Jeff,
The tax-hike plan is bad, but it isn?t quite that bad. While the individual income tax computation would start with adjusted gross income, rather than the current ?taxable income,? the plan also creates a series of tax credits (typically at 6 percent of household expenditure) for mortgage interest, charitable contributions, catastrophic medical expenses, and a few other items. It also creates a new 0 percent tax bracket, which pulls down everyone’s effective tax rate a bit (extent varies inversely with income, obviously).
But your general point is correct. According to the legislative scoring, the income-tax component of the Senate plan will jack up taxes by $265 million in FY 2010-11, the first full year of implementation, and $344 million in FY 2011-12.
All three big elements of the plan ? income-tax changes, sales-tax changes, and business-tax changes ? are net tax hikes, of $265 million, $134 million, and $170 million, respectively, in 2010-11.
To get to the net effect of the whole plan, though, you must add in several other items. Smacking smokers with higher excise nets (they think) $123 million. Hitting up drinkers takes $45 million. Complying with federal tax-code changes reduces taxes slightly, by $4 million. And here’s a key point: even after the state swipes some additional revenue from the localities, the local tax burden also goes up by a net of $119 million.
Grand total: $860 million in FY 2010-11, the first full year of implementation. But it’s a tax ?reform,? not a tax increase, don?t you know.
