Sales Taxes Again

Every now and then I remember that one of the reasons I started this blog was that I hated writing letters to the editors of various publications and having them disappear into the ether. Letter to the Oregonian:

In his op-ed about Oregon’s tax system, Wally Van Valkenburg makes a stunningly grand mistake when he claims that a sales tax is needed because the state “generates revenue from only two of those three sources” (the other sources being property and income taxes).

Enacting a sales tax doesn’t cause money to appear out of thin air. Every sales tax proposal in recent history has been accompanied by reductions in property and income taxes, a move that shifts the burden of the state’s revenue further onto the shoulders of the poor and middle class. And despite the airy speculations of sales tax proponents, taxes on tourism won’t create a huge windfall. The bulk of any state’s sales taxes are paid by its citizens. Even a large portion of any tourism-related sales tax would be paid by Oregonians; many of the tourists in Oregon are from a different part of the state. That’s not even taking into account the potential effect on decreases in income tax revenue from tourism-related industries whose sales would decrease when dollars spent on their goods and services go directly to pay sales taxes.

There’s also serious doubt about another standard claim of sales tax advocates. According to theory, the sales tax is less volatile than the income tax. But studies of actual revenue figures cast serious doubt on that claim, showing that they’re both relatively volatile.

It’s time for sales tax proponents to stop talking in generalities and put forth some real numbers to make their arguments. Anyone who tells you there’s an untapped “third source” of revenue is as reliable as someone who claims money grows on trees.