Tuesday, January 22, 2013

Raleigh's "Food Tax Republicans"

A little historical perspective, along with a little economic reality, on the NC GOP's plan to eliminate income taxes on the rich while quadrupling sales taxes on groceries, from the Greensboro News&Record (hattip: Clayton Henkel):
In the early 1960s, Democratic Gov. Terry Sanford pushed for a sales tax on food to raise money for schools. His critics called him “Food Tax Terry,” or something like it, for the rest of his life. 
Today’s Republican legislative leaders should take care they won’t be remembered as “Food Tax Phil” or “Food Tax Thom.” They could be if they take tax reform in the wrong direction.... 
...how would the burden of paying taxes be redistributed? A sales tax is regressive because people with modest incomes are compelled to spend most of what they earn rather than save or invest it. Their taxes as a share of income would increase without some means of offsetting their obligations. Without income tax exemptions, such as for children, larger families could pay a stiff penalty. After all, they have to purchase more food, clothing and other necessities. Rather than pay less taxes with more children, they’d pay more. 
Raising the tax on groceries could be hurtful and unfair, particularly if it’s meant to help make up for revenue lost by eliminating income taxes on high earners. 
North Carolina must devise a tax system that raises enough revenue to fund critical services and make productive investments, and that also requires those who can best afford it pay the largest shares. A nearly 8 percent tax on groceries for the poor would earn the politicians responsible a bad name.

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