Since The GOP Likes A Sales Tax So Much . . .

The Republicans have made it very clear that they hate the income tax -- especially a progressive income tax that taxes the rich at a larger percentage than those who make less in income. While the progressive income tax (the idea that those who make the most from our society should owe the most in taxes back to that society) has always made sense to most people, but not to Republicans. They much prefer other kinds of taxes, more regressive taxes like the sales tax (which makes the poor, the working class, and the middle class pay a much larger percentage of their income in taxes than the rich).

Even now, the Republicans want to revise the tax code to allow the rich (who already pay less due to a lower capital gains tax rate) and the corporations to pay less in income taxes. They want to do this in spite of the fact that it is obvious that our government needs more revenue -- not less (and the rich and the corporations are already paying less in income taxes than at any time since World War II).

Personally, I think the opposite should be done. I think the rich should pay a small increase in tax percentage, and the corporations should lose the loopholes and subsidies that allow them to pay little or no income taxes. But that won't happen since the GOP controls Congress. So I suggest another idea -- one which should appeal to the GOP since they like sales taxes so much. We need to institute a new sales tax on the national level.

It is an idea that has been gaining popularity in the last few years. It is a sales tax of 0.5% on all stock transactions on Wall Street (commonly called a Robin Hood Tax). The tax would be tiny enough that it would have no effect on Wall Street and the business it does, but it would pour billions of dollars (maybe hundreds of billions) in badly needed new revenue for the government.

This seems fair to me. If the Republicans like a sales tax so much they are willing to impose it unfairly on the poor, working, and middle classes, then it should also be imposed on the purchases the rich hold so dear -- the stock trades that allow them to pay a smaller capital gains tax rate on income.

I doubt the GOP Congress will do this. It taxes the rich, and that's the group they are dedicated to save from having to pay taxes. The GOP doesn't mind taxes -- as long as the rich and corporations don't have to pay them. But it is still a good idea, and we should be pushing the idea so it can be accomplished as soon as Democrats regain power.

It's Time To Pass The "Robin Hood" Tax (HR1579)

Teabaggers and other right-wingers in the GOP's base like to believe that the Republican Party (and its elected officials) are against taxes, and will always work to lower taxes -- but that is just not true. The Republicans are against progressive taxes (where those making the most money pay the most in taxes), but they have no problem with regressive taxes (where the tax eats up far more of a poor or middle class workers income while taking very little from the rich). It turns out that they are only against taxes that would affect Wall Street, the corporations, and their other rich buddies.

A perfect example of this is in the state of Texas, which has been under almost complete Republican control for about 20 years now. Texas has no progressive income tax, because that would force the rich (and the corporations) to pay taxes. Instead, the major tax revenue in Texas comes from a regressive state sales tax, which even taxes many items necessary to a person's livelihood (like transportation, clothing, all but the most basic food items, etc.). This tax takes a substantial amount of the income of a poor or middle class person, but is negligible to the incomes of the rich. Meanwhile the corporations receive tax cuts and subsidies that keep them from having to pay any kind of taxes (sales, property, business, etc.).

Rep. Keith Ellison (D-Minnesota) has noted this Republican preference for sales taxes over income taxes, so he has introduced a bill that would institute a small tax on the sale of stocks and other items in the stock markets. His bill (HR1579) would bring in billions of dollars in new revenue to the federal government each year, and the tax imposed would be small enough that it wouldn't affect trading. It has been dubbed the "Robin Hood" tax.

Have the Republicans jumped on board to support this new sales tax? No. In fact, they have blocked it from coming up for a vote. They have blocked it because it would mainly affect their rich Wall Street buddies, instead of ordinary working Americans (by giving an exemption to those making less than $50,000 a year). And while the Republicans don't mind taxing the poor and middle class (since someone has to pay the government's bills), they will never approve of any tax that affects the rich (or the corporations).

This is a good bill, and we should applaud Rep. Ellison for introducing it. It would pump new revenue into the federal government (which could them pump it into the economy, spurring economic growth), and stop the need to cut programs helping the poor, the unemployed, the elderly, and our children. We need to encourage Congress to pass this bill -- and vote against any elected official this November who opposes it (whether they are Republican teabaggers or Democratic blue dogs).

If we can tax the poor or buying essential goods and services they need to live, then we should also be taxing the rich for the purchases they make on Wall Street.

