Dumb, Dumb, Dumb, Dumb
Wednesday, May 27th, 2009Regular readers should be aware that it is the News Guy’s policy not to take sides in public policy disputes.
Taking sides is not the reporter’s job. Explaining is the job, also analyzing. That analysis may include critiquing, but the criticism should be applied impartially to all sides of the debate.
This site, then, expresses no conclusion over whether Gov. Jim Douglas or the Legislature is wiser in their conflict over taxes and the budget (though it might hint now and then that neither side is all that wise), or whether the state should force the Vermont Yankee nuclear power plant to set aside money now to pay for its eventual disintegration, or whether the state should tamper with the market price of sun and wind power.
Even the most emotional, personal, confrontation of the year in Vermont over same sex marriage, was the subject of several posts which attempted to acknowledge the bona fides of both sides and to ridicule neither. Or, perhaps more accurately, to ridicule either when warranted.
(A digression: In the interest of bi-ideological ridicule, the News Guy here subjects left-of-center Sen. Bernie Sanders to the same scorn he visited yesterday on Republican Douglas. In a statement released by his office yesterday, Sanders said, “In nominating Judge Sonia Sotomayor for the Supreme Court, I very much appreciate that President Obama is attempting to address…blah, blah, blah.”
No, Senator, Obama nominated Judge Sotomayor. You did not nominate anybody. But you said you nominated her, using the same kind of dangling modifying clause Douglas used in his statement about Auditor Tom Salmon’s offer to mediate the budget dispute.
Pay attention class (this includes governors and senators). “Walking down the street, the man thought the flowers were beautiful,” is correct. “Walking down the street, the flowers were beautiful,” is not, because it says the flowers were walking down the street, which is unlikely. Public officials have a responsibility to the language. End of digression)
But sometimes a proposal comes along which is so inane, so out of synch with common sense, so absurd, that, in Linda Loman’s words, attention must be paid.
Especially when no one else seems willing to pay attention, even those who understand the foolishness of the proposal. Even more especially when the general public seems enthusiastic about it. Their enthusiasm helps explain why the politicians are reluctant to speak out. An explanation is not an excuse.
The proposal comes from the Governor. He made it last year, and brought it about. Now, in the budget “alternative” he outlined last week, he’s at it again. He wants another summer weekend “sales tax holiday,” when shoppers could buy anything that costs $2,000 or less without paying the six percent state sales tax.
This is, without doubt, one of the stupidest ideas in the entire history of humanity. Mind you, it is not one of the most destructive ideas in the history of humanity. Just to take a few examples, the Crusades, Communism, and artificial turf were stupid ideas that caused substantially more harm (the last of those only to knees and aesthetic sensibilities). Still, for out-and-out pluperfect dumb, it’s right up (down?) there with the worst of them.
To be sure, it is not stupid for shoppers to take advantage of this weekend should it come about. If, for instance, a shopper wants to buy one of those fancy flat-screen television sets for $1,000, it makes perfect sense for her to buy it on that weekend and therefore not pay the $60 in sales tax. Good for her. She’s now saved sixty bucks.
But in almost every case, she’s only buying what she was going to buy anyway. She has saved some money, but the state’s economy has not gained a penny. Yeah, she’s got the 60 smakaroos to spend elsewhere. But then the state does not have the $60 to spend, and the state is one of the state’s biggest consumers.
Humbly, the News Guy consulted an economist, one who does not live in Vermont and so has no dog in this fight. His reply? “People will just spend on that Saturday or Sunday what they were going to spend on any Tuesday or Wednesday.”
Net gain to the economy? Zippo.
In fact, Vermont economist Tom Kavet, in a message to the Legislature’s Joint Fiscal Office, reported that, “there is no credible literature…that suggests such holidays result in anything but net revenue losses at the state level, and therefore produce no net stimulus to the economy.”
But wait a minute. Isn’t it possible that some people, inspired by the tax-free day, will buy something they were not going to buy anyway?
Yes, because some people are almost as dumb as the holiday idea. He who spends a thousand bucks on something he didn’t need or really want to save 60 bucks is he who is not hitting on all cylinders.
Well, let’s not be judgmental. It’s his business. If he wants to throw his money around, let him throw it.
But from the point of view of the state’s economy, it makes no difference. This careless shopper would then have a thousand dollars less to spend on other stuff. And he would spend it. People spend their disposable income. That thousand dollars was going to be spent on something, almost surely in Vermont. And most of that other spending would have been taxable, so the state would have more money to spend. Last year’s sales tax holiday cost the state $2 million, just what it saved the consumers, according to Kavet.
Again, net gain to the state’s economy: Bupkiss. In fact, according to Kavet, there was probably a net loss.
Let’s deal with the final objection. Wouldn’t the state gain if the sales tax holiday attracted a whole lot of non-Vermonters to come into the state and buy their flat-screen TVs, fancy sofas, or riding lawnmowers?
In theory, yes. In actuality, not hardly.
First of all, no one has even claimed that many out-of-staters took advantage of last year’s holiday. And from whence would they come? Not from New Hampshire, which has no general sales tax at all. Not from Quebec because the currency exchange (a Canadian dollar was worth about 89 cents yesterday) would cancel any savings even if it were legal to bring all that merchandise back into La Belle Provence, which it probably is not.
There’s Massachusetts and New York, but northwestern Massachusetts is sparsely populated, and so is eastern New York except for Plattsburgh and environs, and it makes little sense for a Plattsburgher to schlep to, say, Tafts Corners, to go shopping, even to save a few bucks. The round trip by land is 175 miles and takes almost four hours, according to Mapquest. Depending on the wait, taking the ferry might take less time, but for two adults the round trip is $24. Hardly worth it.
It isn’t that no one benefits from the sales tax holiday. Some shoppers do. And probably so do stores that sell expensive, taxable, merchandise. That’s because some of the money shoppers spend in them on the tax holiday would otherwise be spent in restaurants, or ski trails, or going to the movies, or buying (mostly tax-free) clothing.
So good for the stores. But not good for the state’s economy. In fact, bad for the state’s economy.
Altogether, the sales tax holiday is an idea whose time has never come and never will. But it’s popular. So here’s the question: Will any one of the many government officials who knows it’s a dumb idea have the gumption to say so?
Like maybe one of the Democrats thinking of running for governor? Let’s see if they have any gumption.





