Clarion-Ledger political columnist Bill Minor says it's 50–50 that Trent Lott will run for governor of Mississippi in 2003.
Bill Hobbs is kind enough to pass along this Fisking of the Nashville Tennessean's lead editorial. Choice quote:
A stab at honesty: “tax reform” = “income tax” in Tennessee media and government language. California’s total 2002 revenues from taxes and licenses were $12.9 billion lower than their revenues for 2001. Personal income tax collections were $11.5 billion lower and corporate income tax collections were $1.4 billion lower, accounting for every bit of the total revenue reduction. Sales tax and other collections were up slightly, offset by those that were down. But the income tax is California’s primary revenue source, accounting for 67% in 2001 and 61% in 2002. Tennessee can equal California’s “performance” with the healthy dose of stupidity required to implement “tax reform”.
Well, in fairness, in Tennessee “tax reform” also means “divert gas tax money to the general fund.” TDOT may not be a paragon of government efficiency, but I don't think there's anyone outside the Sierra Club who thinks Tennessee spends too much on highway construction and maintenance. You can argue with the allocation of those resources — Mississippi has done far better in a similar time frame with less money to build an efficient four-lane network.
More to the point, though, Tennessee's taxpayers don't trust the state government to spend their money wisely or run their affairs properly. The mismanagement of TennCare, blatant legislative gerrymandering in urban areas, and the rank ineffectiveness of the Republican caucus hardly inspire confidence among the electorate.
She mainly discusses the relative merits of changing the tax treatment of dividends, corporate tax reform, and a payroll tax cut. On the latter, she writes:
Reducing the payroll tax would give every worker an immediate tax break and encourage companies to hire (or retain) employees. It's a winning idea whether you're looking for a Keynesian jolt to consumer spending or a supply-side boost to hiring. And it would particularly benefit low-income workers, who pay little or nothing in federal income taxes but still owe payroll taxes.
However, she notes a low-end payroll tax cut — exempting the first $10,000 of income, for example — could have perverse policy implications, by making it more cost effective for employers to hire two workers on a part-time basis than one full-time worker. A cut in the payroll tax rate, as opposed to an exemption, might therefore be economically preferable.
Of course, cutting the payroll tax has other problems associated with it — either future benefits will have to be cut accordingly, or general taxes will have to be diverted to subsidize social security and Medicare; neither option would be very palatable. A solution some have suggested — taxing high-income workers on their full incomes without a corresponding benefit increase — has some appeal to income redistributors but may not be popular with the electorate (and a tax increase is a tax increase, at least in a 15-second sound bite).
One plausible option (speaking as a “policy wonk” rather than a libertarian) is to have a rate cut in the payroll tax, coupled with a new tax in two years (bringing the total rate back to the old rate) tied to privatized accounts. The holiday would serve a useful short-term goal, while the new financing arrangement would kickstart a move toward privatization of social security.