We Need A "Robin Hood" Tax On Wall Street

[The image above is from robinhoodtax.org. The photo at left of Jim Hightower is by photographer Larry D. Moore (CC BY-SA 3.0).]

The congressional Republicans are still whining loudly that the federal government cannot pay its debts, and therefore the programs to help hurting Americans must be cut. What they will not tell you is that it is their own policy that has caused the huge budget deficit -- a policy of waging unfunded wars while cutting taxes for the rich and giving unneeded subsidies to large corporations, and perhaps most egregious of all, giving Wall Street a "free ride" when it comes to taxation.

The truth is that the United States is still the richest country in the world, and there is plenty of money in this country to fund programs to help ordinary Americans that are hurting. I have spoken many times on this blog about my belief that the rich should pay a little more (by taxing their capital gains income as earned income), and the corporations should pay their fair share (by removing the billions in unneeded subsidies and loopholes).

But there is another thing that can, and should, be done -- and that is to institute a "Robin Hood" tax on Wall Street transactions. This would be a tiny tax on all stocks bought through the stock market. The tax would be small enough to not inhibit any stock trading, but because of the huge volume of trades, would be enough to add hundreds of billions of dollars in federal government revenue.

One of the best explanations of why this tax would be a good thing for this country is put forward by Jim Hightower (a leading Texas progressive). Here is some of what he has to say on the subject at his website, the Hightower Lowdown:

When I buy a $3 pack of toilet paper here in Austin, Texas, I pay an extra 8.25 percent in sales tax. If I buy a cuppa jo, book, bicycle, or blue jeans--same thing.

But if a high-roller in the HFT game buys $10 million worth of corporate stock, $10 million worth of oil futures, and $10 million worth of a Goldman Sachs package of derivatives--he or she pays zero tax on the sales.

First, it's a rank injustice that even the poorest among us are taxed on their purchases while millionaire Wall Streeters who make high-speed computerized purchases skate through this gaping loophole. Second, the profiteering churners and reckless speculators wrecked the country's economy, and they've never paid for the mess they made for so many millions of families that consequently lost jobs, homes, income, and hope.Third, this is a BIG idea that will let our society do big things again. Plugging this loophole with even a small sales tax on purchases by high frequency traders will generate the money America needs to do what needs to be done.

A Financial Transaction Tax. An FTT is not an idea whose time has come, but simply returned. From 1914 to 1966, our country taxed all sales and transfers of stock. The tax was doubled in the last year of Herbert Hoover's presidency to help us recover from the Great Depression. Today, 40 countries have FTTs, including the seven with the fastest-growing stock exchanges in the world. Seven members of the European Union (including Germany and France) voted for a financial transaction tax to help blunt rising poverty, restore services, and put people back to work.

This is no soak-the-rich-idea. Rather than asking the Wall Street crowd to join us in paying a six to 12 percent sales tax, the major FTT proposal gaining support in the US calls for a 0.5 percent assessment on stock transactions. That's 50 cents on a $100 stock buy, versus the $8.25 I would pay for a hundred-dollar bicycle.

Even at this miniscule rate, the huge volume of high speed trades means an FTT would net about $300-350 billion a year for our public treasury. Plus, it's a very progressive tax. Half of our country's stock is owned by the 1 percenters, and only a small number of them are in the HFT game. Ordinary folks who have small stakes in the markets, including those in mutual and pension funds, are called "buy-and-hold" investors--they only do trades every few months or years, not daily or hourly or even by the second, and they'll not be harmed. Rather it's the computerized churners of frothy speculation who will pony up the bulk of revenue from such a transaction tax.

An FTT is a straightforward, uncomplicated way for us to get a substantial chunk of our money back from high finance thieves, and we should make a concerted effort to put the idea on the front burner in 2014 and turn up the heat. Not only do its benefits merit the fight, but the fight itself would be politically popular. One clue to its political potential is that the mere mention of FTT to a Wall Street banker will evoke a shriek so shrill that the Mars rover hears it. That's because they know that this proposal would make them defend the indefensible: Themselves.

First, the sheer scope of Wall Street's self-serving casino business model would be exposed for all to see. Second, they would have to admit that they're increasingly dependent on (and, therefore, making our economy dependent on) the stark-raving insanity of robotic high frequency speculation. Third, it'll be completely ridiculous for them to argue that protecting the multi-trillion-dollar bets of rich market gamblers from this tax is more important than meeting our people's growing backlog of real needs.

