I applauded Sen. Jay Tibshraeny when he voted against the FY08 budget earlier this year because he cited a lack of fiscal discipline and because he believed the budget would lead to future deficits. He turned out to be right, of course, as Arizona faces a potential $2 billion budget shortfall.
However, being good on spending doesn’t excuse him for proposing bad tax policy. According the Capitol Times, Sen. Tibshraeny is again going to offer his bill to exempt senior citizens from paying a vehicle license tax on one of their vehicles. The bill failed in 2006 and 2007. For good reason.
No matter how politically popular it might be to exempt one class of citizens from a tax (especially a hated tax like the VLT), it’s just bad public policy. If seniors should be exempt from the VLT, why not income taxes, or property taxes, or sales taxes? Why shouldn’t teachers, or firemen, or people who carpool be exempt? If a 65 year-old is exempt, why not the 64 year-old. The reasons are pretty clear.
An ideal tax system taxes the broadest possible base at the lowest possible rate. Just as eliminating all exemptions, credits and loopholes would lead to lower taxes for everyone, creating new exemptions, credits and loopholes will lead to higher taxes for everyone.
I’m sure Sen. Tibshraeny believes he’s actually cutting taxes for a segment of the population, but really he’s just creating a new program for seniors that the rest of us will have to fund.