UpFront: Expert says eliminating income tax could mean big sales tax hike
Wisconsin Taxpayers Alliance President Todd Berry said on "UpFront with Mike Gousha" that a shift to a sales tax-based revenue model could raise the sales tax to 15 percent, if state spending remains unchanged.
Berry, responding to Gov. Scott Walker's talk about eliminating the state's income tax, said it makes more sense to have a lower sales tax rate than the current 5 percent but with broader application.
"You've really got to do something that politicians hate; you've got to stop carving up every tax like it was Swiss cheese," Berry said on the program, produced in conjunction with WisPolitics.com . "You can't exempt all the things that are being exempted."
In order to keep the sales tax rate low, Berry said the state would need to follow Washington State in levying taxes on things like food and real estate sales, both currently tax free in Wisconsin. He said the state would also need to decide to reduce spending.
"If you look at the states that don't have an income tax, they all spend less per capita than we do," Berry said.
According to Berry, the state property and income taxes are around 25 percent higher than the national average, while the sales tax is 15 percent lower. He said the state could work to balance the two.
"There's no question that there's a need for tax reform," Berry said. "We haven't had a comprehensive discussion in decades."
When asked his opinion on the possibility of introducing sales tax holidays, Berry said his organization avoids taking stands. He instead pointed to the conclusions of other entities.
"If you look at all the various research groups and think-tanks in Wisconsin and around the country, whether they're on the far right, the far left or anywhere in between, none of them support a sales tax holiday," Berry said. "They all say for the same reason; basically, it's pretty bad tax policy."
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