Comment by Luther Snyder on 'Tax Gamble'

Luther Snyder — Thu, 17 Jan 2013 19:31:50 GMT

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Comment by Chris on 'Tax Gamble'

Chris — Fri, 18 Jan 2013 18:07:30 GMT

Unfortunately, the GOP proposal doesn't address one of the big problems of that state's tax system: it is very dependent on the economic health of the state. We saw this after the '07 collapse, when revenue from income and sales taxes declined enormously, just at a time when needs for revenue were increasing. As a result, we had to borrow billions from the Feds to pay unemployment benefits.

Further, tying revenue to the economic health of the state is something of a one-way ratchet in the size of government: when tax revenues increase, politicians love to spend the extra money expanding the size of government. When they decrease, though, programs are rarely cut altogether; instead, they are just temporarily cut back.

The better option is a tax system where revenue increases with the number of people in the state and with inflation, but doesn't allow the one-way ratchet. For that, you need... a property tax. Since property is reappraised only occasionally, it does not suffer the same ups-and-downs as either an income or sales tax.

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Comment by Luther Snyder on 'Tax Gamble'

Comment by Chris on 'Tax Gamble'