Don Schroeder weekly newspaper article

By Don Schroeder
May 22, 2015

The 2015 Legislative session grinds on without resolution. At this point, we are beyond the normal 90 days scheduled for session. I am aware that some high level strategy meetings are going on, but little of that information is shared with Legislative members.

A tax proposal to increase sales taxes by .7% was voted on in the House and failed miserably on a voice vote. Having a voice only vote was orchestrated to avoid having any recorded votes that could be used as campaign fodder in the future.

There are those that would like to convert our tax system to a consumption tax. A consumption tax is basically a fancy word for sales tax. The argument is that it is simpler because much of the work collecting and remitting the money is done by merchants and not government employees. Income taxes require quite a number of people to process and review the returns.

We seldom hear about the regressive issue in regard to taxes anymore, but sales or consumption tax is still considered the most regressive. That simply means that everyone, regardless of ability to pay, pays the same rate. Property taxes fall in the middle of the regressive discussion because a particular property may or may not have the ability to produce more income if property taxes increase. Of course, most residential property does not produce income anyway but the purchase price of a house is a function of someone’s ability to pay.

Income taxes, though, are quite fair in that if someone makes more, they pay more. If someone makes less, they pay less. Therefore it is considered least regressive of the three primary tax sources. The discussion is that the State should not tax productivity but should rather tax consumption.

Not everyone automatically increases their ability to pay when sales taxes increase. To rely strictly on sales taxes with no income taxes would require adding several services (legal, professional, perhaps even medical) to the tax base and possibly increasing the rate to equal the current revenues. The point is that a broad-based tax system has everyone paying some so no one particular group pays a disproportionate amount.

Much work is being done by the tax committee to find a mix that is palatable. The budget committees are also looking for additional ways to reduce spending. Something that has been suggested to the budget committees is the possibility of eliminating programs. Most programs are so thin now that elimination may be the only option left. To do that, it becomes a matter of priorities. The bottom line is that we must have a balanced budget before the session will end.

In other news, a bill allowing the Secretary of State prosecutorial power is on its way to the Governor. The same bill also increases the level of severity for many voter crimes from a misdemeanor to a felony. Also, a bill changing spring elections to the fall of odd numbered years narrowly passed the House. The elections will remain non-partisan. Improved voter turnout is the goal.

I cannot say whether we will be here for days or weeks. Finding a budget and tax combination that attracts 63 House and 21 Senate votes, and is something the Governor will sign or allow to become law will be a challenge. It’s like reading a mystery where the outcome is not solved until the last page.