The Goldwater Institute has issued a report on the lost jobs that an increase in the Arizona sales tax would cause. According to projections by the Beacon Hill group, the one cent increase in the sales tax would bring in $1 billion annually to Arizona state government. But the cost of this sales tax would be 14,400 private sector jobs.
Arizona has about 2.3 times the population of Kansas, so a similar analysis would probably show fewer jobs lost in Kansas. But the number would still be high, we can be sure.
Taxes on transactions — that’s what a sales tax is — drive a wedge between buyer and seller. The result is that fewer transactions occur. That leads to a loss of jobs.
Additionally, more money in the hands of government means less in the hands of the private sector. Wealth is lost as inefficient and ineffective government spending replaces private spending and investment.
We should also be accurate in reporting the magnitude of the proposed sales tax increase in Kansas. Proponents often say it’s just one percent. In reality, it’s an increase of one cent on every dollar spent. As the current Kansas statewide sales tax is 5.3 cents on each dollar spent, increasing that by one cent to 6.3 cents is a tax increase of 18.9%.