Tax reform proposals need a sales-tax rate cut, too

The bad news about the state tax reforms proposed last week is they didn’t do enough to keep tax reforms from becoming tax hikes. The good news is there’s an obvious remedy.

But first, a primer on what the Special Council on Tax Reform and Fairness for Georgians recommended.

The headlines are: lowering individual and corporate income taxes by 2 percentage points to 4 percent and eliminating some exemptions; dropping certain exemptions to the state sales tax, most notably the one for household groceries; and adding the sales tax to certain services and online purchases.

The goal was to be “revenue neutral.” But the council’s own estimates show the measures, taken together, would increase tax revenues by at least $1.1 billion, or about 7.5 percent more than their current, recession-deflated levels. Using higher estimates in the council’s report, the rise could be as large as $1.4 billion, or almost 10 percent. (Revenue estimates are not provided for some proposals, so these numbers may rise or fall somewhat — though probably not dramatically.)

You don’t get from “revenue neutral” to a billion-dollar tax hike without raising a lot of people’s taxes.

Most businesses’ taxes would go down, in a way that simplifies the tax code and removes the majority of tax breaks tailored to specific industries or even companies. This part of the package should help the economy while maintaining equity for companies, whether they pay income tax at corporate or individual rates.

But for most Georgians, income taxes would fall only slightly — about $50 per year across much of the middle class, according to illustrative tax tables in the council’s report. Upper-income individuals and families fare better, realizing the full 2-point drop in tax rates at different income levels, depending on the type of filer. But few Georgians, regardless of income, are likely see a net reduction in what they pay to the state, once they account for additional sales taxes.

It gets worse: One of the recommendations is to broaden the income-tax base by changing the way the state calculates taxable income. While it’s hard to tell exactly how Georgians’ adjusted gross income would change, a rise of as little as $1,000 could more than negate the effects of the lower rates.

That’s the bad news. Now, here’s that obvious solution: Lower sales-tax rates.

The best reason to broaden the tax base is to lower rates. Citizens may end up paying about the same amount of total taxes, but the result should be more efficiency and stability, and fewer distortions.

In this case, the income-tax base has been broadened and the rates lowered — but the sales-tax base has only been broadened. The result is a sales-tax hike of anywhere from $1.3 billion to $1.6 billion a year, according to the estimates in the council’s report.

I’ve done some rough math based on state sales-tax receipts in past years, and I think the council’s package could be made truly revenue-neutral by lowering the sales-tax rate from 4 percent to 3.5 percent or even 3.25 percent.

I took the mid-point of the council’s variable revenue estimates, then calculated an average of sales-tax receipts in the years leading up to the recession. My very rough estimate is that combining the council’s package with a sales-tax rate reduction to 3.5 percent would yield a net tax hike of about $375 million. Or go further: A reduction to 3.25 percent would actually cut taxes by some $80 million.

Which combination would be more “revenue neutral” depends on how revenues would change. Remember, not all the income effects of these state tax reforms were estimated in the council’s report.

But I know this: A range of minus-$80 million to plus-$375 million is in the ballpark. A tax hike of $1.1 billion is not.

62 comments Add your comment

CJ

January 12th, 2011
7:46 pm

Kyle: Most businesses’ taxes would go down, in a way that simplifies the tax code and removes the majority of tax breaks tailored to specific industries or even companies. This part of the package should help the economy…

I’m not sure if I like Kyle’s alternative much better. Ideally, people would not be paying taxes on goods and services that are necessary for basics such as food, shelter, transportation, and housing. The Council’s proposal and Kyle’s alternative would increase taxes on spending in these categories. And again, shifting from income/corporate taxes to sales taxes is a shift from progressive taxes to regressive taxes, adding yet another obstacle to climbing out of poverty or staying in the middle class.

