This Bill is a Big Deal

From Greg Patterson at Espresso Pundit. He’s right about this.

‘God, I thank you that I am not like other men—robbers, evildoers, adulterers—or even like this tax collector.
from Arizona’s Own Espresso Pundit by Greg Patterson

You don’t have to read Luke 18:11 to know that the most despised person in Biblical times was the Tax Collector, yet few people understand why. We tend to think of Tax Collectors as IRS agents and since no one likes the IRS, we tend to equate that with the Biblical version.

However, first century tax collectors were vastly different from modern IRS agents. Ancient tax collectors were ordinary citizens who contracted with the Roman government. They assessed taxes and kept a percentage–and if you refused to pay…well, let’s just say that Rome had ways of making you pay.

Tax collectors were despised because the people understood that the system was fundamentally unfair. After all, there was always some room for interpretation so merchants had to decide if it was worth fighting over an assessment that was too high. And since the Tax Collector collected a percentage of the overage, the assessment was always too high.

In modern times, we measure the amount of corruption in government by the degree that the functionaries’ benefit from the regulations they enforce. And we long ago learned that we don’t sell tax collection franchises to private individuals and let them assess the tax and keep a cut. Well, at least we used to know that.

The Arizona League of Cities and Towns has entered into a partnership with a private company with the Orwellian name of “Revenue Discovery Services.” Under this arrangement*, RDS would have access to the private salses tax records of individual businesses and conduct private “audits” in order to assess these small businesses additional tax liability. The businesses would then be forced to either hire a lawyer in order to appeal the assessment, or write a check to RDS. RDS then takes its cut and forwards the rest to the city. Frankly, I can’t think of a more destructive tax system. Nothing drives away business faster than a third world tax structure.

The scheme is obviously illegal to implement, after all, A.R.S. 42-2003 prohibits a city from distributing confidential tax information to a private party–and the arrangement won’t work if the city isn’t allowed to transfer the information.

Here’s where the story gets interesting. Rather than go straight to court, those who opposed the scheme sponsored a bill that would make the partnership illegal on its face. That seems like a no brainer. It’s a feel good bill that protects taxpayer’s personal information and prevents a private party from shaking them down for profit. The bill, HB 2512, failed in the House–twice.

Supporters then tried to pass the bill in the Senate and the amendment that added the language failed on 4-4 tie with Repubicans Ron Gould and Barbara Leff voting with the Democrats to kill the provision. Frankly, if anyone understands the abuse of power that the government can wield through tax code enforcement it should be Gould.

And Leff? Frankly, I’m baffled. After a career of advocating for economic development how could she vote to kill a bill that would have prevented such an anti-business scheme? Leff is running for State Treasurer and after fumbling such a basic issue many will question her fitness for the office. In fact, someone with a decent budget could define her entire career by that one vote.

Is there a solution? Well, the obvious answer is for business advocates to seek an injunction in order to prevent confidential information from being turned over to a private company.

How about a legislative solution? Since the bill failed three times–twice in the House and once in the Senate–it seems unlikely that the Legislature is willing to step up and address this issue. Ironically, one of the priorities for the House is HB 2550, which is an economic development package dubbed the “Jobs Bill.” Well, there’s nothing that will kill jobs faster than a banana republic taxation scheme. Come to think of it, the Anti-tax collector bill is germane to the Jobs Bill… Hmm, Maybe the legislative Republicans will get a fourth chance to do the right thing. After all, the Bible says that everyone has a chance at redemption–even tax collectors and Legislators.

*footnote: Don’t be fooled by claims that RDS is merely a private collection agency. Advocates for RDS admitted in Committee that RDS conducts private audits and rejected a proposal to limit its activities to collections.