Stop the Tax! Newsletter

   

Is This Really a Crisis?

By

Hugh McInnish

There is an important matter emerging in these latter days before the fateful 9th, and it concerns one more deceptive thing that the tax-and-spend crowd, among many others, has apparently done. In practically every "objective" news story on the tax you will find in the first paragraph, if not the first sentence, either a certain noun or a certain adjective. The noun is "crisis" and the adjective is "dire."

The reporter will invariably refer to "Alabama's dire financial situation" or to "this crisis." As in "What are the proposed solutions to this crisis." The idea that a crisis is upon us has been planted with remarkable effectiveness into the minds of most of us. And it has been repeated uncritically ad infinitum in the media. But just a minute!

Is there a crisis? Is our financial situation dire? In the closing days of this campaign it now seems likely that all this crisis talk is just the foundation of a monumental propaganda scheme to hoodwink the public and garner more money into the hands of our politicians and, of course, into the lap of Paul Hubbert.

Bill Armistead, certainly one of the most trusted voices in the state, has joined others who question the accuracy of the purported $675 million shortfall which is the foundation of the Hubbert-Riley tax campaign. Bill has done what few others have. He has done some grungy homework. Working with the LFO, the Legislative Fiscal Office, he has deduced from their figures that the deficit is only $262 million.

If he is right, and I believe he is, the fraud perpetuated on Alabama citizens is monstrous. A gap of this size is not a crisis and can be closed by effecting small economies. There would be no need for a tax hike of any size, much less the absurd $1.2 billion proposed by Hubbert-Riley.

I hope that this word can be broadcast to every voter in this state. It has the power to affect the undecided, and maybe even to change a few minds.

Turning to another subject, Dick Armey, Former Republican Majority Leader, will lead an anti-tax rally in Birmingham Thursday, September 4. It will be at 6:30 PM at the Birmingham-Jefferson Convention Center. Other notables, including Steve French, Scott Beason, and Bill Armistead will be there. It will be a fiery, memorable occasion, and all of us who can should be there.

Meanwhile Armey has written a marvelous, hard-hitting op-ed piece which the Birmingham News has published. I reproduce the entire piece below.

Myth-Making
Special to the Birmingham News
August 31, 2003


By Dick Armey

The big spenders in Montgomery are using two major misperceptions to push the largest tax hike in state history. The first myth is the idea that Alabama citizens don’t already pay enough in taxes, and second is the idea that public education in Alabama is underfunded. Both ideas are wrong.

Even though I lead a national grassroots organization with 7,000 Alabama members, I’ve been personally attacked on the first question. Some supporters of the tax increase have argued that my home state of Texas has a higher tax burden than Alabama, which is somehow an argument for raising taxes in Alabama. That’s wrongheaded—the best way for Alabama to compete and grow is to lower taxes on workers and business, not raise them. It is also incorrect to suggest that Alabama’s taxes are “irresponsibly” low – as a matter of fact, the state and local tax burden in Alabama is actually higher than the burden in Texas!

Since 1937, the Tax Foundation, a non-profit, non-partisan think-tank based in Washington, D.C., has provided the public with objective information on taxes. They rank the state and local tax burden for all fifty states, calculated using data from the U.S. Bureau of Economic Analysis.

The 2003 rankings are extremely illuminating. In the U.S., the worst state in the county is Maine (ranked 1st, with a state and local tax burden of 12.2 %) and the best is New Hampshire (49th, 6.6 %). (Alaska is actually best at 50th but has exceptional oil royalties).

Alabama’s state and local tax burden as a percentage of income is 8.4 percent, ranking it 45th. That’s relatively low, but as a percentage of income, Alabama already has a higher tax burden than its Southern neighbors Texas (46th, 8.3 %) and Tennessee (47th, 7.7%). Further, Florida (44th, 8.4 %) citizens pay the same percentage of their incomes as Alabamians. In fact, Texas, Florida, and Tennessee don’t have the same degree of fiscal mismanagement and massive deficits we’re currently witnessing in Alabama. So the idea that revenues to the state of Alabama are somehow too low is completely off base. The problem in the Heart of Dixie is spending in Montgomery, not a lack of revenues.

By increasing taxes by $1.2 billion a year, Alabama will actually become less competitive compared to its high growth neighbors. It is also significant that Florida, Texas, and Tennessee don’t impose a state income tax. This just goes to show that with leadership, it is possible for Alabama to implement state income tax reforms without increasing taxes overall. Indeed, a true vision for Alabama would involve repealing the state income tax altogether.

On education, too, Alabama is already spending as much or more than many of its neighbors. One measure, from the U.S. Census Bureau, ranks state spending on elementary and secondary education as a percentage of state income. This measure is better than straight spending comparisons because it captures some of the relative differences in cost of living between states. By this measure, in 2001 the Census Bureau ranked Alabama’s spending at 35th in the nation. Thirty-fifth is hardly the spending wasteland constantly described by the Alabama Education Association.

Indeed, as detailed in a new CSE report, over the past 30 years Alabama education spending has steadily grown while the state’s student population has decreased by 14 percent. Despite this decline in the number of students, Alabama education spending, even after being adjusted for inflation, has increased by 180 percent and the number of teachers has increased by 42 percent. What’s more, Alabama’s teachers are already compensated above the national average, ranking 16th in salary when adjusting for cost of living differences between states.

No doubt, building a world-class education system is a critical issue for every state. But instead of simply throwing more money at the problem, Alabama should look at reforming the current system. Innovations like charter schools and school vouchers are improving public education in communities across the country, but these ideas are dead on arrival in Montgomery.

In fact, Amendment One would actually change the Alabama state constitution to make it more difficult to pass school reforms! Amendment One will redefine “education” in the state constitution to favor the public school monopoly. This little poison pill will, in some cases, bar legislative initiatives like scholarships or vouchers to help kids escape failing public schools. Instead of education reform, this referendum is a step backwards.

Higher taxes, more spending, no reform; it’s just more of the same from Montgomery. All of this is why Alabama voters should ignore the myths surrounding Amendment One and vote no on September 9th. The facts are that Alabamians already pay enough taxes, and the public education system already has enough funding.

Former House Majority Dick Armey is Co-Chairman of Citizens for a Sound Economy, a national grassroots organization with 7,000 members in Alabama.

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3 Sep 03