School Zone: No Taxes

July 31, 2008 at 2:05pm By: Mr. Wilson Posted in The Lincolnite Blog

Lincoln State Senator Bill Avery wants Nebraska to follow Iowa’s lead and have an annual tax holiday during the back-to-school shopping season. It seems like an awfully Omaha-centric proposal. Who, besides folks in the Omaha metro, rushes to Iowa to shop every year? Consider folks driving from Lincoln. Let’s say you spend $15 on gas getting to Council Bluffs and back. If you save 5% on taxes, you would need to spend $300 just to break even. And that’s without factoring in the two hours of time you just lost. You don’t value your time at $0/hour, do you?

(Pst, if you do go to Council Bluffs, be sure to fill up your gas tank at the station just east of Ameristar. Cheapest I’ve found in the area.)

Maybe the problem is much greater in Omaha. But is it great enough that we would recoup the costs of applying this program across the state? Where’s an economist when you really need one?

The LJS article includes this bit:

Avery says he’s “tired of seeing parking lots in Council Bluffs full of cars with Nebraska license plates” and that he can’t blame Nebraskans for crossing the river. he plans to introduce a bill for a sales tax holiday next legislative session.

Well now I’m curious. What is Bill Avery doing hanging out at Council Bluffs shopping malls?

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The Comments

biancvalana July 31, 2008 at 8:39pm

Probably buying items with all the
money he won at the casinos…

Gene August 1, 2008 at 12:12pm

I suppose it would be nice for the middle income and lower income folks to save a couple of bucks on their back to school stuff. I’m surprised that none of the conservatives have chimed in here, actually. Probably because it would be an equitable tax break.

Fletch August 1, 2008 at 10:50pm

I guess you’d have to paint me as a conservative. I’d have no issues at all with a sales tax holiday. It may seem Omaha-centric, but I happened to once be in Minnesota during such a weekend, and it was fantastic paying $10 for an item marked $10. I think it’s not a bad idea at all. Does that disappoint you?

Mr. Wilson August 2, 2008 at 3:26pm

I don’t have any problem with getting a day off from (some) taxes. I think it’s great. I wish every day could be like that.

Just don’t think of it as a “free” day. It comes with costs (very) roughly equal to 1/365th of the state’s sales tax income per day. That’s a relatively small number, sure, but it isn’t zero, and it will need to be made up.

Well, unless the state were to decide to cut its spending to cover the loss. But you and I both know that isn’t going to happen.

To clarify: I’m not opposed to Senator Avery’s proposal, I’m just not in favor of it. I dispute the notion that we somehow “need” it. I’ll happily change my assessment if somebody can show me a reputable economist’s analysis that says differently.

Now if Senator Avery wants to talk about the economic impact of Iowa’s casinos on Nebraska and what we can do about it ...

Fletch August 2, 2008 at 4:24pm

I think it’s really a feel-good bill. I’m not totally a proponent of it, but I wouldn’t complain if they did it. If it was limited to clothing purchases under a certain dollar amount, and school supplies and the like - it’s just so hard to define.

As far as it being 1/365, I think that really comes out in the wash. I don’t remember the exact breakdown, but did you know that a business does not truly pay every single last solitary cent of sales tax it collects? There’s some kind of goofy formula that usually leaves some leftover for the business owner that he/she gets to keep, for his troubles, more or less.

Don’t shoot the messenger. I had a retail business of my own for about 3 years, and collected taxes, and knew to the penny what I had collected. When it was all reported, I think I had to pay a percentage to the state. With rounding, there was always a surplus. The instructions were to keep it.

If you own a retail business that does such sales - back me up on this.

The other maddening thing I find is how hard it is to interpret the laws. Have you noticed that in some stores, if you buy a bottle of Coke, marked 1.25, that you pay 1.25? And at others, that same bottle of Coke is 1.25 + tax? WHY?

I sold bottled Coke in my business. I had the tax code, and a CPA that specializes in taxes. Neither of us was exactly sure what the right answer was, it’s so convoluted. Methinks I didn’t charge tax, but I don’t recall.

My point is, it just shouldn’t be that hard. And there’s so much fudging that I don’t know that we’d truly miss the taxes from such a holiday. It could end up being more than 2/365, if people save their purchases for that weekend.

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