Tuesday, July 28, 2009

Is Now the Time for a Sales Tax Increase?

Deep in the bowels of the land of midnight payraises, state legislators are debating whether to give counties the option to increase sales tax by 1%. The current bill, which only applies to third class counties, would have to be amended. Approximately half of the money generated would reduce real estate taxes, but the rest would be a windfall to county and municipal coffers.

Calling it "tax fairness," the County Comm'rs Ass'n of Pa. (CCAP) supports this tax increase. But this is precisely the kind of regressive tax that has a disproportionate impact on the middle class and poor. One study shows that the poorest twenty percent of our nations's population already pay 5.4% of their income in sales taxes, while the top one percent pays just 0.6%. Is this tax fairness?

And is now the time? Northampton County Exec John Stoffa, noting the number of lost jobs and paycuts in this area, told the Express Times that he has reservations.

Wasn't casino money supposed to wash away all our sins?


Anonymous said...

Yes, it was and could but Mr. Stoffa gave over half of it away to Allentown, thanks John.

Also he supports starting the a new superbureaucracy in this tough economic times.

Which side of his mouth is he talking out of tomorrow.

Anonymous said...

Retired ASD teacher here.

Sure seems fair to me. I would actually like to see all property taxes replaced with sales taxes. EVERYBODY spends, but not everybody owns property.

If we assume at this time, the purchase price of goods purchased increases by 1% (increased sales tax) that SAME amount of increase is applied to everyone.

The fact that higher wage earners typically pay less sales tax (as a percentage of their total income) is not an indicator of fairness, as 1% is still 1%. The difference in percentage only suggests that higher wage earners make more than they need to cover typical purchases.

In reality, higher wage earners spend much more than lower age earners. For example, buy a Mercedes, not an old, used Jeep! As such, they will contribute more through use of sales tax.

Sales taxes close all loopholes. All money is spent at some point otherwise it has no value.

Sales taxes catch under-the-table workers, criminals, welfare cheats, etc. Each of these consume government services, yet might not actually own recorded property.

With a sales tax, everyone's total annual contribution is based upon only their ability to purchase in the first place. Sounds OK to me.

Anonymous said...

re:"Wasn't casino money supposed to wash away all our sins?"
I hope you are being facetious.

LVCI said...

An increase of sales tax is all fine and dandy if the entire 1% were allocated to reduced property tax. But then why would there be a 100% trade off if there weren't a couple of extra shillings in for the government?

Never is. It's like federal and state tax reductions that are always coupled with local funding decreases. In the end we end up paying for the tax reductions + a few shillings, eh? Oh I'm sure there's something in this for the government or otherwise why do it? I always get a bit nervous when there's tax shifting going on. And this is no exception.

Another example of 'tax shifting' just yesterday when it was announced the toll commission is going to pile on a heap of money for the Easton "River Walk project. And here I thought tolls were collected to maintain the highways.

Anonymous said...

Bernie, this would shift Dertinger's balance of power, wouldn't it? He wouldn't be able to bash you for being a renter that has no say in county government because you dont pay property taxes, like Lorraine Pasquali? If sales taxes were raised then people like you and Lorraine would be allowed to have a say. What a revolution.

Anonymous said...

Either way they need some type of revenue. The republican senate and our friend lisa Boscola are talking out their butts with this no tax increease bullshit. If they don't increase taxes at the State level then the County (HUman Services) and the School Districts (Education funding) will have to make up for the State's cuts (or lack of increases) to pay for these programs. So if the state does nothing we'll get killed with higher property taxes. People never see this. These idiots calling for a no tax increase are not doing anyone a favor, especially property tax owners. It will kill low income retirees. They might as well start selling their homes.

Anonymous said...

The fact that the debate is about WHAT KIND of tax increase, rather than a nuclear attack on spending, is depressing, to say the least.

No more food for the monster.

Slay the monster.

Anonymous said...

For the last time - Renters pay property tax. There is not a landlord anywhere who pays the tax out of his own pocket. It is in the rent.

Bernie O'Hare said...

Retired ASD, Thanks for your point of view. It seems fair to CCAP, too, but in my mind it is a regressive tax that hurts those who can least afford it. A $15k per yr person who pays a 6% sales tax suffers a lot more, when buying a $1,000 fridge, than a person who earns $100k. That's just the way it is.

Anonymous said...

Retired ASD teacher here.

Anonymous 11:23am - In an ideal world, you would be correct.

However, in cities like Allentown (and I'm sure Allentown is not alone) thousands and thousands of dollars in tax revenue goes UNCOLLECTED.

Allentown is loaded with converted multi-family properties that are still taxed at the single rate. Check for yourself at the Lehigh County website. It's a serious deficiency.

On nearly every block in a half-square mile area, you'll find 3 family units charged the same rate as a single family unit right next door! In other words, three households, with who knows how many children, paying perhaps $700 in school taxes and $300 for city services.

Bernie O'Hare said...

That's why apartment buildings should be discouraged.

Anonymous said...

