Greater Opportunity Through Innovative Change

THOU SHALT NOT COVET

(Sept. 15) Arkansas advocates of raising taxes were dealt a decisive defeat last Tuesday when Alabama voters rejected a proposed $1.2 billion tax increase, the largest in the state’s history. Arkansas advocates want to raise our taxes, and hoped Alabama voters would give them momentum.

Alabama voters defeated the proposed tax by a landslide, 67-to-33 percent margin. Republican Gov. Bob Riley, a majority of state legislators, the Alabama Education Association, newspaper editorial pages and special interests favored the tax hike. Farmers, entrepreneurs and anti-tax groups at the state and national levels opposed the tax hike. The Alabama plan would have raised income, property, cigarette and many other state taxes.

The Birmingham-based Alabama Policy Institute and The Beacon Hill Institute of Boston, MA., concluded the tax increase would reduce jobs and investment. The groups are sister organizations of the Arkansas Policy Foundation in the State Policy Network (SPN), a research group network.

Dr. David G. Tuerck found the Alabama proposal “would cost the state about 24,000 jobs, $331 million in business investment and $2.3 billion in inflation-adjusted disposable income. Eighty-three percent of Alabama families would lose ground economically. Why such high losses? According to our index of competitiveness, Alabama ranks 43rd among the 50 states, ahead of Mississippi but behind Georgia and Florida, both of which avoided broad-based tax hikes this year. A massive tax increase of the kind at issue here would only worsen Alabama's ability to compete for workers and business capital.” (Birmingham News, Aug. 24, 2003) Dr. Tuerck is chairman and economics professor of Suffolk University and also serves as the Beacon Hill Institute’s executive director.

Arkansas ranked 47th in the U.S. in the Beacon Hill Institute’s 2001 “competitiveness index,” ahead of only Louisiana (48th), West Virginia (49th) and Mississippi (50th). “Competitiveness” is defined “as the ability to ensure and sustain a high level of per capita income and its continued growth.” Arkansas ranked 49th in per capita personal income last year (2002).

An essay written by Univ. of Alabama law school professor Susan Pace Hamill led to the failed Alabama plan. She spoke in Little Rock in August.