Replace All Federal Taxes on Income with the Fair Tax Act , HR 25
New Study: Property Tax vs. Sales Tax
The Texas Public Policy Foundation recently published a study co-authored by Art Laffer relating to tax reform at the state level http://www.texaspolicy.com/pdf/2009-04-taxswap-laffer-posting.pdf.
Essentially, the study provides support for a sales tax being the best approach to taxation from an economic growth standpoint. In Texas' case, we don't have a state income tax, but our property taxes are out of sight. The study is very heavy on economic theory (barely readable for non-economists), and is another arrow in our quiver in favor of the FairTax.
As more states investgate moving to a FairTax type system, that can't help but improve the chances for the FairTax at the federal level.
Essentially, the study provides support for a sales tax being the best approach to taxation from an economic growth standpoint. In Texas' case, we don't have a state income tax, but our property taxes are out of sight. The study is very heavy on economic theory (barely readable for non-economists), and is another arrow in our quiver in favor of the FairTax.
As more states investgate moving to a FairTax type system, that can't help but improve the chances for the FairTax at the federal level.
Replies to This Discussion
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Permalink Reply by Ron Wenrich on
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PA has talked about going this route. I'm not in favor of it because it will take all local control of the schools and put them right into the state hands. Then we play politics to see who gets the biggest piece of the pie. My bet is Philadelphia and Pittsburgh make out a good deal better than some of the more rural counties. Elk county, for example, is getting no stimulus money, although it has a 13% unemployment rate.
They also started exempting certain products and services. Drugs and doctor's were exempted, for example. I don't think business to business was exempted. So, people who are subcontractors would have to figure out who was going to eat that sales tax. You can't pass all your taxes forward, or you'll be competing with out-of-state businesses that don't have the burden.
Its also a very regressive tax. The poor have to spend a greater deal of their earnings on basic necessities. People that are better off save money, and spend a lower portion of their income on goods and services. The Fair Tax has a prebate, and that makes it a more progressive tax.
One other thing to consider is if you put a sales tax on people, they'll do their shopping on the internet to avoid it.
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Texas is talking about a version of the FairTax. Our sales tax is already 8.25% and this would raise it to around 10% without a prebate and 11% with a prebate. Remember, we don't have a state income tax and the state already controls the $ for schools through a plan called Robin Hood.
Anyway, all I am saying is that the more we can get states to pursue and possibly even pass a tax structure similar to the FairTax, the more pressure there will be on the feds to do the same. After all, if the FairTax will do what we think it will do on the national level in terms of economic growth, it should do the same on the state level. The first state to pass a FairTax should reap huge economic rewards through businesses relocating to the state.
Of course, local control of schools is a completely different subject. One that is easily solved through vouchers - the ultimate form of local control: parents.
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The sales tax for PA is 6%. Food, clothing and services are exempt. Some of the larger cities are allowed to add a 1% sales tax. We also have a 3.25% flat income tax...no deductions. The locals also charge an additional 1% income tax. The county and the school district both levy property tax. Corporate taxes are some of the highest in the country.
When the sales tax increase was proposed, they said they would drop the rate to 5% and eliminate all property tax. But, the math didn't add up. They had a study that said it would, but that was smoke and mirrors. They lost credibility and the plan has pretty much been ignored by both parties.
The problem isn't the taxation, but how its being spent. They have pension plans for public workers that are totally unsustainable in the long run.
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Permalink Reply by Jim Tomasik on
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Tennessee has a state sales tax and the counties property tax.
We have a 9.75% sales tax with no prebate or exemptions that I know of.
So i think we are pretty lucky.
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Permalink Reply by chiefcook on
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I am not sure how other states operate, but in Florida all the taxes are collected by the State. The County Tax Collector is a State officer. He is elected to serve a single county, but the monies go to the State and then are dispursed to the local govenmental agencies. The tax rate set by the local agencies including school boards, county commissions, water control, etc as to the amount of revenue they want to apply to the property value set by another State officer (county property appariser). There is a lot of misunderstanding of the structure of state government and local agencies. This should be looked into in each state before one makes the assumption that the local agency will lose power that they do not have now
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Permalink Reply by micheleking on
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GA Senate "passed and adopted SR503", FairTax on 4/01. Haven't heard any more. Just looked on my GA legislature thing and I lack understanding.
The GA bill did impress upon the fed the need to pass fairtax. MO, TX, AK going FairTax! Is much better than ConConv.
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