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...Politics & Current Events In N.C.

Monday, December 15, 2003

Wade Chestnut can do a good rumba!! 

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Wade Chestnut is the director of party affairs for the NCDP.

I know that he has good rythm because someone got me into the Governor's ball held in Greensboro last Friday.

Besides seeing the leaders of our state slightly looped, and eating too much shrimp, I got a preview of the Governor's message.

As I suspected, it is the same stalwarts of Democratic campaigning--Education, Healthcare, and Jobs, Jobs, Jobs. The only other major component of the message was the fact (which I knew but forgot) that Gov. Mike Easley really loves the state of North Carolina. I think that is something important, and if he is as sincere and honest as he was in Greensboro about his love of the state, that will go far.

But the speech does bring back the question that I asked earlier. Is the same old message going to be enough to survive the rising Bush tide?

I think there is a chance. The Democrats, and progressives in particular, need to emphasize that although times have been tough with Democrats in charge, it will be a lot worse under a Republican dominated Assembly or a Republican Governor. By pushing the dangers and inequities of the Republican tax cutting strategy, progressives can demonstrate that an aggressive stance in support of the most vulnerable amongst us can be a winning strategy.

The Common Sense Foundation issued a statement that provides a good start for this attack. In their Consider This newsletter, they said:

TAX REFORM, NOT TAX CUTS

The Republicans did all they could to slash state taxes in the 1990s, claiming that the government had more money than it needed. Now, in leaner times, their one-note economic solution is--you guessed it--more tax cuts.

...

The single-minded tax-cut obsession not only rules out many excellent policy ideas, it's also downright dangerous for a state government that can barely make ends meet even before the tax cuts.

What's needed at this point is tax reform. Perhaps that should begin with a serious examination of expanding the sales tax to include more services.

Nearly every state taxes some services, many of them (like NorthCarolina) mainly utilities. Expanding the range of services covered would finally acknowledge that the state's economy has fundamentally and permanently shifted away from the sale of manufactured and agricultural products and toward an economy that is increasingly dominated by services.

...

In 1982 U.S. households began buying more services than goods, a trend that does not look like it will reverse anytime soon. Yet the 20% of American families with the lowest incomes pay 5.9% of their income in sales taxes, while the wealthiest 1% pay just 1% of their income in sales taxes. That?s a horribly regressive tax, so an expansion of the sales
tax to cover services would need to address that concern.

The state could tax only certain services, like investment advising or charter aviation, that are used primarily by the wealthy. Unfortunately, such an approach wouldn't raise more than a few million dollars in North Carolina. A better idea might be to establish a 'floor' for the services tax (say $400), below which the tax would not apply.

Ohio has just instituted a major expansion of the state sales tax onservices. Many other states tax more services than we do already.

A progressive tax reform would help stabilize, and possibly even increase, state revenues. Then the General Assembly could concentrate on funding education and health care ...


Running on raising sales taxes may seem like political suicide, but combine this proposal with several other shifts towards a more stable and progressive tax regime and you can sell the whole thing as tax reform--which it is. A possible route would be to make sure that the projected revenue's from the shifts in taxes would not increase. That would severely restrict credible conservative labeling of "tax-raisers."

But perhaps the most important part will be to make it clear to voters that they are choosing between a better education system under the Democrats (an important aspect in recruiting new businesses) and tax-cuts to the wealthiest us. That is a winning message if you work to sell it.


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