Friday, August 09, 2013

Missing The Point

There was an article in the U-T San Diego the other day about California revenue, which said that sales tax revenue had dropped because people were spending more on services and non-taxable items and were spending less on items which are subject to sales tax. I think the writer missed the point, and the Editorial Board compounded the missed point today. Our local paper continues to set records for obtuseness.

Their idea seems to be that consumer thinking goes, “I’m trying to decide between groceries and a new electric drill. I think I’ll buy the groceries, because the electric drill is subject to sales tax.” Most people choose the groceries because they are what is called a “necessity,” which is why they are not subject to sales tax. The new electric drill is an optional purchase, which is why California subjects it to sales tax. That is the principle which prevents sales taxes from being entirely regressive.

People are not buying fewer taxable items because they are taxable. They are buying fewer taxable items because they are optional purchases and the economy sucks. Raising taxes is not going to help the economy and cause people to buy more, thereby increasing California revenue.

What will increase revenue is creating more jobs, and in particular more jobs that pay better wages. We could start that process by electing legislators who have something inside their skulls other than sawdust.

Finding media with brains is, however, something beyond our power.

1 comment:

  1. bruce5:38 PM

    That would mean finding voters with more than sawdust in their skulls. Which may be hard to find, considering the media that they watch.