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Jan 19, 2013

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justcorbly

Most of my income is not taxed by NC, so the changes would certainly cast relocating in a new light. I might be looking to pay grocery taxes elsewhere.

Roch

Wow! What an astoundingly bad plan. It's not just an increase in the sales tax (the extent described in your quote disagrees with Ribar's, BTW), but it adds:

  • A real estate sales tax
  • A tax on services
  • A tax to your rent
  • A tax on insurance premiums
  • A tax on out of pocket medical expenses
And just in case it's not completely clear just who is getting screwed and who is doing the screwing, these taxes would not be paid on services and goods purchased by businesses (although small businesses would still get a nice kick in the crotch from a new minimum $500 annual business license fee.)

Tony Wilkins

Roch, how can I adjust greensboro101 to just see the blogs and not the tweeter feeds?

Roch

What Tony? You're not fascinated reading of the excitement of all the Beiber fans?

Click on the center header icon, that will reveal control buttons for each type of feed, including Tweets. By default, they are all on. Click on any to toggle on or off. Your preferences will be remembered until you change them again.

Hugh

"Quadrupling the sales tax on groceries could sharply lower North Carolina's obesity rate."

I think they've confused grocery stores with Fast Food joints.

Dave Ribar

Ed & Roch:

Hi. Technically, the state does not impose a sales tax on groceries; the 2% tax is a local government tax.

polifrog

Ribar from the link in the post:

In 2011-12, personal income taxes, corporate income taxes, and franchise taxes brought in $12.5 billion of the state's $21.9 billion in tax revenue. Civitas proposes replacing this $12.5 billion with $4.0 billion from a new business license fee, $0.4 billion in an expanded real estate conveyance fee, and the rest (approximately $8.0 billion) in expanded sales taxes (this would come on top of the $5.5 billion that households already pay in state sales taxes).

You don't get $8.0 billion in revenues from closing just a few sales tax loopholes or from raising the tax rate by a percent or two.

I believe it is helpful to cite the total amount of NC's 2011 Tax Expenditures, the number from which you concoct your grab-bag of horrors.

"$9242.7 million" (Table 1) or $9 1/4 billion.

Compare that to the smaller 8 billion Civitas required to keep their plan revenue neutral. Not only do you do get $8 billion from "from closing just a few sales tax loopholes" you get more.

That means not all NC Tax Expenditures are required to meet the $8 billion needed to make the Civitas plan revenue neutral.

It also means that you can not pick horrors willy-nilly from those expenditures under the assumption that they are all to expire. The chart in your post suggests you believe otherwise. There is no literary licence to fan the flames of fear through non professorial analysis. In this too your post suggest you believe otherwise.

It would have been more honest for you to state that costs to the state budget were on the table in the Civitas plan but that not all would be cut. Triage does not mean death to all. Your list of horrors indicates you seem to believe triage means something akin to death to women a children first. It does not.

As a reminder: This plan would mean no NC income tax returns for anyone. It would also mean no passing of corporate taxes to consumers in all the products we purchase. (at least those produced in NC) There is an honesty in that alone, far more than the loop-holes you endeavor to protect. No?

Weigh that against what one can only presume to be of greater value to you ... the value of protecting half a billion in corporate, tobacco, franchise and alcohol welfare that is housed within NC's Tax Expenditures.

Andrew Brod

Frog, the $9.2 billion figure is the sum of tax expenditures resulting from all taxes. Of that total, the largest chunk comes from the individual income tax. Only $3.1 billion is the result of exemptions and deductions from the sales tax.

So what Dave said is accurate. You can't generate the $8 billion from closing sales-tax loopholes.

polifrog

I see now that their proposal is limited to sales tax and, yes, that would be $3.1 billion not $9.2 billion.

But I do not believe the plan claims to make $8 billion from repealing sales tax loopholes alone.

It attempts to widen the tax base so as to capture taxable events not currently captured while doing away with the income tax for both individuals and corporations.

Ribar is still wrong. He may as well have said that you can't generate $8 billion through a 1% tax on real estate conveyances. In either case that is not the stated claim of the Civitas plan.

The plan shifts the burden of paying taxes from disincentivising industriousness and incentivising consumerism to incentivising industriousness and disincentivising consumerism.