In addition, I’m not clear on how this part of the package “should help the economy.” Even the Council acknowledges that businesses thinking about moving into a state are less motivated by tax rates than other factors such as education and transportation. By reducing corporate taxes at a time when revenues are low, Georgia inevitably must reduce or limit spending in these two areas. Our continuing water woes can’t be helping the cause either.

Incidentally–

January 12, 2011 – “A Palm Springs, Calif., man has been arrested for leaving phone messages threatening to kill U.S. Rep. Jim McDermott, the Seattle Democrat….In the first call, Habermann said he’d seen McDermott on television and was enraged by his comments opposing tax cuts for the rich…’He’s a piece of human filth. He’s a liar, he’s a communist, he’s a piece of [expletive] garbage,..Habermann said George Washington, Thomas Jefferson and other U.S. founding fathers would ‘blow his [McDermott's] brains out’ if they met him.’ Habermann said in the recorded message, according to the criminal complaint.”

http://seattletimes.nwsource.com/html/localnews/2013915035_mcdermott13m.html

Political Mongrel

January 12th, 2011
8:19 pm

Deliberately choosing to remain revenue-neutral when you have terrible shortfalls that are causing enormous problems all over the state is just not very smart. And when you talk cutting programs to reduce spending, the inevitable consequence is increase in unemployment. And please, don’t give us the baloney about leaving employment to the private sector; they’ve not been the solution before or during the current economic disaster, and they’re not likely to any time soon.

Eric

January 12th, 2011
8:25 pm

If grocery and other services are going to be taxed higher, you can bet I won’t be voting for these crooks again. So much for gaining the trust of the people. Why can’t gov. just leave well enough alone?

Claude

January 12th, 2011
8:33 pm

Cutting the sales tax now would also improve the prospects for the 2012 vote on funding new transportation projects.

Kyle Wingfield

January 12th, 2011
8:46 pm

@CJ: The council did say that corporate tax rates are not the largest factor when businesses decide where to locate. However, it also said, among other things:
– “Testimony given at Council meetings indicates that cutting personal income tax rates would be the most advantageous change Georgia could make to attract high-technology companies and jobs.”
– and that “As [S-corporations, partnerships and LLCs, which are taxed at individual income-tax rates] continue to grow in Georgia, the personal income tax code should be kept at parity with the income tax structure for C-corporations.”

They are, after all, trying to take unnecessary variation out of the tax code.

The bigger tax impacts on the economy, from a business perspective, will be the elimination of taxes on energy used in manufacturing and agriculture, taxes that none of our neighbors have and which make our companies less competitive.

Kyle Wingfield

January 12th, 2011
8:47 pm

@Claude: It certainly couldn’t hurt.

Karl Marx

January 12th, 2011
9:52 pm

Funding new transportation project. NO. Not until the GDOT has been gutted and reorganized. They have wasted the most money and built nothing for it. All this will be is another big tax hike on the middle class while leaving big business with their tax breaks. If they really want to fix this then adopt the Fair Tax on a local and state level. Until then NO to this proposal and NO to incumbents.

khc

January 12th, 2011
10:19 pm

reduce the long held 6% income tax is going to draw high tech companies and jobs…..testimony but like to see studies…..could understand lower corporate rates but this has got to be a stretch….which economist stated this (and were they independent)

61% of ga income tax payers pay at 6%

Michael H. Smith

January 12th, 2011
10:46 pm

There are times when you should be elected Governor by unambitious consent, Kyle. This happens to be one of those times. Your solutions would be good for “Mom and Pop” business and small business provides the most jobs to the must people, common people.

Then again, the coincidental benefit of watching CJ gagging to death, that a Governor Wingfield would bring, along with some very good solutions to our problems, I’ll shamelessly admit does have a strange delightful appeal.

Michael H. Smith

January 12th, 2011
10:49 pm

Correction: unambitious consent should have been “unanimous consent”

CJ

January 12th, 2011
11:33 pm

Michael H. Smith: “Then again, the coincidental benefit of watching CJ gagging to death,…I’ll shamelessly admit does have a strange delightful appeal.

