Wednesday, April 22, 2009

Herald lead editorial cites BHI sales tax study

Expanding the debate on taxes, The Boston Herald cites BHI's new study on a proposed sales tax increase for Massachusetts. The choice words are here:
That 20 percent increase in the sales tax no doubt will be filed as an amendment to the House budget on which debate is expected to begin April 27. That’s because for many lawmakers hitting up the taxpayers is easier than saying no to public employee unions (who would be asked to pay a greater portion of their health insurance under the proposed House budget) or cops (who would lose Quinn Bill pay hikes for college degrees).

But the Beacon Hill Institute study found that the 20 percent sales tax hike would “destroy 10,182 private sector jobs and reduce investment by $41.31 million per year. The average person would lose approximately $369 a year in wages.”

The tax, of course, is the most regressive and would hit low income families hardest. Also bearing the brunt of the impact would be small retailers along the New Hampshire border - already an endangered species - as Massachusetts residents head north to avoid taxes on computers and a host of high-ticket electronics.

The Institute noted that the state was already losing about 2.2 percent to 3.5 percent in sales taxes to Internet sales. And that’s 2008 holiday season sales increased by 16 percent over the previous year, while Massachusetts’ sales tax revenue dropped 8.6 percent for the same period.

There may be nothing that can be done to stop that kind of bleeding, but there’s no need to make it worse either. And that’s what a sales tax hike would do.
Tax increases have consequences.

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