Sunday, March 11, 2001
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Posted on: Sunday, March 11, 2001

Tax rollback proposal is foolish and unwise

The move by 14 state senators to roll back the income tax cuts the Legislature created in 1998 may be making a political point, but it is a dangerous one.

The point, apparently, is to dramatize the impact and importance of the many spending demands on the Legislature this year, particularly public worker salary increases.

And even more particularly: raises for public school teachers.

Supporters of the rollback say it would simply be impossible to take care of the teachers and other needs without rolling back two rounds of income tax cuts approved in 1998. The first round covered the 1999-2000 year and will remain. The cuts in place for this tax year and scheduled for next year would be repealed, producing an estimated $200 million in tax income.

Without argument, this does make a dramatic point. But it is the wrong one. There’s no doubt that public worker raises are deserved, particularly for teachers.

But pulling back from tax cuts that formed much of the bragging rights in the last election is dishonest; it is a form of welshing on a political deal already made.

Furthermore, it may be a deeply short-sighted idea.

There is plenty of debate over the economic stimulus value of income tax cuts. Some believe that simply putting a few more dollars in taxpayer pockets adds up to a stimulus, because that money will be pumped back into the economy. Others say the long-term value of this kind of trickle-down thinking remains in doubt.

But this tax cut plan was sold on another basis as well. It was touted as part of a larger package of incentives, business regulation changes and tax policy designed to attract new industry to the state.

The theory was that high-tech firms and others would be intrigued by a state that was streamlining its red tape and cutting income tax rates at the same time.

All that goes right out the window if these rollbacks make it through the entire Legislature. It will be a particularly hollow effort if, as he has already promised, Gov. Cayetano vetoes the rollback.

For a variety of political and economic reasons, this is a poor idea. If the Legislature truly believes it needs more money to meet obligations, it should look elsewhere.

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