Really?

You guys deny you violent imagery or the impact of it on the one hand while continually reinforcing it on the other. You can’t seem to help yourselves.

The part about being shameless, by the way, goes without saying.

Dabir Dalton

January 12th, 2011
11:39 pm

The very first place for Georgia legislator’s to cut away needless fat out of the state budget before they even consider tax hikes on the rest of us is their very own salaries. As far as I’m concerned Kyle the only way for the Republican party to regain it’s moral credibility is for Nathan Deal and the band of thieves that inhabit the gold dome to first set the example they want the rest of us to follow. Unfortunately though all we are going to hear coming from the gold dome is the deafening chorus of OINK! OINK! as the Republicans gorge themselves at the public trough.

Michael H. Smith

January 13th, 2011
12:06 am

Really?

You guys deny you violent imagery or the impact of it on the one hand while continually reinforcing it on the other. You can’t seem to help yourselves.

The part about being shameless, by the way, goes without saying.

Yeah, really.

How can anyone but you be responsible for your self-inflected injuries that result from your hatred of anything or anyone that disagrees with you and your ideology, CJ?

Michael H. Smith

January 13th, 2011
12:16 am

Now CJ, tell me how wrong I’m for thinking that a Governor Wingfield would darn near send you into a state of convulsion?

Of course Kyle and I would have caused it… me for suggesting and Kyle for actually winning.

How dare we! LOL

Michael H. Smith

January 13th, 2011
7:10 am

and that “As [S-corporations, partnerships and LLCs, which are taxed at individual income-tax rates] continue to grow in Georgia, the personal income tax code should be kept at parity with the income tax structure for C-corporations.”

Kyle Wingfield

“The majority of the new jobs in Georgia will come from small businesses — LLCs and small businesses that will not qualify for the corporate tax breaks. We will not be

distracted by publicity stunts that do nothing to create new jobs.”

– House Minority Leader Stacey Abrams, D-Atlanta

~

S-corporations, partnerships and LLCs, who are these people, Kyle?

Mostly “Mom and Pop”?

Are “Mom and Pop” the “Eeeeeeeeeeeeevil RICH!”?

These S-corporations, partnerships and LLCs, which are taxed at individual income-tax rates are made up of many “Mom and Pop” businesses that are often referred to as being in the top percentile of income, are they not Kyle?

Good to know at least one Democrat understands the meaning behind not killing the goose that lays the golden eggs and is unwilling to join the tax hungry mob on the left that demonizes “Mom and Pop” as the “Eeeeeeeeeeevil RICH!”. Truth is “Mom and Pop” look rich on paper but they struggle many times just to pay their bills. All the while they are the ones who create the most jobs.

The tax burden on these S-corporations, partnerships and LLCs should be adjusted downward immediately.

JD

January 13th, 2011
8:14 am

So, which agency closes doors first? Higher Ed — per pupil spending is lower than any since 1992 — and heading to zero

carlosgvv

January 13th, 2011
8:15 am

Corporate taxes will go down and the people’s taxes will go up. That is the Republican way and no amount of fancy language will hide it.

Do the Math

January 13th, 2011
8:17 am

Implement Flat Tax, it’s only fair.

Liberal Pariah

January 13th, 2011
8:55 am

CJ…concerning your example of the guy who threatened the Congressman in California. Does the Liberal faction bear any responsibility for repeating ad nauseum the lie about ‘tax breaks for the rich’ that upset the guy in the first place? Or is it only Conservative rhetoric that fans the flames?

jconservative

January 13th, 2011
9:25 am

The problem is that Georgia is spending more money than it is bringing into the cash box. Correct?

So all we are talking about is raising taxes to have more money to spend.

I am waiting for someone, anyone, to start talking about reducing spending.

We just had a national election that clearly showed the American people are fed up with the constant increases in spending. The American people want spending cuts!

Yet we sit in Georgia and the discussion centers on taxes.

Again, when will the debate center on cutting spending?

