Some thoughts on using only a sales tax on all goods and services. The Moffett-Harmon ticket proposes using such a tax with no exceptions to fund Kentucky state government.
First let’s give credit to these guys for trying to think of a new way of approaching the revenue question. There basic idea, as near as I can tell, is that a 6 percent tax on everything sold in the state coupled with some cuts in programs would provide all the income Kentucky would need.
I agree we need to expand the sales tax base to services. But the key to keeping the existing sales tax rate at 6 percent is taxing all the food and medical items that are now excluded. In this system the taxes paid by lower wage earners or someone on fixed income would be proportionally higher than the taxes paid by higher wage earners.
Now if we exclude food and medical items from the sales tax the rate would probably be somewhere in the 10 to 12 percent range to meet the state budget needs. The only way to keep the rate lower is to make drastic cuts in state programs and services.
So when talking about a flat tax on everything sold, the question becomes what do you really think is fair.
Option one is balancing the state budget on the backs of those least able to pay. I personally have a hard time tell someone with a fixed income they need to pony up the same as a millionaire on everything they buy.
Option two is raise the sales tax to an exorbitant rate. Can you really see the wimps in the Kentucky Legislature growing a backbone and doing something like this?
Option three is to reduce the services of state government to match the existing revenue. I can go with this, but I just want anyone (that means you Politicians) in favor of this to tell me exactly which program you want to cut and which service you want to eliminate, and make sure you tell us the dollar amount you are going to save by doing this.
One final thought on a universal sales tax. What if we had different rates for different items? For example, maybe a 1 percent tax on food bought from a farmers market, a 3 percent tax on food bought at a supermarket, and how about a 50% tax on country club memberships, limo rentals and diamonds. Seems fair…….