Sunday, January 27, 2013

GOP Governors Push Higher Sales Taxes, Increasing Inequality

Gov. Bobby Jindal of Louisiana (left) and other Republican governors are continuing their party's regressive tradition of promoting the cutting of personal and corporate income taxes and raising sales taxes. Taxing consumption instead of income, favored by conservatives, benefits the rich and hurts those lower down the economic ladder. Joseph Henchman of the conservative Tax Foundation acknowledges the reason that some are against this policy: "It’s just that some people prioritize fairness":

In Louisiana, Gov. Bobby Jindal is pushing to repeal the state’s personal and corporate income taxes and make up the lost revenue through higher sales taxes. Gov. Dave Heineman of Nebraska is calling for much the same thing in his state. Gov. Sam Brownback of Kansas wants to keep in place what was supposed to be a temporary increase in the state sales tax to help pay for his plan to lower and eventually end his state’s income tax.

...Taxing consumption has the potential to lift economic growth by encouraging more savings and investment. But the shift could also increase inequality by reducing taxes predominantly for the wealthy, who spend a smaller share of their income than middle- and lower-income people.

“The question of whether we should tax income or whether we should tax spending is really a proxy for a different debate,” said Joseph Henchman, vice president for state projects at the Tax Foundation, a conservative-leaning research organization. “Everyone agrees we’ll get more growth with consumption taxes. It’s just that some people prioritize fairness.”

...For Mr. Jindal and other Republican governors who are considering a presidential run in 2016, there are obvious political benefits to having a robust income tax-cutting record to present to conservative primary voters.

But Democrats say the approach would lead to cutbacks in education, health care and other vital services while shifting relatively more of the tax burden to those who can least afford it.

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