On last Saturday’s KTCN Roundtable, Rep. Phyllis Kahn promoted a five cents per drink tax and claimed it would have generated enough revenue to cover the state’s portion of the Vikings stadium. She said is was such a small tax that people wouldn’t notice it. Erin Haust countered that people do notice it since the ’5 cents here, 5 cents there’ claim is on top of rising prices and it all adds up. Rep. Kahn said it was fine if people drank less, to which Ms. Haust said it wouldn’t generate the revenue they expected.
“That’s not true. There are good analyses that show that you never lose on those kinds of things.”
- Rep. Phyllis Kahn
I doubt it. I’m tired of baseless claims and ignoring facts.
As I wrote last year, the federal government tried to “tax the rich” in 1990 by raises taxes on the things most likely purchased only by “the rich.” It lost money, in a big way:
Only “the rich” would pay it since only they could afford yachts, “gas guzzling” cars, jewelry and airplanes. Well, the luxury tax devastated those industries. Thousands of workers were laid off and many companies filed for Chapter 11 bankruptcy. It was so bad that Congress repealed this tax in 1993. As Kwame Holman from PBS’ “The NewsHour” said, “Some members of Congress realized almost immediately they made a mistake in levying the luxury tax.”
Not only did this tax increase on “the rich” adversely affect the middle class, but it was a fiscal failure as well. Estimates at the time expected $31M in new revenue in the first year, but only $16M was collected. Additionally, government paid $24M in unemployment benefits due to the job losses in these industries. Only short-term thinking lawmakers can aim for 31, get 16 , spend 24 and think they’ve done something good.
Yes, Rep. Kahn, you can ‘lose on those kind of things.’ The old adage is that if you want less of something, tax it. You want less drinking? Tax it. Less “rich people” living in Minnesota? Tax them.
I don’t mind if you want to argue for higher taxes, but have your facts straight, please.
Cross-posted at noranndillon.com