The State Income Tax War

A D.C.-based group marshals the defense against the ALEC-led push to kill income tax in N.C. and elsewhere
Louisiana Governor's Office

When you clear away the econobabble, the argument against doing away with state income tax and raising sales taxes is pretty simple: It hurts — to a degree people in the higher tax brackets do not seem to appreciate — a state’s middle-class and poor, strips them of buying power and damages both the economy and people’s lives.

Nevertheless, Republican legislators here in North Carolina are pushing for it. Bobby Jindal, the governor of my home state of Louisiana, has made it the cornerstone of his tax overhaul plan. In South Carolina, Gov. Nikki Haley has proposed cutting income tax brackets but not doing away with income tax entirely. (Congratulations, Old North State, you’re potentially more regressive than South Carolina, which I didn’t think was possible.)

Cue the pushback.

In the call and report, the CBPP said ALEC’s economic policy recommendations were “deeply flawed” and represented a disconnect from “mainstream economic research.”

“ALEC’s proposals to cut income and estate taxes not only pose a threat to adequate funding of services, but they also raise a very significant likelihood that middle- and lower-income households would pay highertaxes,” the CBPP study said.

The assertions made by the CBPP throw into sharper relief another report released last November naming Louisiana the sixth most income unequal state in America. Jan Moller of the Louisiana Budget Project said while its unclear how much ALEC’s agenda has influenced state policy, their concerns hold steady across the board.

“We have no way of knowing for sure how much ALEC’s work has influenced the governor’s tax-shift proposals – that’s a question only he can answer. But the similarities between the two are obvious,” Moller said.

“Our concerns about the ALEC agenda is the same concern we have about the Jindal tax shift: That it will result in higher taxes and fewer services for low- and moderate-income people while giving massive tax cuts to the wealthiest Louisianans (sic),” he added.

ALEC is this group. The CBPP is the Washington, D.C.-based Center on Budget and Policy Priorities, a left-leaning (meaning they pay attention to poor people) fiscal policy organization, which has marshaled a response to the “dump income tax, raise sales tax” movement that includes, besides the Carolinas and Louisiana, Kansas, Missouri and Nebraska. It’s worth a review. The money paragraph:

These policies would cut taxes deeply for wealthy individuals, investors, and corporations; shift tax burdens substantially from well-to-do to middle- and low-income households; and impose strict constitutional or legal limits on revenues or spending that would severely limit states’ ability to provide adequate funds for education, health care, and other priorities, and impair state economic growth.

It’s the farmer’s versus swarm of locusts’ approach to arable land: You can invest in and sustain it, or you can strip it of value, discard it, pocket the proceeds and move on to the next finite resource. Your choice.

Categories: Poking the Hornet’s Nest