Friday, January 18, 2013 1:07 PM
Unfortunately, the GOP proposal doesn't address one of the big problems of that state's tax system: it is very dependent on the economic health of the state. We saw this after the '07 collapse, when revenue from income and sales taxes declined enormously, just at a time when needs for revenue were increasing. As a result, we had to borrow billions from the Feds to pay unemployment benefits.
Further, tying revenue to the economic health of the state is something of a one-way ratchet in the size of government: when tax revenues increase, politicians love to spend the extra money expanding the size of government. When they decrease, though, programs are rarely cut altogether; instead, they are just temporarily cut back.
The better option is a tax system where revenue increases with the number of people in the state and with inflation, but doesn't allow the one-way ratchet. For that, you need... a property tax. Since property is reappraised only occasionally, it does not suffer the same ups-and-downs as either an income or sales tax.