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Dutchess_III's avatar

Why do sales taxes keep going up?

Asked by Dutchess_III (41921points) October 9th, 2016

When the cost of goods goes up, which it does, that automatically creates more tax revenue, right?
So why do cities keep increasing sales taxes, when they increase automatically?

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27 Answers

Love_my_doggie's avatar

Where have sales taxes been increasing? I’m not doubting you; I’m simply not familiar with any recent rate hikes.

MollyMcGuire's avatar

Because they can. The bigger the city the more lake houses to be built for commissioners. Those things take serious cash! ;)

Dutchess_III's avatar

In my town, and a neighboring town. When I moved here, in 1995, sales tax was 4%. When I had the shop, which closed in 2007, sales tax was 6%. It’s now 8.15%

RedDeerGuy1's avatar

@Dutchess_III Because most jurisdictions are in deficit and are reaching for easy money.

Seek's avatar

Whenever they want to raise sales taxes around me, they have a big campaign and the people vote on it referendum-style.

Penny for Pasco came around in the early 2000s. They built a couple of new schools and improved a bunch of intersections with the penny tax. If I venture into that county (which I grudgingly do on occasion) I’ll sometimes see a “Penny for Pasco Project” sign outside of some construction zone.

Dutchess_III's avatar

When I moved here they had a community pool. It was the same kind I had, growing up. Just a big, cement hole in the ground that they filled up with water. Diving boards and a slide. It cost $1.00 to get in.
Well, then they decided that wasn’t good enough, and they just had to build an “aquatic center.” They increased sales tax, and promised that taxes would pay for the whole project and they wouldn’t have to increase the cover charge.
They increased the cover charge to $2.50. It was a few years before I could afford to send my kids to the pool again. They just played in the river.

Love_my_doggie's avatar

@dutchess PM your city/town, county, and state, and I’ll be able to tell you what’s going on and what the authority is.

JLeslie's avatar

I think sales tax is usually raised by a vote. I voted to raise sales tax for a few years when I lived in Palm Beach County, FL. It was to help renovate K-12 schools. I voted against raising sales tax when I lived in a suburb of Memphis. It was to build more schools in the suburbs to keep the inner city kids out of the suburbs.

Dutchess_III's avatar

Why did they want to keep the inner city kids out of the suburb?

Seek's avatar

So their perfect white daughters wouldn’t come home with black boyfriends. Obviously.

stanleybmanly's avatar

The whole promise of the suburbs is to allow “escape” from inner city kids and others unable to flee.

Darth_Algar's avatar

A couple of years ago my county voted on 1% sales tax increase to help fund the schools. The people voted it down, then threw a fit when the high school had to start cutting some programs.

JLeslie's avatar

@Dutchess_III Mainly because the city schools have bad scores, and they don’t want those parents voting to elect school officials. Then add that the suburbs that already have inner city people who moved out the burbs (yes they are black people) now have more violence in the schools according to the parents, I have no idea if there are real stats to back that up. They also might be worried about what @seek said, but no one ever said that out loud to me, they did say the other two things I mentioned.

The inner city, Memphis, had its own school district, separate from the rest of the county. Memphis voted to give up their school charter and become part of the county schools. The towns in the county didn’t want “those” kids in their schools, they worried about kids being bused and about the parents voting as I mentioned. So, the towns in the burbs decided to vote to each have their own school district for each town, raise sales tax to pay for schools that would need to be built.

I voted against it. I didn’t believe for a second the increase in tax would be sufficient, especially in my small town. Also, I didn’t believe anyone was going to be bused so fast, especially not way out where I lived. Next, I think let’s try it with the county taking care of the school needs of the citizens of the county; give it a chance.

Plus, if the county running things does make education in the city better, then I want that. Although, I do admit, the vote is a concern. I know that sounds awful, but they were putting in idiots. I would never stop someone from voting, but this is one of the hazards of democracy. I think some school districts in the country don’t vote for some of those positions they are hired or appointed, I don’t know. I don’t know enough about how school systems work.

SmashTheState's avatar

It’s the result of a tactic used by neo-liberals to institute permanent systemic change without any obvious signs: downloading. The way it works is, responsibilities which have traditionally been those of the federal government get passed to the state (or provincial) governments – but without any corresponding increase in methods of generating tax revenue. As a result of this downloading, the federal government has cut its budget on paper without actually having to make cuts, allowing them to lower taxes for the rich.

