Home » Taxes » Recent Articles:

Opinion: Sales Taxes Outdated In 21st Century

February 15, 2017 Featured, Retail, Taxes Comments Off on Opinion: Sales Taxes Outdated In 21st Century

We order stuff online frequently because it’s convenient to do so, not because we want to save on taxes. Often we’ll order from target.com so we pay the same tax rate we do when we shop at Hampton Village location once per month.  Amazon is the bulk of our online shopping so now we’ll pay 4.225% for Missouri sales tax. Fine.

There are lots of online retailers out there, from 2013:

Using figures from a variety of sources, including Internet Retailer’s Top 500 Guide for 2013 and data from the U.S. Census Bureau, ReferralCandy determined that there are 102,728 e-commerce retailers in the United States that are generating at least $12,000 per year in revenue. That’s a 13.5 percent increase over last year’s findings, which revealed 90,501 online retailers generating the same amount.

Other findings from the study include:

  • 61,728 online retailers generate at least $25k in revenue (up 12.8 percent from the year before)
  • 38,157 e-commerce merchants generate at least $50k in revenue (up 12.3 percent from the year before)
  • 23,587 online merchants generate at least $100k in revenue (up 13.6% from the previous year) (Forbes)

So over 100k retailers should register with every state to be able to collect and report sales taxes?  I looked at three retailers located on Cherokee Street to see how they handle sales taxes on their online shops — they ship to every state:

Firecracker Press

  • Collects 8.7% Missouri & St. Louis sales tax on orders shipped to Missouri customers.
  • Doesn’t collect sales taxes shipped outside Missouri.

Spoked Bikes & Stuff

  • Doesn’t appear to collect sales taxes on any online order, though a tax line appears in the cart.

STL-Style

  • Doesn’t appear to collect sales taxes on any online order, no sales tax line appeared .

More than half of those who voted in the recent non-scientific Sunday Poll support online retailers collecting state sales taxes:

Q:  Agree or disagree: Online retailers, without brick & mortar stores in a state, shouldn’t collect sales taxes in that state.

  • Strongly agree 6 [14.63%]
  • Agree 5 [12.2%]
  • Somewhat agree 1 [2.44%]
  • Neither agree or disagree 1 [2.44%]
  • Somewhat disagree 3 [7.32%]
  • Disagree 9 [21.95%]
  • Strongly disagree 15 [36.59%]
  • Unsure/No Answer 1 [2.44%]

Oh, I bet many thought I was talking only about Amazon. Where is the line drawn in the sand? Is it based on sales shipped to each state? If so, the three small retailers on Cherokee would need to keep track of sales to each state and then begin collecting state sales taxes only when their sales to that state have crossed the threshold?

We pay taxes to receive services from the government(s). How governments collect revenue varies widely, not all collect sales tax:

In 2013, sales and gross receipt taxes nationwide totaled $254.7 billion — a 3.9% increase from the year before — which means Americans spent an average of $806 on sales taxes last year. That’s less than the $309.6 billion, or $979 per American, spent on state income taxes. However, including selective sales taxes, which are levied on goods like gas and cigarettes, Americans actually pay more in sales taxes than they do in state income taxes.

Sales taxes vary widely from state to state. Some states charge no sales tax, while some localities charges as much as 10% when state and local sales taxes are combined. Tennessee, on average, has the highest sales tax at 9.44%.

There are four states with no sales tax: Delaware, Montana, Oregon, and New Hampshire. A fifth, Alaska, has no state-level sales tax but allows municipalities to impose the retail-level tax. As a result, the average sales tax rate in Alaska is 1.69%. 

While 10% of U.S. states impose no sales tax, a much smaller percentage of the population lives in one of these states — only about 2.5%. (Motley Fool)

Let’s not forget the complex sales tax pool in St. Louis County.

I think it may be time to admit sales taxes as a revenue source is outdated by current technology & shopping trends. I’m not suggesting we need lower taxes — but that we need to find a better way to fund local & state government services.

