Tax cutters looking for ways to raise taxes

 North Carolina tax cutters are looking for scapegoats. Anticipating that state revenues will crater when they enact a series of new tax cuts, the GOP is trying to find activities unsavory enough that few North Carolinians will object to taxing them. Sports betting and “obscene materials” are on the tax man’s menu. The need for new sin taxes has inspired a hunt for sin. 

It’s easy to ridicule the GOP for wanting to tax porn and DraftKings wagers. But one should be clear that these are regressive taxes. Poor and middle-class people will pay proportionately more of their income from these levies than will rich people with predilections for low-end entertainment. In other words, the Republican Party is already seeking to raise regressive taxes to compensate for the fiscal fiasco their policies are likely to cause when Phil Berger gives his final farewell to the wealthy people whose trough he’s filled so many times in his interminable tenure at the top. 

North Carolina policymakers like to use the state’s Bible-Belt prudishness as a cover for tax increases. When Wall Street banks destroyed the U.S. economy in 2008, the Democratic General Assembly eschewed income tax increases for noticeable raises in the liquor and tobacco taxes. North Carolina, which ranks forty-forth in the country in liquor consumption, levies the highest liquor tax in the country. Cigarette taxes are relatively paltry given the continued power of tobacco-growers in our state. It was considered a feat of considerable political courage when Governor Bob Scott coaxed a five-cent (yes, five-cent) cigarette tax out of the cigarette-strewn chambers of the General Assembly. Legislators both Republican and Democratic have sought to extract revenue from other seedy industries rather than demand that the wealthy pay a reasonable share of the tax burden in our state. 

Porn taxes may be upon us because Republicans have successfully “starved the beast” of state government. Coined by supply-side economics advocates, the term “starve the beast” refers to a strategy of deliberately cutting government revenue in order to force spending cuts. North Carolina Republicans have fulfilled this mission quite handsomely. Since 2011, state-government spending as a percentage of North Carolina’s GDP has fallen by one-third. To put that figure in perspective, consider that Thomas Jefferson’s radical Congress cut the young federal government’s budget by 50%. Centuries later, when citizens rightly expect their government to do far more to ameliorate social ills, the neo-Confederate NCGA imposed spending cuts that rivaled Mr. Jefferson’s. The impetus for this radical downsizing was a series of tax cuts that have reduced government revenues by tens of billions of dollars. 

But the Mark Robinson Tax, as one might call it, almost certainly will not compensate for the vast revenues likely to be drained from state and local government in the coming years. The State Office of Management and Budget estimates that scheduled income tax cuts will cost an additional $5 billion if they go into effect. The GOP hopes (and its prospects do seem promising) that voters will approve constitutional amendments to gut local property tax revenue and legally prohibit future legislatures from ever reversing Phil Berger’s tax cuts for the rich. Mr. Berger and his young sidekick Destin Hall hope to gleefully punish local governments for wanting to provide services like parks, libraries, public schools, and other amenities that promote literacy and culture. 

The history of North Carolina’s tax policies is largely regressive and has gotten much worse since Phil Berger conquered the legislature in 2010. But the latest attempts to cut taxes for the rich and make the poor deal with it are at odds with parts of our political tradition. In the 1920s, North Carolina was the first state—under a largely conservative political machine—to enact a progressive income tax. Later in the Great Depression, state government sought to help local governments stay solvent by removing the burdens of funding roads, schools, and prisons from counties and towns. This generosity has left the legislative building. Instead of administering a fair tax system, GOP tax writers are looking over your shoulder to see if you’ve placed a bet on the Stanley Cup finals. If so, you’ll be paying for the tax-cut feast Phil Berger has delivered to the rich on fine China. 

This article was originally published on newbranchhead.substack.com