Never?

gary

January 13th, 2011
9:27 am

Just due the math

$100,000 taxable at 2% lower rate = $2000 savings

$50,000 taxable at 2% lower rate = $1000 savings

family of four of 4% food tax for either family at $10,000 per year in food costs at 4% tax = $400

Duh………….kinda looks like a flat tax with all those big savings for the middle of the road folks …….please. no wonder GA is 48 in ed

TRUTH

January 13th, 2011
9:35 am

Kyle, thanks for your input on this. It may work if those dolts at the “dome” were reading your column. And I’m a Democrat!! But, again, Alan Weiner of NY stated it clearly a few months ago, “The Republican Party is a wholly owned subsidiary of Big Business.” Period, point blank. The rich get bigger tax breaks than the little guy. (Wonder where we’ve heard that before?). Big Business gets a tax break of 2% while the rest of the working class gets to keep their current tax levels with a distinct possibility of a “rate hike” (translated: Tax Increase).

Yep, although you folks WON’T admit it, RE-THUGGERY in this state is a live and well. I, for one, am SOOOOOO HAPPY that I fly away from here permanently to a state that is nowhere near the backwards approach of Georgia. Its a shame to have to say that, but the ideals and direction of this state since Perdue was elected apparently will continue under the newly sworn in administration of Deal. Good luck to those Progressives that continue to hold out hope for better, but the writing is clearly on the wall (in bold print with the largest font possible!).

Republicans represent the rich. Even if you’re working hard to acheive financial success, this approach to taxation will see that your dreams, your basic right as a American and citizen of this State, will NEVER come to fruition.

Oh, and I agree with CJ, the rhetorical tone of MOST things spat out of neo cons, tea partiers, et al., mouths are violent and incendiary. Further, I think the most incredible aspect with that is the indifference and faux astonishment of the Right when presented with the argument that maybe, just maybe those words encouraged or incited the violence. (Like kids deflecting blame). Let’s return to civility, people before something far worse occurs. That applies to both sides.

Jenzen

January 13th, 2011
9:43 am

It appears, after reading the blogs of those liberals who have bothered to reply to your column, Kyle, that they have perfected the art of tap-dancing around issues of taxing – whom and how much. Many “Progressives” (an oxymoron if ever there was one) favor raising taxes as a way to equalize the burdens of all Georgians and again give special attention to the needs of the poor, oppressed, unfortunate, etc., etc., ad infinitum. Of course, the liberal class (who favor social programs and government intervention into our lives in every way) favors increasing taxes. My question, therefore, is: To whom do we look to pay additional taxes, e.g., income taxes? My guess is those who favor raising taxes – corporate, personal, etc. are those that the IRS has identified as “non-payers”, or about 47% of all Americans. Obviously that leaves some 53% of us who DO pay taxes (and lots of them, by the way) to pick up the additional tax burden. Will the “Progressives” (ugh!) be so kind as to tell us who will have to pay increased income taxes and who will determine that class of tax-payers? I’d wager that if you polled the “poor” about who should pay more taxes they would give you a resounding “the rich!”
Hmmm. If I paid little or no taxes (for whatever reason) and depended on the government to take control of most facets of my life I may agree. But, fortunately, I chose to get an education (self-paid), work hard for 40 years, save my money and retire to the well-deserved golden years as they say.
One more thing: Not to pat myself on the back but I believe in charititable giving and have averaged giving over 20% – of my net income- per year for many, many years to charitable organizations.
Please spare me the whining about taxing the rich and oppression of the poor and disadvantaged (whatever that means). Get a life.

Rafe Hollister

January 13th, 2011
10:08 am

It seems to me that the states that have no income tax are doing the best, during this economic depression. Georgia should work to get to this point, but now is not the time to lower taxes. We should be cutting every program to the bone and reexamining the need for each and every service. Many of the programs administered by the State should be privitized or contracted out to private concerns.

Taxes should stay where they are until we have retired this budget deficient.

