just procrastinating

Tuesday, February 17, 2004

Sales Tax
James Joyner at Outside the Beltway makes a good point on taxes. He is talking about a proposed plan here in Virginia for "eliminating sales tax exemptions enjoyed by utility companies, the shipping industry, airlines, dry cleaners, telephone companies and other businesses.
Since when are sales taxes a tax on business? Sales taxes are passed on directly and openly to consumers. Of course, all taxes on businesses are actually passed on to their customers in the form of increased prices.

The only sense in which making dry cleaners collect sales taxes affects the dry cleaners is that it raises the effective cost of their product and, to the extent that demand is elastic, costs them customers. Someone who is willing to pay $5 a week to have their shirts cleaned and pressed might not be willing to pay $5.40 and thus decide to do their own. Or they might decide to have their suits cleaned every fifth time they’re worn rather than every fourth time.
Good points. When businesses pay taxes, they just end up passing them along to consumers one way or another. It just is easier to say you are taxing business, 'cause you know, those guys are evil.

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