Unsurprisingly, then, Koch-funded operatives and other defenders of privilege are rushing out articles that amount to Wall Street blah-blah-blah: "FTT would hurt poor pensioners, farmers, long-term investors, job creation, liquidity... and blah, blah, blah." Note that there's nary a mention of who'll really be pinged: Wall Street's gamblers and thieves. After all, to concede that they'll be hurt, even a little, would elicit a coast-to-coast shout of, "Yes!"

The Financial Transaction Tax idea is blessed with broad support, ranging from Bill Gates to Occupy Wall Street to the Vatican, and it's been embraced by dozens of major economists, including Nobel laureates Joseph Stiglitz and Paul Krugman. But this fight will be won at the ground level of good politics, and that's well underway. Many grassroots groups and several progressives in Congress have already forged solid coalitions and are going to the country-side with a growing campaign to make Wall Street pay.

A major push is being made under the banner of the "Robin Hood Tax," led by National Nurses United, National People's Action, Health GAP, andProgressive Democrats of America. They and some 150 other organizations are backing the IPA. (This IPA is not a beer, though I suggest the organizers brew one to help popularize, cheer, and lubricate the cause.) It's theInclusive Prosperity Act, a proposal by Rep. Keith Ellison and others for an FTT. Sen. Tom Harkin and Rep. Peter DeFazio have another version with a more modest tax rate.

This campaign offers a remarkable democratic opening. It widens America's public policy debate from the plutocrats' tired, narrow-minded mantra of defeat: "We're broke. Big undertakings are beyond us. Shrink all expectations for yourselves, your children, and your country's future." Instead, a new conversation can begin, saying: "Look under that rock. There's the money we need to invest in people. Let's get America moving again!"

A sales tax on speculators can deliver tangibles that people need but Wall Street says we can't afford--infrastructure, Social Security, education, good jobs, etc. Just as important, it can deliver intangibles that our nation needs but Wall Street tries to ignore--fairness, social cohesion, equal opportunity, etc. It's a holiday gift card for America's future--a gift that literally would keep on giving.

Americans Oppose Internet Sales Taxes

The White House has proposed that state sales taxes should be charged for items bought on the internet, and a bill requiring that has already squeaked through the Senate. It will be much more difficult to get it through the House though, since that body seems unable to agree on much of anything these days.

The idea behind this is two-fold -- to supply the states with a sales tax some extra revenue, and to level the playing field for local businesses (which have to collect the tax). The first reason may be its death knell, since few representatives are going to want to be seen as supporting any kind of new tax (especially since it won't help solve the federal deficit). And the second reason probably misunderstands why people buy on the internet. It is usually done because it is so easy and the itms are delivered to the buyers door -- not because a few dollars can be saved on a sales tax.

So what does the American public think about taxing internet sales? Most are against it. The Gallup Poll did a survey on this question on June 15th and 16th. They surveyed 1,015 nationwide adults, and their poll has a margin of error of 4 points. As you can see from the chart above, about 57% of Americans oppose the internet sales tax, and only 39% support it.

One interesting aspect of the survey is that younger people don't like it by large percentages (the 18 to 29 and the 30 to 49 age groups). It is only older Americans (50 and over) that are split on supporting and opposing the tax (with the results being within the margin of error, and therefore not a statistically significant win for either side). The chart below gives a demographic breakdown on how different groups see the issue:

Tx GOP Raises Taxes (Just Not On Rich)

Once again the Republicans here in Texas (and probably most other places too) are running on a pledge to not raise taxes. It would take a fool to believe them though. They ran on the same promise in 2010. They didn't keep that promise then, so why would they do it now?

Now some of you fellow Texans may be thinking "I don't remember a tax raise. Isn't the sales tax the same as it was before?" -- in which case I have to think you must not have been paying attention. Yes, the rate of the state sales tax (the most lucrative tax for state government) is the same as it was in 2009. But that one fact doesn't mean taxes weren't raised.

First of all, all kinds of fees were raised. This is a favorite dodge of Republicans. If they raise a fee, they can claim they didn't raise taxes. But that's just playing word games. The fact is, if they government is taking more money out of your pocket, then they have raised taxes -- and calling it a fee instead of a tax doesn't change that a bit.

