I opposed the proposed Georgia SPLOST (special-purpose local-option sales tax) for transportation because a sales tax is regressive. The smaller the income, the larger percentage of income is taken by a sales tax. Some people said that was true, but the immediate need for money for transportation was too important, if we didn't pass this it was the last chance to get transportation funds. Of course, the claim that if it didn't pass, the Georgia legislature would not go back and try another plan. Which was nonsense. If nothing else, their campaign donors need road improvements. And as I told them, if we keep letting them get away with these sales taxes, they will never change. The Republicans and their power elite backers like sales taxes precisely because they are regressive.
Well, lo and behold! Now Georgia Republicans are proposing bills to reduce the income tax and replace it by increasinng the sales tax. If you are surprised, I have a bridge I want to sell you.
Republicans in other states are trying to do the same thing.
http://jacksonville.com/news/georgia/2015-08-29/story/georgia-gov-deal-urges-legislators-use-caution-phasing-out-income-tax
Georgia Gov. Deal urges legislators to use caution on phasing out income tax
By Walter C. Jones Sat, Aug 29, 2015 @ 6:15 pm
ATLANTA | Republicans’ long-held goal of ending or reducing the state income tax could wind up hurting the state’s finances by scaring bond investors.
And that’s the reason Gov. Nathan Deal is urging his fellow Republicans in the General Assembly to go slowly and carefully.
“I have asked them to be very cautious,” he said Friday after addressing a science-education group.
This month, the House Ways and Means Committee held the first of a series of hearings on a bill that would shrink the income tax from 6 percent to 4 and compensate by boosting the sales tax from 4 percent to 5, all over three years. Backers say the bill would attract the owners of small and medium-sized businesses, the type that are growing and generate high-paying jobs.
Business that depend on lower and middle income customers would be hurt, because their customers would have less money to spend.
The legislature created a separate citizens’ tax reform commission expected to call for the complete phaseout of the income tax when it meets this fall. Leaders in the legislature have, for years, been calling for replacing the tax with a higher sales tax.
So, why would these politicians in Georgia care what investors on Wall Street think?
It’s because the state needs their money. It borrows around $1 billion each year by issuing 20-year and 30-year bonds to them.
The investors hand over the money in exchange for semiannual interest and principal payments. The state uses their money to build roads, schools and offices.
If investors, who are usually mutual funds, insurance companies and pension plans, think there is a chance they won’t be repaid, they ask for a higher interest rate to mitigate their risk. Higher interest costs the state money it could otherwise use to fund education, health care or other public services, so officials like Deal try to keep investors happy, especially the rating agencies that grade bond risks.
“From what I have seen and read of their comments, even the introduction of legislation to [cut taxes] sometimes gets noted in their assessments of why they gave us a certain rating,” the governor said.
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Kansas shows what can happen. It eliminated its income tax in 2012 and 2013, and since then, it experienced mounting budget deficits, prompting increases in sales and tobacco taxes. It has also had to pay higher interest rates on the bonds it issues, including those issued to cover the deficits.
Making matters worse, the expected economic stimulus from the tax cut didn’t materialize. Slumping sales there have resulted in lower sales-tax collections than anticipated, the state announced Friday.
Moody’s Investors Service, one of the major rating agencies, downgraded Kansas bonds last week.
“Kansas’ economic recovery has been slower than many of its peers, and growth so far in 2015 has been disappointing,” Moody’s said.
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Doing an internet search, I found that Republicans are trying to do this elsewhere. There might be others I didn't see:
U.S. Congress
Kansas (which already did this, with disastrous results)
Idaho
Louisiana
Maine
Minnesota
Mississippi
South Carolina
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