Tag Archives: Sales Tax

News

Residents of New York and California flee high taxes and regulations

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Here’s a funny story from the New York Post. (H/T National Review via ECM)

Excerpt:

On top of the city and state payroll tax, Social Security and Medicare [small-business owner John Logue] pays for employees, Logue said the city also hits him with a slew of permit fees. He recently had to pay $50 to obtain a certificate to collect sales taxes for the city and the state. In the past, it was free. He also pays the city to have a restaurant certificate, an exhaust-system permit and an illuminated-sign permit.

Logue said his [government-issued] water bills have also increased by nearly 50 percent in the last three years. Currently, he pays $1,600 every three months to the city.

“I’m getting to the point where I’m thinking about leaving New York,” he said.

And Kevin D. Williamson adds:

If you want to know where the future is headed, look where the people are going. And if you want to know where the people are going, check with U-Haul. Here’s an interesting indicator, first noted by the legendary economist Arthur Laffer: Renting a 26-foot U-Haul truck to go from Austin to San Francisco this July would cost you about $900.

Renting the same truck to go from San Francisco to Austin? About $3,000. In the great balance of supply and demand, California has a large supply of people who are demanding to move to Texas. There’s a reason for this.

Yes, prices rise when there is a high demand and supply is the same.

I once had a job interview at Fidelity in Boston, MA, and I remember going up the elevator with someone who commuted in every day from New Hampshire to avoid the taxes. And I remember thinking – this guy probably votes Democrat like everyone else in Boston.And shortly thereafter, New Hampshire turned blue and is now somewhere down in the gutter.

Why do Democrats do this to themselves? Anyway, the whole country will be like New York and California if more of these crappy bills pass, and where will we run to then? We’ll be stuck until the next election, and it serves us right. I think a good long period of suffering under Obama is just what we need to learn the importance of economics – the hard way.

Videos

What are the effects of Nancy Pelosi’s proposed national sales tax?

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Watch this video by libertarian Dan Mitchell of the Cato Institute. (H/T Power Line via ECM)

I normally don’t like these Dan Mitchell videos, but this one is better than the others I’ve seen at giving you a great introduction to so many useful topics.

The national sales tax would be a GREAT idea, if we went on to remove an equivalent amount of revenue from the income tax. It’s much better to tax consumption than productive work. But that’s not what the Democrats want to do with this value-added tax. They want both income and consumption taxes, so they get a new revenue stream and more money to buy votes from their favorite special interest groups.

Here is a Wall Street Journal article about the Democrats’ proposed VAT.

Excerpt:

The allure of a VAT for politicians is that it applies to every level of production or service, rakes in piles of money, and is largely hidden from those who ultimately pay it—namely, consumers. With a $9 trillion 10-year budget deficit, $4 trillion in spending in fiscal 2010 alone, and a $1 trillion (at a minimum) health-care entitlement in the wings, Mrs. Pelosi knows that not even the revenue from the expiration of the lower Bush tax rates in 2011 will cover the bills. Nearly every European country that has passed national health care has also eventually imposed a VAT, and it’s foolish to think the U.S. will be different.

Tax and spend.

Commentary

Missouri legislators consider Fair Tax policy

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UPDATE: Welcome visitors from The Maritime Sentry!

I discovered this story at the Tax Foundation blog.

Excerpt:

Missouri lawmakers are considering a drastic change to their tax system. A bill recently passed by the state’s House of Representatives would allow residents to vote on a Constitutional amendment that would eliminate corporate and individual income taxes in the state and replace them with a broad based sales tax. The plan is essentially a state version of the national FairTax proposal popular with some grassroots groups that would replace the federal income tax with a national sales tax. If the Senate passes the bill Missouri residents would be voting on the amendment in November of 2010.

Missouri currently has a sales tax, a corporate income tax, and a personal income tax. The sales tax rate is 4.225%, and the top corporate and personal tax rates are 6.25% and 6%, respectively. The plan put forth would replace all those taxes with a single sales tax levied at a rate of 5.11%. Accompanying the sales tax rate hike would be a substantially broadened sales tax base that would include all purchases. Currently most services are tax exempt and certain goods, most notably groceries, are taxed at a reduced rate of 1.225%. These exemptions would not exist under the new tax structure.

The overhaul of the tax system is meant to be revenue neutral. In other words, the revenue from the sales tax increase and broadening of the tax base is meant to exactly offset the elimination of income taxes. In 2008 Missouri’s sales tax brought in $3.2 billion while the state’s corporate and individual income taxes brought in $5.5 billion. In order to achieve revenue neutrality, at a rate of 5.11% the base would have to increase by 124%, or a little more than double. This may sound like a huge increase, but it is very possible.

This would be a useful test case to see if a national fair tax is feasible. I am all for consumption taxes. Leave a comment if you prefer the fair tax to the flat tax. I’m leaning towards the flat tax, and I love the way that it’s been implemented in those Baltic states, like Estonia. Estonia is such a courageous country!