We do not, under any circumstances want to be like the Federal Gov and just continue to spend and load ourselves with debt, that will be passed on and forever hold the state down. Once we have the budget under control, move to a consumption tax and drop the income tax and property tax to encourage industries to move in and create jobs.

Intown

January 13th, 2011
10:27 am

I’m tired of Georgia trying to balance the budget through sales tax hikes. The sales tax is already too high. A regressive tax is not what residents of a state like Georgia which is relatively poorer than most other states really needs. It’s time to stop running scared from state income taxes and start thinking again.

This state has also historically played the race to the bottom in order to lure industries and businesses with giant tax breaks and other goodies. I would be wary about haphazardly messing with corporate tax rates. It may result in losing jobs and tax revenue.

khc

January 13th, 2011
10:30 am

CJ

January 13th, 2011
10:49 am

Kyle: “The bigger tax impacts on the economy, from a business perspective, will be the elimination of taxes on energy used in manufacturing and agriculture, taxes that none of our neighbors have and which make our companies less competitive.

Rafe writes, “It seems to me that the states that have no income tax are doing the best, during this economic depression.”

How are our low tax competitors doing? Well, poll after poll shows that the most important issue to most Americans are jobs. By that measure, we and our nearby competitors aren’t doing so well. According to November 2010 figures, Florida (no income tax?) had the fourth highest unemployment rate in the nation at 12 percent. South Carolina had the sixth highest at 10.6 percent. Georgia, Tennessee, and Mississippi are also in the top third of states with the highest unemployment rates.

Texas, a state that prides itself on low tax rates and and a state in which the right has held up a a model for governing, is below the median at 8.2 percent. Kudos to them. But will it last? They woke up one morning after the recent election to discover that they have a budget deficit that is comparable to that of California’s and New York’s.

And remember how Ireland was a darling of the right with their low corporate tax rates? Now they’ve enjoyed several years of unsustainable deficits that austerity has only exacerbated.

The tax cutting argument, it seems, has less to do with evidence and more to do with ideology.

JF McNamara

January 13th, 2011
11:16 am

LOL…at all the Republicans who bought into the hype of lower taxes during the election cycle. The simple, cold reality is that we need more revenue, and the only way to get it is through raising taxes. If not on business or the wealthy, then on you. This is just a way to try to hide the additional taxes through “simplification”. If you make it complex enough, the uninformed will never catch on.

Not only does this proposal cut taxes on the generally well off, it puts a lot more burden on the poor. Household groceries are the largest expense of the poor and they pay little in income tax, so you are essentially establishing a tax on them. Most of the poor already have jobs, so how in the world are they supposed to absorb this tax? Is there an exemption for that?

In addition, as a middle class citizen, I’ll get the 2% cut, but the other little tax increases have to outweigh the lower taxes. If not, how else do you get the additional revenue? Unless it is the myth of the spurred economy from tax cuts, it means that my comprehensive tax package has to be higher to offset the tax breaks on businesses and my own 2% reduction.

Instead of all of this complexity, why not just raise taxes in a simple fashion to balance the budget? Go from 6% to 6.5% on everyone or something like that.

In any event, what’s the reason for making “revenue neutral” adjustments except for rewarding those who financed his campaign? Lower tax on the rich and businesses, and raise them on the poor. Apparently, being one of the most business friendly states already isn’t enough. Who are we competing against for businesses that we need to lower the business tax rates? Companies are already migrating here in droves.

This is classic robbing the poor to pay the rich for no other reason than they can.

Kyle Wingfield

January 13th, 2011
11:38 am

@jconservative: You’re right, the bigger topic is spending. As a number of other readers seem to have forgotten, before the recession our revenues were growing quickly — and so was our spending, faster than inflation and population growth. That increased spending is one of the reasons the budget ax has had so far to fall.

That said, I think rationalizing the tax code — making it simpler and flatter — is a worthwhile exercise…as long as the result is a revenue-neutral one.

