Tuesday, May 5, 2009

Another nearby state looks at tax reform

As Kentucky draws closer to an expected legislative tax reform special session, North Carolina is considering a broad-based tax increase.

The John Locke Foundation weighs in:

"As I have previously argued, tax reform can only succeed when it is a net tax cut, not a tax increase. Lawmakers need tax relief both to mobilize the general public to favor the plan and to placate the objections of previously favored groups losing their special tax breaks. Otherwise, they’ll end up compromising in ways that make the “reforms” even less reforming than originally planned, while increasing complexity."

"Lawmakers also need to drop some of their more unrealistic goals. For example, both state and local policymakers have for decades schemed to force out-of-town business owners and tourists to pay for government services for North Carolinians. That’s silly. Few economists will tell you that it is wise to tax your exports, which is what such tax schemes consist of. Those who work, invest, and live in North Carolina should bear a tax burden roughly in proportion to the value they derive (at least in theory) from the provision of government services."

See the rest here.

As more states look at improving their tax systems, we hope Kentucky policymakers will consider wisely the various options rather than knee-jerking their way to a bigger bite of taxpayer money.

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