Bartlett wants to change the sales-tax-only law

[Red Arrow]

Perhaps we would have a much more equitable sales tax system like no sales tax on groceries which is brutal on low income earners.

Take the sales tax off of clothes too. 

[swake]

How would a county-wide fire department help me in Bixby?

The suburban fire departments don't have all the equipment that Tulsa does.

As a resident of Jenks I want nothing to do with TPD and their issues in my town. TFD I would be fine with.

[swake]

Take the sales tax off of clothes too. 

But cap it at $30 or $40 per item.

[AquaMan]

Appraisal value and assessment value usually are quite different.  The FMV the assessor values the two properties I own in Tulsa at about 80% of what they would likely appraise at.

There’s little doubt property tax rates would go up since you are changing the funding mechanisms, but not property valuation.

Perhaps we would have a much more equitable sales tax system like no sales tax on groceries which is brutal on low income earners.

They are different but they are based on the same underlying assumptions. Location, school district, improvements and construction. As a realtor we would note tax appraisals as an indicator of the benefit or deficit of a property. A home that wasn't served by a well funded fire department would have a lower appraisal for tax which would keep the house-payment down but also would command a lower sales appraisal. Same thing in spades for schools.

I believe the first step by savvy administrators would be to raise the % of assessment, then when that isn't sufficient to meet costs or the public doesn't yelp, to then raise the valuation itself by using the same criteria that property appraisers hired by mortgage companies use. For instance, my tax appraisal lists the quality of construction of my home as "good". A more thorough appraisal would note it has granite surfaces, updated electrical and lifetime warranty roofing. That will tend to narrow the margin between a tax appraisal and a market appraisal. One pushes the other. I could see it artificially inflating home values in order to meet government budgets.

There needs to be a check and balance between the budgeting process and the appraisal process. You don't let the guys writing the checks balance the checkbook.

[cannon_fodder]

1. Sales tax only laws are dumb. They are unstable, encourage bad growth, and take away local control.

Sales tax go up ad down seasonally and on a cyclical basis. We can try as hard as we want to predict what will happen, and we will fail. As a consequence, we cannot do long term planning. Every three years there is a budget crisis.

Also, the more sales tax you have the more incentive to cheat you have.  The internet isn't going away. Taxes on the internet are not efficient and usually not enforceable.  That fight has been fought, and lost for now. If/when Amazon builds in Oklahoma - they are taxable. if not, they are not taxable. Time to move one from that debate.

SALES TAX REVENUE!!! GIMME GIMME GIMME. That's all that matters in development. That encourages stupid decisions for long term quality development. That results in bedroom communities giving sweetheart deals to any chain they can find.

Finally, I thought we were all about local control? Why not allow municipalities differentiate themselves by having different tax policies?


2. Sales tax exemptions are a bad idea.

Yes, we must exempt food because it is regressive to the poor! It is, but a sales tax is generally regressive. That's how it works. Next, we need to exempt medicine because it hurts those on a "fixed income" (code for old people). And clothing, because it harms large families. Also, we should exempt diapers and other essentials for raising babies. Farm and ranch goods. Health related items. And...

And guess what? Politicians get to set all these definitions. And lobbyists get to give input on these items. Soon - Redbull is a food items and is tax exempt.


3. Taxes suck, but are essential.

No one likes taxes. No one likes stop lights. But at the end of the day, both are needed for things to properly function.

But, just like stop lights, we would prefer for taxes to only interfere with a limited group of people. Keep commerce flowing. So try to target the taxes at those that benefit from the service.

- Raise the gas tax to pay for roads and subsidies public transit (more public transit means less need for wider lanes, more parking, and more frequent road repairs).

- Keep the toll roads. I know, it sucks that all roads to and from Tulsa are tolls --- but it is the best way to have those that use the roads, pay for the roads. However, examine who is subsidizing what roads and make adjustments. Cross subsidizing can ruin the efficacy of the theory.

- Property taxes are more stable. Property doesn't fluctuate nearly as much. it is easier to collect and easier to enforce. It is nearly impossible t cheat. Police, fire, and other essential service should draw essential operating funding from the most stable source available.

- Items that cost money, should pay more tax. Not a "sin tax," but a society tax. Tobacco, alcohol, and gambling cause problems that society has to pay for. So they are rightfully taxed more. Budweiser doesn't kick in when Drunko McDrunk beats his wife or drives drunk. The Cherokees don't kick in when mom blows her savings and relies on social services to pay the bills (you can't tax the tribe and they are unlikely to help, but you can tax gambling income).

- Watch where we spend money. I drove 1500 mile this weekend. Much of it at night. Most of it on roads that did not have street lights except at interchanges... and I was fine. I was protected by a police force that did not use sworn officers to do menial tasks around the office. There are a ton of common sense ways we can save money, and the sky won't fall (like once a week trash pickup, everyone got over it).

