October 31, 2001

11:52 AM

Sales Tax Free Christmas? Sen Olympia Snow (R ME) and Patty Murray (D WA) have proposed a 10 day moratorium on sales tax as a stimulus to get people shopping this holiday season.
posted by Lanternjmk (25 comments total)

All spin, minor impact, as it shifts taxes from sales (which are equal to all people) to income taxes (which are anti-rich).

Guess this will get lots of democrat backing!
posted by dwivian at 12:25 PM on October 31, 2001

Lame Idea. The reason I can't shop is not because of a 1-5% sales tax. It is because I have no fucking money!
posted by aj100 at 12:33 PM on October 31, 2001

yes, all spin. is a tax "equal to all people" when a larger percentage of one person's income must go to paying it than another's? anti-rich, indeed.
posted by jimw at 12:33 PM on October 31, 2001

Florida drops it's sales tax on clothing and related items during the month before school starts. Helps minimize the cost of keeping junior in fresh Nikes for the school year.

I believe it has increased sales, especially for stores that combined it with promotions, etc.
posted by groundhog at 12:35 PM on October 31, 2001

Pennsylvania has Tax Free PC Weeks to help make computer purchases a little more affordable, and the program has been judged a resounding success. I wouldn't discount the impact something like this might have on spending habits nationwide -- for example, I might be much more apt to get a few more options on my spiffy new laptop if I knew they would essentially be free thanks to the tax savings. No?
posted by barkingmoose at 12:45 PM on October 31, 2001

The reason I can't shop is not because of a 1-5% sales tax. It is because I have no fucking money!

LOL! I second that. It's funny cuz it's true!
posted by Rastafari at 12:45 PM on October 31, 2001

Boy, sure is easy for Senators in the Federal government to take away the State's form of revenue when they need to.
posted by brucec at 12:48 PM on October 31, 2001

is a tax "equal to all people" when a larger percentage of one person's income must go to paying it than another's?

Yes. A dollar is a dollar regardless of how many dollars you have.
posted by kindall at 12:51 PM on October 31, 2001

Gee, dwivian, troll much?

The main reason this is a bad idea is that it's a Federal proposal that would starve non-Federal entities of income. States, counties, municipalities, and regional infrastructure entities that depend on sales tax will be hopping mad that Congress took it on themselves to do this, because Congress doesn't have to answer to their constituencies.

It's a more intensive form of the much-hated unfunded mandate, i.e. things the US government requires states and others to perform without having to face the responsibility of raising the funds.

Sales taxes, however, are not equal to all people; they are widely understood to be regressive, as they impact much more heavily on people with lower incomes -- people who spend all the money they get have to pay sales tax on most of that spending. I don't know that there is any tax that is "equal to all people"; that's probably a fantasy. The only question is which people will be affected by which type of tax.

That said, aside from aj100's outburst, there probably is a minor impact on overall spending. If you make something effectively cost (say) 5% less, the number of people who will be able to afford it increases. The amount by which it increases depends on a lot of factors, and could be 1% or could be 10% or 100%. There is no direct relationship, IIRC.
posted by dhartung at 12:52 PM on October 31, 2001

dhartung, it doesn't starve states or municipalities of anything. Under the proposed bill, the federal government has promised to pick up the tab. Read the article again:

Under the proposal, all the states would temporarily suspend their sales taxes for 10 days starting on Nov. 23, the day after Thanksgiving, when the holiday shopping season begins. The federal government would reimburse the states for lost revenue.

Snowe and Murray said the proposal would cost the federal treasury about $6.5 billion and have an immediate impact on the economy as shoppers took advantage of the tax break.
posted by dogmatic at 1:06 PM on October 31, 2001

Gee, dwivian, troll much?

always, unfortunately....
posted by jpoulos at 1:06 PM on October 31, 2001

Boy, sure is easy for Senators in the Federal government to take away the State's form of revenue when they need to.

The main reason this is a bad idea is that it's a Federal proposal that would starve non-Federal entities of income. States, counties, municipalities, and regional infrastructure entities that depend on sales tax

did anyone actually read the article?
posted by tolkhan at 1:12 PM on October 31, 2001

New York did away with sales tax for clothing sales under $120 sometime last year.
posted by o2b at 1:21 PM on October 31, 2001

While I'm all for anything that reduces taxes, this really doesn't do that to any meaningful degree. Furthermore, it perpetuates the federal government's fascination with using tax code to influence societal behavior. If Sens. Snowe and Murray are really interested in helping people have more money to spend at X-mastime, pass a tax cut - don't bother with these smoke-and-mirror gimmicks.
posted by ljromanoff at 1:24 PM on October 31, 2001

This is nothing more than tax-payer candy (how appropriate for today...) to make the politicians look good. In the long run it does nothing for the economy.
posted by internal at 1:29 PM on October 31, 2001

aj100- in some places, such as Seattle, where I live, sales tax in the city is 8.8%, other places I have been in the US it is even higher, closer to 10%. If sales tax were only 1-5%, I would shop more!



