Bryan Caplan    Why Do Sales Taxes Exist?  Elitism: The Lesser
Poison... Atoms, Bits, and Growth...  Mankiw's post on AMT
reform reminds me of yet another simple challenge to the
rational, selfish voter model: Since we can deduct state & local
income and property taxes on our federal income tax, but not
state & local sales taxes, why do sales taxes still exist?
After all, a state could abolish its sales tax, increase the
income tax enough to equal the lost revenue, keep spending
levels the same, and let the federal government write refund
checks equal to roughly 1/3 of the tax increase.  You could say
this is too simple, because sales taxes weigh more heavily on
the poor. But (a) this is exaggerated, because a lot of states
exempt necessities from the sales tax, and (b) you could
compensate for the problem by cutting income taxes in a
progressive way.  Anyone care to meet my challenge? Why would
rational, selfish voters keep sales taxes at the state & local
level, when the feds only allow deduction of income