Second, the claim they didn't increase sales taxes is not true. They increased them by making sure that they now apply to anything any Texan buys off the internet. Now I'm sure the Republican legislators will say this wasn't a tax raise -- just a clarification of tax law. But the fact is that Texans weren't paying taxes on items bought off the internet, and now they are.

One company tried to fight the new internet tax -- Amazon.com. But the Republican State Comptroller, Susan Combs, went after them. And Amazon finally capitulated. On July 1st, they started charging Texas customers the required state sales tax. There won't be any more tax-free books, tapes, etc.

I'm not really against the new sales tax. I think it just levels the playing field between local retailers and internet retailers -- and that's a good thing for your local neighborhood businesses. But I just don't like hearing Republicans claim they didn't raise taxes. I didn't use to have to pay a tax on internet purchases and now I do -- and that's a tax raise, whether they want to admit it or not.

Just remember, the next time you hear a Republican say he/she "won't raise taxes", there is some fine print to that pledge. And that fine print says taxes on the rich or on corporations won't be raised. The new internet tax (and the higher fees) mean nothing for a rich person or a corporation (since it is such a tiny portion of their income or doesn't apply to them at all). But for the poor, the working class, and many in the middle class, it's not negligible at all. It's a tax raise and it means they have less to spend on other things.

Republicans don't really mind raising taxes -- on everyone but the rich.

Teabaggers Think Texas Taxes Aren't Regressive Enough

Texas already has one of the most regressive tax systems in the United States. There is no income tax. That's because it's far too progressive (with the rich having to pay a higher rate than the poor), and the Republican leadership in the state would never make the rich pay taxes. Although some state money is raised from a lottery and from license fees, the majority of state funds comes from two kinds of taxes -- a sales tax and a property tax.

The sales tax is easily the most regressive kind of tax, because it takes a much larger percentage of the income of the poor, working class, and middle class, than it does from the rich or from corporations. In fact, the lower your income, the larger percentage of that income is paid in sales taxes. You can't get anymore regressive than that.

The conservative mantra is that the poor don't pay property taxes because they don't own property. That sounds good, but it isn't true. Landlords pass on their property taxes to their renters, and businesses pass on their property taxes to their customers. So the truth is that no one avoids paying property taxes. However, the property tax is a bit more progressive than sales taxes, because the owner of a very expensive property will generally pay more in taxes than the owner of a property that is not worth very much.

And even a slightly progressive tax system is anathema to teabaggers (ultra-right-wing Republicans). And it seems that they have figured out that the property tax is a slightly progressive tax -- that taxes the mansion of a multi-millionaire more than it taxes the hovel of a poor person (even though both pay the same rate). The very thought of the rich (and corporations) actually having to pay taxes has sent them into a tizzy.

Led by their failed gubernatorial candidate, Debra Medina, Texas teabaggers have asked the state legislature to outlaw property taxes. Testifying before the House Ways and Means Committee, which is currently looking at tax fairness, Medina and her cohorts asked that property taxes be banned, and replaced with an "improved" sales tax and new business taxes. Now any observer of state government will know that the Republican leadership in Austin is not going to raise or create new taxes on businesses (because that might affect the rich, and would certainly affect corporations).

That means that the teabaggers are actually asking state government to replace the property tax with a bigger sales tax (either through a higher tax rate or a broadened tax base, or both). In effect, this would raise taxes on the poor and working classes while lowering them for the rich and corporations -- making Texas the absolute king of regressive taxation.

This is sheer insanity. But then sanity or common sense has never been a teabagger attribute.

Comptroller Incompetence Could Cost $21 Million

A couple of weeks ago I posted about the unbelievable incompetence displayed by the office of Texas Comptroller Susan Combs (pictured). Employees in this state agency posted the personal information of over 3.5 million Texans (names, addresses, social security numbers, dates of birth, driver's license numbers, etc.) on a computer system that was accessible by anyone in the general public. And making it even worse, they didn't find their mistake for more than a year -- leaving these millions of people at the mercy of identity thieves.

The only thing that could have made this any worse was if they had advertised their dumb mistake after doing it (and I'm half-surprised that they didn't). If you think I sound a little angry at this blunder, then you are exactly right. My daughter and I were two of the 3.5 million people who's private information was exposed by the comptroller.

