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Decline in Tax Policy Evident in Proposals

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By Lowell L. Kalapa

The sad state of affairs insofar as the tax front is that lawmakers no longer understand what is setting policy and what is meddling and abusing of the tax system.
This is no more evident than in the proposals that are still under consideration in this last quarter of the legislative session. Many of those bills use the tax system as a mechanism to take care of this or that constituent, providing what amounts to a subsidy of state funds. Lawmakers use the tax system as a way to hand out state money without having to go through the appropriation process where they have to fight with other lawmakers over what will be funded. They also see handing out money through the state tax system as “free” money because it is money that hasn’t materialized yet and the loss of those funds is somewhere down the road.
Take for example, the proposal to allow taxpayers who have what is known as “exceptional trees” on their property to take a deduction of up to $3,000 for expenses associated with the maintenance of that tree. The advocating lawmaker argues that this will provide an incentive to people to have the county designate more “exceptional trees” on private property. It should be noted that each county is directed to have a special committee to recommend to their respective county council trees to be designated as exceptional. The standards are set by this county committee and may differ from county to county.
But in any case, those who have their trees designated as “exceptional” have to use the services of a certified arborists in maintaining their trees. This, of course, is not cheap and, therefore, the proposal to allow the deduction of those costs. When suggested that the county provide this subsidy, advocates noted that the counties don’t have any money. A response suggesting that if it is so important to provide this subsidy why not just appropriate the money to the counties elicited blank stares from advocates.
Of course, advocates don’t even give a passing thought to the fact that tax department personnel have no expertise in the maintenance of trees let alone the standards set by these county committees, yet they would be charged with the task of determining whether or not the expenses incurred meet the county standards for maintenance and therefore can be deducted on the state income tax returns.
Then there are all those proposals to allow taxpayers to donate a portion of their tax refund to worthy causes. Two which have survived this far into the session would allow taxpayers to contribute five dollars to fund spouse and child abuse programs, or in the other case, a dollar for beach restoration. They follow the precedent of check-offs adopted for contributions to the minor school repairs program adopted a couple of years ago and the check-off for libraries adopted last year.
Although advocates believe that this will support these worth causes with money that the state would have returned in the form of a tax refund, they do not see that adding “just one more little line” on the state tax return will cost all taxpayers more. Adding a line to the state’s single page return will be a challenge as every bit of space is already taken. Then there is the staff time it will take to check each return for the dollar or five dollars that is being donated to the respective fund and then making sure the right amount is put in the respective fund.
As in the case of the check-off for school repairs which brought in just over a $100,000 in the first year – substantially less than advocates projected – it will probably cost more to administer the check-off than they will raise for the respective cause.
Finally, there is the bill that would give police officers a tax credit for the health care premiums they have to pay for their health care coverage. Apparently the negotiated pay raise police officers received last year was not as much as the rise in the health care premiums. Police officers purchasing coverage for a single person could get nearly $1,000 and $2,400 for family coverage.
Thus, what should have been negotiated at the bargaining table will be paid out as a tax credit as an additional cost for taxpayers. While some may believe that police officers are deserving of the additional compensation as that is what the tax credit represents – that is where this amount should be – in the police officers’ pay raise and not handed out the back door as a tax credit.
As taxpayers can see, lawmakers do not understand tax policy, they see the tax system as merely taking care of another constituent. So much for good tax policy.

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