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The Berger plan: Slash services; shift taxes to the middle class and poor

Phil BergerThe experts at the N.C. Budget and Tax Center will be out with more detailed analyses in the hours and days to come, but here are some preliminary takes on state Senate President Phil Berger’s big tax plan announcement/opening salvo in his race for the 2014 GOP U.S. Senate nomination:

#1 – Same ol’, same ol’ – This is what we had to wait more than four months for? After all the delays and big promises, all Berger and his aides could come up with was a plan to slash the state’s most progressive taxes (i.e. the personal income tax, the  corporate income tax and the inheritance tax) and raise more money from the tax that hits poor and middle class people the hardest — the sales tax. Oh, and since the plan won’t bring in the revenue necessary to keep government going at its already underfunded levels, the plan also contemplates lots more spending cuts to essential services. No wonder these guys are championing bills to raise class sizes and cut pre-K!

#2 – Perverting a good ideaThe sad thing about this is that there is a kernel of a good idea in this plan. The idea of expanding the base of the sales tax to cover more services that are currently untaxed and more frequently purchased by people of means is a good idea, provided we lower  sales tax rates significantly and provide for ways to assure the poor and middle class aren’t unfairly targeted.  At this point, however, it appears the Berger plan is to simply make more things subject to the sales tax at the current rate or something close to it. The BTC has already shown in its analysis of a similar plan why such a scheme will simply make our already regressive state tax system even more regressive.   

#3 – Making us more like the rest of the Deep South – The bottom line on the Berger plan, is that it’s ultimately predicated on the fatally flawed idea that what North Carolina needs is to be more like Florida or Alabama or Tennessee — other Deep South states with hyper-regressive tax codes and inadequate and threadbare public services. The Berger premise is that such an approach will make North Carolina more “business-friendly” and thereby somehow spur economic development. But, as study after study has demonstrated, this is simply incorrect. The truth of the matter is that lowering tax rates has precious little impact on economic development while other items like the quality of a state’s public education and transportation systems (and overall quality of life) are vastly more important.

In short, the Berger tax plan is just a gussied up version of the same old far-right prevarication that taxes (especially those that impact corporations and the wealthy) are inherently evil and that public structures and services that actually bind our society together and make us stronger should be run, if at all, on a shoestring.

Let’s hope House leaders and the Governor — who have already sent signals of skepticism regarding Berger’s radical and regressive approach — dismiss it ASAP so that lawmakers can get on with the business of passing a responsible budget and tax package in the coming weeks.

6 Comments

  1. Jack

    May 7, 2013 at 11:55 am

    With all the tax cuts how else is NC going to generate revenue unless a predatory state tax system is implemented?

    Our future will be full of new and additional taxes in the form of surcharges, tolls and fees. We’ll be taxed whether we choose paper or plastic and especially if we bring our own bag.

    If you have a personal chip implanted in you then doors of convenient stores, grocery stores, book stores and the mall will open-wide for you and your account will be changed accordingly. “Thank you, come again.”

  2. Doug

    May 7, 2013 at 1:29 pm

    don’t forget to note that it has been a dream of the democrats up in Raleigh to expand the sales tax base for at least a decade if not more. They just could not get the measures through due to infighting.

    You guys should be loving this though….if the libs ever get back in power what is the first thing to do? Just keep the sales tax scheme, and then raise the income taxes that way you guys are doubling up on the taxes to collect and re-distribute. You guys are just hating it because the current leaders are actually deciding to cut taxes elsewhere…including a zero tax rate for those unsung heroes “the needy”. This post just reeks of the scientific Law of Ignorance of Liberalism.

  3. RJ

    May 7, 2013 at 2:26 pm

    So let me get this straight, Doug. Internet companies, which already have some internet savvy or they wouldn’t be in that business, would be unjustly burdened by having to calculate and collect sales taxes. You wrote, “It is inevitable that a successful business in the current environment will be hurt by the burden of this regulation.”

    OK, so let’s assume you have a successful business as an accountant, providing services that up ’til now were not subject to sales and use tax. If the GA gets its way and you have to start collecting and paying sales and use tax, will your “successful business in the current environment be hurt by the burden of this regulation”?

    If so, why are you championing it?

  4. Doug

    May 7, 2013 at 4:13 pm

    Well,
    As an accountant….it will probably benefit me as I will be filling out forms for more people so I am good with it. I can’t see it being too much of a burden as for the most part you are working in one county or possibly multiple in the state so we should be good. The forms for NC are pretty simple…for government documents. Now keeping up with all those filings for say 50 states times how many counties and cities and special tax entities? That is quite a different story. Like I said earlier….for a small business that has the profit margin of 5-10% on the beginning range of that federal law it will be a burden.

    As an aside…it is nice to see you faux concerned with the small businesses in this state. Looks like someone here is possibliy making an attempt to think beyond the progressive box. There may be a small glimmer of light.

  5. Jack

    May 7, 2013 at 6:08 pm

    So what happens when someone in England or Germany buys online from a company in NC or some other state?

  6. Doug

    May 8, 2013 at 10:37 am

    Another interesting premise.