Comptroller Combs has assured Texans (and those who were affected) that the information is no longer available to the general public. And she has said that those who were responsible have been terminated. I still wonder if the people responsible for supervising those employees, including Combs herself, aren't also responsible and should be submitting their resignations -- especially in light of the huge amount of money the stupid mistake is going to cost the state now.

In an effort to make up for the egregious mistake, the comptroller's office is now offering credit monitoring, free of charge, to all 3.5 million people affected by their blunder. Each of those people will have the option to sign up for a free year of credit monitoring, and if they all sign up, it will cost the state of Texas $21 million dollars (at the rate of $6 a person). I've already signed up and I don't see why the other 3.5 million wouldn't do the same.

As you may know, Texas is already in the throes of a serious budget crunch. It has an anticipated budget deficit of about $27 billion for the next biennium. The legislature is already proposing large cuts to every state agency and to social programs, and from $5-$9 billion in cuts for K-12 education. The state certainly didn't need another bill for $21 million to clean up the incompetency of a Republican office-holder.

But the Republican-dominated legislature can't say too much because they're engaging in their own brand of fiscal idiocy. They have decided that a mere $27 billion budget shortfall doesn't warrant an increase in state revenues -- just massive cuts to nearly everything -- cuts that will negatively affect the quality of service delivered to every Texan. In fact, instead of raising taxes (or broadening the sales tax base) they have decided to cut taxes -- not for everyone, just the richest Texans.

A House subcommittee has approved a cap on the state sales tax for YACHTS that cost at least $250,000. Now a reasonable human being might think that anyone who can afford a yacht costing $250,000 should be able to pay the full amount of the sales tax on that purchase. But not our Republican leaders. The thought that the rich might have to pay the same percentage in sales taxes that the poor and workers pay just horrifies these Republicans. What are those poor rich people going to do if we actually ask them to pay taxes?

I've come to the conclusion that the Texas voters are getting exactly what they voted for. They elected these incompetent idiots, and that's what they are getting -- incompetence and idiocy.

Texas Economy Is Still Hurting

Although the state Republican leadership would like for everyone to believe that the Texas economy is improving, there is little doubt that the state is still in the firm grip of the recession. If there's any doubt in your mind, just look at the newest sales tax figures.

According to Texas Comptroller Susan Combs (pictured), the state collected $1.46 billion in sales taxes for March of this year. That may sound like a lot of money, but all it proves is that Texas is a large state with a huge economy. That figure is actually 7.8% lower than in March of 2009, and means that the sales tax generated has been falling for more than a year now.

Combs tried to paint a rosy picture by noting that the drop in sales taxes were back in single digits now, where the year before that each month's drop had been in double digits. She says that shows the figures are tapering off as the economy improves. That is not only false, but it is more than a bit disingenuous.

She might have a point if she was comparing the last two months to months in a normal economy. But the harsh fact is that both February and March of 2009 were recession months -- not normal months. Since we are now comparing current months against other recession months, it is not a good sign that we are still experiencing revenue drops of 7.8% and more.

The sad fact is that even if we have showed a zero drop in revenue compared to March 2009, it would still mean we were double digits down from where it would be in a normal economy. The fact that it dropped another 7.8% shows the economy is still badly hurting and the state is not yet entering a recovery period.

That is no surprise, since the state has yet to start producing a significant rise in job creation. Although the state gained a few thousand jobs in the last employment report, they were just a tiny drop in the bucket when you consider the size of the Texas economy.

It almost seems like our Republican leaders think the state's economy will recover just by wishful thinking. It won't. There won't be anything like a real recovery until the employment situation makes a radical improvement. Jobless people and people afraid of losing their jobs are not going to go on a buying spree and jumpstart the economy.

Texas Is In Financial Trouble

Our incompetent governor, Rick Perry, would like for Texans to believe that this state has not been hit hard by the recession -- not as hard as the rest of the nation. He's so confidant in the Texas economy that he's even turned down federal money meant to help our schools.

But if the recession hasn't hit Texas hard, then the governor has a lot of talking to do to explain the situation the state finds itself in. According to a spokesman for the Texas Legislative Budget Board, the state will be between $11 billion and $15 billion short of what will be required just to maintain the current level of services. Any new spending authorized will push the deficit even higher.