- On the State level - assume we get ZERO oil and gas revenue. What we do get, put it in a trust fund. The Nordic countries did, and now their governments are loaded. Hand to mouth is a bad idea for a household, or a state. Relying on boom or bust revenue predictably fails eventually.

4. Finally, view expenditures as an investment.

What is the ROI? It doesn't have to always make dollars and cents, but it should make sense. A park may raise property values, it may encourage development, and it will increase quality of life. All of this should be considered.

Education draws in quality residents. Helps attract employers. And in the long run prevents crime, raises earnings, and generates more tax revenue.

The City should be looking at a 20 year horizon as a minimum. Instead, we are worrying how we feed ourselves when winter comes.

[carltonplace]

Great post as usual CF.

I completely agree with you on the Highway lighting. Bottom line: We don't need it, we've just been convinced that we do. I drove back from Grand Sunday night after watching the blood moon event and it was glaringly clear how distracting the highway lights are once you hit the city limits after driving on non-lit highways and interstates.

I think we should at a minimum turn them off between midnight and 6AM when usage is low if not turn them off altogether.

[Red Arrow]

2. Sales tax exemptions are a bad idea.

Yes, we must exempt food because it is regressive to the poor! It is, but a sales tax is generally regressive. That's how it works. Next, we need to exempt medicine because it hurts those on a "fixed income" (code for old people). And clothing, because it harms large families. Also, we should exempt diapers and other essentials for raising babies. Farm and ranch goods. Health related items. And...

Exempting real food, clothing, and prescription drugs is good.  People need those things.  They don't NEED Large Sreen TVs, Halloween decorations and grills.  PA did not have a State Income Tax until 1971 (the year our family moved to OK) but they did have a 6% sales tax with the exemptions I just mentioned.  There was also, of course, property tax but I don't think it was a personal property tax on things like furniture and cars. (Car tag prices were a real jolt when we moved here too.)  I think prescription drugs may already be exempt in OK or it's already included in the  $10/90 day generic refills I get.  Whenever I go to Atwoods or Tractor Supply Co, they ask if I have a farm exemption so that is probably already in place. If cities get to use property tax, I believe a reduced sales tax with exemptions is appropriate.  Poor people will be paying property tax too in the form of higher rents.

And guess what? Politicians get to set all these definitions. And lobbyists get to give input on these items. Soon - Redbull is a food items and is tax exempt.

A risk I am willing to take if cities get property taxes.

3.
- Property taxes are more stable. Property doesn't fluctuate nearly as much. it is easier to collect and easier to enforce. It is nearly impossible t cheat. Police, fire, and other essential service should draw essential operating funding from the most stable source available.

Which also makes it easier to inflate budgets.

- Items that cost money, should pay more tax. Not a "sin tax," but a society tax. Tobacco, alcohol, and gambling cause problems that society has to pay for. So they are rightfully taxed more. Budweiser doesn't kick in when Drunko McDrunk beats his wife or drives drunk. The Cherokees don't kick in when mom blows her savings and relies on social services to pay the bills (you can't tax the tribe and they are unlikely to help, but you can tax gambling income).

Honest gamblers already pay tax on winnings above losses.  With all the winning going on at the local casinos, the Feds and the State should be flush with tax money. 

- On the State level - assume we get ZERO oil and gas revenue. What we do get, put it in a trust fund. The Nordic countries did, and now their governments are loaded. Hand to mouth is a bad idea for a household, or a state. Relying on boom or bust revenue predictably fails eventually.

Total reliance on boom/bust income is not smart.  Neither is totally discounting it.

4. Finally, view expenditures as an investment.

What is the ROI? It doesn't have to always make dollars and cents, but it should make sense. A park may raise property values, it may encourage development, and it will increase quality of life. All of this should be considered.

Education draws in quality residents. Helps attract employers. And in the long run prevents crime, raises earnings, and generates more tax revenue.

The City should be looking at a 20 year horizon as a minimum. Instead, we are worrying how we feed ourselves when winter comes.

I agree with #4 although if my property value goes up and my taxes go up, I want to see something for it. Same-old, same-old but costing more money just doesn't cut it.

[Red Arrow]

The suburban fire departments don't have all the equipment that Tulsa does.

As a resident of Jenks I want nothing to do with TPD and their issues in my town. TFD I would be fine with.

Suburban fire departments probably don't need all  the equipment TFD does.  With multistory apartments going up in the 'burbs, fire departments  may need to add some taller ladders.  Coverage cooperation between the suburbs and TFD should be worked out.

