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Jan 21, 2013

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Hartzman

If they shift to a higher sales tax and eliminate income tax...

If the sales tax becomes 10%,
someone making $20,000 who spends all of it
would cost them $2,000 per year, or 10% of their income.

Someone making $150,000 and spends half = $75,000

10% of $75,000 = $7,500 = 5% of income.
.
.
Low income guy pays more as a % of income.

How is who saying this is a good idea?

Are some who choose not to say payroll taxes are federal income taxes suggesting this is a good idea?

Could the sales tax scheme bring more high paying jobs in?

If so, is it worth making our poorest citizens pay the majority of the bill?


Spag

Tell that to all of the political suicide victims in Texas and Florida.

Not unexpected, your narrative is rooted in a falsehood.

Hartzman

The falsehood being?

Account Deleted

Only two of the states on the list of those with no income tax are comparable to NC and those are Texas and Florida. Comparing NC to sparsely populated plains states is a non-starter.

Texas has the highest property taxes in the country in addition to getting about 35 percent of its state revenue from the federal government.

I wonder what aspects of the Florida economy allow it to rely on sales and hotel tax. Do people travel there much?

Ed Cone

I think Sam is saying my assumption about the political consequences of plan implementation is incorrect, based on results to date in other states, and that my incorrect assumption is a "falsehood." He may end up correct that my assumption will not pan out, but it seems a bit early to write it off, or to do so based on two very different political cultures.

Account Deleted

What I find ludicrous is that conservatives in NC have been fighting off local sales tax referendums for several years and resisting the increased tax on homes sales. They argued last year that a incremental sales tax increase would cripple the state economy.

Some 40 percent or more of the state's population pays little to no income tax because their income is so low but now they want to quadruple the tax on basic foodstuffs and tax poor people's rent and old people's medical bills.

I'm sure its more equitable.

Andrew Brod

It's not fair unless the poor are squeezed.

polifrog

Jeff

What I find ludicrous is that conservatives in NC have been fighting off local sales tax referendums for several years and resisting the increased tax on homes sales. They argued last year that a incremental sales tax increase would cripple the state economy.

Do you think the shift might have something to do with eliminating the state income taxes on individuals as well as the crippling effects of corporate income taxes that are passed to all consumers including the poor?

I believe there is more to this than your myopic focus on an increase in sales taxes alone.

Hartzman

The shift is going to come from having to pay the federal government back about $3 billion in unemployment benefits borrowed since 2008/9.

The R's in Raleigh have some big bills to pay off that the D's and some R's left for the new government.

If they don't want to say they raised taxes, restructuring the tax code to raise taxes in disguise may look like a good way to go for them.

I suppose the Fed can just email some funny money to pay the debt back, but that would increase scrutiny of the whole debt monetization plan at the federal level, and every other state would want the same.

That would most likely lead to $5 gas faster than than the speed it is already going.

I believe we are going to see some news about how bad the state budget is from the R's that was inherited from the D's.

How ironic.

polifrog

That's interesting, Hartzman. I had forgotten the debts inherited as a result of previous overspending.

One wonders how much stronger our state's position might be today had some not fought to protect that which we could not afford earlier due to the supposed detrimental effects of spending cuts in an economic down turn.

But, hey, when if one limits their expectations to crap, crap is vibrant.

Andrew Brod

If you're talking about the debt owed to the federal government for unemployment benefits, a big part of that was a number of reductions in businesses' UI tax during the 1990s.

When one consistently underfunds a program, one is bound to have a deficit.

polifrog

Brod:

If you're talking about the debt owed to the federal government for unemployment benefits, a big part of that was a number of reductions in businesses' UI tax during the 1990s.

If there hadn't been rampant overspending, or the unreasonable resistance to cuts in state spending, our state could have afforded to fund UI.

As it is we are now saddled with debt and entanglements today due to the wonders of debt as a solution for the problems of gluttony.

Worst person on the internet

Yeah, and I wish someone would reframe this foolish "nice-things-pay-for-them" soliloquoy by just asking us up front the next time they want a new nice thing for someone else if we will be so kind as to pay for them.