The governor has already asked all state agencies to cut their budgets by 5%, but that won't even come close to cover the impending deficit. That would only save $1.7 billion. The reason for the huge shortfall is a huge drop in sales tax revenues.

For over a year now, the sales tax revenues have been off by double digits over the same period the year before. And it may be a long time before those tax revenues recover. Some saw February's tax revenues as a good sign, because they were only off about 9% instead of double digits. I think they're fooling themselves.

The tax revenues won't recover until the joblessness is ended, and that could be years (especially if the off-shoring of jobs is allowed to continue unabated). There is no magic bullet to raise sales tax revenues. People that don't have jobs, or have minimum wage jobs, cannot spend money they don't have.

I expect the Republicans will continue to cut services for regular folks, because raising taxes on the rich or stopping government giveaways to corporations is anathema to them. The citizens will continue to suffer while the rich and the corporations get richer, because that's the Republican way.

For Texans, the future looks pretty dim.

Sales Taxes Still Sliding Downward

I'm certainly glad that Governor Rick Perry has decreed there is no recession in the great state of Texas. If he hadn't assured us of this, I would probably have been fooled into thinking Texas is sliding deeper into trouble each month after viewing the sales tax figures compiled by the Comptroller's office.

Evidently Texas Comptroller Susan Combs (pictured) didn't get the good news from our delusional governor, because she admitted yesterday that once again the sales tax figures for the state have gone down (as they have been doing each month for a while now).

The sales tax collected for the month of January was about $1.66 billion. That may sound like a lot, but it's a whopping 14.2% less than January of 2009. In fact, things are so bad that Texas, a state that had a balanced budget after the last legislative session, is looking at a deficit of over $8 billion when the next legislature meets.

But our Republican Comptroller assures us that good times are on the way. She says she expects the decline in sales taxes to moderate, and actually show a growth in the second quarter. She doesn't say how she expects this can be done in an economy that's still losing jobs.

I guess we'll just have to trust in our Republican overlords. After all, if you tell a big lie long enough, it finally becomes the truth -- doesn't it?

Recession Is Still Going Strong

The pundits are still trying to convince Americans that the recession is ending. They point to the stock market, which keeps going up (even though none of that money is being put to use for business expansion or new jobs). But the stock market has little to do with the economy these days. Whereas it once was a vehicle for long-term investment that spurred growth in the business community, it has now devolved into short-term buying and selling get-rich-quick schemes -- sort of a "casino" for rich investors.

I also remember hearing that retail sales for December were up "slightly", making it seem like people were ready to start spending again. I don't know about other states, but that is simply not true here in Texas. The state comptroller, Susan Combs, has just released the sales tax figures for December. They were not just down, they were down by a double digit percentage.

When compared to December 2008 (which was well into the recession) the sales tax figures showed a drop of 11.6%. That's a huge drop, and shows that retail sales must also have been down by a similar percentage. It looks like people are still too scared of the economy to start spending what little money they have left. Since business-wise, Texas is supposed to be one of the economically-healthier states, I expect December was also disappointing in other states as well.

And you can't blame people for not spending, since unemployment figures just keep getting worse. Although economists were expecting a small gain in jobs created, that did not happen. Even with seasonal holiday hiring, December saw the economy lose another 85,000 jobs. The official government unemployment rate stayed the same, but that is because the government doesn't count everyone out-of-work.

The rate stayed the same because thousands more people have given up finding a job. When you count all the people out-of-work and working part-time because they can't find a full-time job, the actual unemployment rate climbed again last month and now stands at a whopping 17.3%. That may not be as bad as what it was during the Great Depression, but it's damn close and still rising.

When all the facts above are considered, it is easy to see that the recession is certainly not over. In fact, it seems to still be going strong. Regardless of what the pundits say, we still haven't seen the bottom yet, and probably won't for quite a while longer.

The Recession Comes To The Panhandle

It may have taken a little longer for the current recession to start affecting the Texas Panhandle, but it has arrived now and it's starting to hurt. Unemployment is still fairly low when compared to the rest of the state. Here in Amarillo, the unemployment stands at 5.7% while it has climbed to 8% statewide. But that still means there are more than 2,000 people out of work now. That's about double the figure out of work a little over a year ago.

Business has been hit even harder. Sales taxes collections for June show a drop of 8.03% over this same time a year ago. The drop for the first six months of the year is 1.66%. That means the sales tax drop has gotten bigger since the first of the year (and will probably grow even larger).