I was a volunteer fireman in my younger days near Phila, PA.  We were pretty good.  Our town had some of the lowest fire insurance rates around.  We had about 6 sq mi and 30,000 people if I remember correctly.  4 Pumpers, a ladder truck with a 75 ft big ladder, a rescue truck and a Chief's car.  Ambulance service was separate at the time.  All the equipment I knew has been replaced by now.  We had reciprocal agreements with surrounding fire companies that if a company was fully engaged, a neighboring company from the next town (truly across township borders) would send a skeleton crew to cover for the engaged company. 

[Red Arrow]

But cap it at $30 or $40 per item.

Because you're "the tax man".

Hey, Levis are $40 on sale.  If you insist on a cap, it needs to be a lot higher.

[Red Arrow]

They are different but they are based on the same underlying assumptions. Location, school district, improvements and construction. As a realtor we would note tax appraisals as an indicator of the benefit or deficit of a property. A home that wasn't served by a well funded fire department would have a lower appraisal for tax which would keep the house-payment down but also would command a lower sales appraisal. Same thing in spades for schools.

I believe the first step by savvy administrators would be to raise the % of assessment, then when that isn't sufficient to meet costs or the public doesn't yelp, to then raise the valuation itself by using the same criteria that property appraisers hired by mortgage companies use. For instance, my tax appraisal lists the quality of construction of my home as "good". A more thorough appraisal would note it has granite surfaces, updated electrical and lifetime warranty roofing. That will tend to narrow the margin between a tax appraisal and a market appraisal. One pushes the other. I could see it artificially inflating home values in order to meet government budgets.

There needs to be a check and balance between the budgeting process and the appraisal process. You don't let the guys writing the checks balance the checkbook.

Hmmmmm.

[cannon_fodder]

You raise good points Red Arrow, but you also point out the flaw...

Who gets to decide what is "real food?"  Lobbyists. Who gets to decide what people "need" and should therefore be tax free? Lobbyists.  It very quickly becomes a special interest nightmare. Implementation is hard for sellers.  In Iowa, Pumpkins are sales tax exempt if you say you are buying them as food. But they are taxable if you are buying them as a decoration.

I'm not dead set against exemptions, but it needs to be done carefully.

Also, re the oil revenue, assume a minimum threshold for budgeting purposes. Say assume 80% current production at $40bbl for tax revenue purposes. Budget based on that. Anything over that goes into an Oklahoma investment fund of some kind. It can loan money to the State at low rates, do revolving entrepreneurial loans, fund grants for universities, maybe even quality of life projects... stuff like that.  Maybe deposited into 529 plans for State students.  If the fund gets to be a certain size, it then becomes an Alaska style citizen payout.  Just don't count on it for essentials above a minimum.

[Red Arrow]

You raise good points Red Arrow, but you also point out the flaw...

Who gets to decide what is "real food?"  Lobbyists. Who gets to decide what people "need" and should therefore be tax free? Lobbyists.  It very quickly becomes a special interest nightmare. Implementation is hard for sellers.  In Iowa, Pumpkins are sales tax exempt if you say you are buying them as food. But they are taxable if you are buying them as a decoration.

I'm not dead set against exemptions, but it needs to be done carefully.

I agree there can be difficulties in deciding what gets exempted but it  should not be impossible.  My memories of PA are from a long time ago and the situation has probably changed.  When we went to the grocery store, the customer (us) sorted out the taxable items to be totaled first so the clunky mechanical cash register could get a subtotal to add tax to.  Mistakes were handled at the end, perhaps with a separate receipt, I don't remember the details there.  This would be no problem at all for items always taxed or not always taxed with today's Point of Sale computers.  I remember getting some Listerine at the local pharmacy and being asked if it was for gargle or mouthwash, tax exempt or taxable respectively.  This was pre-1971.  I don't see it as a problem once items are defined as taxable or not.

Also, re the oil revenue, assume a minimum threshold for budgeting purposes. Say assume 80% current production at $40bbl for tax revenue purposes. Budget based on that. Anything over that goes into an Oklahoma investment fund of some kind. It can loan money to the State at low rates, do revolving entrepreneurial loans, fund grants for universities, maybe even quality of life projects... stuff like that.  Maybe deposited into 529 plans for State students.  If the fund gets to be a certain size, it then becomes an Alaska style citizen payout.  Just don't count on it for essentials above a minimum.

I can agree with setting some threshold that it would be reasonable to always expect to exceed.  Above that goes into a rainy day fund or other fund for non-regularly recurring expenses.

[swake]

The easy fix to all cities tax issues is to charge sales taxes on goods delivered into your city.

[Conan71]

The easy fix to all cities tax issues is to charge sales taxes on goods delivered into your city.

Retail or wholesale level?

[sgrizzle]

The easy fix to all cities tax issues is to charge sales taxes on goods delivered into your city.

See, there is the Bezos complaint from page 1.