One of the loudest critics of the recent wave of corporate inversions is University of Southern California law professor Ed Kleinbard, who warns that these transactions will erode the U.S. corporate tax base because...
- The Tax Policy Blog
- Delaware, Bad Tax Policy, and the "Slippery Slope&qu...
Delaware, Bad Tax Policy, and the "Slippery Slope" as a Rhetorical Device
Milton Friedman once said that “nothing is so permanent as a temporary government measure.” I’ve elsewhere modified that statement to say there’s nothing so permanent as a temporary tax increase. While snarky, I’ll admit that my idiom doesn’t always hold true, and I was happy to be proven wrong last year when Arizonans voted against a teacher’s union-sponsored initiative that would have continued a sales tax hike that was originally sold to voters as a temporary measure.
Delaware might be a different story this year though. Governor Markell has recently proposed making permanent the 2009 increases in the state’s income tax (the top bracket rose from 5.95 percent to 6.95 percent), franchise tax, and gross receipts tax (perhaps the most destructive tax in creation).
The problem of course is that these tax hikes were sold to taxpayers as temporary solutions to economic crisis. In fact, 30 states enacted tax increases in 2009, which some hailed as a “reasonable response to shortfalls.” But now, these temporary measures are the status quo, and the narrative has become that these taxes are already in place, so the state must look to “stabilizing [its] revenue situation.”
I’m generally not a fan of slippery slope arguments, but I think giving in to temporary tax hikes today almost necessarily means you’ll have to engage in a tax battle in the near future to keep them from becoming permanent. The status quo is a powerful argument. The speeches almost write themselves.
More on Delaware.
Follow Scott Drenkard on Twitter @ScottDrenkard.
Subscribe to the Tax Foundation Newsletter
Join the Tax Foundation's fight for sound tax policy Go
About the Tax Policy Blog
The Tax Policy Blog is the official weblog of the Tax Foundation, a non-partisan, non-profit research organization that has monitored tax policy at the federal, state and local levels since 1937. Our economists welcome your feedback. If you would like to send an e-mail to the author of a blog post, please click on that person's name to locate his or her e-mail address or visit our staff page here.