1859 Summer 2009

sales tax may provide a more stable revenue source than income and
property taxes.
Fourth, the revenue instability problem can be solved with an adequately
sized rainy day fund, but the politics of the state’s “kicker law” have not
allowed this to happen. Adding a state sales tax is an opportunity to break
this political logjam and establish the rainy day fund that we need.
Fifth, taxing consumption encourages saving while taxing income discourages
work, so replacing income taxes with a sales tax increases the
incentive to work and save, both of which encourage economic growth.
Sixth, visitors use state resources while they are here, and other states
don’t hesitate to take our money when we visit them, so why not impose
a sales tax and return the favor?
Seventh, income is taxed differently depending upon the source (e.g. capital
gains are taxed less than labor income) and that distorts incentives. A
sales tax overcomes this problem.
Finally, the biggest problem with a sales tax is that it is regressive. However,
this can be addressed by exempting necessities, and by adjusting
other taxes and transfers to compensate.
Mark Thoma is a University of Oregon economics professor.
Sales tax is regressive. Poor people, wage earners, fixed income citizens
pay a larger percentage of their money on sales tax than the wealthy.
I have always been puzzled that Democratic politicians are the chief
advocates of a sales tax which hurts the “most vulnerable” people they
claim to protect.
A sales tax costs you more for everything. It’s not just the groceries and
the cup of coffee. Cars cost more, house renovations cost more, energy
costs more and entertainment costs more. Consequently the overall
state GDP declines, and our people live less well.
A sales tax always goes up. It may start as 1 or 2 percent, but once established,
it can be raised promiscuously by legislators.
A sales tax has a local disadvantage. Under most sales tax regimes, cities
and counties get a portion of the revenue. Cities compete ferociously to
attract shopping centers and big box retail stores because of the sales tax
revenue they bring. This is a disaster for small business and for urban
planning.
Jay Kushner is chairman of the Multnomah County Republicans
Is this as
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