Speaker Richardson floated a proposal today that would replace all local property taxes with a 5% income tax and a 5% “consumption tax.” The proposal raises more questions in my mind than answers. However, my initial reaction would be “no thanks,” I’d rather decisions about my taxes be made at a local level based on local needs. Under this proposal it would seem to expand the role of big state government’s power at the expense of local governments, which I suspect may be Richardson’s goal.
Richardson will also probably run into problems in his own party since it retains the income tax and does not create the sales tax utopia that some like Rep. Earhart, and others wants.
I also wonder whether the “consumption tax” would have any exemptions as the current sales tax does on things like food and medicine. The article also mentions that the consumption tax would not only tax goods, but services. Currently there is no tax on services. So, this is one example of an increase in taxes on things that are currently not taxed at all.
Lastly, what will be this new system’s impact on promoting home ownership? Property taxes are currently deductible from your income taxes. Sales taxes are not.
Also, Adam, I’d also like to point out that even Richardson calls his proposal “radical.” Because it is.