Columns » Ernest Dumas

Economy wrecker



While you have been minding your business and paying your taxes, the AR One Tax has been shuffling silently toward the Capitol to be born.

The AR One Tax, as its eloquent authors call it, is the amendment to the state Constitution that by the simple expedient of one giant tax on everything you ever buy would wreck Arkansas's feeble economy and enrich its neighbors.

When we left it back the first week of January the Constitutional Amendment to Repeal All State Taxes and Establish a Flat Rate Sales Tax had got the imprimatur of Attorney General Dustin McDaniel, who said it met all the tests for going on the ballot — that is, its name and ballot title were clear, accurate and impartial. A five-minute review would prove that the name and ballot title were none of those things, but the attorney general's stamp is official.

Since then, Secretary of State Charlie Daniels has pronounced the proposal fit for the ballot, and a month ago the attorney for the inaptly named Arkansas Progressive Group and the drafter of the amendment (he's also legal counsel for the Arkansas Republican Party) quietly asked the Arkansas Supreme Court to approve the name and ballot title, which would forestall a legal challenge if the group gets the signatures by July to qualify it for the ballot in November.

Despite the attorney general's and secretary of state's offhand approval of the proposition, the Supreme Court is not going to be so blind. Unless it abandons every principle it ever applied to judging the abbreviated descriptions that voters get to see in the voting booth, the court will say that it doesn't fairly inform voters about what they are about to do and it doesn't get a place on the ballot.

But stranger things have happened, which is why this nutty proposition deserves another fevered essay. And in the unlikely event it gets on the ballot, the voters surely would reject it, right? A savvy business lobbyist told me the other day: In this maniacal political climate, don't count on it.

Oh yes, what does the AR One Tax amendment do? It purports to repeal all of the more than 100 taxes collected by the state and replace the $5.5 billion or so in revenues that they produce with one big sales tax on every item or service bought by an individual, including groceries and medicine. Your barber, dry cleaner, doctor, yard man and, yes, your drug dealer, prostitute, pimp and bookie, as Mike Huckabee pointed out in a Fox News commentary in January, would have to collect a big tax from you and remit it to the state treasury. (Huckabee is a fanatical fan of the tax.)

No business, whether it is a farm, a local merchant or a multinational corporation, would ever pay a dime of taxes on what they bought. Businesses would be exempt from all taxes. The sales tax rate on your purchases would have to be high enough to compensate for the huge loss of revenues from exempting business activity. You would have to pay a sales tax of 30 percent or more when you bought a car or filled up the gas tank, but Wal Mart and Exxon wouldn't.

The big tax would drive the purchase of every big-ticket item like cars and appliances to border cities like Memphis, which may be why car dealers and other business groups have hired one of Little Rock's savviest lawyers to block it in the Supreme Court.

The legislature next spring would determine how much money the state needed for all its many programs, including the public schools, and fix the sales tax rate. If it guessed wrong, it could adjust the rate one more time by a three-fourths vote and then the rate would be fixed forever.

Here maybe is why the sponsors call themselves progressives: To prevent the big tax from sinking anyone into poverty, the state would send monthly checks to all 2.9 million Arkansawyers, minus those who cannot prove they are U. S. citizens. The checks would be based on the poverty rate and each person, rich or poor, baby or nursing home ward, would get the same check. Presuming the current poverty level of $11,000 a year and a sales tax rate of 30 percent — it probably would be much higher — the state would pay each of us $3,300 a year.

The biggest beneficiary that we know of would be Jim Bob Duggar, the famous family man with 19 children. His yearly bonus from the state at the outset would be some $70,000.

But here is why the Supreme Court is not going to put this stupidity on the ballot. The popular name and ballot title mislead voters about what it would do. The popular name, ballot title and indeed the amendment itself say that “all” taxes would be repealed. But then it identifies all taxes as those found in Title 26 of the Arkansas Code, which includes only a few of the taxes levied by the state, albeit most of the big ones. There are many other such deceits or oversights.

McDaniel and Daniels certified that the amendment did not violate the U. S. Constitution and the Supreme Court is asked to do the same. It can't because the proposition violates the Constitution in at least two ways. It purports to repeal “payroll taxes.” Payroll taxes, as they are commonly known, are federal taxes and the supremacy clause of the Constitution doesn't permit states to thwart federal law. The amendment also would make noncitizens pay the huge sales tax but would prevent them from getting the poverty subsidy from the state that offsets it. The 14th Amendment prevents states from denying anyone on U. S. soil, including noncitizens, the equal protection of state laws.

The court will not stand in the way of voters doing something stupid, as long as they are told what they are doing, but it won't let them flout the Constitution.

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