In response to George Kraft's article "Taxes in Texas" from his blog Lone Star Observatory:
It should be noted that Texas is in the lowest fifth of states in terms of overall tax rate, and that most states have both income and sales tax. If Texas wanted to increase its revenue by bumping sales tax, there would be both potential gains and losses to consider. The idea of collecting (significantly) larger sales tax and eliminating income tax was floated on the national level starting with John Linder and his 2005 book The FairTax Book. Proponents of the measure cite as you do the economic benefits of taxing consumption rather than income and outline ways not to increase the effective tax burden on the middle and lower classes using rebates. Opponents have legitimate concerns, however; high taxes on consumption (23% in the FairTax measure) increase the incentive for tax evasion in the form of underground transactions, and rebate systems are open to serious fraud.
Wednesday, April 14, 2010
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