Stam takes N&O to task for sales tax reporting

Rep. Paul Stam, R-Wake, released the following statement this morning:

The Raleigh News and Observer has engaged in a sustained disinformation campaign concerning state sales tax reductions. Here are the facts. All of the calculations were reviewed by the General Assembly Fiscal Research staff. The implications and editorial comment are my own.

On July 1, 2011 the reduction in the state sales tax by 1¢ reduced sales tax collections by $1,100,000,000 dollars per year. Governor Bev Perdue vetoed the budget because of this reduction. When her veto was overridden there was weeping and gnashing of teeth over the imminent collapse of state government and western civilization.

In 2013 (but effective at different times in 2014) some sales tax items were added to partially offset large income tax reductions. The additions cost $134,000,000 per year. The difference is $966,000,000 per year in sales tax relief since July 2014. Over the four years there has been a cumulative state sales tax reduction in collections of $4,100,000,000 (estimated through June 30, 2015).

The claim of an extra sales tax on electricity ignores the equivalent reduction in the franchise tax so the net charge to the customer was essentially a wash. But this method lets the consumer know how much tax is actually being collected in a more transparent way.

Since the sales tax is highly regressive this cumulative reduction in state sales tax collections over the last four fiscal years blows out of the water the left wing narrative that tax rate cuts went mostly to the “rich.”

One might say that every income group benefits from the General Assembly’s tax reforms.

Mitch Kokai / Senior Political Analyst

Mitch Kokai is senior political analyst for the John Locke Foundation. He joined JLF in December 2005 as director of communications. That followed more than four years as chie...