Should states be looking at broadening their sales tax bases to cover more currently untaxed services? That is the argument made in a recent paper by Michael Mazerov of the Center on Budget and Policy Priorities:
Most states could improve their sales taxes and their tax systems in general with some expansion of the tax base to include services. Levying sales taxes on services makes state tax systems fairer, more stable, more economically neutral, and easier to administer. Moreover, because state sales taxes are a major source of funding for schools, universities, health care, public safety, and other functions of state and local government, adding services to state sales tax bases can help states maintain their support for those functions, for instance during an economic downturn when state revenues are declining.
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