Wednesday, March 01, 2006

My Take on Tax Structure

I have often maintained that of the two trials the greater problem is not taxes, but spending. When it comes to strangling the economy and limiting personal freedom, the manner in which revenues are collected is not so important as the sheer volume of collecting/spending.

Government spending cannot, as is now the case, continue to grow faster than our earnings. At some point it will cause a collaspe, like the slow-motion one we now seem to be in. I would advise that we make it illegal, with penalties, for our rulers to continue spending money at a rate greater than we earn it.

Still, the manner in which taxes are collected does matter.

(click day below for rest of article)


Blogger Mark Moore (Moderator) said...

For example, keeping a retail sales tax on energy used by manufacturers makes little sense. The energy used for manufacturing is clearly not a retail sale. Also, higher energy costs make Arkansas less competitive with any other state's industries that consume energy- in other words, all of them.

This is a tax that is inaccurately applied and retards economic growth. If it were eliminated, we could keep and get more jobs, thus offsetting some or all of the lost revenue.

***The other thing that needs changing***

Mike Masterson and others have noted how regressive our total tax system is. We rely on sales tax for about as much total revenue as we get on income taxes. The sales tax, especially absent an exemption for food, is quite regressive, but even our income tax structure is deceptively regressive.

Why? Because our personal exemption amounts are paltry compared to other states. Not all states even have income taxes, but here are some comparisons from those who do....

Arkansas has a $20 per person tax credit, which equals about a $300 personal exemption at the $30,000 income level, and even less on higher incomes.

Compare that to......

Alabama: Personal Exemptions: Single - $1,500; Married - $3,000; Dependents - $300

Arizona: Personal Exemptions: Single - $2,100; Married - $4,200 with no
dependents, $6,500 with one dependent; Dependents - $2,300; 65 years or older - $2,100

Connecticut: Personal Exemptions: ** Single - $12,750; Married - $24,000; Dependents - $0

Delaware: Tax Credits: Single - $110; Married - $220; Dependents - $110; Over 60 - take an additional $110 (five and one half times as large as ours)

D.C.: Tax Credits: Single - $1,370; Married - $2,740; Dependents - $1,370

Georgia :Personal Exemptions: Single - $2,700; Married - $5,400; Dependents - $2,700

Idaho: Personal Exemptions: ** Single - $3,200; Married - $6,400; Dependents - $3,200

Iowa has tax credits that double ours.

Illinois and Indiana have much larger personal exemptions, though without a standard deduction.

Kansas: Personal Exemptions: Single - $2,250; Married - $4,500;
Dependents - $2,250

Louisianna: Personal Exemptions:** Single - $4,500; Married - $9,000; Dependents - $1,000; 65 and older - $1,000 (but no standard deduction).

Kentucky is the same as ours- one of the few that is so low.

Maine: Personal Exemptions: Single - $2,850; Married - $5,700; Dependents - $2,850

Maryland: Single - $2,400; Married - $4,800; Dependents - $2,400
Additional Exemptions: 65 or older - $1,000 each additional dependent

Minnesota: Personal Exemptions: ** Single - $3,200; Married - $6,400; Dependents - $3,200

Miss: Personal Exemptions: Single - $6,000; Married - $12,000; Dependents - $1,500

Missouri: Personal Exemptions: Single - $2,100; Married - $4,200; Dependents - $1,200; Plus $1,000 for dependent 65 or older.

I could go on, but you get the idea. Arkansas has a much more regressive, and anti-family income tax system than the bracket chart alone would indicate because of it's extremely low personal exemption amount relative to other states.

Everyone seems to have a plan for what to do with the state's budget surplus. I do as well- give it back.

Use it to finance a generous increase in the personal exemption amount. Look at it as a simpler and easier way to have a defacto exemption in the sales tax for food. Finding a way to do exempt food is complicated because you have to reprogram registers to have a different rate for food and non-food items. There are products where it is hard to know if they qualify as groceries or not.

But if taking the tax off of food is hard, taking the tax off of food eaters is as simple as raising our personal exemption to parity with the rest of the country.

Tax reform anyone?

10:54 PM, March 01, 2006  
Anonymous Springdale and Proud said...

Jim Holt has votred for tax increases. He can't be trusted not to do it again. Matayo for Lt. Governor.

3:04 PM, March 02, 2006  
Anonymous soyouwantapieceofme? said...

Was this article even about Senator Holt? Do Matacko's mad dogs have to turn a thread about tax policy that give's Asa's energy tax plan a thumbs up into another hate-fest over this poor guy.

Did you know Doug Matayo supported $3.2 Billion dollars in NEW spending in the 05 session and on? Of course he managed to not be in the room when the taxes to pay for $300 million of it were passed. Still, we would have had $2.9 billion more in bills to pay coming so SOMEBODY would have had to vote for a tax increase to pay for it.

I guess Mr. Matayo just wants the credit for "what I have done for you". The blame for raising the taxes to pay for his spending goes to others.

As far as I know, Holt has never voted for any tax. Well, there was a booze tax that he voted for. The Eagle Forum rates him as one of the top five legislators. You may be a practiced spinner, but you are going to have a tough time painting Holt as a tax guy.

Painting Matayo as a big spender though, is as easy as painting by numbers.

4:32 PM, March 02, 2006  
Anonymous Anonymous said...

So you admit that Holt voted for a tax increase? Why would he want to open greater revenue streams for the government?

7:42 AM, March 03, 2006  
Anonymous Anonymous said...

"Earth to anonymous@7:42. Come in, anonymous..."

(Obviously, no one's home.)

11:03 AM, March 21, 2006  
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10:02 PM, March 16, 2007  

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