That would be a win for all.

Andrew Brod

Leave it to Frog to advocate "disincentivising consumerism" in a depressed economy. That's essentially what the economy has done already, but Frog wants more of it. Very smart.

Andrew Brod

Frog's right in saying that the Civitas/Laffer proposal would do more than close sales-tax loopholes to raise the nearly $8 billion needed to make the tax reform revenue-neutral. They advocate broadening the tax base as well. But the tax base they're talking about is the sales-tax base. So they are indeed proposing that the extra money is going to come from the sales tax.

I haven't had time yet to read the latest Laffer report, but I intend to. However, a few things stick out after a brief scan. For example, the Civitas/Laffer proposal dismisses the claim that sales taxes are regressive, i.e. that they hit the poor proportionally harder than the rich. They claim (1) that the tax reform will spur so much growth that everyone's incomes will rise, and (2) that the tax system isn't actually regressive once one factors in government transfers.

The first claim is an attempt to change the subject from the relative incidence of taxes across income levels, and hence the equity of the tax system. Beyond that, it's an example of the deeply felt conservative belief that the structure of taxes really matters. The reality is that taxes are a second-order consideration at best. Sure, they shouldn't be too high or too low (because business benefits from many types of government spending), but the precise structure matters much less than conservatives want to believe. There's no evidence that progressive income taxation has doomed the economy (we had it back in the '90s, when things were pretty good, and we had even more of it back in the halcyon '50s), but conservatives believe it nevertheless.

The second claim is on-topic but it's been refuted repeatedly. After-tax income in most analyses of income distribution factors in government transfers as well as taxes. If anything, the transfer system has become markedly less redistributive, i.e. more regressive, over the last few decades.

I'd respect this proposal a little more if Civitas said, "Yes, we know it's more regressive. So what?" Instead of admitting the obvious, they're providing cover to those who would deny the obvious.

Andrew Brod

By the way, I like the idea of broadening the sales-tax base. However, I like it only if it's coupled with something else that offsets the increased regressivity of adding more sales tax to the mix. One possible offset is to reduce the sales-tax rate to keep the whole thing revenue-neutral. However, the Civitas/Laffer proposal would raise the rate, because of course its goal is to extract more revenue from sales taxes.

Another possible offset is to increase the progressivity of other taxes, such as the income tax. Of course, the Civitas/Laffer proposal would eliminate the income tax altogether, so no luck there either.

All in all, this is a great way to get poor and working-class people to bear a bigger burden of state taxes. Add it to the state lottery and we're fixing to brew up a really compassionate tax system.

Now, if we could only figure out a way to get rid of those pesky public schools...

Joe Guarino

This Civitas plan counterbalances, in a small way, the sharply progressive (read: socialistic) income tax at the federal level. Large numbers of citizens pay no federal income tax. That is profoundly unfair because it leaves a hugely disproportionate share of the revenue generation at the federal level on a much smaller number of citizens. And of course, for those of us who pay income taxes, the federal income tax usually takes a much larger share of our income than the state income tax.

The Civitas plan is more fair than the current system-- if you truly want fairness. Everyone has to contribute their fair share, and there is no systematic attempt to stick certain income groups with a disproportionate share of the burden.

Progressives want, by definition, a tax system that is unfair. They want a tax system that takes much more from some citizens than from others. From each according to their abilities... to each according to their needs.

Dave Ribar

Poli:

The Civitas plan is:
- eliminate the corporate income tax (in FY 2012 this brought in $1.2 billion)
- eliminate the personal income tax (in FY 2012 this brought in $10.5 billion)
- eliminate the franchise tax (in FY 2012 this brought in $0.8 billion)
Eliminated taxes equal $12.5 billion; Civitas claims less, but they used a projection rather than the actual tax amount (i.e., they made a $750 million error right from the start).

Keep revenues the same as FY 2012, which means replacing these $12.5 billion with:
- a new business franchise tax (Civitas estimate $4.0 billion)
- a new transfer tax on real estate (Civitas estimate $0.4 billion)
- a higher and expanded sales tax (Civitas estimate $7.4 billion, but to keep revenues the same, the actual amount needed is $8.1 billion).

