Rep. Paul Stam: Real sales-tax relief

In reference to the April 30 letter “Stam’s omissions”: Your correspondents and others may appreciate more facts on state sales-tax-rate relief.

On July 1, 2011, the reduction in the state sales tax by 1 percent reduced collections by $1.1 billion per year. Gov. Bev Perdue vetoed the budget because of this reduction. When the 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 million per year. The difference is $966 million 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 $4.1 billion (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.

Because 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.”

The writer, a Republican, represents N.C. District 37.

This story was originally published May 28, 2015 at 5:28 PM with the headline "Rep. Paul Stam: Real sales-tax relief."