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Why Our World Would End If CSAT Full Forms Disappeared

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The Landlord
Post time 2021-5-12 01:22:35 | Show the author posts only Reply Awards |Descending |Read mode
First, let me explain a little about myself. CSAT full form has a good chunk of our budget and is one of the things that I spend the most time on. I do a lot of public outreach and I spend a lot of time in my state capitol discussing the impacts that CSAT has on tax reform, insurance policy options, and other topics. I have been quite vocal about my concerns with CSAT as the best option for revenue reform. We have seen several states like Kansas take it off the table recently because of concerns that CSAT might be a good replacement for the current, flawed, state tax system.
For the next several months, I expect a lot of tax policies to be debated as part of the state budget process. Obviously, many of these proposals will be discussed at both the federal and state levels, especially the other big taxes, but I hope we will continue to hear proposals for tax changes to decrease or eliminate the different forms of taxation we have in our state. I fully expect the federal government to continue the trend of moving towards eliminating the estate tax and reducing taxes on pass-through income. But we must fight these moves to make sure that the full array of our state tax system is kept on the table. Our state taxes are not bad. They are well below the national average and some would argue they are one of our biggest advantages in the modern world. However, if they are not preserved, our state would have even more ways to raise taxes and make our economy less competitive. Our state tax code is one of our biggest advantages in modernizing our economy to a future where more workers are expected to be paid full-time, part-time, or freelance work.

Why do I feel this way? Well, in fact, the state would likely still be one of the top five or so states for income taxes, but we would be forced to shift the entire burden to other taxes that I have argued are far less progressive. For example, we could end up with one of the more regressive state tax systems because a lot of the state’s benefits from CSAT would disappear. If the full array of taxes is allowed to disappear, it is hard to see where the state might make up any lost revenue from CSAT. Most states, with the notable exception of California, have been working over the past decade to reduce the sales tax and they would likely be forced to make up the difference through taxes on groceries, manufacturing, utilities, and other products. This means that businesses and consumers that use products and services will end up paying a higher state tax, raising the prices for them. Businesses would have to pay a higher tax and be forced to make up the difference. This would actually make many goods and services, like manufacturing, less competitive in the long run. If CSAT is ended, I expect businesses to move out of our state, not only because the government would have less money to tax them, but also because the government would be less able to collect taxes that could force businesses to relocate.

If our state tax system does end up being reduced, I would expect to see many other taxes disappear, too. Currently, we have a fairly full range of sales taxes. Now, we have a fairly full range of sales taxes because we also have a state excise tax. If we do end up with fewer taxes, then we could end up with fewer places where those sales taxes end up. Instead, we would likely end up with fewer taxes on cars and trucks, water and heating fuels, building materials, and gasoline. I think we would also end up eliminating a full range of taxes on manufacturing and would end up with very few taxes at all on goods and services. In fact, there is a fairly full range of sales taxes in our state, but many of them are actually much less progressive than we would like to be. For example, one of the more progressive forms of our state sales tax is the state sales tax on cars and trucks. This tax generates about 4% of our state revenue, even though the tax will likely raise prices by about 30% for cars and trucks. This tax will probably be adjusted in the state budget to be eliminated or reduced, but it would be a huge blow to manufacturers and to a broader array of products and services.

All of this tells me that if we want to maintain a competitive state tax system, we should preserve our state tax system.

We already are paying much less in taxes than other states. Full-time employees working in our state will end up paying about 14% of their paycheck in taxes compared to nearly 20% for full-time employees in other states. Full-time employees working in our state will end up paying about 5% of their paycheck in taxes compared to 7% for other full-time employees in the country. I doubt many of these people will care about whether or not the state tax system is actually more progressive, because if they end up paying less, then they will end up earning more. This would improve their personal bottom lines and would also help to keep businesses and consumers from fleeing our state. Also, since we pay fewer taxes than other states, it would be foolish to spend over $40 billion on CSAT, which, as it is currently designed, could end up completely eliminating a wide range of taxes, not just our state sales tax.

We have been working over the past decade to reduce taxes and the state has succeeded to a much greater degree than California has. Many of us have been trying to reduce our state tax burden. The general public may want to hear this from legislators, but I hope they don’t listen to me. I actually believe that a state tax system would end up costing us our state if we eliminate CSAT. The other states that have reduced their taxes, all had full-time employees pay much less in taxes than we do. If CSAT is removed, we will end up paying more in taxes because we would have less government to tax us and fewer people to be taxed. This would be a very serious setback for our state economy. I think it would reduce the competitiveness of our state, and our economy.

Many of you may not fully realize that there is a possible precedent for a full-time state employee paying full taxes. What if the Federal Government ended up creating a new full-time job for every citizen in the country?


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