The neo-liberal state/provincial governments now use the same solution the federal government did: they download responsibilities to cities and municipalities, again without giving them any additional tools for generating tax revenue to pay for them. And the municipalities were left holding the bag, giving them no choice but to use the few tools they had to generate a lot more tax revenue: namely, property taxes and user fees. Property taxes and user fees are regarded as two of the most regressive possible taxation streams, meaning poor people are dispropotionately targeted, while the rich pay such tiny fractions of their income that it’s essentially pocket-change for them – all the while the federal government is slashing things like income taxes where they used to get hit hardest.

Sales taxes are one of the few ways state/provincial governments can generate money, so whatever they are unable to download to the municipalities got added to sales and “sin” taxes – which are also regressive and disproportionately target the poor.

It’s really quite ingenious. At the same time the rich get huge tax breaks, they simultaneously make the lives of the poor so sadistically horrible that workers will agree to work in almost any conditions to avoid being impoverished. Because the changes are largely invisible on the surface and systemic in nature, no one notices or protests. And the neo-liberal government which initiates these changes gets to portray itself as a tax-cutting, fiscally responsible administration.

JLeslie's avatar

@SmashTheState Most of the Republicans I know, and all who I classify as right wingers, want sales tax over income tax. Generally, they like lower tax period, but that vote I talked about above regarding the schools in TN, the sales tax was 9.25% at the time of the vote and those republican, conservative, people voted to increase the tax.

SmashTheState's avatar

Er… yes. Those “right wingers” are neo-liberals. As I said, they like sales tax because it’s regressive, while income tax is progressive.

Love_my_doggie's avatar

@JLeslie In the U.S., sales taxes are governed by states and localities. Many developed countries have some version of a VAT, but the U.S. lacks a national sales tax and leaves the option for local jurisdictions. This small v. big government characteristic appeals to the conservative mindset. Traditionally and currently, conservatives tend to favor sales tax.

Of course, when a sales tax is in place, the same supporters complain about it. This is also true for personal property and real estate taxes, which are local-based.

JLeslie's avatar

^^I know. But, when they “talk fair tax” vs. income tax they I assume mean similar to a federal VAT. Regarding local sales tax, they were willing to raise it to keep the inner city kids out. They really complain about property taxes, you know, paying for other people’s kids to go to school. I just argues with a friend about this. She is sure it’s more fair to have a big sales tax and no income tax. Mind you TN sales tax is even on food! Including staple goods. I find it so regressive.

@SmashTheState You know what? I had to read up on the definition of neo-liberal. Thanks for your response.

Love_my_doggie's avatar

^^^ Yes, sales tax is extremely regressive, but also very effective because it’s so broad and sweeping. Virginia, too, taxes grocery purchases. I don’t mind at all, because I can afford to pay, but I find this very unfortunate for the poor.

jca's avatar

New York taxes some grocery store items, such as candy. It’s called a “luxury tax.” Meat, milk, produce, not taxed.

JLeslie's avatar

@Love_my_doggie Virginia taxes everything! LOL. Property tax on cars, home, income tax, sales tax, sales tax on groceries. That commonwealth is one of the few states that really gets you coming and going. It’s not a matter that you can afford it, it’s the people who have trouble affording it that it matters.

Dutchess_III's avatar

Wow, @jca. We are taxed on everything.

Love_my_doggie's avatar

@JLeslie Except the individual income tax hasn’t changed since I moved here in 1979, neither the rates nor the brackets. Needless to say, the tax is extremely low. I’d love to see it changed to a more progressive structure, with the intent of reducing or scrapping some of the more regressive taxes, but an ultra-conservative legislature won’t do that.

JLeslie's avatar

^^Come live where I live. No income tax, no sales tax on groceries, no property tax on cars. We do have sales tax on other goods, and a fairly high property tax if you have a vacation home here, and we tax the tourists to the hilt.

Dutchess_III's avatar

Oklahoma doesn’t have property tax, and you can tell the minute you cross the border. Their roads are shit.

JLeslie's avatar

^^I don’t think I’ve ever heard of no property tax. I gotta buy some land there. Lol.

Dutchess_III's avatar

Lots of people from Kansas get a piece of junk property in Oklahoma and list it as their home address. Then they don’t have to pay property tax on their stuff.

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