File this under, “Things that ought to drive taxpayers nuts.”
You and I know taxes don’t exist in a vacuum. When politicians on the city, county, state and federal levels begin chattering about raising them, and about how little their share will cost you, no one, except you, is adding up the total damage.
And when something big gets reported on in the news — some cataclysmic tax change such as the
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Supreme Court deciding states can begin taxing sales to online retailers? Well, no one seems to be pulling out an adding machine for that, either.
Case in point: Salt Lake County is getting ready to impose a quarter-cent sales tax increase to fund local transit and highways needs. But last week’s Supreme Court decision is bound to increase the amount of money current sales tax rates bring in, right?
I mean, either that’s right or the politicians who have been telling me for years about the hundreds of millions being lost to online sales have been, to put it charitably, mistaken.
Wouldn’t it at least be wise for the county to pause and see what happens?
But of course the county can’t pause. State lawmakers have put artificial deadlines in place that see to that.
If the county imposes the tax increase this year, it gets to keep 100 percent of the new revenue for the first nine months, which it must use to pay down transportation debt or fund projects that have a regional significance. After nine months, cities would get 40 percent for road projects, UTA would get 40 percent and the county would get 20 percent.
If the county doesn’t act by June 2020, cities could impose the tax on their own and keep a lot more of the money.
So, shouldn’t the state call for a pause?
Surely, state lawmakers will act next year to change the law, setting updated rules and parameters for out-of-state retailers that sell to Utahns online. Utah already is one of several states that are part of a Streamlined Sales Tax Agreement, which makes it easier for online retailers to collect taxes for Utah, without having to figure several rates for each little jurisdiction.
But until now, state law has assumed that the old rules were in effect; that online retailers had to have some sort of physical presence in the state in order to be liable for tax collections. Surely, some new rules will be put in place. Perhaps small businesses will be exempt, and perhaps not.
The state already had signed a bunch of agreements with individual retailers, such as Amazon, to collect Utah sales tax, but the court’s ruling ought to greatly expand how much money comes in, right?
Of course, some lawmakers might want to write laws that reduce overall sales tax rates so the Supreme Court’s ruling doesn’t result in a big windfall. But no one should assume anything at this point.
With a tax hike looming, this seems like a great time to call a special legislative session. Why not remove the deadlines and put the tax hike on hold until we know how much money is coming in?
And what about that figure — $58 million — everyone keeps attaching to this tax increase? Is that still accurate? Shouldn’t someone be looking at that?
The county sales tax increase comes with an extra public relations burden. Three years ago, the exact same tax hike was on ballots in several counties. Voters in Salt Lake County rejected it.
Sure, only about 2,000 votes separated the yeas from the nays, but some voters are, quite naturally, feeling a betrayal of trust.
Presumably, that’s one reason county leaders decided to let cities decide. If enough of them, representing two-thirds of the county’s population, said yes, the county would enact the tax. That threshold apparently has been reached, although some debate exists as to whether Sandy’s letter of support should count.
To be clear, I am a big supporter of transit. I ride the rails to work every day. I’d like to see those services expand.
But if governments are going to raise taxes, they should do so with the best data available. Right now, we don’t know how online sales tax collections will affect public coffers in Utah. Waiting a little while longer wouldn’t hurt.