Civitas would raise the sales tax revenues from
- eliminating ALL exemptions in the current sales tax (the big things here would be groceries, medicines, medical devices, and refunds to non-profits; the exemptions are covered in the biennial tax expenditures report)
- taxing new things including every service taxed by at least one other state, insurance premia, rents, lottery tickets, and other things
- raising the state sales rate.

The new taxes listed in my post are the some of the current exemptions in the NC sales tax (some of the exemptions that Civitas would eliminate). The current exemptions (your $3 billion) come directly from that report. I computed the new taxes by applying the tax (8.05%) that Civitas would impose (Civitas is most likely low in its estimate, so the tax-neutral rates are likely to be higher). My figures are far less than $8.1 billion. They don't include the new service taxes, lottery taxes, etc. Also, it is doubtful that Civitas' new state sales tax will actually cover the short fall.

I'm happy to share the spreadsheet calculating the numbers with anyone who is interested; just e-mail me for the spreadsheet.

Andrew Brod

Nice try, Guarino. The fact is that the entire tax system -- state and federal -- is pretty close to proportional now. Making state taxes sharply regressive has the potential to undo that balance and make the whole system more regressive.

More importantly, it's fine for you to believe that progressive taxation is unfair, but it's not unfair "by definition." There are definitions of fairness that progressive taxation comes closest to meeting.

Joe Guarino

Andrew, why is it fair to take huge amounts of income taxes from some citizens to pay for government, and no income taxes from many others-- some of whom have annual incomes?

You can define fairness any way you wish, Andrew; but it does not make it intellectually or ethically valid. Progressive income taxes are unfair-- by design.

If we did away with the state income tax, the "whole system" would still be quite progressive because the numbers in the federal system are much greater than the numbers in the state system.

Andrew, let's face it. You won. We are moving to a much more socialistic environment at the federal level. You got what you probably wanted. Taxes are going up at the federal level in various ways-- some related to Obamacare, some related to the recent fiscal cliff deal, and perhaps some others. The abolition of the state income tax would merely take some of the edge off the sharp progressivity at the federal level. We would still have a steeply progressive tax system overall.

Andrew Brod

"Why is it fair to take huge amounts of income taxes from some citizens to pay for government, and no income taxes from many others-- some of whom have annual incomes?"

Note the weasel word "some." Yes, some low-income people have incomes.

Note also the conservative need to shift the conversation to income taxes. Yes, we get it. The federal income tax is progressive. And yes, we realize that you hate this. And yes, it's going to be slightly more progressive now than it has been over the last decade or so of economic weakness, and approximately as progressive as it was during the strong economy of the '90s. Oogedy boogedy!

Misstating the facts about taxes overall doesn't help the conservative cause.

Andrew Brod

The point is that what's fair is a value judgment, and different people have different values. There's no right or wrong; there's only persuasion.

So yes, I can understand why someone would think that a proportional tax is fair. I can also understand why someone else would consider a progressive tax to be fair. I'm not saying that I'm undecided; I'm quite clear on what I think is fair. But my view isn't correct "by definition," "by design," or any other phrase you might employ to try to end the debate.

Virtually no one thinks that a regressive tax is fair... except for NC Republicans.

Ed Cone

"Progressive income taxes are unfair-- by design."

Or they are fair by design, depending on one's perspective.

In any case, I'd guess that this plan has zero chance of being enacted as described, because voters would react very negatively to anything that approaches its scope and scale, and politicians do like to get reelected. More likely it's a bargaining chip.

polifrog

Brod:

Leave it to Frog to advocate "disincentivising consumerism" in a depressed economy.

Absolutely! It's why I argue against Keynesianism.

Keynesianism is a rational for consumerism throughout the business cycle. And don't retreat to Keynesian Theory and argue otherwise. You know Keynesian Theory is not practiced. Keynesianism, however, is.

Keynesianism is the Fed transferring the wealth of retirees and other savers to banks in the service of government spending and protection.

Keynesianism is the destruction of the saving incentive through inflation in the service of government spending and protection.

Keynesianism is a trillion dollar coin in the service of government spending and protection.

Keynesianism is resistance to reductions in taxation in the service of government spending and protection even during depressions when the citizenry is in the most need.

