Sales Tax

The economy is down, a percentage of people are either losing their jobs when businesses close or getting less hours. Many are underemployed, which is employed, but at lower paying jobs that hopefully cover the bare necessities. The stock market is down so lots of people have lost lots of their retirement investments. Those who are close to retirement or who are retired may have been hit the hardest. Normally, that means lots of people are buying less. That means less sales tax revenue, mainly sales tax.

With less tax income, some federal, state and local programs and services must either get less money or be cut. The government's solution to this is to raise taxes and tax rates to get more money so programs can be funded as before. It's a vicious cycle. The more taxes are raised, including sales taxes and luxury type taxes (and "sin" taxes) the less people will buy because everything costs more. The people buying are not necessarily making more money and a percentage are still making less and less. It looks like it could be a vicious cycle.

There is an upside in one sense. When "sin" taxes go up, people buy less of those items too. Generally, "sin" taxes are taxes on cigarettes and alcohol. If people used less of both they would be a lot healthier. Our state uses "sin" taxes to pay for basic things like public schools, health and children's programs. It seems ridiculous to me that we need people to do unhealthy things in order for our children to get an education. Wouldn't it make more sense to tie education and other programs to something much more wholesome? It puts the government and schools in the business of promoting unhealthy practices in order to get funding. Gambling profits go under this nonsense too, but that's a whole different area. The more people smoke, drink and gamble, the better off the children are? Wow!

Our city keeps coming up with new ways to tax people these days. Restaurants now have to pay a "fee" (tax) for their mandatory inspections to stay in business, as of this week. The extra tax expense will be passed on to the consumer.

Special higher tax districts are springing up all over town. They use that tax to improve the immediate area. Those who are watching their pennies will simply choose to shop someplace else, especially for the higher priced items where taxes make a more significant difference. Little businesses vote for it in the hopes the high volume guys will bear the majority of the load of expense. Really, it is the customer who will pay the extra dollars for the same thing and customers are free to go wherever they like. An extra 1% is a penny on a dollar, $1 on a hundred and $100 on $10,000. $100 means something to many, especially if they are getting nothing extra for their extra expense. The high volume business person will either decrease in volume, lose customers to a point where they go out of business or have to relocate. Anybody who thinks the majority of people will gladly pay more if it amounts to more than a few pennies total is not living in reality. In a good economy, people do not pay as much attention to pennies, but they do in a difficult economy like ours.

Enough people will avoid CID's (city improvement districts with their higher sales taxes) that those hoping to bring in more revenue will be disappointed.

Restaurants are having to lower prices and do special promotions to bring people in because more people have less discretionary income. Sales are still down quite a bit overall, even with the slaes and promotions. The new tax on mandatory inspections, on top of the CID's in some areas, will raise consumer costs. If they raise their prices 25 or 50 cents or more, it will discourage those on the margins and sales will go down even further. We are still in a bad economy.

It doesn't matter to me if they keep raising taxes. I will vote against it but when they do it anyway, I just quit buying or buy less. So will most other people. Increasing the tax rates is not going to increase the income of the city, state or federal government over the long haul. Eventually the majority will develop a depression era mentality. Repair it, use it up, wear it out, make do, share with others or do without. To a degree we are seeing the beginnings of that.

I wonder what they are going to come up with next to tax extra? I heard there was some kind of energy bill that was passed last week that is going to cost everybody a lot of extra money every year. Dandy. The promoters say it is worth it. Everybody who wants a tax always says the extra expense is worth it. Maybe, but what about the total accumulation of taxes coming out of all but the poorest people's paychecks? At what percentage is it no longer "worth it"? When the total taxes hit 50% of everything we earn? (we are past that already if you include the hidden taxes such as licensing fees, phone fees and fees for any little things plus sales taxes, property taxes, etc) 60%? 75%? 90%? Looking at the aggregate tax rate, it seems a bit absurd to me.

The taxes on taxes are based on the premise that our behaviors will not change with the times. It is erroneous to believe because we spent freely before, in a good economy, that we will continue. The rate of unemployed is at 10% and those are just the ones looking actively. There are others who are not officially looking, experts say up to 15%. The percentage of sick, significantly mentally challenged and disabled people is at a similar rate, around 10%. Possibly a larger percentage is underemployed at low paying jobs that barely pay the bills or worse. I read that one person in 7 is incarcerated right now. That seems awfully high. That would add a bit over 14% to the number of citizens not working. A percentage are children, maybe 18%?, and a percentage are senior citizens who are no longer working, maybe 18%? There is even a percentage of illegal immigrants who pay no taxes at all, maybe 2%-4%?

That makes it look like only 15%-30% of the population is gainfully employed and lots of those work at minimum wage jobs. That can't be right. It seems like it should be more than double the top number, but maybe not.

Anyway, I think our government officials need to rethink some of what they do. It should be interesting to see how this all pans out.