[kimbernator]

I grew up in WA and as much as I enjoyed the lack of income tax, it's factual that until recently they held the title of #1 most regressive state tax system nationwide (recently bumped to #2 by FL). Income taxes are much better distributed among income brackets than consumption taxes are. I grew up just over the river from Portland, where there is no state sales tax; we got to enjoy the best of both worlds by crossing the state line to OR for large purchases and living in WA.

Ironically, my home for the last decade (MO) has recently moved forward with a bill eliminating the statewide income tax in favor of a higher sales tax. This is in a state where the two largest cities are situated on the borders of other states, so it's essentially a guarantee that this will backfire.

[limagnolia]

In Missouri, the current proposal is to put it up to a vote, so Missourians will decide what they want. There are safguards builtin where the income tax is only phased out if there is revenue to replace it. Its an interesting experiment setup.

**

The way to make a consumption tax progresive is with a prebate, or if you want to be more complicated, a rebate. With a prebate, every citizen or resident would recieve a check each period for the amount of the consumption tax up to the spending level you set as the curve for regresiveess, such as the federal poverty line.

It would be difficult for Missouri to implement a prebate on its own due to the proximity of the population to other states! (Residents could take the prebate, then travel across state lines to spend it, resulting in a huge loss to the state).

Income taxes are complicated to collect, subject to massive violations of privacy, and generally provide more perverse incentives than consumption taxes.

[kimbernator]

Given the experience I've had with MO's legislature, I don't have a lot of trust in them to do anything that directly reflects the majority desire. Ultimately they have clearly shown a preference towards Republican dogma than democratic norms, so I fully expect the income tax removal to go through regardless of the balance sheet.

[TheJoeMan]

The "free" federal tax filing service I use in Florida, makes their money by charging for state filings. It will add an additional hour or two of effort to every resident of the state, even if they are below the state income threshold which is quite an externality.

Also, I would be wary bragging about buying your goods in Oregon, you technically may owe WA use tax https://dor.wa.gov/taxes-rates/use-tax.

[tylerritchie]

>It will add an additional hour or two of effort to every resident of the state, even if they are below the state income threshold which is quite an externality.

Nope, that is false. The language of the bill only requires filing if tax is owed. There will be a handful of folks on the cusp who will need to calculate their AGI to determine their state tax liability but everyone else knows offhand if they need to file.

The language is "Individuals not owing tax under this chapter are not required to file a return..."

[TheJoeMan]

Okay, that is good to know thanks for pointing that out.

[pc86]

This is one of those things that I question the legality of, but it will never get answered because nobody is going to the Supreme Court over sales tax. I can understand the argument of me sitting at home in State 1, buying something online, and having it delivered to me in State 1, and owing State 1 some sales tax on that.

It is absolutely no business of State 1's what I do when I travel into State 2. Whether or not I buy something and/or the value of that purchase should not enrich State 1 in any way. The only reasonable exception I can think of is if I'm buying things to bring back and resell.

[lovich]

The Use tax is levied when you bring items from State 1 into State 2 and use it within State 2's jurisdiction.

Not State 2 taxing you for using items within State 1's jurisdiction.

As far as I remember from my tax days they are also limited to the difference between the tax you paid for in the originating state and the state you use the item in, much like US federal taxes for citizens abroad.

In practice as well, no government gives a fuck about regular consumer abuse at that level. You get hit for violating the taxes when you either were A: committing other crimes and this was more of them throwing the book at you, or B: are a company or organization abusing the tax difference at large, such as a laundromat in Massachusetts buying 500k of machines in New Hampshire and thinking your'e so clever for tricking the tax man.

[pc86]

> The Use tax is levied when you bring items from State 1 into State 2 and use it within State 2's jurisdiction. Not State 2 taxing you for using items within State 1's jurisdiction.

That's what I understand it to be as well, sorry if that wasn't clear. But to use your washing machine example what business is it of the state where I bought this washing machine? Why does Massachusetts get a percentage cut of this washing machine's purchase price. The electricity is already taxed, the water is already taxed, so hooking up to the grid doesn't seem to be a very good reason.

