A progressive alternative to Art Pope's destructive tax reform plan
I understand the instinct that many Republican electeds may have for doing something radical about taxes. After a long drought of being powerless, Governor Pope has given them the whole government as their playground, and there are no teachers around to monitor their activities. They'll make whatever messes they want, by god, and there will always be some poor schmuck without a job to come around and clean it up.
That said, I'm hoping there may be at least some members of the Show who are willing to take a step back from Pope's disastrous tax reform plan and ask themselves, just what the hell are we doing?
More to the point, I'm hoping those members will consider having an honest debate about another radical proposal (below) that would actually accomplish their goal of stabilizing North Carolina's economy, attracting business, and fairly addressing the needs for public services and infrastructure.
As Steve Harrison has noted on our front page today, Pope's plan moves the tax burden from income to consumption, resulting in a clear transfer of wealth from poor people to rich people. This fact is not debatable. Yes, the resulting system would be less complicated, but it also shifts the burden of revenue management to hundreds of thousands of businesses throughout the state. What's more, it will drive consumers to purchase goods and services from other states with lower consumption taxes.
For comparison purposes, here are the states that have no income tax.
There is, however, an even simpler and more elegant alternative to the Berger plan. It is the approach that has been adopted in states with no sales tax.
Of special interest to me is the fact that Oregon is a state that benefits enormously from having no consumption tax. Arguably one of the most progressive and enlightened states in the nation, I see Oregon as a state North Carolina could well benefit from emulating.
The same is true for Delaware, which is a magnet for consumers from surrounding states. Bordered by Maryland, New Jersey and Pennsylvania, the same is true for Delaware, which is a magnet for consumers in surrounding states. Just like South Carolina, Virginia, and Tennessee will benefit from higher consumption taxes in North Carolina. Charlotte retailers, car dealers, and other service providers will most assuredly find themselves sucking wind.
Which brings me to Plan B.
- Reduce the sales/consumption tax to zero across the board.
- Take businesses out of the hot seat when it comes to managing tax revenues.
- Eliminate the corporate income tax.
- Expand the state income tax structure with an additional bracket at the top for those earning more than $400,000 annually.
- Eliminate all deductions on state income taxes. No one will ever need a tax accountant to complete the simple short form that would remain in place.
- Tax dividends and investment income as ordinary income at the state level.
I can't imagine that there is a Republican legislator with the spine to cross Art Pope when it comes to challenging his reverse-Robin-Hood plan. But if there is one, he or she should at least put on the table the alternative proposed here.
As always, I'm not holding my breath.