Our friends over at Mercatus have a new study out on sales tax and exemptions.
Here’s my summary in five easy steps:
1. Need more revenue, raise sales tax
2. Estimates of extra revenue is often overly optimistic
3. Everyone is in favor of a tax hike – as long as they don’t have to pay it.
4. Lobbyists step in to get special interests exempted from the tax
5. The more exemptions, fewer people paying the tax, less revenue is generated, the higher the rate to bring in the expected revenue.
When the General Assembly convenes in 2015, they should continue tax reform by taking a good hard look at the many exemptions to NC sales tax. Taxation should be based on liberty, prosperity and sound principles of taxation.
