THE STATE HOUSE IS abuzz with talk of a plan to overhaul our tax system and our school funding system. The details change daily, and the House leaders backing the plan aren't even sure they will bring it out, but the idea is being discussed enough behind the scenes that it's time to bring it into the light of day and analyze its potential effects on our tax system.

The basic proposal is this: Increase the sales tax to 7 percent and eliminate many sales tax exemptions; in return, eliminate the property taxes that pay for school operations, which constitute nearly half of all property taxes. This would increase education funding by about $400 million.

Even when the details are finalized, the overall plan will be neither entirely good nor entirely bad. The proposal could affect public education both positively (increasing funding and potentially providing equity, for example) and negatively (stripping counties of much of their control over the schools). Beyond that, it would have a dramatic effect on our tax system.

On the positive side, it has the potential to:

• Eliminate the war between senior citizens (and other property owners) and the schools.

• Eliminate the 1995 property tax rollback, and all its problems, which likely will not otherwise occur.

• Eliminate the problem of high car property taxes.

• Eliminate many sales tax exemptions, thus broadening the tax base and doing away with bad policy.

• Give cities and counties more room to raise property taxes to pay for their needs.

• Spur development in poor, rural counties, by reducing their extra-high property taxes.

• Reduce the demand on current residents to subsidize new growth.

• Reduce the tax disparity between large and small, old and new industry, and between industrial and non-industrial businesses, by reducing the need for special tax breaks.

• Move the ratio of state/local funding more toward the national average.

• Reduce the incentive for people to not register -- and insure -- their cars.

• Shift a large part of the tax burden to tourists.

The plan has fewer negatives, but many of them are substantial. It would:

• Make the tax system less able to withstand economic changes. We rely about equally on funding from the sales, property and income taxes. This would change that three-legged stool to one in which sales taxes make up more than half the money from the major taxes and property taxes less than 15 percent.

• Make the tax system more regressive.

• Move the sales tax from 21st to fourth highest in the nation, and raise the sales tax in some localities, for some products, as high as 10 percent.

• Give away the deduction property owners are able to claim on federal income taxes.

Beyond all that, the plan is not comprehensive tax reform, yet it is so massive that it could slam the door on a thorough rebalancing of state and local taxes.

None of these points alone is reason to support the plan; none alone is reason to oppose it. And there are ways to address some problems; for example, the tax code could be made less regressive by eliminating the sales tax on food or making the income tax progressive. What's important is that everyone consider all these points (and others) and make them -- rather than the politics of the moment -- the basis for their decision.