Gunfire and Insults: A State Tax Revolt

'READ my lips - no new taxes," was the cry that catapulted George Bush to the White House in 1988, a continuation of the tax-nixing, budget-snipping style of former President Ronald Reagan.Anyone who doubted the American people have taken that philosophy to heart should have been in Connecticut Oct. 5. Some 40,000 residents of the richest state of the richest country in the world shouted and marched on the state Capitol, protesting a newly-imposed state income tax. Residents of other states had to wonder. They saw citizens spit upon Gov. Lowell P. Weicker Jr., who vetoed three state budgets that did not contain the hated tax. Forty-one of 50 states have a broad-based income tax. Whether they can hold out forever is made more difficult by the policies of the Reagan years that cut back aid to states and made taxes an anathema. In 1980, in constant dollars the federal government sent $105.9 billion back to states and localities. By 1990, the figure was $101.9 billion, according to the Federal Advisory Commission on Intergovernmental Relations. Nationwide, states faced budget deficits amounting to $13 billion this year. Connecticut, mired in a recession and grappling with a budget $965 million in the red, was forced to consider imposing an income tax or raising sales taxes and business taxes, already among the highest in the nation. Gov. Weicker opted to cut other taxes and insisted upon an income tax during a standoff with the legislature that left the state without a budget for 53 days. By the slimmest of margins, the income tax finally passed and a new movement to repeal it was born of voter rage. The lesson is being eyed by other states with their own problems. Florida, which relies heavily upon a 6 percent sales tax for its $29 billion budget, is facing a cash shortage as sales tax receipts fall short of projections. Estimates are that the budget will be $621.7 million in the red. Yet the state is forbidden by its constitution, passed in the 1920s, to have a state income tax. Anticipating the problem, the legislature last year authorized the formation of the Tax and Budget Reform Committee, 25 citizens who will study whether the state should have an income tax. If the panel finds a state income tax is the best alternative for Florida, it can send the matter to the voters to decide in November of 1992. Even if the committee decides an income tax would be a more reliable form of revenue and sent the matter to the voters, the tax would probably face a tough fight. Public opinion polls year after year show a significant majority of people against enactment of a state income tax. Yet such a tax is far more fair than sales taxes, for example, which tax everyone equally, regardless of their ability to pay. And sales taxes are notoriously unreliable. Yet until the latest recession, Florida seemed immune; sales tax receipts dropped for two years in a row, which didn't occur even during the 1982 recession. New Hampshire doesn't have the option of hiking a sales tax when state coffers are empty. The state is one of a very few which have neither a sales tax nor an income tax. Imposing either would cause an uproar, yet at the same time there is increasing difficulty in holding down the state budget in the face of voter demands for more state-provided services. Local property taxes provide most of the money for public education and other services so it is not surprising that the state has among the highest pro perty taxes in the nation. Increasingly, the elderly (for whom the property taxes are the greatest burden), poor towns, and young parents are beginning to voice support for an income tax. But the state's largest and most powerful newspaper, the Manchester Union, remains steadfastly opposed. If states that have no income taxes try to enact one they should be prepared for real voter anger. After many years of being told that taxes are bad, voters believe they do not deserve them. At least that is the message from the "ax and tax" crowd in the Land of Steady Habits. And some opposition has turned ugly. Over the weekend, one legislator who voted for the income tax had gunshots fired at her house; the wife of another pro-income tax lawmaker was run off the road. Other legislators have gotten hundreds of harassing and obscene phone calls. Whether the weekend rally or voter outrage will be enough to repeal the tax still remains to be seen. In 1971, the last time Connecticut passed an income tax, the governor advocated repeal when he saw the extent of voter opposition. That tax was overturned and the state passed bonds to pay for the deficit. In Lowell Weicker, the state has a third-party governor who doesn't budge in the face of opposition as long as he firmly believes in his cause. He sees no way to balance the state books without an inco me tax, and it isn't likely that the chants and insults of 40,000 people will change his mind.