How Raising Sales Taxes Will Kill the Economy

Right now, Kentucky legislators from both parties are huddling to figure out how they can use the Governor Steve "Cowardly Waste of Oxygen" Beshear's bullshit "tax reform" commission's recommendations to eliminate taxes on their rich individual and corporate campaign contributors and raise taxes on the poor and working class. 

 

I wish it were just the repugs.

 

Kevin Drum: 

Stymied at the national level, Republicans have spent the past couple of years focusing a lot of their energy at the state level. And they've had considerable success. Hundreds of abortion restrictions have been passed. Voter ID laws were enacted all over the country. Just recently half a dozen Republican-controlled states have started efforts to game the Electoral College in preparation for the 2016 election.

 

So what's next? Apparently state sales taxes. CBPP's Elizabeth McNichol reports:

In an alarming trend, governors in Louisiana, Nebraska, and North Carolina have proposed eliminating their state’s personal and corporate income taxes and raising the sales tax to offset the lost revenue....Proponents claim that eliminating income taxes and expanding the sales tax would make tax systems simpler, fairer, and more business-friendly, with no net revenue loss. In reality, they would tilt state taxes against middle- and lower-income households and likely undercut the state’s ability to maintain public services. Specifically they would:

• Raise taxes on the middle class.

• Require huge sales tax hikes.

• Levy those new, higher rates on a much larger number of transactions.

• Create an unsustainable spiral of rising rates and widening exemptions.

• Fail to boost state economies.

• Make state revenues much less stable.

There's more detail at the link. But the bottom line is pretty simple: This is a transparent effort to reduce taxes on the rich and increase taxes on the poor and the middle class. No matter how flowery their speech, Republicans remain hellbent on cutting taxes on the rich no matter what the consequences. Given how well the rich have done recently and how poorly the middle class is doing, this is nothing less than jaw dropping.

Travis Waldron at Think Progress:

The poorest Americans are subject to a tax rate at the state and local level that is twice as high as the tax rate paid by the wealthiest earners thanks to “fundamentally unfair” state tax laws, according to a new report from the Institute on Taxation and Economic Policy (ITEP). Middle-class taxpayers also pay higher effective rates than the wealthy.

Believe it or not, Kentucky is currently not among the ten worst states for soaking the poor to benefit the rich. But by the time the General Assembly adjourns in March, the Commonwealth is likely to join serfs-n-lords havens like Louisiana.