Keynesianism is resistance to rolling back government spending at the time it is most politically palatable to, and needed by the citizenry ... economic contraction.

Keynesianism is anti deflationist in a down market when deflation would help the neediest among us and when the need to increase the velocity of money is the greatest.

Keynesianism is debt for government largess that the citizenry eventually owes.

The unfairness that flows from Keynesianism is staggering. But what is more staggering is the heartlessness of its defenders.

What Civitas proposes is a path to a stronger, fairer NC economy, one that better reflects individual human nature rather than directed government protection.

And the argument that Civitas's plan is somehow regressive in a nation of welfare dependents buying food, phones and all needs with the transferred efforts of others is an incredible reach. But such is Keynesianism.


Dave:

I appreciate the rundown on the numbers, Dave. It helps. But it does not show that the Civitas plan fully relied on $3 billion to cover $8 billion.

That is solely your assumption.

polifrog

Brod:

Virtually no one thinks that a regressive tax is fair... except for NC Republicans.


I have seen no regressive tax plans proposed.

Of course channeling discussion of stimulative tax proposals such as the Civitas' to the topic of how progressive that tax plan might be does little for the discussion over attracting economic activity to NC.

Simply put, more jobs through fairer taxation is better than the fewer jobs that result from our current highly progressive tax policy.

Only the heartless would deny jobs to otherwise productive souls to protect a progressive tax scheme.

Andrew Brod

"I have seen no regressive tax plans proposed."

Which proves my point.

Joe Guarino

Poli is correct that NC's income tax has become a drag on our state economy.

More on "fairness". Let's imagine that we have a FLAT 10% income tax rate. The person who makes $500,000 pays $50,000. The person who makes $30,000 pays $3,000.

How can that possibly be described as "fair"? How can that be viewed as "equality"-- as two parties being treated equally under the law? One person, at threat of imprisonment, is forced by the government to pay more than ten times what the other person pays. One person's property is taken in much greater amounts than another person's property-- via coercion.

And that is with a FLAT income tax! Imagine how much worse the disparity is when we have a "progressive" income tax!

Andrew Brod

And there we have our second conservative argument for regressive taxation, and it's not even 9:00 in the morning. Guarino claims that even a proportional tax is unfair. If some working-class schlub pays $3,000 a year in taxes, then it's unfair for a multimillionaire hedge-fund maestro to pay a cent more.

That's bizarre. But at least it's honest. In contrast, Frog plays the game of pretending that regressive taxes aren't regressive.

Andrew Brod

"NC's income tax has become a drag on our state economy."

The key phrase here is "has become." Because not even Guarino would deny (well, maybe he would) that in the past, the NC economy was quite strong and vibrant even while it employed an income tax. So something has to have happened in recent years to render the state income tax suddenly a drag on the economy.

The obvious candidate is that we have a depressed economy (and not just in NC), something we haven't seen in 80 years. An income tax certainly feels like a drag on the economy in times like these.

But the income tax didn't cause the depression. Attempting to solve the problem by eliminating something that wasn't its cause would be a cynical ideological ploy.

Of course, such ploys are Civitas' stock in trade, and they're what Frog and Guarino applaud.

MojoNixon

The example below is clearly one of trolling. No one with any serious understanding of tax theory would give the following excerpt an iota of legitimacy (It's a good thing this clown stopped blogging.):

"Let's imagine that we have a FLAT 10% income tax rate. The person who makes $500,000 pays $50,000. The person who makes $30,000 pays $3,000.

How can that possibly be described as "fair"? How can that be viewed as "equality"-- as two parties being treated equally under the law? One person, at threat of imprisonment, is forced by the government to pay more than ten times what the other person pays. One person's property is taken in much greater amounts than another person's property-- via coercion.

And that is with a FLAT income tax! Imagine how much worse the disparity is when we have a "progressive" income tax!"

Ishmael

Never before have I seen an approach so cynical and heartless that it reeks of rotten garbage. A tax on groceries might satisfy the boundless need to punish those supposedly with no skin in the tax game, but it also increases the suffering of innocents - the children of the people you so love to hate.
I expect a passionate outcry from every self respecting Christian out there. All others are just posers.

