Proposition 126 is a scheme by special interests masquerading as taxpayer protection. It deserves a “no” vote in November.
Prop. 126 would amend Arizona’s constitution to bar state lawmakers from imposing a sales tax on services, for example those provided by lawyers, real estate agents and accountants, but also beauticians, dry cleaners and auto mechanics.
Normally, we’d be first in line to support a tax-limitation effort; but not in this case. Arizona should be working toward a fairer, flatter tax system that treats all businesses the same. Prop. 126 would do the opposite by writing unfair and discriminatory tax treatment into the Arizona Constitution.
Our state constitution should be about equal rights and fairness, not picking economic winners and losers.
Prop. 126 supporters propagate the false claim that shielding the services sector from sales taxes also shields consumers from a heavier tax burden. It doesn’t. It merely creates a privilege that shifts the burden away from their customers onto others.
This is simply bad tax policy — it would lock in high rates on a specific set of goods rather than applying low, competitive rates across a broader array of purchases.
And keep in mind that this would be a constitutional exemption from taxes on services. If Arizona ever wanted to address this imbalance by lowering the sales tax on goods and imposing an identical one on services so that all consumers were treated the same, Prop. 126 would make that all but impossible.
The economy is always evolving. Prop. 126 would prevent Arizona from changing its tax laws to adjust to our changing economy or to changing economic conditions. States need flexibility in setting fiscal policy, not restrictions imposed by special interests looking out for themselves.
Don’t get us wrong — we don’t like taxes.
But if we are going to have a sales tax, we should make sure it is equally applied and have a serious conversation about what, if anything, we should exempt. Proactively exempting an entire sector of our economy isn’t just a bad idea, it’s unjust.
And the reality is that excluding one source of tax revenue simply means all other sources are vulnerable to increases.
Politicians are always looking to raise our taxes because, well, that’s what politicians do. By constitutionally exempting the services sector from sales taxes, Prop. 126 means that if lawmakers ever decide to increase taxes, they will look to property and income taxes.
But most important, Prop. 126 would effectively kill chances at broad tax reform that lowers rates across the board.
When the sinister voice comes on your television warning of the calamity that will befall us if we don’t approve Prop.126, remember that “The Protect Arizona Taxpayers Act” will not protect Arizona taxpayers or make the state more competitive — it’s just another special-interest giveaway that we’ll regret down the road.
Come November, voters should see past the deceptive sales pitches. Those who truly want to protect taxpayers will vote “no” on Prop. 126.