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Taxes Fuel the Fire as Races Heat Up

By: Brian Phillips

It might be equal parts Tip O’Neil and James Carville. But whether you think “All Politics is Local” or “It’s the Economy, Stupid”, taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. es and tax reform are making big splashes in some of the most contentious gubernatorial races in the country.

The Wall Street Journal today writes of the Bay State:

You’ll never guess the hottest issue in this fall’s Democratic primary for governor of Massachusetts: income tax cuts. Two of the three Democratic candidates in this bluest of blue states have endorsed cutting the state flat-rate income tax to 5%. … An August 27 Boston Globe poll found that 57% of Democratic primary voters support the tax relief plan. This is the same electorate that has given the nation Ted Kennedy, Michael Dukakis and John Kerry.

In Michigan, the contentious fight over the Single Business Tax (SBT) has forced the Democratic incumbent, Jennifer Granholm, into pushing tax reform. After being spurned by the people of Michigan, who effectively overrode her veto of legislation that eliminates the SBT by 2007, Granholm has unveiled a “restructuring package” to replace SBT revenue. For his part, Republican challenger Dick DeVos supports replacing it with what he calls a “business-based tax”. The details of his proposal are still in limbo which means the issue isn’t going away any time soon. Democratic nominee Mike Beebe is looking to convince the people of Arkansas that he is a born-again tax cutter as his race heats up against Republican Asa Hutchinson. Beebe’s support for eliminating sales taxA sales tax is levied on retail sales of goods and services and, ideally, should apply to all final consumption with few exemptions. Many governments exempt goods like groceries; base broadening, such as including groceries, could keep rates lower. A sales tax should exempt business-to-business transactions which, when taxed, cause tax pyramiding. es on groceries is being questioned by the former Congressman who says Beebe has had opportunities to eliminate the tax but hasn’t taken them. Beebe also tells Arkansans he’s going to cut property taxA property tax is primarily levied on immovable property like land and buildings, as well as on tangible personal property that is movable, like vehicles and equipment. Property taxes are the single largest source of state and local revenue in the U.S. and help fund schools, roads, police, and other services. es by $22 million. National polls put economic issues at the top of voters’ lists of priorities over Iraq and national security. On the ground, the core of those economic issues seems to be candidates positions on a wide variety of taxes; namely, how to cut them. Thankfully, it is not just the winning position but the right one, as well.