Ed Cone

Worst, the idea that nice things must be paid for doesn't strike me as foolish, but as a basic principle of sound governance and finance.

One sticking point is what counts as a nice thing, which goes to your point about asking up front. Generations of Americans have said that, yes, they want certain services to be part of the social contract, so the question has been asked, answered, many times.

Which brings us back to the question of how to pay for the things voters say they want. An 8% tax on groceries and some of the other items strike me as bad policy. You?

hartzman

what would the sales tax have to be to eliminate the income tax?

Andrew Brod

The Civitas/Laffer proposal would raise it to 8.05%. And it would have to include many services that are currently exempt from sales tax.

Roch

"And it would have to include many services that are currently exempt from sales tax."

And rent and insurance premiums.

Sammy must be contemplatin' another run for office.

polifrog

Ed:

One sticking point is what counts as a nice thing, which goes to your point about asking up front. Generations of Americans have said that, yes, they want certain services to be part of the social contract, so the question has been asked, answered, many times.


I don't think that is entirely true.

Prior to implementation questions regarding funding generally produce answers that can be characterized as little more than lies if the funding issues that always follow implementation carry any weight.

I'll retract the "always" if someone can point to a government program that has been over funded. I suspect there is something considering the sheer number of programs.

justcorbly

>>"I don't think that is entirely true."

Is there a constituency out there demanding that the government stop sending it money and support while it simultaneously and deliberately makes food, shelter and fuel cost significantly more? All the while greasing the skids to transfer the proceeds to the tiny layer of people who already have most of the money?

Andrew Brod

Ezra Klein addresses the long-run conundrum of unstable consensus: "The Democrats have mostly won the debate over what the government should do, while the Republicans have mostly won the debate over how much the government should tax. Sadly, the two sides of that equation don’t come anywhere near to adding up."

Ed Cone

That's pretty much the point I try to make here, AB.

If people want things like SS and Medicare (or good schools and roads), those things have to be paid for.

We seem to be approaching a moment of truth on the question of which thing Americans want more -- the programs or historically low tax rates. Can't have them both forever.

Hartzman

"programs or historically low tax rates."

I fear we have embarked upon a different path Ed.

We are printing about $85 billion per month.

Money from nothing backed by less and less
is the run around raising taxes or program cuts.

Let's not kid ourselves.

D's and R's both just as culpable.

All those folks we have elected over and over again.

Our deficit is being supported with funny money.

Andrew?

justcorbly

>>"We seem to be approaching a moment of truth..."

I can't imagine that most people would willingly deprive themselves of the things taxes pay for in return for a mere chance at becoming rich. Although Mr. Barnum was often correct, and that does seem to be the core of right-wing thought these days: You deserve a shot at getting rich, but nothing more. Failing to be rich means you are a failure.

polifrog

If people want lower taxes, unaffordable things need to be cut.

It works both ways.

Whatever. Hartzman is correct.

Spending along with taxation are increasing in this country. This is no way to close the gap ... well unless you think needless spending is stimulative.

Funny money.

Ed Cone

"If people want lower taxes, unaffordable things need to be cut."

Absolutely, although it would be more accurate to say "things that are unaffordable with those lower taxes" rather than the abstract "unaffordable."

Spag

The majority of Americans didn't want Obamacare, but got it anyway.

Let's be honest about this. This isn't really about what the majority of people wanting "nice things" and finding ways to pay for them. If only 20% of the population wanted something and the rest wanted to eliminate it, Ed would still be pretending that there is a mandate to pay for it.

If the majority wanted to cut spending, lower taxes, and change the method of taxation - and that may very well be the case in North Carolina- we would still be lectured on what's wrong with all three.

One side favors more spending ("nice things"), higher taxation, and a progressive method of taxation. The other side favors less spending, lower taxes, and a more uniform taxation. This is classic Left vs. Right ideology that is being obfuscated in policy debates. The Left seems to feel confident that they have won the ideological debate and we are only arguing policy. The Right believes that the ideological debate is far from over and are therefore far more resistant to getting bogged down in policy arguments as if the war is over. The Left asks "how?" and the Right asks "why?".

