October 30, 2004

Tax-Switching Proposals

Plenty of people, notably libertarians and libertarian-Republicans, have fantasies about switching tax schemes from income to sales or from property to income or from sales to property. I dislike these plans, and I gave a rant on it to the Free State Project in that thread. I liked the rants and I wanted to reproduce them here for posterity and visibility. It's easy for discussions to get lost in the fog of netboards, so I figured this would differentiate them and archive them. Here we go:

Here's what we should emphasize in all policy discussions:

1) NO INCOME TAX. NOT NEGOTIABLE.

2) NO SALES TAX. NOT NEGOTIABLE.


Most people in New Hampshire, especially the ones who would not consider suicide better than voting libertarian, revere their lack of income tax. Businesses prosper and poach business from VT and MA for the lack of sales tax. I couldn't foresee any spending needs that could justify starting these taxes. Once started, it would be impossible to get rid of them.

It's almost problematic to suggest eliminating one type of tax (say property tax for NH) and replacing it with another (sales or income tax). Your opponent can ALWAYS just mention the part where you raise taxes and neglect to mention the cut. It'd have to be wildly popular and VERY well known for us to make a tax switch. I personally don't think it's a good idea, especially since income taxes are so confiscatory and sales taxes dampen business profits.

So I think we should always pledge to NEVER EVER make a sales tax or an income tax. We could, in theory, add some proviso that we'd change it out if it became very clear that switching completely from one type of tax to another were a good idea. Again, I think tax-switching is politically stupid and I like the way NH is with regard to which taxes I'd least like to endure.

3) REDUCE PROPERTY TAX AS MUCH AS POSSIBLE

This is self explanatory. Vermont shows how bad property taxes can get, and I really hate the idea of people being taxed right out of their homes.

4) BALANCE THE BUDGET IN ALL CASES TO PROTECT AGAINST ANY NEW TAXES

Democrats in New Hampshire sometimes suggest (I'd say 'threaten' to be honest) raising taxes or creating new taxes in order to balance the budget. This was part of the reason Benson (hooray for him) vetoed the budget, it wasn't balanced and could have lead to an income tax.


As a companion issue, I've been kicking around two other ideas, perhaps not as popular in NH, but they would allow us to cut propoerty taxes but still balance the budget.

The first is marijuana decriminalization. This is where it's not legal, but if they catch you with it they don't waste time or prison space on you, they just confiscate the weed, maybe a fine or something. I really like this not just because it would allow a reduction in the exorbitant costs of arresting and incarcerating potheads, but also because it frees up police to go out and catch kidnappers, rapists and violent criminals.

I also think we should look at making the state UNH system base itself more heavily on tuitions. Most of the STATE education budget's controversy is in the university system, though. Reagan as Governor in California deregulated there in 1960s and since then the UC schools are almost all some of the best schools in the country - public or private. I don't think we need either Reagan or California as a model, but certainly if there's a way to cut the budget costs of a program and to increase its prestige, it's worth exploring. Sidenote, I'm actually looking at attending UNH for grad school and later for employment, and still think dereg and higher tuitions are a great idea. We could introduce higher tuitions for half the students, let low-income students get good scholarships and I think the reform would pass.

There are other ways we can cut state budget costs and thus cut taxes, but I think those two are biggies.

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-- End number one. I also gave a second one to emphasize why tax-switching is a bad idea for a third party in New Hampshire to waste time with. I should also point out that when third parties get elected, it's because they ride popular issues into the center of the debate. When they try to ride new issues in without a base that cares, then they're screwed. Almost everybody hates taxes, and if libertarians can stress taxes and just a few other issues really, really hard in their appearances, it could propel them into influence. If they watse time with obscure tax-switch plans (only income dervied from property sales! :P) then it really dilutes almost the entire appeal it has to the center. So here is that one:

Also, to reiterate on taxes:

Any change wherein we introduce a tax on sales or income, even if it reduces the overall amount of taxes paid, can be attacked as a new tax and a tax hike. We have to be VERY cognizant of this danger, because it happens to better organized groups than ourselves. Rather than endorsing the best policy absent all political considerations, we have to adopt the best strategy we can get the state (the courts, the Governor, the legislature, the voters) to accept.

That means we have to ignore all of these bright ideas for major tax changeovers unless we can be positive everyone will get the entire message. I don't believe that's possible until there's a Libertarian Governor (assuming the LPNH achieves that), since a Governor has the most power to address the media and the populace on matters of state policy. Short of that, and perhaps even including that, we need to stick to a very simple, easily communicated and easily understood policy - yet one we are positive still works.

KISS- Keep It Simple, Stupid. The easier it is to explain, the easier it is to sell. We can take a complex plan to eliminate old taxes in favor of whole new ones, we need to stick to ideas that, though they may seem boring to some of you, are both effective and easily illustrated.


Everybody can understand "no new taxes; cut old taxes" and more importantly, it's easily explained in a 30-second (or even 15-second) spot on TV and radio. It doesn't require a complex analysis or a detailed description. Best of all, it doesn't take any further explanation to get people on our side.


It takes more time to explain any tax-switch proposal because a) you have to explain that overall taxes will not go up, b) people have to trust this isn't yet another swindle, c) people have to trust the fact that there's a whole new tax but they're paying less, d) even if they believe all of the above, they have to believe that it betters to change what they're used to based on the strength of your evidence and arguments. That means D) will require a great deal of time and research to get all the evidence necessary to show the benefits.


It's silly for us to take one of the most popular libertarian positions, cutting taxes, and then mess with it by trying to get all fancy with tax-switching proposals. People want the government to stop screwing them over. They don't care very much about the way the government is screwing them over as long as it's doing less screwing.

Let's stop discussing these tax-switching proposals and focus our political energy on easily achievable, ALREADY POPULAR goals: cutting the taxes as they exist now. Please trust me on this one.

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