As part of what may be a longer-term tax reform effort, North Carolina enacted legislation in July that makes a few changes. The one I want to highlight is broadening the sales tax base to include entertainment. That is, admission to live theater and sporting events and a few other activities that fall within there.
I have more at SalesTaxSupport,com - here. While this might sound like a bad idea to many people, consider how much some entertainment costs - season tickets to a major league sports team, premium seating for an Elton John concert. To exempt this type of consumption from sales tax just means that the rate has to be higher on tangible personal property, such as clothes and household items. It makes the sales tax less equitable because it ends up exempting a good amount of consumption of high income taxpayers, paying for that with a higher tax on basic consumption items for everyone, such as clothing and school supplies.
The blog post includes reference to data from the Bureau of Labor Statistics on how much is spent on entertainment by high income individuals versus low income individuals - its quite a difference.
What do you think?
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