As far as the "falsehood" that I initially referred to- I wasn't directing that to George. Rather the falsehood is that the sales tax idea is being floated for the purpose of lowering taxes on "rich" people and corporations. That is a narrow minded conclusion.

Sykes also misses the point because he doesn't take in the big picture. In a vacuum, I don't favor a higher consumption tax. But I would accept that as a trade off for a lower income tax. By the same token, I would much rather pay higher state taxes in exchange for lower federal taxes. I think that is something that the founders envisioned when the Republic was formed. Few would argue that the federal government is more responsive and more efficient in dealing with issues that confront people on a daily basis than the states are or could be.

I find it noteworthy that Ed would argue that the sales tax in places like Texas doesn't provide a valid comparison to North Carolina because the "political cultures" are different, while at the same time being such a big advocate of federal programs where one entity has to deal with 50 different political cultures. The whole red state/blue state divide illustrates this quite well, and that is before we get to the differences within those blocks.

justcorbly

The majority of Americans want good health care and they don't want access to it to depend on how much money they have. Nor do they believe that the kind of corporate market conservatives shill for can deliver that. They'd be fools to believe that just given a cursory understanding of how things currently work in this country.

Go find me some 70-year-old woman who has never made more than $30,000 a year, has breast cancer, no health insurance, and tells you, "I deserve to let the cancer kill me because I failed to make myself rich 40 years ago."

prell

"If people want things like SS and Medicare (or good schools and roads), those things have to be paid for."

The private sector is perfectly willing and able to fund all of those things, Ed. If it weren't for the pesky government, we'd see the wheels of the free market in action. They're just waiting for the gov't to get out of the way. Less government and lower taxes isn't the answer. The answer is no government and no taxes. Only then will we defeat the armies of Uncle Karl.

Ed Cone

We don't have to construct a hypothetical in which only 20% of Americans want something -- we're talking about real programs that enjoy broad support and cost a lot of money.

If we're going to have those programs, they have to be paid for.

If we're not going to pay for them, we can't have them.

We've pretended otherwise for years. It's not worked out so well.

It's a math problem, and it can only be solved by making hard choices.

Account Deleted

Sam: Could you explain how Texas and its lack of state income tax helps lower our federal taxes when they end up getting 35 percent of their state budget from the federal government?

prell

Why do conservatives always roll-out Texas as the perfect model for "responsible" fiscal-disciple? Have any of you ever visited, driven through, or actually lived in Texas? The only livable city is Austin and you'd all be social outcasts there as it's the San Francisco of the SW.

Andrew Brod

Spag misses the point of my Klein link and Ed's "if you want nice things" meme. It's not true, as Spag claims, that one side wants more spending and higher taxes, while the other side wants less spending and lower taxes. Sure, the Republicans talk a good game on cutting spending. But if they really wanted less spending, we would have seen less spending somewhere along the line by now.

I don't doubt that Spag really wants less spending, but his representatives continually let him down.

The problem is that Republicans have never mustered the commitment to cut spending. It's a big part of what did them in on the fiscal-cliff negotiations. The grand scheme of "starve the beast" failed twice, under both Reagan and Bush 43. And since the end of 2007, total government spending has risen much more slowly than it did over the previous six years. It appears that the only real success Republicans have had in cutting spending was to drive us into the deepest recession in 70 years. Good job!

I agree with Spag that one side wants a progressive tax system, while the other side has lately felt sufficiently emboldened (or, alternatively, sufficiently wack-a-doodle) to advocate "uniform" taxation, which appears to mean regressive taxation.

Spag

"If we're going to have those programs, they have to be paid for."

"It's a math problem, and it can only be solved by making hard choices."

But who is advocating the "hard choices"? Everything I've read here over the years is about avoiding those hard choices and pretending that the only hard choice is to raise taxes on the rich. But that doesn't solve the math problem because there isn't enough money involved with that choice to do it.