— Steve Patterson

 

Opinion: Missouri Needs To Increase Fuel Taxes, Index For Future Adjustments

January 11, 2017 Featured, Missouri, Politics/Policy, Taxes Comments Off on Opinion: Missouri Needs To Increase Fuel Taxes, Index For Future Adjustments
Missouri Capital, Jefferson City, MO, April 2011
Missouri Capital, Jefferson City, MO, April 2011

The last time Missouri’s fuel tax rate increased was 1996 — from a 1993 law that increased it a little for 3 years. Meanwhile, Missouri has built more miles of infrastructure to maintain and maintenance/construction costs have increased. There are many ways to raise money for roads & bridges but the most direct is fuel taxes.

Our legislators in Jefferson City need to address this issue — but I don’t see it happening. Even if they managed to pass a small increase our new governor would likely veto it.

The results of the recent Sunday Poll:

Q: Agree or disagree: Missouri should index fuel taxes so they automatically adjust up or down.

  • Strongly agree 11 [40.74%]
  • Agree 8 [29.63%]
  • Somewhat agree 4 [14.81%]
  • Neither agree or disagreeii 1 [3.7%]
  • Somewhat disagree 2 [7.41%]
  • Disagree 0 [0%]
  • Strongly disagree 1 [3.7%]
  • Unsure/No Answer 0 [0%]

In addition to increasing the fuel tax, there needs to be an index to automatically adjust it going forward. Not exactly sure the basis for the indexing, but we can’t go decades without a change since deterioration & increased costs never stop.

— Steve Patterson

 

Know Your Ballot: Propositions & Amendments

Vintage photo of the former offices of the St. Louis Board of Election Commissioners. From my collection
Vintage photo of the former offices of the St. Louis Board of Election Commissioners. From my collection

Absentee voting for the November 8th general election began in Missouri last Tuesday, but since I’m still researching items on the lower part of the ballot I haven’t voted absentee yet. I decided to start at the bottom and work my way up, so this post is my initial research on ballot issues. Most are statewide, but even the first applies to St. Charles County, St. Louis County, and the City of St. Louis:

Proposition S — senior services

Voters in 3 counties will vote on identical measures.

A November ballot measure seeks to create senior citizen service funds in St. Charles County, St. Louis County and St. Louis that together would raise about $18 million a year in property taxes to help people stay in their homes longer.

More than 50, mainly small, Missouri counties already have created similar programs to help provide transportation, food, health care and other services. If the new measures pass, they would be the largest of their kind in the state.

Proposition S would levy a 5-cent property tax on every $100 of assessed value, which boils down to $9.50 a year on a home worth $100,000. Local boards would decide which needs are a priority for residents who are at least 60 years old.  (Post-Dispatch) 

I’ll probably vote yes on this. It is often better for seniors to be able to stay in their homes as they age — it’s also cheaper on taxpayers.  This is a good investment, assuming the local boards are well-managed. This is on the ballot because of Seniors Count St. Louis.

Proposition A/Constitutional Amendment 3 — cigarette/tobacco taxes

Regular readers know I’m a non-smoker who supports prohibition of smoking in public. I’ve also pointed out how low Missouri’s cigarette taxes are compared to neighboring states. So, you might think I’d be happy to see two ballot issues that raise taxes on cigarettes/tobacco. Wrong.

The campaigns behind both of the competing tobacco tax increase measures on the ballot were largely funded by tobacco companies. Large tobacco companies, in general, backed Amendment 3, the 60 Cent Cigarette Tax Increase Initiative, while some smaller companies and wholesalers supported Proposition A, the smaller tax increase.

Reynold’s American Inc. gave over $2 million to Raise Your Hand for Kids, which is supporting Amendment 3, the 60 Cent Cigarette Tax Increase Initiative. The drafters of Amendment 3 included a 67-cent-per-pack fee on wholesale tobacco sellers, raising the total state tax for smaller companies to $1.27 per pack. This added tax for small companies was designed to close an alleged loophole that allowed small companies to evade making payments to 46 states mandated by a multi-state court settlement to help offset Medicaid costs. Missouri Attorney General Chris Koster had been pressuring the Missouri General Assembly to end this loophole and demand lost payments from small companies totalling $50 million annually.