On another note, as a bookkeeper, I can't help but imagine the nightmare this will create in the books for businesses. It would come down to documentation and parameters. It would create a documentation mess (to say the least) with business taxes for the IRS and state revenue. When would the 10 days (a weird number of days in terms of keeping books) start? When would they end? And I mean exactly, to the second. A business would have to time-stamp all of your transactions. This could be an especially big mess for small businesses that operate online (like my small business does). That's my main reason for veto.
posted by raintea at 1:37 PM on October 31, 2001

Troll? Me? Nope.

Though, I am good at noticing common trends, like the trend of democrats to shift taxes away from their voters (poor, new money), and republicans to shift taxes away from their voters (old money, defense contractors).

Sales tax is one of the most equal taxes there is -- it only hits consumers, and only when they consume. The rich consume at a higher cost level, and pay an equal share for large purchases, per dollar, as the poor. Of course, this discounts states that have luxury taxes (sales tax on the rich) and those that eliminate taxes on common goods (foods and medicine). That always wonks the figures.

That bit about "as a percentage of total income" is total rot -- I've been homeless for a while, and have been a six-figure engineer for a while (and am now on the way to homeless again because of the dot.bombs, as I try to find any contracts and permanent work in a storm). I found that, as a whole, I paid more in taxes when richer than when poorer (and, in fact, was a net tax receiver while poor). Even sales taxes, since I had more to buy when richer, were a higher total percentage of my income. This is because I don't save much.

That's the only variable in the equation that has any real impact, by the way. Learned that from a very nice, and liberal, economics professor. The reason things look like they cost the rich less as a percentage is because the rich may, if they save, spend less as a percentage of their income. If you evaluate the money SPENT, it's the same. Savings, while nice, are useless until spent, so it washes out in the end when that money is used (but pretends not to be income anymore). As you might guess, this particular economics prof was very much in favor of the GST. Nice guy, but needed to wash his hair more often.

I have to agree with ljromanoff -- if you want to let me keep my money, make it permanent in a tax cut. The illusion of a gift, by shifting around in the books (don't pay here, we'll get it from that column there) is an insult. Problem is, it works with the dumb masses on both sides of the political landscape.
posted by dwivian at 1:42 PM on October 31, 2001

I must add -- I was quite swayed by the concept of user-fees. I worked on the Public Area Recreation Visitation Survey (PARVS) project, doing statistics. This project was responsible for asking the questions that lead to a user fee for federal parkland. It made sense back then, and even today, for people to pay for the things that they use. Of course, there are properties in the common trust and common services that need to be borne by all, but I do like user-based taxation (road taxes for cars, etc).

Does that make me a democrat or a republican? I can never keep up with all that...
posted by dwivian at 1:51 PM on October 31, 2001

this is a problem, since this ten day moratorium on taxes would be right after thanksgiving. I don't think I'm capable of thinking that far in advance. I normally do my shopping a couple days before xmas, so I'm being penalized for being a slacker.
posted by panopticon at 1:54 PM on October 31, 2001

Would a slacker tax be progressive or regressive?
posted by dwivian at 1:59 PM on October 31, 2001

well, if you're rich you can pay someone else to do your shopping for you
posted by panopticon at 2:10 PM on October 31, 2001

Sounds like a double tax -- payroll, FICA tax, benefits, plus the sales tax and the actual outlay....
posted by dwivian at 2:11 PM on October 31, 2001

Excellent point dwivian made about the nature of consumption taxes! I recommend anyone who thinks that calling sales taxes "regressive" is insightful to read his explanation until they understand the central point therein.
posted by marknau at 2:51 PM on October 31, 2001

Every Christmas in Oregon is sales tax free.
posted by modofo at 3:39 PM on October 31, 2001

Given the Tenth Amendment, maybe someone could explain to me where the Federal Government gets the authority to do this?

I recall a few years back when I owned a small deli and the sales tax changed rate (a "temporary" increase -- hah). A technician from the company had to come around and manually change the cash register. Took about ten minutes, not counting transportation. Due to having too much to do, he came a day late. This would require doing it twice, ten days apart.

Sometimes I wonder what planet these senators come from.
posted by anewc2 at 3:48 AM on November 1, 2001