Jefferson

January 13th, 2011
11:39 am

There again, giving breaks to those who don’t need them. When are you red heads going to vote for your best interest or do you think you will be rich one day ?

Kyle Wingfield

January 13th, 2011
11:41 am

@gary: Your math is oversimplified. As I mentioned in the column, the proposal includes removing some income-tax exemptions, so it’s likely that your taxable income will be higher than it was before, even at the same wages. That eats away at the savings. And, as I also mentioned, groceries aren’t alone in being added to the sales-tax list…meaning the balance shifts even more.

killerj

January 13th, 2011
11:52 am

Haven,t figured it out yet Kyle?to make up for the biggest rip off in American history “you who have survived the scam” will make up the difference by our illustrious politicians clearing the books,also you can bet that millions of Americans will not play by Uncle Sam,s rules anymore,they are not to be trusted with our future.Go Tea Party.

Outside the Perimeter

January 13th, 2011
12:34 pm

PLEASE! Someone tell me (particularly you “Progressives?”) if taxes are to be raised, WHO is to take the brunt of this? The 50+ percent of those who pay taxes or the “others” (i.e., non-paying parasites)? If I am “rich” (and, while you’re at it, define rich), do I pay more taxes? Who determines this and who says how much I should pay? If I don’t pay taxes (and over 45% do not), do I get a pass? Then the “rich” can provide me with the services I want (maybe not need, but want). I will be happy: Gummint gives me and the dastardly rich pay for it.
I’m still waiting on the definition of who is “rich” and how is this determined, mathmatically or otherwise.

khc

January 13th, 2011
12:57 pm

if i readd it rite, lose deductions for mortgage interest, property and ad valorem…..housing market already suffering…..while testimony was given it was by folks from the right what else are they going to tell their buddies…..

seems regressive and will hit middle class if they itemize now

CJ

January 13th, 2011
12:58 pm

As [S-corporations, partnerships and LLCs, which are taxed at individual income-tax rates] continue to grow in Georgia, the personal income tax code should be kept at parity with the income tax structure for C-corporations.

Not necessarily.

C-corps have specific advantages and benefits over other forms of organization, including some advantages over S-corps. Some of the major advantages include limited liability, transferability of interest (i.e., rules under which shares of stock can be exchanged), the ability to raise large amounts capital from a larger number of sources (including corporate sources).

If people who form C-corps don’t want the obligations of a C-corp, then they should operate under a different legal form (as many seek to do). But in this case, the Council advocates for the benefits of incorporation while seeking to remove the obligations of incorporation.

In fact, the personal income tax code should not be kept at parity with the income tax structure for C-corporations.

khc

January 13th, 2011
1:09 pm

otp read the GA portion of this report…it suggests that low income classes pay more iin all taxes (not just income) as % of their income, not absolute $$$……while they don’t pay income taxes like upper classes they pay more% for sales tax…..

http://www.itepnet.org/whopays3.pdf

i guess fairness in eye of beholder…..council quotes testimoy but i have not seen any studies that suggest job are created by their recommendations….maybe kyle can point us to them

Hillbilly Deluxe

January 13th, 2011
1:12 pm

But for most Georgians, income taxes would fall only slightly — about $50 per year across much of the middle class,

If you buy more than $1250 ($24.04 a week) worth of groceries a year, you’ll lose that $50.

get out much?

January 13th, 2011
1:27 pm

It is interesting how no matter how loud people cry for “less government” they cry even louder when service cuts (which is what less government means) are mentioned. Kyle, tax cuts are easy, everyone wants to pay less taxes. When are you going to tackle the tough stuff, service cuts. Oh and if you are going to attack pensions, you may want to take a look at some of the sweetheart deals the government officials cut for themselves, rather than going after the rank and file. Then again, it is easy to attack the rank and file since they might (gasp !) belong to a “union”.

