The problem with sales tax

TRACKSIDE ©

by John D’Aloia Jr.

September 28, 2004

Remember the ditty "Don’t tax me, don’t tax thee, tax the man behind the tree."? I do believe that the ditty is being played out in the efforts to sell the sales tax ballot issue in our county - with a bit of greed thrown in - when proponents point to the dollars that will come from those in the neighboring county who shop at the new Wal-Mart, inferring that they will pay a good share of the new tax. So what - Pottawatomians will also be saddled with a new tax load. Could it be that Wal-Mart located in Pottawatomie County just across the border from Riley County because Pott County did not have a sales tax, thereby lowering the total cost of Wal-Mart’s merchandise, giving it a competitive edge? The success of Wal-Mart indicates that people do count pennies.

The proposed sales tax is supposed to reduce the pressure on property taxes. In principle, consumption taxes are a fairer tax, with appropriate exemptions for the basic necessities of life. I would feel a lot better about imposing a county-wide sales tax if the proposition included a mandatory cap on the amount of money raised by the property tax, forcing county and city governments to limit their size and growth to that funded by what sales taxes they can convince taxpayers to approve. As it is, if the sales tax passes, the property tax will still be on the books and available as an unlimited source of revenue to alleviate Leviathan’s hunger pangs.

City and county governments have no direct control over the upward spiral of property taxes created by appraisal increases. What control they do have is to hold the line on spending and to actually reduce mill rates an amount necessary to zero out the tax increase generated by higher assessments. This takes a positive action on their part - with so many demands on the new tax dollars, it is a very hard action to take. It becomes a painless and hidden way for them to generate more money - leave the mill rate levy the same, might even be able to lower it a bit, and when people protest about the higher taxes they are being forced to pay, blame it all on the assessors.

The sales tax ballot measure states that it will expire in 15 years. The sunset provision is included in the measure to give, commissioners said, local governments an opportunity to pay off bonds that might be floated based on the new found money. This is an open invitation to local governments to spend on less-than-vital projects because more tax dollars are assured for 15 years with no action on their part. Actually, sunset provisions in laws are a farce. The Kansas legislature has proven time and again that a sunset provision helps pass a bill, but that once on the books, the sunset is nothing more than an administrative speed bump which can be removed or extended with a wave of the pen to keep tax dollars flowing into government coffers or to a particular constituency. Ronald Reagan put it thus: "Government does not tax to get the money it needs; government always finds a need for the money it gets."

Taxes do take on a life of their own, one that takes more than a silver bullet or a cross to end. In the words of our state senator, the only way to control spending is to "starve the beast," a belief that comes from watching the inability of politicians to resist spending all the funds legally available to them. When government defines public purpose to mean whatever it wants it to mean to enable handing out taxpayer-funded largess, narrow interest groups mobilize their forces and expend time and effort to get their hands on some of the money, while those who are being nickeled and dimed to provide the new tax dollars do not have the same incentive to fight the assault on their resources.

It was a different era, but Adam Smith, in The Wealth of Nations, opined that "The uniform, constant, and uninterrupted effort of every man to better his condition, the principle from which public and national, as well as private opulence is originally derived, is frequently powerful enough to maintain the natural progress of things toward improvement, in spite both of the extravagance of government and of the greatest errors of administration." If the sales tax is approved, I hope his belief will hold true. I hope that the sales tax does not become one more link in the tax-slave chain for county residents, an economic and social burden on county society.

See you Trackside.