No Local Sales Taxes (Glasgow: real estate, rent, mortgage)

[GiftShoppeGuy]

The Senate rejected a bill today that would allow city and county governments to enact local sale taxes.
The bill was soundly defeated by a 38-to-12 vote after a lengthy debate.
Democratic Senator Sam Kitzenberg of Glasgow said the bill would not guarantee new taxes, but would give voters the opportunity to initiate a sales tax on non-essential goods.
He says local sales taxes would give Montana's cities another way to pay for city services. Most major cities in the state have expressed support for the bill.
But opponents argued the bill was unfair to rural residents, who only shopped in bigger cities but did not live there. Republican Senator Keith Bales of Otter says they would be paying the taxes without receiving any benefits.

[grizzfan]

I was not in favor of that tax either but for different reasons.

At the end of the day the sales tax is the fairest tax - you pay tax only upon what you consume. Real estate taxes and payroll tax are the most unfair taxes and that's one reason why payroll taxes are called regressive taxation - the more you earn the higher the taxing rate. Anyway you look at regressive taxation it is patently unfair. Taken to its illogical end, a millionaire should pay $20 for a loaf of bread and $12 for a draft beer, just because he can.

Real estate taxes are unfair as they cause an owner to pay for services, based upon ever increaseing market values, the whim of the voter and bureaucratic averice, for those who are not owners. (Certainly part of a renter's rent goes to the owner's tax, but never the entire amount.) An owner has no control over the value of his property, the whim of the voter or government bureaucrats, ergo how much he is taxed.

The solution is to repeal income and property tax for residents (excluding absentee land owners and "off-shore corporations') and substitute an equitible sales tax rate on goods and services, excluding food, medicine and medical care. And institute protections from our legislators so they cannot raise the rate at will. 5% would probably put Montana deeper in the black than it is now.

I know, there will be some neanderthals out there that will be looking for my hide but, to borrow a phrase: "Bring 'em on"!

[NYMTman]

Interesting to see Democrats supporting this, considering their recent assertions (at least on the national level) that they only support tax hikes on the rich.

[Reziac]

The problem with sales tax is that the poorer you are, the harder it hits you. Out of all forms of tax, sales tax probably hurts the most people in the lower income brackets. 5% of what you spend doesn't sound like much til you realise that might be a whole day's worth of food for a poor person.

The trouble with real estate tax is that, as Heinlein put it, it's a fine for improving your property. Worst case, RE taxes can get so high that it forces people out of their homes (this happens whenever property values are rising and are reassessed annually, rather than only when sold). Hence Prop13 in CA, tho local gov'ts get around that with "special assessments", many of which you get no vote on. Hence CA's 1% RE tax is actually more like 2%. My annual property tax comes to the same as THREE extra monthly mortgage payments.

And income tax is no better, especialluy when SS, payroll tax, and workmans comp get into the act. I once looked into hiring part-time help, and found that it would have cost me 28% of my GROSS INCOME just to cover tax and required benefits, for one part-time minimum-wage worker. Never mind!!

The real solution is to force government to live within its means. If a gov't is doing so, then it should never need to raise taxes.

Montana used to be really good about this, because of the policy of expiring the "mill levy" (property tax) and people had to actively vote to increase their own taxes. I remember how few mill levy increases passed when I was living in MT. Yet public services there were tons better than here in CA, where taxes are high and go up regularly.

One other point about sales tax: they always go up. Remember when it was 3% in most states? Now it averages around 8%. If you're just barely making it as it is, given the bite that 8% sales tax takes out of your purchasing power, that's 2.4 days of every month that you don't get to eat.

My neighbour needs to buy a new (used) vehicle. She can make the down payment -- what she can't make is the sale tax, which DOUBLES the cash needed at the time of sale. So much for that...

Montana, don't get into sales tax, it's a trap you'll never get out of.