Under the Dome reported yesterday on the tax changes agreed to in budget talks after the negotiators got the word on a potential $70 million hole in leftover money.
The good:
- Exempting some bakeries from sales tax. People who buy bread directly from the bakery pay sales tax for prepared food, but if they bought the same loaf in another location only pay the rate for groceries if they go to another store and buy the same loaf.
- Taxing alternative methods of home heating at the same, lower, rate. Recognizing that interior decorating services are separate from sales of products and should not be counted in the sale price of those products for tax purposes. Other small-ticket items of tax fairness.
- Repealing the state gift tax, one of only four in the country.
The well intentioned
- Creating a property tax homestead exemption for fully disabled veterans. It’s hard to disagree with the sentiment, but carving out exemptions for seniors, disabled veterans, and other groups leaves fewer people to bear the full burden of taxes, making it easier to raise them on someone else.
- Extending a tax credit for small businesses that provide health insurance to employees, attacks the problems in insurance the wrong way.
- Reducing the tax on industrial machinery refurbishers.
The bad
- Increasing the size of the earned income tax credit, even before it takes effect.
- Adding a sales tax holiday for energy-efficient products. Sales tax holidays are bad ideas generally – someone who needs to replace an appliance that breaks pay a penalty if it breaks too soon before or immediately after the holiday. Prices for energy (and water) can often convince people to spend extra upfront for efficient appliances if they really save money.