The hard choice would involve raising taxes on everyone- including the downtrodden and middle class that you, Obama, and others on the Left claim you are trying to protect. This whole discussion about consumption taxes illustrates that quite well. It's going to take more than just a "little skin in the game".

So while on the one hand, you repeat "if you want nice things you have to pay for them" you balk when anyone presents a plan that would actually make people pay for them or suggests that we can't pay for them so we should cut back on them to a level that is affordable. You are the one who is resistant to "hard choices" and dealing in math that doesn't add up. Worse, you continue to reinforce the idea that other people should pay for "nice things" because you complain when anyone other than the "rich" are responsible for part of the tab.

I question what your reaction would be to any tax program- state or federal- that raised taxes on everyone, not just the "rich". Would you rally behind such a program by explaining to people that if they want nice things, they have to pay for them? Or would you do what you have done here, and that is complain that people who aren't "rich" are being asked to contribute more? I suspect that an income tax increase that reaches into the middle class and below would be met with the same resistance. Yet unless you are willing to cut back on the nice things, that is the hard choice where the math takes us.

polifrog

I found the whole of Texas livable.

I especially like the Hispanic influence in which family is respected and in which there resides an innate rejection of leftist "Jesus Crow" laws within government.

Of course there is that whole respect for liberty being the fertile ground for economic growth thing too.

California, with all its climactic and established business advantages, can't compete with the liberty and resultant prosperity Texas offers.

Spag

Jeff, I can only say that states should raise their taxes in exchange for lower federal taxes. Texans would be better served if they didn't send a larger share of their income to Washington only to get some of it back. That is inefficiency and it happens all across the country.

The federal government actually spends more per capita in NC than Texas. A lot of the federal money that is sent back to states is because of federal mandates. The feds get the money from federal income taxes and then return it to the states IF the states abide by federally imposed mandates. It is not a revenue shortfall that is subsidized by the federal government as you portray it. Rather it is the coerced federal takeover of certain state functions. Texas could reject the federal money and raise their state taxes to compensate for it, but then they would be rejecting a return of their own money and would in effect be subsidizing other states that elect to take the federal money.

Prell, I did live in Texas. Taxes are low, economic growth and unemployment are among the best in the nation, and housing is affordable.

Andrew writes "The problem is that Republicans have never mustered the commitment to cut spending." Absolutely correct. Hence, the advent of the Tea Party. Contrary to the argument that the Tea Party movement was a racist reaction to the election of Obama, the truth is that it was due to the lack of both parties to reign in spending. History has shown that the Tea Party movement is a greater threat to the Republican party than to Democrats. That movement is attempting to force the GOP to commit to spending cuts or face primary opposition and/or lose support.

Spag

One more thing, Andrew - why didn't the wack-a-doodle Democrats in North Carolina eliminate the regressive sales tax when they controlled the state? Who implemented it in the first place? Why didn't you (or anyone else whining now) complain before the GOP took over?

Ed Cone

Sam, let's agree that I'm the last person anyone should listen to about any of this stuff. At the very least this will save you a lot of typing.

But that hard problem of popular programs that cost a lot of money in a political culture that wants both those programs and historically low tax rates?

It's still here.

Hartzman

I don't see how math counts if those at the top get away with securities fraud and the big accounting firms have permission from the government to lie.

The Veteran's Administration is allowed to negotiate for prescription drug prices.

Medicare is not.

Letting Medicare negotiate could save $200 billion plus over 10 years.

None on either side are suggesting it,
therefore both sides are guilty of benefiting a select few
as they enrich their contributors.

Same thing as before only different.

No difference on the state and local level.

Press won't report it, because they make X off the ads.

Same reason with the lack of pundit opposition to super pacs, the networks walked with a good chunk of the ad money, while they "covered" the election without bias.

I suppose it's the same with Guilford County's real estate property revaluation. Our professional reporters didn't bother to investigate the story.

They didn't want to know.

A breach of journalistic integrity, just like at the national levels with pharma.

