360° Coverage : State Tax Reform Advice For 2014 -- Think About Spending

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State Tax Reform Advice For 2014 -- Think About Spending
Photo Credit: Forbes Business

State Tax Reform Advice For 2014 -- Think About Spending

Jan 1 2014, 12:05pm CST | by

Writing for a tax magazine, I have always focused on the revenue side of public finance. I believe that there is either a right way or a wrong way to raise money to pay for public services. Everyone...

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42 weeks ago

State Tax Reform Advice For 2014 -- Think About Spending

Jan 1 2014, 12:05pm CST | by

Writing for a tax magazine, I have always focused on the revenue side of public finance. I believe that there is either a right way or a wrong way to raise money to pay for public services. Everyone assumes that any significant changes to the tax system must occur in a revenue neutral way – that is, we will be spending the same amount of money after reform as we did before reform. I have written about this before, making the point that there is no reason to limit changing the tax system in this manner. Neutrality is a political contrivance – designed to show that liberals and conservatives are nice people.

But in thinking about tax reform efforts in the past year, I am more convinced than ever that our refusal to rethink the size of government makes fixing problems with the tax code impossible. Here is what we know. Cutting government programs is difficult because each program has a constituency that will fight like a gladiator to protect its access to public money. So when the topic of tax reform comes up, conservatives and liberals vow to find a fix that will neither raise nor decrease spending. But we also know that politicians – the majority anyway – generally hate raising taxes. This reflects the fact that most of their constituents hate the idea of paying more taxes. But the costs of government continue to increase. And that leads to worse tax policy as states look to gimmicks, excises, gambling, and other junk ways of collecting revenue. It also ensures that some horrible tax policies are never fixed.

For example, business entities pay about 50 percent of all sales taxes in the United States. They should probably pay zero. Repealing the sales tax on business inputs would cost billions of dollars. No one has the guts to call for such repeal because it would require that other taxes be raised or government services be cut. One can make the same argument for repealing the state corporate income tax and the state estate taxes, neither of which work well in an open, global economy.

My advice? If you are not willing to pay for a certain level of government with broad-based taxes on personal income, consumption, and property, reduce your spending.

Source: Forbes Business

 
Update
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8 weeks ago

Khazanah throws MAS RM6b lifeline

Aug 29 2014 5:01pm CDT | Source: Business Times Singapore

August 30, 2014 1:15 AMKHAZANAH Nasional will inject RM6 billion (SS$2.4 billion) over three years to resuscitate loss-making Malaysia Airlines (MAS) under a recovery plan that includes even an Act of Parliament. Other key moves are migrating its operations, assets and liabilities to a new company (NewCo) and slashing th ...
Source: Business Times Singapore   Full article at: Business Times Singapore
 

 
Update
1

8 weeks ago

MAS posts loss of RM307m for Q2

Aug 28 2014 5:00pm CDT | Source: Business Times Singapore

August 29, 2014 1:13 AMMALAYSIA Airlines (MAS) registered a loss of RM307 million (S$122 million) for the second quarter to end-June, but warned of worse to come in the second half when the "full financial impact of the double ...
Source: Business Times Singapore   Full article at: Business Times Singapore
 

 

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