"Either way they need some type of revenue. The republican senate and our friend lisa Boscola are talking out their butts with this no tax increease bullshit. If they don't increase taxes ...... blah blah blah blah blah ..."

When will fiscally irresponsible leeches take a different perspective and consider restraint? More than half of wage earners are no longer tax contributors. This leaves sponges to simply impose their will at the ballot box on those left to pay for their irresponsibility and lack of control.

This commenter is the change we got. Lots of it. Money grows on trees right? Right.

ironpigpen said...

Hell yeah, a flat sales tax hurts the poor more than the rich.

Tee, hee.

The whole d--- country is broke.

Try trimming the salaries of politicans. Cut back on their perks. The lavish lifestyles afforded at tax payer expense.

Jen Mann voted against a payraise, that I recall.

How is Vince Fumo doing this morning?

Anonymous said...

Retired -

You are talking about a bureaucratic snafu that is easily remedied by simply inspecting and reassessing. I would much prefer that, and be willing to pay for it, than to just igmore that problem and jump to talk of new taxes.

Again, we must stop feeding the monster. We have to quit talking in terms of public employees being entitled and exempt from the fiscal realities faced by those who pay them. Pensions (yours included) should not be off limits. The guys at the Steel and many other companies were not exempt. My 401K was not. Why should you be?

Fix the loopholes, reduce expenses in every single area where possible, freeze them where it is not, and let them live with what they already take from us.

I don't spend 50% of my gross income on anything - EXCEPT GOVERNMENT.

Anonymous said...

Retired ASD teacher here.

Anonymous 2:33pm. You are correct about the Allentown city administration being derelict in its duty to all residents by not pursuing all of its entitled tax revenue.

I do NOT agree my current pension should be on the table. My pension is a different animal than the Bethlehem Steel pension (no employee contribution) and other 401(k) agreements, in which each participant COULD have used less risky fixed rate instruments.

My pension is a finalized annuity contract based upon total accrued contributions and my life expectancy. There's also the matter of my having paid more than one-third of the total contribution total as a salary deduction over the years.

Seek what you feel best with future PSERS contribution arrangements, but my sum is lawfully protected, as I believe it should be.

I do share your frustration with government waste and spending, however.

ironpigpen said...

Easy fix -

Call Obama

Nationalize the Commonwealth of PA

(works for banks and auto companies, does it not?)

Anonymous said...

Anon 11:11am has it right - no more tax increases, enough is enough.

Call it a hunch, but California will survive just fine, and so could we.

The Banker

RS said...

Question about Teacher Pensions:

Is there a COLA built into the teacher's contract for retirement? If not, no raise should ever be given. Even in the old days, private defined benefit pensions didn't give cost of living increases.

Remember the last COLA that wasn't going to cost the taxpayer a dime? The only reason teachers and other state employees get unjustified COLAs a few years back was so the legislators could get twice as much. As late as last year retired teachers were lobbying for another COLA. Check your school tax bills over the next couple of years which will reflect both that raise and last year's market meltdown.

Sorry, as a fellow retiree who will never see a pension COLA outside of Social Security (LOL), I don't understand being taxed for something that was not owed.

Anonymous said...

Retired ASD teacher here.

NO, there is no cost of living increase built into a teacher's retirement contract.

If, as we should hope, the economy grows exponentially over the coming decade, say at a rate of 15% per year, the teacher's monthly payment (those who already receive one) does NOT increase.

Take solace, if that's what you need, my monthly pension payment will remain the same 30 years from now, despite what the economy does.

I'm OK with that. That's what the contract specifies, and I believe in honoring all contracts.

Folks, there are more deserving targets for your scorn than public school teachers.

Anonymous said...

No, you greedy techers do nicely.

Bernie O'Hare said...

"No, you greedy techers do nicely."

Stop the name-calling, please. I have the highest respect for teaching as a profession and for Retired ASD on a personal level. I welcome his opinions, whether he agreees or not. I always learn from him.

If you want to disagree over pensions, do it civilly.

Anonymous said...

Come on now. Calling a spade a spade is not being uncivil. And I don't think it unreasonable to use the word greedy (though it was not my post) when you consider they hold themselves above their benefactors, use children as tools in their quest for financial gain, and feel THEIR pensions should not be subject to the same risks as those of others who had "finalized annuity contracts" but whose sponsors found themselves without the funds to fulfill those contracts. Now the state is in a situation much like that of Bethlehem Steel in that it no longer has the means to keep all of its promises.

The state, instead of raising taxes even one cent, should balance its budget by cutting expenses. If it cannot, it should follow the lead of the private sector it so wishes to emulate when it comes to negotiating salary, and file bankruptcy. Then all contracts can be broken, and we could start over.

It's funny how many people on the public payroll are outraged at the excesses of public spending, never noticing that which is excessively spent on them.

Bernie O'Hare said...

Sorry, dude, you can call a politician greedy or me greedy or teachers as a group greedy. But I will not permit one individual to use this blog as a forum for calling another person a name.

Anonymous said...

Bernie only allows the "real" comments when they are directed at people he hates.