Smaller companies such as Cheyenne International, LPC Inc., and Xcaliber International donated toward the Proposition A, the 23 Cent Cigarette Tax Increase Initiative, largely to oppose the Amendment 3. Chuck Hatfield, lawyer for Cheyenne, said that the Amendment 3 was “about Big Tobacco wanting to tax their competitors. That’s what this has always been about.” (BallotPedia)

Given this information, I’ll be voting no on both.

Constitutional Amendment 6 — Voter ID

Voter ID laws in other states have been controversial and ruled unconstitutional, but that didn’t stop the Republican-controlled legislature from overriding the veto to place this on the ballot. Their intent is very clear — discouraging/preventing African-Americams from voting. Period. What about the 78th House Dist race?  A voter ID wouldn’t have made a difference, the St. Louis Board of Elections had created a secondary process for absentee ballots that was abused.

In January a Missouri State Senator argued in favor of such a law:

Kraus said Missouri needs a voter I.D. law because there have been more than 16 cases of “some type of voter fraud” in Missouri. That number isn’t wrong, but it doesn’t support Kraus’ assertion that photo identification would solve the problem — or that there is a problem of people impersonating voters.
Kraus’ statement is partially accurate but takes things out of context. We rate his claim Half True. (PolitiFact Missouri)

I’ll be voting no.

Constitutional Amendment 4 — banning new sales/use tax on services

More states are looking to tax services, so some in Missouri are trying to stop it from happening here:

Could Missouri tax haircuts, veterinary services, pedicures and yoga classes? Missouri voters will have their say this November at their polling place with Amendment 4.

The “Taxpayer Protection Amendment” was certified for the ballot this month. If approved by voters it would ban a sales tax on services.

The amendment would prevent the state from taxing such services as car repairs, tattoos and lawn care. 

Currently, consumers don’t pay taxes on those services. Inconvenienced travelers pay a sales tax on a new tire but not on the service of replacing a flat.

But despite Missouri’s current lack of a sales tax on services, Amendment 4’s supporters – primarily the Missouri Association of Realtors, which circulated the initiative petition – see trouble on the horizon. (Missouri Times)

Taxing service transactions could be a headache for those providers, but this might also help budgets in areas heavy on service but low on retail. Hmm…

Retired financier Rex Sinquefield is a potential adversary, especially because he’s advocated for replacing Missouri’s income tax with an expanded sales tax. An e-mail to one of Sinquefield advisors wasn’t returned about whether he’d actively oppose Amendment 4. (St. Louis Public Radio)

This might force sales taxes to go up even more — an unintended consequence. I’m not sure yet how I’ll vote on this issue.

Constitutional Amendment 2 — campaign limits

Big money flowing into politics is something I generally favor trying to limit/stop:

The measure would cap donations to candidates at $2,600 per election and to political parties at $25,000. It also would impose other campaign finance restrictions aimed at preventing political committees from obscuring the source of their money.

In November 1994, 74 percent of Missouri voters approved a ballot measure limiting contributions to state candidates. The Republican-led General Assembly repealed contribution limits in 2008, which at the time stood at $1,350 for statewide candidates, $675 for Senate candidates and $325 for House candidates. (Kansas City Star)

Even though the person behind this is anti-abortion, I’ll likely vote yes.

Constitutional Amendment 1 — renew tax for soil/water conservation

This measure has been renewed in the past:

Amendment 1, upon voter approval, would renew the existing sales and use tax of 0.1 percent for 10 years. The revenue from the tax goes toward conservation efforts, and the measure was designed to “continue to generate approximately $90 million annually for soil and water conservation and operation of the state park system.”

Constitutional Amendment 1 was automatically referred to the 2016 ballot. This measure originated with a 1984 constitutional amendment. Due to the wording of this original amendment and subsequent iterations, the measure must be reapproved by voters. It is automatically referred to the ballot every 10 years. Previous versions of this amendment were approved in 1988, 1996, and 2006. If Amendment 1 is not approved in 2016, it will not be referred to future ballots. (BallotPedia)

I’ll vote yes to continue this tax.

Next week I’ll post on judges up for retention.

