House Appropriations Chairman Rep. John Kavanagh said some legislators have started to tout a taxpayer bill of rights, or TABOR, as an alternative to a flat income tax rate in the 2010 budget.
Speaking at legislative wrap-up breakfast hosted by the Greater Phoenix Chamber of Commerce, the Fountain Hills Republican said there are issues with the flat-tax proposal, including as the inability of small businesses to take deductions on things such as retirement and health insurance. The proposal in the Legislature would replace the progressive tax rate of 2.59-4.54 with a flat rate, likely between 2.8-3 percent.
“If we do wind up going down this path, my guess is – this is not going to be effective until 2012 – we’ll have to make changes to that. But I understand that TABOR is now floating around the Senate, so there could be a switch,” Kavanagh said while outlining the potential problems he sees with a flat-tax rate.
Kavanagh said he is beginning to doubt whether the flat tax will even be included in the budget, and said TABOR is starting to look like a viable alternative to some lawmakers. He stopped short, however, of endorsing such a plan.
“If it’s a spending limit … that’s really the root of the problem. If you want to directly control somebody’s behavior, then you control that behavior. You don’t start controlling things that person can use as a tool for that behavior. That’s kind of an indirect control,” he said. “But TABOR’s got issues too that have to be worked out.”
TABORs are measures designed to limit government spending and taxes. They often include provisions such as requirements that increases in tax revenue be tied to inflation and population increases.
-Posted by Capitol Times reporter Jeremy Duda