RALEIGH – Those who profess to care about fairness in taxation should take note of the leadership shown by two liberal Democrats who represent Durham in the North Carolina House: Larry Hall and Paul Luebke.
Local officials in Durham, one of North Carolina’s most heavily taxed communities already, have long sought the authority to impose a new 1 percent prepared-foods tax to fund tourism-related construction projects such as a new museum and civic-center improvements. Hall and Luebke are against the idea on the grounds of fairness and sound budgeting.
“We need to have a broader discussion about what are our priorities going to be,” Hall told the News & Observer. “I’m real hesitant to say the poorest person who’s getting little or no benefit should pay for some of these cultural amenities. People who can give you that perspective need to be involved in that discussion.”
Bouquets for Rep. Hall. And brickbats for Durham County Commission Becky Heron, who whined that “we’ve got to find some big bucks somewhere if we’re going to do what we’d like to do” and sniffed that “we’re either going to be a viable community or we’re going to be a little country hick town.”
Given that one of the projects the tax would fund is a Minor League Baseball “fan experience” museum, I think Heron’s choice of terms qualifies as an unforced error. More importantly, it illustrates a common theme in the rhetoric of politicians who say they are for the little guy until a decision must be made, at which point they side with the rich and powerful who like to entertain themselves at someone else’s expense.
Many self-described liberals and progressives talk a great game about how North Carolina’s tax code is regressive and backward. But when it comes down to particular proposals to raise regressive taxes to fund new government spending, they grow noticeably silent or even endorse the taxes, anyway. Such behavior is commonplace in the General Assembly, where members proclaim their support for tax fairness one minute and then the next minute vote for tax hikes on cigarettes, alcohol, retail sales, hotel rooms, car rentals, telephone service, and other goods and services.
These are all regressive levies, to varying degrees, defined the way liberals usually define regressive: that the tax takes a smaller income share of the wealthy than it does middle- or lower-income taxpayers. This is even true for most purchases of hotel rooms and rental cars. No one disputes that it is true in the other cases.
So, if tax fairness is a problem, shouldn’t one oppose all attempts to raise regressive taxes to make it worse? I think so. Of course, the response would be that I just oppose all tax increases of any kind, so my position should be discounted.
Actually, I’ll go one better. Although I know that state government doesn’t need to raise any taxes to fund necessary services, and I’m skeptical that any local government is truly undertaxing its citizens, either, I’m willing to state that if I did believe a tax increase is in order, I’d favor raising property or income taxes, not taxes on overall retail sales or on the sale of any particular product. Properly structured, property and income taxes are broader, more visible levies that are not as far out of sync with the modern economy as the sales tax is, and don’t distort the economy as much as selective taxes on, say, meals or rental cars.
The next round of local tax referenda in May mostly involve sales-tax hikes. Advocates of tax fairness and reform should be against all of those. Check and see if they are.
Hood is president of the John Locke Foundation.