Spag

It's good to see so many people opposed to taxes. No income tax means that you get to keep more of your money and have the discretion to decide how to spend it knowing the tax consequences. Those who spend the most would contribute the most.

Plus the underground economy pitches in.

I know that it isn't as sexy as having the government take your money up front and leaving you with less discretionary funds.

What if the rich were expected to carry the tax burden but there weren't any rich?

Andrew Brod

Interesting question, except that the rich are already expected to carry the tax burden (as conservatives frequently complain), and yet in spite of that there are plenty of rich people. In fact, there are more than there used to be.

Your "what if" appears to be BS.

Roch

Are you just gainsaying, Sam, or do you favor the recommended new taxes?

Ed Cone

"No income tax means that you get to keep more of your money and have the discretion to decide how to spend it knowing the tax consequences."

This presupposes a world where groceries, medicines, medical devices, insurance, and rent are discretionary expenses.

Again, I think this plan as posted would be political suicide, and I'd guess that a lot of powerful people in Raleigh know that, and so it's really a way of setting up other changes (maybe good ones! I don't know.) I could be wrong, but if I am, I'd expect a change of power in upcoming elections.

Dave Ribar

Poli:

While you might not need the $3.1 billion that I identify to get to $8.0 billion, it's where Civitas is getting its money.

Civitas' plan calls for "repealing current exemptions, preferential rates, and refunds." Civitas does not indicate that ANY exemptions, preferential rates, or refunds will be spared (there is no qualifying language whatsoever), and they explicitly say that food and out of pocket medical expenditures are included. The tax base that they claim for the repeal of the exemptions, preferential rates, and refunds is $83.83 billion (see p. 6). Applying the current state rate of 4.75 percent, Civitas is raising $3.98 billion from closing these things.

prell

I think we need to abolish all taxes. Taxes are unfair to everyone - even those who don't pay them. Let things play out in a free and unregulated marketplace. All rich people are very generous people. None are greedy with their money. They will create the jobs and care for the infrastructure.

michele

This comment is specifically addressed to those who call themselves "Christian" but propose or support policies that are unjust and oppressive to the poor.

Deuteronomy 26:12 "When you have finished setting aside a tenth of all your produce in the third year, the year of the tithe, you shall give it to the Levite, the alien, the fatherless and the widow, so that they may eat in your towns and be satisfied."

Leviticus 19:9-10 "'When you reap the harvest of your land, do not reap to the very edges of your field or gather the gleanings of your harvest. Do not go over your vineyard a second time or pick up the grapes that have fallen. Leave them for the poor and the alien. I am the LORD your God."

Job 34:17-19 "Can he who hates justice govern? Will you condemn the just and mighty One? Is he not the One who says to kings, 'You are worthless,' and to nobles, 'You are wicked,' who shows no partiality to princes and does not favor the rich over the poor, for they are all the work of his hands?"

Psalm 12:5 "'Because of the oppression of the weak and the groaning of the needy, I will now arise,' says the LORD. I will protect them from those who malign them."

Proverbs 29:7 "The righteous care about justice for the poor, but the wicked have no such concern."

Isaiah 10:1-3 "Woe to those who make unjust laws, to those who issue oppressive decrees, to deprive the poor of their rights and withhold justice from the oppressed of my people, making widows their prey and robbing the fatherless. What will you do on the day of reckoning, when disaster comes from afar? To whom will you run for help? Where will you leave your riches?"

Ezekiel 16:49 "Now this was the sin of your sister Sodom: She and her daughters were arrogant, overfed and unconcerned; they did not help the poor and needy."

Amos 5:11-12 "You levy a straw tax on the poor and impose a tax on their grain. Therefore, though you have built stone mansions, you will not live in them; though you have planted lush vineyards, you will not drink their wine. For I know how many are your offenses and how great your sins."

Luke 1:52-53 "He has brought down rulers from their thrones but has lifted up the humble. He has filled the hungry with good things but has sent the rich away empty."

Luke 3:11 "John answered, 'the man with two tunics should share with him who has none, and the one who has food should do the same.'"

Luke 6:20-21 "Blessed are you who are poor, for yours in the kingdom of God. Blessed are you who hunger now, for you shall be satisfied. Blessed are you who weep now, for you shall laugh."

