Step carefully in creating broader tax bad
Published January 15, 2016
Editorial by Fayetteville Observer, January 14, 2016.
The Tax Foundation, a conservative group that pushes tax reform, came to Raleigh on Tuesday to congratulate state lawmakers on a job well done - and to ask for more of the same.
Foundation leaders had lavish praise for North Carolina reforms that dramatically cut personal and corporate income taxes and moved at least some of that burden to broader sales and use taxes. The foundation ranks states for their tax policies and said North Carolina moved from 44th in 2013 to 16th last year - the biggest change the foundation has seen in its 12 years of rating state tax plans.
But North Carolina still ranks 33rd in sales taxes, despite the state's move into taxing services as well as retail and food purchases. The foundation's solution is simple - tax even more services.
Legislators didn't invite any opposing viewpoints. It's clear that the architects of state tax policy want to more aggressively cut corporate and personal income taxes.
If the lawmakers had invited tax experts with differing views, they might have considered the impact that a shift to broader sales taxes has on the poor, who spend a larger percentage of their incomes on basic goods and services. It's the same problem that plagues proposals for a "flat tax." Wealthier people who don't need all of their income for living expenses pay a far smaller share of their earnings in taxes. The shift away from income taxes and toward consumption taxes is one of the driving forces behind the growing gap between rich and poor in the U.S.
While we agree that some shift of sales taxes to services was unavoidable in an increasingly service-based economy, we hope state tax code writers move with caution there, lest they create even broader gulfs between the haves and the have-nots.
January 15, 2016 at 10:17 am
bruce stanley says:
Since 2013 NC tax reform, the job participation rate is up, GDP is up, and wages are up. I'f i"m poor, which would I rather have, a job, higher wage (of which I get to keep more), more opportunity in a better economy, or........not having to pay sales tax on movies, etc.
