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GOP Governor Bobby Jindal is proposing it. Another Republican governor, John Kasich in Ohio, is looking for a way to do it. So are GOP governors in Nebraska and Kansas.
Do what? Eliminate state income taxes.
Republican governors are moving aggressively to cut personal and corporate income taxes, including proposals that would increase reliance on state sales taxes, setting up ambitious experiments in tax reform that could shape what is possible on a national level.
Here's the plan in Kansas....
In Kansas, Mr. Brownback wants to pay for lower income tax rates in part by making permanent what had originally been a temporary sales tax increase, but also by eliminating deductions for property taxes and mortgage interest, setting off objections even in his own party.
What's the goal here. Why eliminate state income taxes and replace them with other taxes or tax increases? Proponents of eliminating state income taxes argue that...
Taxing consumption has the potential to lift economic growth by encouraging more savings and investment.
Quite frankly, I don't get that statement. Someone smarter than me....i.e....most readers.....will have to explain how eliminating the state income tax and then raising sales tax rates will "lift economic growth by encouraging more savings." Somebody help me out here.
But what I do know is this: state income tax rates are most often progressive.....which means that the higher your income, the higher income tax rate you pay on that income. I'm a believer in progressive tax rates.....because I'm a progressive. Those who have the most should be required by society to pay the most....for the benefit of all. Others disagree.
What GOP governors are up to by swapping state income taxes for increased sales taxes.....is looking to help the rich and powerful. Republicans and conservatives hopelessly believe in supply side economics. This debunked theory includes the faith-based belief that if society gives all the benefits to the already rich and powerful......low or no taxes, fewer government regulations....then, and only then, will our national economic forces be turned loose to 'trickle down' benefits to their lessers.There is no truth in supply side dogma....and it has never worked, ever, anywhere....but Republicans cling to it almost more than they do their guns.
GOP governors want to move the responsibility for paying for state government from the rich and place it on the not-rich. Average working families spend every nickel they earn and would, therefore, pay higher sales taxes than they pay in state income taxes currently as a percentage of their income. Everything they purchased would be taxed because average families spend everything they earn.....while the wealthy, who do not spend every dollar they earn, would only pay a higher sales tax rate (the same rate the lessers pay on all purchases) on the money they actually spent.
Under the higher sales tax/no state income tax plan, the tax burden would fall, regressively, on the non-rich.....and that is just fine as far as these GOP governors are concerned.
In the case of Ohio's Kasich, it is true he wants to LOWER state sales tax rates by a quarter of a percent.....but he also is looking to place new taxes on distillates pumped out of the ground in the state......which would act as a regressive price increase on energy, acting very much like an increased sales tax.
With these GOP governors, it's the economic philosophy which is mistaken. Pumping more money into the hands of the already rich and powerful...whether in lowering federal tax rates or eliminating state income taxes....will not, and have not in the past, led to more job creation or robust economic growth.
The wealthy......the mega-corporations....are not our job creators....consumers are. The one basic truth that we should have all learned from the Bush era of lower tax rates is that lower tax rates do not incentivize job creation nor do they guarantee economic growth. The lowest federal tax rates in 60 years resulted in the worst national job creation numbers in modern U.S. history and did nothing to avert the worst recession in 60 years.
So, when you read about these GOP-led plans to eliminate state sales taxes....and media portrays that elimination as a good thing....keep in mind that it will be the average Ohioan or Kansan family who will be paying a little more so that his wealthier neighbors can get a break.
And THAT is the only doctrine the GOP really cares about.