Luke 6:24 "But woe to you who are rich, for you have already received your comfort."

Luke 12:33 "Sell your possessions and give to the poor. Provide purses for yourselves that will not wear out, a treasure in heaven that will not be exhausted, where no thief comes near and no moth destroys."

2 Corinthians 9:6-9 "Remember this: Whoever sows sparingly will also reap sparingly, and whoever sows generously will also reap generously. Each man should give what he has decided in his heart to give, not reluctantly or under compulsion, for God loves a cheerful giver. And God is able to make all grace abound to you, so that in all things at all times, having all that you need, you will abound in every good work. As it is written: 'He has scattered abroad his gifts to the poor; his righteousness endures forever.'"

1 Timothy 6:10 "For the love of money is a root of all kinds of evil. Some people, eager for money, have wandered from the faith and pierced themselves with many griefs."

1 Timothy 6:18 "Command them to do good, to be rich in good deeds, and to be generous and willing to share."

1 John 3:17 "If anyone has material possessions and sees his brother in need but has no pity on him, how can the love of God be in him?"

James 5:1-6 "Now listen, you rich people, weep and wail because of the misery that is coming upon you. Your wealth has rotted, and moths have eaten your clothes. Your gold and silver are corroded. Their corrosion will testify against you and eat your flesh like fire. You have hoarded wealth in the last days. Look! The wages you failed to pay the workmen who mowed your fields are crying out against you. The cries of the harvesters have reached the ears of the Lord Almighty. You have lived on earth in luxury and self-indulgence. You have fattened yourselves in the day of slaughter. You have condemned and murdered innocent men, who were not opposing you."

James 1:27 "Religion that God our Father accepts as pure and faultless is this: to look after orphans and widows in their distress and to keep oneself from being polluted by the world."

James 2:5 "Listen, my dear brothers: Has not God chosen those who are poor in the eyes of the world to be rich in faith and to inherit the kingdom he promised those who love him?"

There are many, many more verses like these. Know this, as well: "Do not be deceived: God cannot be mocked. A man reaps what he sows." (Galatians 6:7)

sal leone

I would agree with people about fair taxes. I am tired of paying more in taxes while others get a big check. I worked to pay off my house, me and my wife work and no kids to take off on taxes and I have to pay for everyone else to have kids. I know tons of people that dont pay federal taxes or state taxes and they always get way more than me. I am lucky to get back a third of what I pay into taxes. My only crime is working and not having more kids than I can afford.

I say increase the sales tax and get rid of state income tax.There are seven states that dont have state income tax and they survive,
•Alaska
•Florida
•Nevada
•South Dakota
•Texas
•Washington
•Wyoming

The Welfare states

http://www.fixwelfare.com/the-problem/

polifrog

Brod:

In contrast, Frog plays the game of pretending that regressive taxes aren't regressive.

Dishonesty is claiming a tax plan that is in actuality less progressive is "regressive".

It leaves one to wonder what Brod would label a tax plan that taxed lower income earners at a higher rate than higher income earners.

An honest man would call such a tax plan regressive. Of course no regressive plan has been proposed. Hence my honest assessment.


Andrew Brod

Thanks for letting us know that you don't know what "regressive" means.

polifrog

Prell:

None are greedy with their money.

(presumably said with sarcasm)

Interesting.

A person can be greedy with that which is shared, but how is a person greedy with that which is their own?

I believe this belies a fundamentally unAmerican attitude toward property rights, one that is repeatedly the foundation of failed nations.

I guess if one defines money as that stuff we pass among one another it can appear to be shared.

But money actually represents one's time on Earth and when one expects my money to be shared, that individual lays claim to a piece of my time on Earth.

Whether it is bartering the rights of slaves, bartering the rights of blacks via Jim Crow laws, bartering the rights of the unborn, or bartering the property rights of the productive, liberals have a dark history of trading the rights of a select minority for the votes of those who benefit from that minority's loss of liberty.


polifrog

Michele, "giving" via government coercion is not giving.

