I don’t often use the literary tactic of referring to something as the “best-ever.” Indeed, the only time that phrase appeared in the title of a column was back in 2014 when I smugly wrote about the collapse of government-run single-payer healthcare in Vermont. Recalling what Justice Brandeis wrote about states being the “laboratories of democracy,” I asserted that the disaster in the Green Mountain State taught the entire nation a valuable lesson about the dangers of bad policy and that this was the “best-ever argument for federalism.”
Well, it’s time to once again use this superlative because consumers in California get the “best-ever receipt” when they make purchases at Firearms Unknown. Here’s the example that’s gone viral, and I’ve highlighted the relevant portion that gives an amusing description of California’s onerous sales tax.
By the way, not everything you see on the Internet is true (yes, shocking news). And since the folks at Independent Journal Review didn’t want to make the mistake of sharing without checking (like I did when trying to mock Justin Trudeau), they actually did some due diligence.
Many times, viral photos are too good to be true. So we contacted Firearms Unknown in National City, CA, to find out if this was one of those times. Sure enough, a representative with Firearms Unknown confirmed the receipt’s authenticity to Independent Journal Review. Then, he let out a chuckle. I guess if you’re going to operate a gun shop in a far-left state like California, you better have a good sense of humor. Bravo, Firearms Unknown.
Yes, kudos to the store, but I also want to take this opportunity to make a serious point about tax visibility.
One of the many reasons to oppose a value-added tax is that the tax almost always is hidden from consumers. When taxpayers make purchases in Europe, they don’t know that VATs are responsible, on average, for about 21 percent of the purchase price.
So it’s good that consumers in America know there’s a sales tax, both because it’s visible on their receipts and also because they can see the difference between the price on the shelf and the price at the cash register.
Though this system isn’t perfect. How many Americans, after all, know how much sales tax they paid last year?
The visibility issue also exists with the income tax. In theory, we all know what we paid the previous year based on our annual tax returns. But because of withholding, most Americans don’t really pay attention to that very important number and instead focus on whether they’re getting a refund. They actually think a big refund is a great outcome, even though it simply means that they gave the government an interest-free loan by over-paying their taxes during the year!
This is one of the reasons why I’m such a big fan of Hong Kong, in part because of the flat tax. Not only is there a low rate and no double taxation, but there’s also no withholding. Instead, taxpayers write checks to the government twice annually. So they are fully aware of the cost of government, which may explain why the fiscal burden of government is relatively low (it also helps that there is a constitutional spending cap).
In the United States, the only levies that are visible (at least some of the time) are property taxes. Taxpayers usually have to make annual or semiannual payments on cars and houses (though property taxes on homes are sometimes built into mortgage payments).
And when you have to write a lump-sum check to the government, that’s a wonderful opportunity for people to ponder whether they’re actually getting good value for their money.
And since the answer almost always is no, it’s easy to understand why politicians are big fans of policies (such as VATs and withholding) that disguise the burden of taxation.
P.S. In the body of previous columns, I have used the “best-ever” superlative a handful of times.
[…] he’s going to argue that Nevada’s no-income-tax status is “distorted” compared to California’s punitive system. Or unless he’s going to argue that Delaware’s no-sales-tax status is “unfair” compared to […]
[…] going to argue that Nevada’s no-income-tax status is “distorted” compared to California’s punitive system. Or unless he’s going to argue that Delaware’s no-sales-tax status is “unfair” compared to […]
[…] going to argue that Nevada’s no-income-tax status is “distorted” compared to California’s punitive system. Or unless he’s going to argue that Delaware’s no-sales-tax status is […]
[…] already written about this punitive property tax. The good news is that property taxes generally are transparent, so people know how much they’re […]
Sales tax IS visible. Sometimes painfully so. With sales tax in most jurisdictions running 5-10%, once one goes over about $100 online purchases from OUT OF STATE vendors become more attractive. And yes, if I’m going to be dropping $1,300 on a purchase, that $100 in sales tax is damn visible. And no, I feel absolutely no shame at all in sticking it to my state and local gov’ts, and no, I’m not about to step forward and pay that tax.
When I was a kid, the sales tax where I lived was 4%. The area (which I left a few years ago) has exploded in population by 20x. Sales tax also doubled, under the argument that more people meant more need for gov’t services. Well, more people also meant more sales, and hence more sales tax revenue.
IF the gov’t services delivered were twice as good as they had been when I was a child, I might be more sympathetic to the increase. Surprisingly, gov’t services are NOT twice as good. Okay, ’tis not in the least bit surprising.
This dynamic is one reason why state and local officials, ESPECIALLY those in high tax states, are all hot and bothered to get sales tax levied on online purchases. Because their inane tax rates put local merchants at a competitive disadvantage, and lowering taxes is the last thing the grifters want to do.
[…] already written about this punitive property tax. The good news is that property taxes generally are transparent, so people know how much they’re […]
[…] Republished from Dan Mitchell’s blog. […]
[…] already written about this punitive property tax. The good news is that property taxes generally are transparent, so people know how much they’re […]
[…] Republished from Dan Mitchell’s blog. […]
Here in Portugal is the same as Germany. Prices are whole in store, but discriminated in receipt. And we have a good gist of direct taxes like IVA as called here for several reasons: first checking the receipt if all was accounted correctly, second by the shear number of times that IVA increased in recent years.
Reblogged this on Gds44's Blog.
Excellent article. And yes, visibility of taxes is important so that people see what they are paying involuntarily to the government. In modern words: transparency. And nothing the governments hate more.
I live in Germany. And as the article correctly mentiones VAT is not visible to the normal customer. If you enter any store in Germany all prices you’ll see include all taxes. You’ll see what you’ll pay. Sounds nice, doesn’t it.
But you’ll never know what the shop owner charges you and what the government takes away until you begin to invest. You finally get a glimpse of it when you take a look at you receipt. It will usually tell you something like: Appliance A €10.00 + 19 % VAT (19 % is the VAT in Germany, books and food but not medications are 7 %), total sum €11.90. Sometimes only a total is given with an added: “Total includes €xx.yy VAT”.
So yes, you CAN know what the government charges you but everything is designed around the goal to make taxes as invisible as possible. The same of course with payroll taxes and social security.
So no wonder some contractors (plumbers and the like) will ask you openly: “Do you need a receipt?” Usually the receipt will cost you 19 % extra (VAT of course) while if you go without receipt you will save this amount and the government gets nothing.
I’ve been a frequent visitor to the U. S. and always find it refreshing to really “feel” the added VAT when I go shopping because the prices in the shops will be without tax.