Talk of state tax reform is in the air, with Senate Republicans releasing their proposal last week. JLF President John Hood offers up an assessment, finding that while the proposal has many good points, it is not ideal:
Because the Senate plan seeks to replace income-tax revenue with a broadened sales tax, it picks unnecessary fights with dozens of industry groups who dislike the idea of becoming unpaid tax collectors for government. The plan also increases the state tax burden on households of low to moderate incomes. What makes more sense to me is to retain the income-tax structure, which avoids new regulatory burdens on business, while using generous personal exemptions to ensure that the overall system doesn’t become more regressive.
I understand what Berger and other Senate leaders are trying to accomplish, but conservatives shouldn’t be in the business of raising taxes on families making $35,000 a year. Instead, they should unite behind a reform package that moves incrementally towards a consumption tax without imperiling their credibility on taxes or their electoral coalition for accomplishing other important conservative goals.
