You Got to Be Kidding Me!

Lots of Tax Initiatives on State Ballots This Year

Posted in Economics, Politics, taxes by Stacy McMahon on August 20, 2008

High gas prices seem to have people looking at more than just what kind of car they drive, or at least anti-tax groups seem to be hoping they are. According to the WSJ (link via Instapundit) there are more tax initiatives on state ballots this year than ever before. The most interesting ones are a proposal to raise the state sales tax in Minnesota, and another one to phase out the state income tax in Massachusetts.

The Journal writer is probably making too much of the latter – “the New Hampshire Advantage” (no state income tax) has been drilled into Massachusetts residents’ heads for years and lured more than a few Bostonians to Manchester or Portsmouth. Still, any move away from income taxes is a step in the right direction. There are good arguments as to why replacing income tax with sales tax (or VAT – Value Added Tax – as the Europeans call it) could have some practical difficulties, but I think the greater efficiency (less incentive distortion and fewer opportunities for loopholes) of a sales (or consumption) tax is worth the effort to solve those problems. In any case, it’s worth watching the results — Boston is notoriously one of the most expensive cities in the world, and in spite of the commonwealth’s reputation as “the people’s republic of Massachusetts”, its suburban and rural residents have elected Republican governors and representatives. Together with a spate of corruption and budget overrun scandals (Big Dig, anyone?) they have plenty of reasons to vote their government less money to waste.

Update: The Massachusetts initiative’s sponsor, Carla Howell, is interviewed in the latest Glenn and Helen Show