republicans will get a fourth chance to do the right thing. After all, the Bible says that everyone has a chance at redemption–even tax collectors and Legislators.

*footnote: Don’t be fooled by claims that RDS is merely a private collection agency. Advocates for RDS admitted in Committee that RDS conducts private audits and rejected a proposal to limit its activities to collections.

Reprinted from the Wall Street Journal’s Political Diary (4-9-10)

April 9, 2010

Leaving Arizona . . . Poorer

Relative to the size of its budget, the red ink in Phoenix is even higher than in Sacramento or Albany. Arizona has one of the largest deficits of any state. Its mortgage foreclosure rate is also one of the highest. No wonder pro-spending groups and labor unions have been consistently pushing for higher taxes. Last year Arizona raised property taxes by more than $200 million.

Governor Jan Brewer, a Republican, is eyeing a sales-tax hike next. Legislators agreed to put a one-point hike before voters in a referendum scheduled for May. They also passed a “contingency” budget — conservatives mockingly call it the “doomsday budget” — that would take effect if the sales tax hike is voted down. Liberal interests want to persuade voters that failing to accept higher taxes will mean draconian cuts in schools, health-care services and road maintenance.

But Arizonans appear not in the mood for higher taxes this year. Last week the powerful Arizona Hospital and Healthcare Association backed away from an initiative it was supporting to boost the state income tax on “the rich” to 5.45% from 4.45%. Leading anti-tax groups, including the Arizona Free Enterprise Club, blasted the proposal, complaining that the health care lobby is in favor of every new tax that comes down the pike, including higher taxes on tobacco, snack foods and liquor.

Also speaking out was former Gov. Fife Symington, who says higher taxes would “make Arizona poorer, when we need more jobs and higher incomes to pay the bills.”

Steve Voeller, head of the Free Enterprise Club, says the hospital group finally “backed down because there was no political support in this state for the tax hike.” The anti-tax groups now are turning their attention to defeating the proposed sales tax increase. Tweaking the hospitals, Mr. Voeller says: “The best way to “keep people off Medicaid is by getting them a job.”

— Stephen Moore

Pro-Subsidy Republicans

And just when I thought something good was going to come out of the legislature.

On Monday, the Senate seemed to kill a bill designed to reauthorize the motion picture (movie/film) tax credit package. These are tax credits that have done nothing for the state other than cost it millions of dollars.

But Sen. John Nelson (R-Dist. 12), the sponsor of this boondoggle, convinced Republican Senators Dave Braswell (R-Dist. 6) and Sen. Linda Gray (R-Dist. 10) to switch their votes from ‘no’ to ‘yes.’

So, here’s what Braswell and Linda Gray support: higher taxes on us to pay for credits for movie producers. But, you ask, at least these movie producers create jobs and tax revenues that benefit all of us Arizona taxpayers, right?


According to the Arizona Department of Commerce, Arizona taxpayers came up $6 million short on the cost-benefit analysis. We handed out $8 million in credits and received $2 million in added revenues.

What a boondoggle. And we’re not the only ones. According to Josh Barro, Senior Fellow at the Manhattan Institute:

A 2008 study from the College of Charleston looked at South Carolina’s film incentive program and found that it generated only 19 cents in tax revenue for every dollar in rebates given to filmmakers. Contrary to film boosters’ rhetoric, these programs impose significant costs on state coffers.

How about we all agree that politicians don’t have a sixth sense when it comes to economic development?

Let’s get serious about tax and budget policy (at least for a little while).

Let’s hope the House kills this total waste of a program.