September 06, 2006

Arkansas: Consistency, Hutchinson Style

Is there such a thing as an informed tax debate in gubernatorial elections? As we've documented in previous coverage of Florida and Ohio, residents of those states better look elsewhere. Well, Arkansas is about to elect a new governor, too-- and the debate there isn't much fun to watch, either.

At issue is whether the state should be taxing groceries under its general sales tax. Republican gubernatorial candidate Asa Hutchinson is making much of the "inconsistency" allegedly shown by his general election opponent, Mike Beebe, on this issue. It turns out that Beebe has changed his mind not once but twice in the past six years on the food tax issue. According to the Hutchinson narrative, Beebe first supported food tax repeal in 2000, then opposed it in 2002, and now supports it again as a candidate for governor in 2006.

Sounds like an unforgiveable flip-flopper, eh? Well, this simple narrative omits some crucial details that actually make Beebe's alleged waffling seem like a sensible response to changing circumstances. The food repeal measure Beebe supported in 2000 would have made up most of the (large) revenue loss from exempting food by hiking other taxes. If done right, such a plan could achieve tax fairness without sacrificing the important goal of revenue adequacy (that is, being able to pay the bills on time). So it's easy to see how an advocate of cutting the food tax could do what Beebe did in 2000.

When anti-tax advocates tried to push through a ballot initiative two years later to repeal the food tax-- this time with no offsetting tax increase whatsoever--Arkansans across the political spectrum recognized that the state simply couldn't afford such a big tax cut at the time. Most people knew that the legislature was, very soon, going to have to deal with a state court case requiring the legislature to come up with more than $600 million in new tax revenues to adequately fund K-12 education. Once again, Beebe's stance (opposing the tax cut) seems quite sensible for someone who wants to see affordable food tax cuts.

Four years later, the state has been largely successful in meeting the state court's mandate for adequately funding education. And with that fiscal sword no longer hanging over lawmakers' heads, food tax repeal looks a lot more doable. So once again, Beebe's alleged "flip flop"-- he now supports food tax repeal-- looks pretty sensible.

One observer in Arkansas makes this distinction a lot more gracefully than I have here. And some would probably argue that this sort of stump-speech rhetoric is not worth debunking. But it seems to me that anyone describing Beebe as a flip-flopper on the food-tax issue is either being intentionally misleading or is simply too obtuse to evaluate more than one facet of fiscal policy at a time. Tax fairness and tax adequacy are two entirely different things-- and Beebe's record on this issue reflects a clear interest in both of them.


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