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North Carolina Republicans are stepping out on a political high-wire.
 
Surely, most people love the idea of not paying personal or corporate income taxes.
 
But then you start looking at the details. Every business would pay a receipts tax. Everybody would pay (and businesses bill and pay) a tax on services – medical care, lottery tickets, haircuts, dentist visits, housekeeping and lawyers’ fees, just to name a few.

And your grocery taxes go up 400 percent.
 
Tax reform plans usually start out great, then wither when people see the details.
 
This one will be fun to watch.
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Luther Snyder
# Luther Snyder
Thursday, January 17, 2013 2:31 PM
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Chris
# Chris
Friday, January 18, 2013 1:07 PM
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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