For the surrounding cities of Brownfield, Hereford, Pampa, Perryton and Post, the drop in sales tax is even larger. They run from a low of 10.72% to a high of 34.42%. Panhandle cities are going to be hurting when the new fiscal year rolls around in September.

Amarillo National Bank president Richard Ware sums up the poor business climate in the area. He says, "West Texas is having a recession. Our customers' sales are down 10 to 15 percent and earnings as much as 90 percent. We're a very commodity-oriented economy and most of our customers are hurting, especially the dairy farmers."

A few months ago, some community leaders were talking like Amarillo and the Panhandle wouldn't be affected much by the recession. They were wrong. And there is no sign yet that things will get better soon. I suspect the opposite is true.

I Learned Something New & I Don't Like It

I learned something new today, and I'm not at all sure I like it. Did you know that not all of the sales tax we pay goes to the state or local government? Businesses are allowed to keep a portion of the tax to reimburse them for the "expense" of collecting the tax and sending it to the state.

Now this may have made some sense at one time. Here in Texas, the sales tax was imposed many years ago, and it probably did entail some expense to track and transfer the tax. Many businesses probably had to hire a bookkeeper to do it. But today we exist in the age of computer cash registers and direct transfers. The tracking and transfer of the taxes is almost an automatic thing and no longer represents a big expense to a business.

As an example, Wal-Mart gets to keep $7.5 million of the sales tax it collects in Texas each year. Do you think it costs them even a tiny fraction of that to collect, track and transfer that tax money? Of course not! This is simply pure profit to the company, on top of the profit they earn from selling their merchandise. In the 26 states that have this sort of compensation program, the company gets to keep about $60 million.

As the above chart shows, Texas loses about $90 million dollars a year in sales tax money through this unnecessary program. This is more than enough money to completely fund the state's pre-kindergarten program.

Now I realize that a small business may need this program. But for the retailing giants like Wal-Mart, the program is just a way to collect windfall profits far above the actual expense of collecting the tax.

Our legislators need to re-think this program. At the very least, a cap should be put on the amount a retailer can keep. I have no problem with a retailer being reimbursed for actual expenses, but I have a big problem with my tax money creating millions of dollars of profit for the retail giants. It also gives these giants an unfair advantage over small retailers who's profit comes only from the merchandise they sell.

Something should be done about this, but I doubt it will be. Our Republican-controlled state government sold out to the large corporations long ago.

Paying Too Much Tax

The chances are very good that you may have overpaid the sales tax you owe. This is especially true if you don't check the amount of the tax on your receipt, and frankly, most of us don't. We just expect the tax to be figured correctly. After all, the tax is being figured by a computer -- not a human. It turns out that is precisely the problem!

When the sales tax first started, an old-fashioned cash register would ring up the total and a clerk would then do some math, or more likely refer to a sales tax chart to find the appropriate amount of tax. It was a bit of a hassle, but it usually resulted in the correct amount of tax being added to your total.

But cash registers have changed. These days, almost all stores have computer cash registers. The clerk does nothing but scan an item or enter a price -- the computer register will add the total and figure the sales tax. The problem is that because of the way they are programmed, they could well be charging too much tax.

When I first heard about this, I thought it was a devious way for stores to make extra profit. But that is not what is happening. The stores just pay the state of Texas whatever tax their computer tells them was collected. So the extra tax is actually going to the state of Texas.

The over-taxing usually occurs when you purchase discounted items or use coupons. Most of the registers are programmed to enter the full price and then after the total is figured they will subtract the discount or coupon amount. This allows the store to more accurately keep up with its inventory and know how much of that inventory was sold at a discount. The problem is that the computer register has figured the tax on the first total -- not the discounted amount.

Say you bought a $20 item that was half-off. The register rings up $20, figures the tax, and then subtracts $10. On an 8% tax, that means you would pay $11.60 when you actually owe only $10.80. And the clerk (and probably the store) have no idea you've just been overcharged.

It would be a very good idea to start checking your receipts. State law only requires you to pay tax on the discounted price -- not the full price. If the store won't correct their computer program and refund the overcharge, then report it to the Texas Comptroller's office. They'll be happy to see the store collects only the correct amount.

Taxes are high enough already. Don't pay too much.