Other states hear Ala.’s loud ‘no’ on taxes (USAToday):
States will have a hard time raising taxes to balance budgets following the decisive rejection by Alabama voters of the largest tax increase in state history.
“This is going to discourage leaders in other states from doing things, not that many were disposed to try anyway,” says Nicholas Jenny, who tracks state tax revenue at the Rockefeller Institute of Government in Albany, N.Y. “States will have to muddle through their budget problems.”
Alabama Gov. Bob Riley, a Republican who previously had opposed tax increases, sought the $1.2 billion increase to close the state’s budget deficit and pay for improvements in education. The proposal lowered state income taxes on the poor while raising more than a dozen other taxes. Tuesday, voters defeated it by 68% to 32%.
Riley said he will implement major spending cuts to close a budget shortfall estimated at $675 million next year.
The magnitude of Riley’s defeat is a setback for efforts to raise taxes and for proposals to restructure state tax systems, advocates on both sides say.
“Mixing tax reform with a net tax increase is a recipe for disaster. It clouds the message that the system needs to be fixed,” says David Brunori, an editor at State Tax Notes magazine.
Posted by Mises.org News
