Skip to comments.Eureka! The fix California needs is foundů
Posted on 03/28/2012 11:30:08 AM PDT by landsbaum
California need not drown in debt and economic failure. So says Arthur Laffer, the happy advocate of a flat tax for California to solve the Golden States ills.
We are inclined to favor a flat tax, as weve intimated and bellowed from time to time. And Laffers new book, Eureka! How to Fix California, is a blueprint for replacing the existing state and local taxes with a single, 5.8-percent flat income tax on personal unadjusted gross income. . .
(Excerpt) Read more at orangepunch.ocregister.com ...
No, I'll pass.
Since you're the author, can you summarize?
Go ahead and post it if you think it is worth while.
I like Mark and all (I take OC Register on my Kindle), but I sure wish he’d respond to these threads he keeps posting excerpts of.
He is just interested in using this member funded group to get more hits.
Sorry, ain't gonna happen.
He's not interested in your opinions or any interaction.
He's just here for the hits. Check it:
... of 3, 1 of 4, 1 of 10, etc.
Yeah, I looked at that before I posted my comment.
Arthur Laffer, you know that the LIBERAL ZOMBIES in California will NEVER go for a fla tax. Maybe in a state like Texas, but the state of Zombiefornia, never.
Dr. Laffer Proposes a 5.8% Flat Tax for All Californians
... "Eureka!" surveys Californias economic history and fiscal policies beginning with Governor Ronald Reagan. Dr. Laffer shows the results of public policies that have powered extraordinary growth for the state, and those that produced economic decline. In "Eureka!", he examines:
the economic performance of all 50 states by comparing tax policies -- including personal income tax rates as well as corporate, estate, and sales taxes
the economic performance of right-to-work states versus forced-union states·
Californians Form 1040s over a 15-year period to evaluate the migration patterns of Californians at various income levels.
the root causes of Californias housing booms and busts, and
the power of the unions, bureaucrats, and other special interests that have held back the state from overcoming its fiscal problems...
Laffer will be appearing at the Lincoln Club of Orange County this evening to raise funds for the Stop Special Interest Money Now initiative, which he has endorsed. "The November statewide initiative will stop the flow of special-interest money from corporations and unions to Sacramento politicians. Analysts are already branding it a battle that could change the balance of power in Sacramento." Dr. Laffer concludes Eureka! with recommendations for reform, including a flat personal income tax rate of 5.8 percent for all Californians. California has been on a rollercoaster ride up and down the Laffer Curve, said Dr. Laffer. How do you think I got the idea in the first place?
I have what I think is a better idea. Drop the personal income tax(and corporate income tax)for CA altogether and institute a extra 5% on the state sales tax. This would tax everyone equally, allow no deductions for any reason what so ever and save millions on not having to process millions of individual tax forms every year.
An extra 5% added to the sales tax would make it 14% in most places. Retail businesses would disappear as people did all their shopping online or on trips across state lines.
We need to go in the other direction — REDUCE the sales tax rate down to 5% total but have it apply to ALL goods and services. At the same time, retain the income tax, but reduce it to a flat 3% rather than the 5.8% Laffer suggests. His 5.8% figure is only required because he leaves the sales tax as-is — the current base includes less than 30% of all purchases because rents, groceries, utilities, and virtually all services are excluded. The current sales tax base is the epitome of attempting to tax the “rich” — no tax on “necessities” but high tax on “conveniences” and “luxuries”.
I’d be interested in how Laffer adjusted for the fact that so much income is not being reported because it is going to illegals under the table. His 5.8% seems high to me so I assume he left all the illegal income as untaxed.
The only viable option for real tax reform is to trash the income tax(both individual and corporate) altogether and drastically reduce the IRS and it's powers to screw over US citizens.
The reduction, or even the elimination of the IRS and replacing it with some other agency with only the power to collect sales taxes, would save millions of dollars a year. Not to mention eliminating one of the weapons that the feds use to intimidate each other and to use as a weapon against anyone who disagrees with them.
This article is about CALIFORNIA, not the nation as a whole. It is much easier to cross state lines to shop than it is national borders. This makes it critical not to rely on a single very high sales tax for revenue — people avoid a high-rate tax in situations where they would not bother if the rate was lower.
You said “add 5% to the sales tax”, and did not say you would include all goods and services. The current sales tax is roughly 9% including the state and county/city rates, but it applies to only 30% of purchases. This revenue would be effectively replaced by a 2.7% tax rate if it applied to all purchases. Instead, you want a 14% sales tax rate on all purchases ?? You want a 500% tax increase ? That is overkill. A sales tax rate that applied to all purchases would only need to be 7% to replace both sales tax and income taxes in CA, plus the extra 1% county/city sales tax. That means a total 8% sales tax to replace both sales and income taxes. Not your 14% rate. Even at 8%, you will get a lot of flack from retirees who are spending savings they already paid income taxes on and now will be taxed again when spending it. By lowering the sales tax to 5% on EVERYTHING, their overall situation is not much different than the 9% they are currently paying on “non-necessities”.
By retaining the income tax at 3%, you still collect money from people earning in CA even if they save their money and later run off and spend their money elsewhere. Two low rate taxes, neither of which is worth much effort to evade, are superior to a single high rate tax which can only encourage evasion.