Substitute “sales tax” for “flat tax,” and those two men could be Phil Berger, boss of the North Carolina Senate, and Pat McCrory, the new governor.
Or in McCrory’s place put Art Pope, the reactionary retailer who bought the legislature two years ago and is now chief budget adviser to the governor some people already regard as Pope’s puppet.
The scheme Berger brags about would replace the personal and corporate income tax with sharply higher sales taxes on goods, including groceries, and on services such as those provided by beauticians, auto repair shops, real estate and insurance brokers, and conceivably even doctors and hospitals.
That’s straight from the propaganda mills that Pope controls, and it’s good news for wealthy North Carolinians like Pope, whose tax bills would shrink dramatically.
But it would be cruelly unfair to many others, especially retirees trying to live on their savings. Any shift from taxes based on income to taxes based on spending spells disaster for people whose entire incomes — or savings — must be devoted to necessities.
According to the North Carolina Budget and Tax Center, it would cost $10 billion to eliminate the state’s personal income tax. The sales tax would have to be more than doubled, to 13.88 percent, to make up the loss. Those with average incomes of $65,000 and higher would pay less. Everyone else would pay more, with the steepest increase, 5.6 percent, affecting people who earn less than $18,000 a year.
The North Carolina tax system is already tilted somewhat against the poor and middle classes, who pay a higher percentage of their incomes than the wealthy. It would be beyond wrong to make this even worse; it would be evil.
That’s not to say that the sales tax isn’t overdue for reform. As consumer spending continues to shift from durable goods that are taxed to services that are not, the sales tax pays for an ever smaller share of the state budget. It would be a progressive step to extend it to services — as the Budget and Tax Center recommends — but only if the rate of tax is reduced in the bargain. It should not be part of a scheme to soak the poor and spare the rich.
That worst of all worlds is dangerously near to being a done deal. Nobody but McCrory can stop it. Will he?