Sales tax elimination: intriguing idea but bogus economics

The RI Center for Freedom and Prosperity, whose funding sources I look into here, has a so-called “prosperity agenda” that calls for elimination of the sales tax. At first glance this would appear to be a reasonable direction to move our State. It is no secret the sales tax is one of the most regressive forms of taxation affecting the lives of low wage earners, and comprising a much larger percentage of their yearly income than that of wealthier residents of our State.

Taking a deeper look in 2012 the sales tax accounted for $824 million, 28 percent of our state budget. No where in the recommendation to eliminate the sales tax is there a mechanism by which to account for the loss of more than a quarter of our state budget which leads me to ask several questions.

The Center claims the lost revenue from elimination of the sales tax will be offset by increased business. This claim is intellectually dishonest and has been widely discredited. The lost revenue would clearly be made up with one painful cut after another to government services which would come as welcome prize for the Centers anti-labor benefactors.

Is it the position of the Center that a 28 percent reduction in the state budget will benefit individuals with developmental disabilities, elderly men and women, school children, and our state’s proud veterans? Will a 28 percent reduction in the State budget improve the lives of Rhode Islanders who depend on public transit to get to and from work, doctor appointments, and to conduct their daily lives?

When it comes to funding important priorities such as higher education, repairing infrastructure, supporting cities and towns, funding public schools, providing a safety net for those in need, and funding important public services count me as one citizen of Rhode Island who is not willing to play games with over a quarter of our state’s budget.

Although an intriguing concept with the potential to reduce the tax burden on working families there is no distinction made on how to replace the lost revenue associated with elimination of the sales tax. Policy grade- D-