As my dedicated readers will recall, I have been describing a session on "Sales and VAT Taxes" (Wednesday, August 1, 2012). After the presentations from Lindy Davies and Erich Jacoby-Hawkins, there was some discussion of the question of why we have sales taxes. If they lead to so many problems, and largely lack the advantages claimed for them, why do politicians persist in committing Sales Tax Suicide, as Professor Gaffney puts it, instead of going with land value taxation?
Is the sales tax more politically palatable? Plenty of people don't like it.
Is it a more stable and reliable source of revenue? But in a recession, sales go down, so sales tax revenues go down.
Frank Peddle spoke up to say we should be warned of a threat to Georgism. There are people pushing the sales tax, including some "conventional" so-called economists. He referenced Gaffney's "Sales Tax Suicide."
The states without a sales tax -- Delaware, New Hampshire, and Oregon -- prosper. High property tax states do well. Low property tax states, like California and Florida, have problems.
Professor Nicolaus Tideman spoke up, saying that the sales tax appeals to politicians because (1) it's a way to tax the poor without being obvious about it, and (2) the sales tax takes many small bites, not one big, visible bite.