- Which States Tax Groceries? by Gerald Prante. The Tax Foundation is often asked which states exempt certain items from their general sales taxes, especially as they relate to food. The following is a list of the states that do tax groceries, and if applicable, which ones apply a special rate on grocery items.
- Challenge to Maryland Tax Increases Dismissed by Joseph Henchman. Carroll County Circuit Judge Thomas Stansfield yesterday dismissed a lawsuit challenging Maryland's recent tax increases.
- Vermont Is Latest State to Consider Lottery Privatization by Alicia Hansen. As we have said before, an outright lottery sale, not a lease, would be good news as it would get the state out of the lottery business entirely. Vermont is the most recent state to catch the lottery "privatization" bug, and is even hoping to beat the other states to the punch.
- Giuliani Tackles Taxes by Nate Bailey. Yesterday, former New York City mayor and GOP presidential candidate Rudy Giuliani unveiled his plan for tax reform and relief.
- Helping Two-Legs Good, Helping Four-Legs Bad by Joseph Henchman. When politicians start exempting certain groups from general taxes, they pick winners that pay no taxes and losers that pay higher taxes. Here, the line was arbitrarily drawn between charities that help needy people (winner) and charities that help needy animals (loser).
Over the weekend, Tax Foundation President Scott Hodge sat down with National Public Radio's Tess Vigeland to discuss the impact of taxes on the fabled American "middle class." The piece was part of a special edition of NPR's Marketplace program dedicated to discussing what exactly the middle class is and where these individuals and families stand today.
From the piece:
Vigeland: Have you ever heard politicians talk about taxes without mentioning the middle class? Well, we wondered whether all those targeted breaks are working. Scott Hodge of the Tax Foundation, do you think they are?
Scott Hodge: Over the last couple of years, we've tried to target the middle class with various sorts of tax deductions like the $1,000 Child Tax Credit and what we've done as a result is knocked millions of low to modest income people off the tax rolls and what that's done is put greater stress on the top 20 percent of taxpayers. Those earning roughly over $80,000 a year pay about 85 percent of all the income taxes in America today.
You can hear the entire interview with Scott here. You can learn more about income distribution and taxes here and here.
With California running out of borrowing options to cover huge budget deficits stretching back nearly a decade, Governor Arnold Schwarzenegger got everyone's attention with proposed budget cuts last week:
Schwarzenegger's proposed budget-cutting mechanisms include:
- A 10 percent decrease in education funding, including $4.4 billion in cuts from K-12 education and $1.13 billion from higher education.
- The closing of 48 of the state's 280 parks.
- A reduction of $1.13 billion dollars from the California Department of Health Care Services, including the elimination of dental care for low income residents on the state's Medi-Cal program.
- The firing of 7,000 state employees.
- An $11.7 million cut from the Office of Emergency Services-Disaster Assistance Program, less than three months after the state suffered from the most extensive and damaging wildfires in its entire history.
- A $175 million cut from the child services division of the Department of Social Services, which provides resources for abused, neglected, and deaf children.
- A 10 percent reduction in retirement benefits for military veterans, along with a $20.5 million cut in the California Department of Veteran Affairs - Veteran Homes Program, which provides nursing services and residential care for veterans.
In addition, the budget includes a provision to borrow $3.3 billion dollars approved under California Proposition 57, placing the state's poor credit rating under further strain and providing cover for future spending cuts.
Schwarzenegger is also proposing the early release of 37,000 prisoners from the state's overcrowded penitentiary system.
This is a classic example of the "Washington Monument" ploy used by government agencies to justify revenue increases or prevent budget cuts. A threatened agency, instead of trying to become more efficient, warns that it will have to cut or shut down the most popular service under its control. The name comes from the National Park Service, which gets Congress to approve budget hikes by warning that it would have to cut hours at the Washington Monument.
We're not the only one who thinks the Schwarzenegger budget plan is a stunt designed to gain public support for raising taxes:
To build a public groundswell for higher taxes, he crafted a budget -- or, more precisely, a budget narrative -- designed to make everyone howl.
So we're told there's an "across-the-board 10 percent cut" when in fact general fund spending is only down 2 percent. We're told education funding is going to be ravished when in fact it is only down by less than 1 percent in a year in which school attendance will decline. And we're told that cuts are so drastic than tens of thousands of prisoners must be released. Yet the Corrections Department budget gets a 6 percent increase!
Do you really think that a department getting 6 percent more money has no choice but to flood the streets with felons?
The script Arnold wants for 2008 could not be more clear: The Dems get a huge new tax increase. He gets a spending cap.
But the Dems know what Arnold is up to, so here's the script we could see instead: The Dems don't just get a huge new tax increase, they get Arnold's support for a constitutional initiative to allow the Legislature to adopt tax increases on a simple majority vote, not the present two-thirds.
Readers may notice that this blog post cites the World Socialist Web Site for coverage of Schwarzenegger's plan. It really is a well-written, relatively unbiased article about the budget proposal. Compare it to the slanted opening of this news article in the Los Angeles Times:
SACRAMENTO—The state's ability to protect children, renters, workers and the elderly as well as California's wildlife and its land would be impeded under Gov. Arnold Schwarzenegger's proposals for closing a $14.5-billion deficit, state agency reports show.
The proposed budget reductions, which Schwarzenegger submitted this week to the Legislature, would erode public protection programs across state government, according to hundreds of pages of assessments that agencies submitted along with the budget this week.
More on the Washington Monument ploy here and here. Thanks also to Richard Rider for updating us on California developments.
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