February 08, 2005
The Tax Man Cometh
In this era of shrinking budgets states are looking for more and more innovative ways to make ends meet. A fine example of this is the very very conservative state of Montana. The legislature is considering a very controversial new tax on “big box” stores like Wal-Mart, K-Mart, Costco, and the like. The tax would amount to 1% on gross retail receipts between $10 million and $20 million, an additional 0.5% on the next $10 million, and an additional 0.5% on everything over that. When a similar measure was proposed in 2003, it was defeated by a mere 2 votes.
There is also a carrot to complement the stick of this tax proposal. Big box stores which have fewer than 25% of their workers as part time and which pay entry level employees at least $22,000 per year, including benefits, may be exempt. This is a fairly low bar to pass. The rationale behind the exemption is that research shows that large employers who pay sub-poverty wages are actually a drain on the local economy rather than a contributor.
Is this an effective approach to dealing with state budgets under increasing pressure and decreasing federal support? What other measures do you know of that have been seriously proposed?
Posted by rev_matt_y at February 8, 2005 02:57 PMSo, it is really a tax on anybody that shops at one of those stores.
I’ll bet my tax refund that consumer prices in those stores will increase by about:
1% on gross retail receipts between $10 million and $20 million, and additional 0.5% on the next $10 million, and an additional 0.5% on everything over that.
Jacktruth -
Right now, Walmart et al can offer lower prices and higher dividends because they skirt labor standards. As any economist will tell you, there’s no such thing as a corporation - it’s just a mechanism by which goods, services, and money flow from some people to other people.
By raising taxes, Montana is transferring money from shoppers, shareholders, and employees to recipients of government services and the shoppers, owners, and employees of other stores. Is one group more deserving than another? No. All are law-abiding citizens. However, if the representatives of the people deems that large stores are undesirable and/or incur disproportionate costs on society, then disproportionate taxes are in order.
Posted by: Chops at February 8, 2005 05:25 PMYou’re right rev_matt,
Montana’s proposal is a fairly low bar to pass - and Wal Mart has made a fortune by lowering it even further. Did you know that 28 hours is considered a full-time work week at Wal Mart?
I’m feeling conflicted, about empathizing with those Bush voters who will be directly affected by his proposed, deep budget cuts.
Ah there, it passed.
Posted by: Bert M. Caradine at February 8, 2005 09:45 PMDuring the American founding, perhaps the biggest worry that brought the Washington, Madison, Hamilton, Wilson and the rest to the constitutional covention was that poor in each state started voting themselves economic benefits at the expense of the rich (mostly, in the form of debt-relief laws). The constitution was established, in large part, due to this unjustied violation of property rights.
I guess the lessons of the American foundings do not apply to the confines on Montana. Taxing an arbitrary category like so-called “big box stores” is really no different, morally, from the poor using their voting power to cancel debts to the rich leading up to the constitutional convention. I hope its hard to “feel bad” for big-bad Walmart, but lets not forget our founding principles as we find ways to fund our state governments.
Posted by: Misha Tseytlin at February 9, 2005 02:22 AMSo, Misha. The founding principle of this nation was the ossification of the economic strata?
No, AP, it was that legislation should not be targetted at categories of people simply because they happen to have a lot of money. Equal protection of the law should apply whether you are a little guy or a big guy.
Posted by: Misha Tseytlin at February 9, 2005 09:06 AMI think another purpose of the tax is to allow mom and pop’s corner store to compete with war-mart; as mom and pop store’s do pay money that someone can live with with hardly any geovernment help, but Wal-mart gets around this by discouraging unions, ect. and therefore keeping its prices lower. This steers consumers away from stores, which are expensive compared to Wal-Mart, but have moral business practices.
Posted by: Warren at February 9, 2005 11:03 AMMisha is a closet Aristocrat, if his comments are followed to their logical conclusion. Tell me, Misha, would you have been on King George’s side during the Revolutionary War, the king believed too that those with wealth should be protected from the masses needs and decisions.
Posted by: David R. Remer at February 11, 2005 05:49 PMActually, David- you are much closer to the King’s position that I am. I believe in individual rights- ones that kings, or legislatures, cannot take from individuals. So there I stand with our founders- Washington, Madison, Hamilton. You stand with those who believe expedience, rather than rights, should be the basis of government. Our constitution was created by people who believe as did- and yet, you would call these revolutionaries friends of the king beecause they believe in individual rights, even against majoritarian tyrrany. interesting.
Posted by: Misha Tseytlin at February 11, 2005 10:59 PMRight, Misha, individual’s rights to poverty and suffering at the hands of law making Aristocrats who are charged with the welfare of all the citizens. I see where you are coming from.
Posted by: David R. Remer at February 12, 2005 03:54 AM
