Michael Wood – 6/15/10

This page was last updated on June 15, 2010.

State should end tax collection discount; Michael Wood, Research Director - Pennsylvania Budget and Policy Center; Beaver County Times; June 15, 2010.

According to its website, “the Pennsylvania Budget and Policy Center (PBPC) is a nonpartisan, statewide policy research project that provides independent, credible analysis on state tax, budget, and related policy matters, with attention to the impact of current or proposed policies on working families.” Review the PBPC website and that of PBPC’s parent (Keystone Research Center), however, and you find “nonpartisan” means leftist. Heck, even the Pittsburgh Post-Gazette referred to PBPC and KRC as “liberal research groups.”

Below is a detailed critique of the subject letter.

“People talk a lot about having government work smarter and want it to take advantage of technology to help reduce the cost of providing services.

“One way Pennsylvania can save $74 million is to eliminate the vendor discount it pays to retailers who collect and remit sales taxes to the state.”

[RWC] A Post-Gazette article appears to give a good description of the issue. In summary, retailers who pay their sales taxes on time get to keep 1% of what they collect. For example, if a retailer collects $1,000 in sales taxes, he gets to keep $10 if he remits the taxes on time. The idea is to help defray the costs of collecting the tax (collecting, accounting, reporting, remitting, et cetera).

“A 2008 report from Good Jobs First found that only two states gave away more money in these discounts than Pennsylvania. Because Pennsylvania can’t cap the amount of discounts a company can get, the lion’s share of the benefit is going to a few huge retailers.”

[RWC] Hmm, it’s funny how a self-described “nonpartisan” group cites a report from a leftist organization, isn’t it? The PG article referred to Good Jobs First as “another left-leaning Wal-Mart critic.”

Note how the letter says “two states gave away ….” When did partially paying for a service (in this case tax collection by retailers) become giving something away?

Also note the comment, “the lion’s share of the benefit is going to a few huge retailers.” I don’t know if that’s true, but of course a large retailer will collect more sales taxes than a small retailer. The percentage each gets to keep is the same, however. This bogus complaint is the same stuff lefties throw at us when large income taxpayers get the same tax rate cut as everyone else. That is, it’s unfair for a large taxpayer to get a bigger cut in dollars than a small taxpayer even if the percentage cut for the larger taxpayer is the same or smaller than for the smaller taxpayer. Note how lefties don’t make this complaint when higher income earners pay more dollars in taxes than lower income earners. When it’s about tax increases, lefties look at tax rates to judge “fairness;” when it’s about tax cuts, lefties look at dollars.

“Vendor discounts probably made sense 50 years ago when companies had to employ legions of bookkeepers to manually tabulate cash register receipts and write checks to the state.

“Today this work is automated, even for the smallest of retailers. Computers do the work but vendors are still receiving their discounts like clockwork.”

[RWC] Is the PBPC claiming services mostly done by machines have no cost to the business and should be provided free of charge? For example, it would be OK to charge a fee when a human teller waits on customers but not when customers use an ATM? What about toll roads? When I use an automated toll lane instead of one with a human toll collector, should I get a discount? As a reminder, even E-ZPass users don’t get a toll discount. In fact, E-ZPass patrons must pay a $3/year service fee plus maintain a minimum of $10 (automatic replenishment) or $15 (manual replenishment) in their E-ZPass account.

“The rest of us - and our employers - are expected to make timely payments of all other taxes to the state and do it for free.

“It’s time to end vendor discounts.

“If we’re going to be serious about making government dollars work harder and squeezing out inefficiency where we find it, we have to apply the same rules equally across the board.”

[RWC] The bottom line is the PBPC wants businesses to be unpaid tax collectors. Yet again we have a leftist group spending someone else’s money.