Jefferson

January 13th, 2011
1:48 pm

Just another way for the man to keep a working man down. GA income tax should become more progressive, rather than flat. Add upper tiers for those with high incomes. Make these corps that use up our roads, water and energy supplies pay for some of the bill instead of lining the pockets of the few. State gov’t for the most part was much better before the “red” takeover. Just ask the oldtimers…

Hillbilly Deluxe

January 13th, 2011
1:55 pm

State gov’t for the most part was much better before the “red” takeover. Just ask the oldtimers…

I haven’t noticed a bit of difference. When the Democrats were in control, they were in it to help themselves and their buddies. Now that the Republicans are in control, they are in it to help themselves and their buddies.

And I’m an “oldtimer”.

Do the Math

January 13th, 2011
2:23 pm

For Gary: from Wiki A flat tax (short for flat rate tax) is a tax system with a constant tax rate.[1] A flat tax may also be called a tax in rem (”against the thing”), such as an excise tax on gasoline of three cents per gallon. Usually the term flat tax refers to household income (and sometimes corporate profits) being taxed at one marginal rate, in contrast with progressive or regressive taxes that vary according to parameters such as income or usage levels. Flat taxes offer simplicity in the tax code, which has been reported to increase compliance and decrease administration costs.

For the others: After you shoveled your driveway did you shovel the public road or complain that your government should have?

JF McNamara

January 13th, 2011
2:28 pm

Kyle said,

“That said, I think rationalizing the tax code — making it simpler and flatter — is a worthwhile exercise…as long as the result is a revenue-neutral one.”

This is how I interpreted your statement:
1. “I don’t care if they raise my taxes as long as the states revenue remains neutral.”
2. “I don’t mind offsetting tax breaks for businesses as long as the states revenue remains neutral.

Is this what you really mean? Really? Tell me that in “revenue neutral”, you were talking about each person’s individual contribution being neutral. If not, you’re basically endorsing higher taxation on yourself. I can’t get with that.

Kyle Wingfield

January 13th, 2011
3:35 pm

JF: Generally speaking, yes, I mean each person’s contribution should be neutral — e.g., your income taxes go down but your sales taxes go up by roughly the same amount.

That’s not an absolute. It may be true that simplifying and flattening income taxes, for instance, includes getting rid of certain tax breaks. When you do that, even if you lower rates — which, as I wrote in the OP, is the best reason to broaden the base — there may well be some people whose net taxes go up.

Jefferson

January 13th, 2011
4:00 pm

Why not get the income instead of hoping for the sales ?

Jefferson

January 13th, 2011
4:01 pm

Corp Income included.

DannyX

January 13th, 2011
4:19 pm

“there may well be some people whose net taxes go up.”

There will in fact be a lot of people whose taxes go up.

Republicans are breaking their pledge to not raise taxes, not matter who hard you try to spin it.

Michael H. Smith

January 13th, 2011
4:21 pm

your income taxes go down but your sales taxes go up by roughly the same amount.

Unless your consumption goes up or down then the difference could be more or less. The possible bad part about a consumption tax is it could cause less consumption, which could mean a negative impact on business and job creation. Anyhow, simplifying and flattening the taxes will be a positive in the long term, even better if taxes where made less progressive.

Government spending of course remains the first obstacle to doing significant tax reform.

Intown

January 13th, 2011
4:23 pm

I still do not understand conservatives’ fascination with the fundamental concept of making taxes flatter and shifting from income to consumption. To me it just seems fundamentally unfair and tailored to punishing the poor and rewarding the very rich. Making the income tax simpler, however, is always appealing. But, to simplify, you’ve got to unwind a whole lotta public policy decisions.

Kyle Wingfield

January 13th, 2011
4:29 pm

@DannyX: Try reading the original column before jumping in and accusing me of spin.

khc

January 13th, 2011
4:32 pm

This may help

The modern conservative is engaged in one of man’s oldest exercises in moral philosophy; that is, the search for a superior moral justification for selfishness.
John Kenneth Galbraith