— Steve Patterson

 

I’m Opposed To Sales Tax For Zoo, Expand Zoo-Museum District And/Or Charge Admission

St. Louis Zoo
St. Louis Zoo

Two mornings a week admission to the Missouri Botanical Garden is free to those who live in St. Louis city & county — who pay property taxes to the Zoo-Museum District. The rest of the time admission is charged. The zoo, however, is free.

In 1972, the Metropolitan Zoological Park and Museum District – the Zoo Museum District – was formed. Through the District, the citizens and taxpayers of St. Louis City and County make possible the extraordinary quality of five institutions that are essential to life in St. Louis: the Zoo, Art Museum, Science Center, Botanical Garden and History Museum. (Zoo-Museum District)

Limiting the district to city and county made sense, that’s where the bulk of the population lived:

In 1970, the large majority of St. Louisans came together to save the cultural institutions. Today, less than half of the citizenry is left to carry the tax burden that fulfills the dream. There are actually 220,000 fewer residents today than there were in 1970 within the combined borders of the city and county, while the metropolitan area has grown by more than 400,000. (St. Louis Magazine, March 2009)

Yes, in 2009 the population of city & county is less than what it was at formation of the district.

St. Louis and St. Louis County residents already pay property taxes that raise more than $70 million a year for the region’s five cultural institutions. The zoo gets $20 million a year, as does the St. Louis Art Museum. The Missouri Botanical Garden, Missouri History Museum and St. Louis Science Center each receive about $10 million annually. (Post-Dispatch, October 2013)

From last month:

Zoo lobbyists are now working in Jefferson City to get legislation passed. The bills would allow county councils to put the tax on county ballots, perhaps as early as next spring.

But a variety of regional leaders have asked the zoo to consider an entry fee for nonresidents instead.

Charging St. Louis and St. Louis County residents with two taxes is unfair, said Ben Uchitelle, a former board member of the Zoo-Museum District, which collects and distributes the existing property tax. He’s also worried about accountability with a new tax. The Zoo-Museum District “carefully studies and holds accountable” the five regional institutions, including the zoo, that receive property tax dollars. Who would collect the new tax? Who would monitor its use? (Post-Dispatch)

In the non-scientofic Sunday Poll a majority supported a sales tax in five counties.

Q: The St. Louis Zoo may propose a 5-county 1/10th of a cent sales tax. Support or oppose?

  • Strongly support 10 [27.78%]
  • Support 8 [22.22%]
  • Somewhat support 2 [5.56%]
  • Neither support or oppose 0 [0%]
  • Somewhat oppose 3 [8.33%]
  • Oppose 5 [13.89%]
  • Strongly oppose 7 [19.44%]
  • Unsure/No Answer 1 [2.78%]

Support was 55.56 % to 41.66% for opposition. Count me among the opposition. We already have a good model for regional cooperation, we just need to expand it the way population has.

— Steve Patterson

 

Sunday Poll: Support or Oppose a Regional Sales Tax for the St. Louis Zoo?

Please vote below
Please vote below

In the news last month was the idea of a 5-county sales tax to support the St. Louis Zoo:

The chief executive of the St. Louis Zoo says a regional sales tax is the right way — and perhaps the only way — to preserve the zoo and its animals for years to come.

President Jeffrey Bonner, in an impassioned argument for a five-county sales tax, said the zoo needs money to repair sewers, roofs and animal exhibits on its 100-year-old Forest Park campus. And it can’t consider operating a proposed 300- to 400-acre conservation breeding site without the new tax.

An admission fee is not the answer, Bonner said. Charging nonresidents for entry would create long lines, discourage attendance, reduce visitor spending and cost the zoo an estimated $50 million in turnstiles, ticket booths and the like. (Post-Dispatch)

The tax, if passed, would be collected on sales in the following counties: Franklin, Jefferson, St. Charles, St. Louis, and the independent City of St. Louis. Currently, the Zoo receives about $20 million annual from a property tax in St. Louis city & county.

This is the subject of today’s poll:

The poll is open until 8pm.

— Steve Patterson

 

 

Advertisement



FACEBOOK POSTS

Archives

Categories

Advertisement


Subscribe