> In practice as well, no government gives a fuck about regular consumer abuse at that level.

Oh so this is one of those things where the government can just choose to arbitrarily enforce it against entities it doesn't like.

Maybe the government shouldn't be able to pass tens of thousands of pages of law every single year and not enforce them until they decide that you are Bad and, as you put it yourself, "[throw] the book at you." Maybe laws should be like copyright where if the government has a history of not enforcing them, they go away.

[lovich]

> But to use your washing machine example what business is it of the state where I bought this washing machine?

It’s their jurisdiction and they made a law for it. I don’t subscribe to libertarian beliefs so it’s not very hard for me to grok.

> Oh so this is one of those things where the government can just choose to arbitrarily enforce it against entities it doesn't like.

Not for 99% of cases although there are times I recognized it gets abused. It’s not enforced on the smaller violations as a result of it taking X amount of dollars to enforce to only get >X dollars in tax revenue. It’s not a vice tax where they are trying to stop behavior but a revenue generator so there is no reason to waste the money.

You get similar behavior in large businesses accounting departments where under a certain value they will just accept the loss instead of spending the time trying to fix discrepancies in their accounts.

[tzs]

> This is one of those things that I question the legality of, but it will never get answered because nobody is going to the Supreme Court over sales tax

Someone did go the Supreme Court over sales tax on property bought out of state. Henneford v. Silas Mason Co., Inc., 300 US 577 (1937). Text here [1].

[1] https://www.law.cornell.edu/supremecourt/text/300/577

[dwaltrip]

What’s the reasoning? If you were a business, would your opinion change?

[pc86]

Going from a high tax state to a low tax state to purchase goods is not substantially different than going from a state with strict anti-abortion laws to a state with very pro-abortion laws to get an abortion. One is economic, one is healthcare, both boil down to "I shouldn't have to tell the government what I do outside of that government's jurisdiction." I'd rather people have the freedom to vote with their wallets and feet.

Even taking states out of the equation, if I live in a city with a city-specific sales tax, that city doesn't suddenly get the right to lay claim to all my economic activity whether in that city or elsewhere.

[tzs]

That tax is a "use" tax. It is basically for having/using things in the state that you didn't pay state sales tax on.

You don't have to tell the state why no sales tax was paid--maybe you bought it in another state but maybe you bought it at a garage sale or from someone on Craigslist or something like that that doesn't collect sales tax.

The use tax is only legal if it is complementary to the sales tax (which means that the total you pay cannot be more than the sales tax rate) so that if you did buy it out of state and paid sales tax in that state your state can only charge you the difference between what the sales tax would have been in state and what you paid to the other state.

That does mean that you will have to tell the state where you got it if you want to get the reduced use tax rate, but as a practical matter most people only pay use tax on items that they have to tell the state about anyway, such as cars, where they will be telling the state that information even if no use tax is owed.

[kimbernator]

> Also, I would be wary bragging about buying your goods in Oregon, you technically may owe WA use tax

In my experience, this is well-known around Vancouver and elicits nothing but eye rolls when mentioned. If there is any enforcement whatsoever for that rule (a big if), it's clearly toothless and people don't worry much about it. A Best Buy opened a couple miles north of the river in the late 2000s and didn't make it much more than a year because another one existed in Jantzen Beach, immediately across the state line. The Vancouver location amounted to a showroom before people decided if they wanted to drive the extra 15 minutes.

[calvinmorrison]

the great thing about sales tax is rich people spend a lot of money on dumb shit

[mtoner23]

Not relative to their income tho. Sales taxes are regressive and get more money from the poor

[pc86]

They get less money from the poor but it's a higher percentage of that person's income. There is a difference.

[gwbas1c]

The great thing about sales tax is that everyone can bypass it. You don't need to be the kind of person who can hire a tax expert to coach you; all you need to do is drive over the state line!

[kimbernator]

Not enough to make it preferable to income taxes.