From your verses:

2 Corinthians 9:6-9 "Remember this: Whoever sows sparingly will also reap sparingly, and whoever sows generously will also reap generously. Each man should give what he has decided in his heart to give, not reluctantly or under compulsion, for God loves a cheerful giver. And God is able to make all grace abound to you, so that in all things at all times, having all that you need, you will abound in every good work. As it is written: 'He has scattered abroad his gifts to the poor; his righteousness endures forever.'"

None of your verses support the outsourcing of gifting to others ... or to government.

polifrog

Brod:

Thanks for letting us know that you don't know what "regressive" means.


Define it.

polifrog

Brod:

The key phrase here is "has become." Because not even Guarino would deny (well, maybe he would) that in the past, the NC economy was quite strong and vibrant even while it employed an income tax. So something has to have happened in recent years to render the state income tax suddenly a drag on the economy.

The obvious candidate is that we have a depressed economy (and not just in NC), something we haven't seen in 80 years.

You say this as though NC. had maxed out its economic health prior to our current depression.

You might consider opening your mind to the possibility that our economy was not only retarded by our poor tax policy then, but set the stage for a more depressed economy today by driving away jobs we would otherwise have drawn.

Oh well, if crap is all you expect crap will appear "vibrant".

polifrog

Roch:

Are you just gainsaying, Sam, or do you favor the recommended new taxes?


How does a revenue neutral plan constitute an increase in taxes?

polifrog

Brod:

Interesting question, except that the rich are already expected to carry the tax burden (as conservatives frequently complain), and yet in spite of that there are plenty of rich people. In fact, there are more than there used to be.

Once again, if crap is all you expect crap will appear "vibrant".

michele

@polifrog: Straw man.

polifrog

My apologies, Michele.

I didn't initially pick up the sarcasm in your previous comment.

Spag

Didn't somebody once say "if you want nice things, you have to pay for them?"

The reason people want to make money is because they need money because living costs money, and if you want nice things, you have to pay for them.

Texas has no income tax nor do they have a food tax. Texas ranks right in the middle of the U.S. in median income. I don't know how they do this without a state income tax- higher median income than NC which is a counterargument to the "sales tax will cause people to starve" theme.

So let's look at reality here. The middle class and above pay state income tax, so let's not pretend that eliminating the income tax and replacing it with a consumption tax would impose some burden on the majority of people that they don't already have. It's a philosophical question about whether it is better for people to have less disposable income because the government takes their money before they see it (income tax) or for people to have more disposable income and decide how much of it they are willing to give up when they conduct transactions. This is no different than any other consumer purchasing decision.

I am curious about the idea that the sales tax would disincentive consumerism. This may be true, but is it any more of a disincentive than having less money available to purchase goods with from the outset? If an item costs $100 and you only have $95 after tax withholding, then you can't buy the item. On the other hand, if you have $100 and the sales tax is $5, you still can't buy it.

A consumption tax is regressive, but we have one now in addition to the state income tax. Eliminate the consumption tax entirely and you have to rely on income taxes. You could raise income taxes much higher to make up for the revenue shortfall, but there won't be enough "rich" people to carry that burden, so it will fall on everyone else. The end result of that tax structure is that everyone ends up with less. This is part of the fallacy of the national argument over taxes. There isn't enough money among the rich at any tax rate to pay for it. So the options are to cut spending, or raise taxes for everyone, or borrow. The latter only makes the problem worse as more revenues are inevitably required for debt service.

A consumption tax on the other hand does not discriminate. More than anything it exemplifies the saying "if you want nice things you have to pay for them". The progressive income tax structure is better understood as "if you want nice things, someone else should pay for them".

If that's what you believe, then at least have the honesty to admit it. The essence of such a belief at its core is simply that it's not "fair" that some people have more than others. That begs the question of what constitutes "fairness" and how it is quantified.

If it's not fair that Roy Carroll has more than Andrew Brod, than it is also not fair that Andrew Brod has more than someone else. Unless it IS fair because each person made personal decisions that led them to their station in life. It might be UNFAIR if the consequences of those decisions had no bearing on a persons station in life because they could always count on the government to make up the difference with other peoples money. Sort of like the person who studies really hard for a test and gets an "A" only to be told that the person who didn't study and copied their answers will also get an "A" just to make things more "fair" or even.

Economics informs us that if "all of us lived like millionaires", none of us would.

Roch

Sam, do you favor the recommended new taxes?

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