Thursday, February 01, 2007

Woohoo! another sales tax proposal!

A new sales tax proposal doesn't surprise me, but this does.
"This version is sponsored by five House Republicans. It would drop the income tax from 9 percent to 6 percent. It also would reduce the capital gains tax and the number of people subject to Oregon's estate tax."
A couple of questions -

First - Has anybody in Salem stopped to consider that this would amount to a federal tax increase on Oregonians? If you pay 30% less state income taxes (deductible on your federal taxes) but replace it with the equivalent sales tax (not deductible on your federal taxes) then the result is net wash on the state level, but an increase on the federal level.

Second - while drawing money out of the underground economy does make sense, what if it increases the underground economy? when I lived in Texas (no income tax, just sales and property taxes), my brother-in-law and I would do painting bids and the perspective customer would almost always ask, "is that the price if I write a check, or if I give you cash?"

I have not had time to dig into this much, but one thing I know. It is not a revenue neutral proposal. Nothing coming out Salem is revenue neutral.

I know that this will be the topic of much debate and blogging.

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