MEMBERS OF the state's joint tax study committee probably expected a basic, boring backgrounder from a tax policy wonk when they gathered last month for their first real meeting. They did get the basic backgrounder -- which is something any group undertaking the gargantuan task of examining our state and local tax structure desperately needs.

But panel members also got some advice that should be extremely useful in evaluating the intriguing proposal to eliminate school property taxes and replace them with a higher sales tax.

The basic backgrounder was, well, basic: A well-designed tax system should produce an adequate amount of revenue year in and year out; it should be fair, however the state defines that; it should be simple, which is to say it should be cheap and easy for the state to administer and taxpayers to obey; it should be neutral, which means it treats all types of business the same (I would disagree on this point, but that's another column.); and it should be competitive with other states.

The tax policy wonk delivering the basics, William Fox, director of the Center for Business and Economic Research at the University of Tennessee, tailored some of those basics to the current fiscal crisis: The key isn't how you fund government for 2004, but how you fund government over the long term.

Dr. Fox made it clear that he's not the type of economist our state's leaders can dismiss easily. Republican leaders have a tendency to dismiss economists as a bunch of wild-eyed liberals who just want to raise your taxes. In some cases, they are; in others they're not, but it's an easy way to respond to messages that conservatives -- i.e., those who don't like change -- don't like to hear about deep flaws in the way they've always done things.

When Dr. Fox talked about how states avoided raising broad-based taxes during the current recession, he said doing so would have been a bad idea; he also noted that it was a bad idea to lower broad-based taxes during the boom times of the mid-'90s.

He said Tennessee has a "structural deficit" in its tax system because it has to keep raising rates in order to collect the same percent of the state's economic wealth. "That creates all sorts of bad behaviors," he said, such as businesses avoiding the state.

His big message: States should design good tax systems and plan their spending so they don't have to raise and lower tax rates as the economy changes. While it's up to each state to decide the rate of taxation, a well-designed tax system will bring in the same percentage of a state's economy whether the economy is boom or bust. Generally, he said, taxes should cover as much of the economy as possible at as low a rate as possible.

Unfortunately, our state fails on both measures. And that leads to the bottom-line message: "Your taxes have performed worse than the norm across the United States," he said. As the tax rates stay constant, our tax collections, as a percentage of the economy, are dropping -- and they're dropping faster than most states.

The two big culprits are the corporate income tax and the sales tax. (Unfortunately, Dr. Fox did not look at property taxes, the most difficult type of tax to get a handle on.) While there are important policy reasons to address it, the corporate tax brings in so little money that fixing it won't stabilize our budget.

That leaves the sales tax, which is a growing problem all over the country, but whose problems are growing extra fast here. Sales tax revenues are dropping off as shoppers turn from Main Street to the Internet, where sales aren't taxed; as they purchase more new products that tax laws don't cover (digital, downloaded books as opposed to paper books); and as they spend less of their money on goods and more on largely untaxed services.

The solution, Dr. Fox said, is not to raise the sales tax rate. It's to redesign the sales tax base so it keeps up with the economy. That means working with other states on a project designed to persuade the Congress to let states treat Internet, catalog and phone sales the same way they treat Main Street sales. It means culling the list of sales tax exemptions the Legislature has granted. It means applying the sales tax to more services. ("The question is not do we tax services or not; it's a service-by-service question.")

This message is especially important as state officials consider replacing school property taxes with a higher sales tax. The most obvious lesson: This shouldn't even be considered unless officials also do something to stabilize the sales tax base.

The other potential problem grows out of the need to maintain a stable tax system. Dr. Fox suggests thinking of a tax system much as you think of an investment portfolio: You want a combination of high-growth, high-risk (or volatile) and low-growth, low-risk (stable) taxes.

Property tax growth tends to be predictable, if slow, while sales tax growth tracks the economy. Those differences don't mean you can't do without one of the taxes, Dr. Fox said; it just means it's difficult. "If you can create rainy-day funds, you could (build your tax system around) either tax," he said. "But that requires the discipline to do so."

I remain undecided on the tax swap. But unless we get a whole new mindset at the State House, that final criterion alone could rule out this proposal.