Myths, realities about sales tax - The Explorer: Voices

Myths, realities about sales tax

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Posted: Tuesday, April 28, 2009 11:00 pm | Updated: 1:36 pm, Mon Apr 18, 2011.

Spent a few days in my last CA 'hood, the eastern LA suburbs running into San Bernadino County.

As is my habit when visiting abroad, I picked up copies of the local dailies, in this case the Inland Valley Daily Bulletin and The Press Enterprise. Both grew from serving specific towns to regional papers, both serve a circulation area approximating the Arizona Daily Star, and both have become equally anemic.

They also are 50 cents each, and in buying both I paid nine cents in sales tax. Arizona, contrary to the many retailers who collect it any way, does not charge a sales tax on newspapers. I mention this to dispel two myths, one each left and right.

The left constantly prattles about the regressive nature of the sales tax. Yet in every jurisdiction where liberal Democrats are in charge, from the state of California where they have controlled the state legislature for over 30 years, to the Tucson City Council, where they've had a majority for about as long, whenever the budget grows shaky they raise the sales tax. They just did that in California again. In Tucson, they even want a modified version of that regression with a 2 percent tax on renters. Without the slightest hint of irony, some of that will go into the affordable housing fund.

Many on the right push for a replacement for the federal income tax with a national sales tax under the banner of the "fair tax." Bad idea for several reasons.

The evils caused as by-products of the income tax, from market distortions to enforced social policies, are still present in the sales tax. Simply deciding what will and won't be subject to it still has the government determining winners and losers based on whatever prejudices are currently in the majority.

Note how the current Tucson bureaucracy wishes to expand de facto sales taxes. They want to tax things like health spas and tanning parlors creeping slowly towards other services that can be deemed "luxuries" and probably beyond. As we know from the infamous luxury boat taxes imposed a few years back by the feds, you can tax things into non-existence and collapse an industry almost overnight. We just did that with the cigar tax to the makers of cheap stogies in Florida by adding a flat 40 cents to each one. That doesn't matter much on a six dollar El Deluxo, but it kills the cheap 20 centers.

Fair Tax advocates need to grasp that the tax they propose already exists, and to add the 20 percent-plus estimated to replace the income tax would create more jobs for all the lobbyists displaced by ending the current tax code, looking for fresh loopholes in the new one. Food — what kinds? Medicine — do you count vitamins and other supplements? Services — which ones?

Liberal advocates of increasing any tax need to grasp that simply decreeing them does not produce the revenues they want and often reduces them. Tucson is currently on the road to incrementally forcing businesses to relocate to places where the taxes are not only lower, but the attitude towards business is better. Too many local bureaucrats supported by avaricious pols have become as predatory as the worst hustlers they are supposed to regulate. Ask anybody trying to get a commercial building permit.

Unlike many participating in the recent tea parties, my biggest objection to big government isn't the cost or even the taxation. It's the Mickey Mouse cumulative oppression. I would pay more if some of them would just go away. I don't recall which free market economist said it, either Friedman or Rothbard, but thank God we don't get all the government we pay for.

Hear Emil Franzi and Tom Danehy Saturdays 1-4 p.m. on KVOI 690AM.

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