Columnist Hal Rothman: Why it’s important to stay off TASC

Hal Rothman

Sunday, Nov. 13, 2005 | 8:12 a.m.

Hal Rothman is a professor of History at UNLV. His column appears Sunday.

Colorado's recent suspension of its Taxpayers' Bill of Rights (TABOR) is the first sign of common sense in a public vote in a long time. Like Proposition 13 in California, passed in 1978, TABOR is a slick manipulation of a gullible, fearful, self-interested and uninformed public. Simultaneously, it is an unmitigated public policy disaster.

With the stunningly appealing name of Taxpayers' Bill of Rights, TABOR purported to be a hedge against wasteful government spending and the creation of new government programs. Modeled on California's Proposition 13, TABOR allowed state government to spend more than it had in the previous year, but only to the level of inflation and the increase in population.

While an appealing model, this formula held in it a ticking time bomb. TABOR worked reasonably well during flush times. Between 1997 and 2002, more than $3.2 billion was returned to Colorado taxpayers.

But even during good economic times, the state was unable to remain competitive in the funding of its education system. Even more, upkeep of roads, state health care and Medicare funding and other necessities lagged.

TABOR did not allow Colorado to make the improvements in its infrastructure and in its education system to continue to recruit new talent to the state economy, a precursor of a continuously improving economy. It was penny wise and pound foolish.

When economic growth slowed, the problems with TABOR became apparent. TABOR did not allow Colorado to create a Rainy Day fund of the kind so important in balancing the state budget.

The shortcomings in education led to passage in 1997 of Amendment 23, a funding measure for education that outstripped the spending limits that TABOR established. The result was a tax-reduction measure that had the parallel impact of creating a permanent shortfall at the same time it eroded the very entities that could promote economic growth.

There is much talk about a similar measure in Nevada called the Tax and Spending Control initiative, which goes by the acronym TASC. The recent housing boom and the increase in real estate taxes, deftly handled by the Nevada Legislature in 2005, have created the same kind of pressure that Californians experienced in the 1970s. Proposition 13, which capped real estate taxes after a similar spike in housing values, serves as an instructive lesson for us.

No single piece of legislation did more damage to California and its status as the leading American state than Prop 13. Even though it is the fifth largest economy in the world, the Golden State is continuously seeking new sources of funding for its schools, roads and universities.

Its social service burden, so much greater than Nevada's that it defies comprehension, grows as governors as diverse as Pete Wilson and Arnold Schwarzenegger struggled to find ways to meet obligations.

Nevada remains in the bottom quarter of state tax burdens in the United States. By the Tax Foundation's reckoning, in 2005 we are 38th in tax burden with a rating of 9.5 -- with 1 being the highest. In 1974 Nevada was the 10th most highly taxed state in the nation at 10.5 percent of income. We are almost exactly where we were in 1989, when the great boom began. That year, Nevada ranked 37th with the same 9.5 tax-burden rating that we have today.

In contrast, Nevada remains in the bottom three in almost every social service category. Our extremely limited state safety net already has great big holes. Nevada is a bad place to be if you are poor, mentally ill, sick without insurance or need other state assistance. We serve best the citizens who can already take care of themselves.

Now I have long argued that you need a microscope to find your tax burden in Nevada. Plenty of people will disagree with me, especially those on fixed incomes. But the truth remains: If you want services -- even police, fire and especially medicine -- you have to pay taxes.

Our tax system is still dysfunctional. Sales tax and casino tax make up 75 percent of state revenue. That has created a typical Nevada dependency on outsiders to pay a large part of our share of running the state.

The system is also regressive; poor people pay the same taxes as the more well-off, effectively pushing the burden down the socioeconomic ladder. While Nevada thankfully does not tax food, sales tax is the most regressive form of taxation.

In the end, the people who push for something like TABOR or Proposition 13 either do not understand Nevada's situation or think they can get elected by spreading fear. We're already cut to the bone.

The question is not how to cap taxes, but how to use the tax dollars we have to further the diversification of the state economy. That's the question I'd like to see gubernatorial candidates and those running for Congress answer.