A nation betrayed by the for profit information dissemination industry.

polifrog

Jeff, via a link (a direct link does not seem to work)within the link you provided above.

More than one-third of the $62 billion in state revenues in Texas in fiscal 2004 came from federal payments for programs administered by the state such as Medicaid, No Child Left Behind, and Temporary Aid to Needy Families.

Is your point that we are nation of dependents?

Andrew Brod

"One more thing, Andrew - why didn't the wack-a-doodle Democrats in North Carolina eliminate the regressive sales tax when they controlled the state? Who implemented it in the first place? Why didn't you (or anyone else whining now) complain before the GOP took over?"

Ah, missing the point is this man's specialty. All along, I and others who have sensibly critiqued the tax system have done it holistically, not piecemeal. We've said not to look solely at the federal income tax, because people pay all sorts of taxes at the local, state, and federal levels. We've talked about the Civitas/Laffer proposal in terms of what it would do do North Carolina taxes overall. Your gotcha attempt is piecemeal.

The point, because it obviously has to be belabored, is not that we've had a regressive tax. The point is that Civitas, Laffer, and apparently the state GOP leadership want to create a tax system for North Carolina that relies heavily on a regressive tax.

prell

@frog: If you dislike these things then why do you choose to fund them? You're only contributing to the problem.

polifrog

Prell:

If you dislike these things then why do you choose to fund them...

I would have a choice if we still lived in a nation based on federalism. Sadly we do not.

Liberalism does not rest with a single state. By going national it forces itself on even those states that would reject it.

The result is that I have my choices limited by liberalism's nationalistic aims.

polifrog

Alternet, Doc? Try and aim higher.

prell

"I would have a choice if we still lived in a nation based on federalism. Sadly we do not."

...but you do have a choice, kid. You're a small-minded one, aren't you?! I'll help you, friend. DON'T PAY YOUR TAXES! Stop funding things you dislike! You're a part of the problem frog!

polifrog

Sorry, but I believe in funding my government.

The method and the amount, however, are up for debate, as is the efficacy.

prell

"Sorry, but I believe in funding my government.

The method and the amount, however, are up for debate, as is the efficacy."

Spoken like a true Marxist. Why do you love the redistribution of one's own personal wealth? Why do you hate freedom?

polifrog

Prell:

Why do you love the redistribution of one's own personal wealth?

I feel that one can redistribute their own wealth to their hearts content.

Such an opinion does not result in liberal force through nationalized governance, nor does it negatively affect the freedom to choose or not to choose to redistribute one's income.

Try not telling people how to live their lives and what insurance to buy.

This is a representative republic; government is expected to reflect the wishes of its citizenry. Unfortunately some groups have found themselves excluded from that privilege. Historical examples would be the slaves freed by a Republican and southern blacks freed only when Democrats ended their filibuster against a conservative push to end Jim Crow laws.

That's history.

Currently there are two new groups that liberals exclude government from reflecting, the unborn though the conjuring of non existent Constitutional rights, and the religious, through a misreading of the Constitution and the subsequent application of what is nothing more than a replication of Jim Crow laws... Jesus Crow laws.

The Democrat party has been and still is a dark force in American politics. Why do you embrace it.

How do any of you so disregard the liberty of others.

Spag

The non-responsive answers on this thread tell you all you need to know. The reality is that this discussion is entirely "piecemeal" as is so often the case. Andrew only wants to discuss the sales tax up to the point where his criticisms implicate Democrats- then suddenly he wants to broaden the discussion to include a completely new topic about how much of a state's budget should come from regressive taxes. Clearly, the line between what is "wacko" and what isn't can be discerned by such a discussion and as a bonus you never have to explain what "wacko" is.

Ed performs a similar tax all but ignoring an invitation to apply his principles to his oft repeated advice. Instead of offering a reality based consistent solution to the problem that he is so fond of identifying, he simply punts and states again nothing more than that the problem exists.

I suspect Ed was intending to be sarcastic when he wrote "I'm the last person anyone should listen to about any of this stuff" but it appears that he was simply being honest.

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