Before you get too excited and start spending all the money you think you’d save, get your head on straight. This reinterpretation of our tax structure is revenue-neutral. You’d still pay a total tax bill that’s about the same as you cough up now. You’d just hand it over in much smaller increments. You’d also have a lot more control over your taxes, because you’d decide when you’d make major purchases and how expensive those items would be.
What makes this altered system an improvement over the status quo is stability. State revenues wouldn’t take sudden lurches in unpleasant directions every time the national economy flinches. With more predictable income projections, state budgets would be less prone to shortfalls. And in the unlikely case of a surplus, we’d face the pleasant options of building up our Rainy Day Fund or reducing tax rates.
As noted above, I like paying sales tax, but I’d like paying one that was only, say, 4 percent instead of about 27 percent more.
I can hear the bleeding hearts whining about how this change would negatively impact the poor. But my plan sets aside enough money to protect low-wage earners. Some of the additional revenue raised by the expanded sales tax would be used to reimburse low-income taxpayers for all the sales tax they paid. They’d get a refund through their income tax — or a direct payment if they didn’t owe any income tax — roughly equal to their sales-tax bill. Our state’s neediest citizens would actually pay less than they do now.
The rest of us would have fatter paychecks, due to smaller deductions for income taxes. We’d have more manageable property-tax bills, because the sales-tax revenue would pay most of the cost of schools. We’d have more incentive to save or invest, neither of which is subject to sales tax.
And if we hit our noggins and had to pay an extra 5 percent on the hospital bill, we’d undoubtedly be too dizzy to notice.
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