CAN’T ANYBODY DO THE MATH?

CAN’T ANYBODY DO THE MATH?

On May 10th I wrote a blog, “Two Taxing Issues” where I pointed out the futility (because it will not produce any revenue for the state coffers) of a 5% state sales tax moratorium for clothes and school supplies from August 6-15. At the time the bill for the state sales tax moratorium was just being discussed; it became official when Governor Quinn signed the bill last week. The number 5% was arrived at by suspending the State’s use tax on eligible items but the 1.25% rate (that portion of the 6.25% Use Tax that goes to local governments) will still be charged as will city and county taxes.

What I wrote then was: “Five percent is such a meaningless number that I do not see how it will help “spur sales and create jobs,” as State Rep. Jack Franks (D-Marengo) said. In April I defended Franks in an unfair diatribe against him by State Rep. Bill Black, (R-Danville) but today I agree with Black who said, “It will cost $25 million to $50 million that the state cannot afford. It's an irresponsible thing to do when we don't have the money." Since the state currently has a $13 billion budget gap, how can the Governor propose tossing away millions?

Every day Kohl’s, Target, Wal Mart have sales of 50% off and more and we don’t see consumers running to the store to spend $1 billion just to save 5%. (That is what is spent to achieve a 5% savings on $50 million). If a 50% off sale does not produce a spike in revenue for the stores how will a 5% tax savings do it? The stores are not going to hire more salespeople in anticipation of a one week tax moratorium so I don’t see how more jobs will be created.

To break it down more simply, the U.S. Census Bureau reports that the annual retail spending for Illinois is approximately $131,469,518,000. So $1 billion worth of spending is a basically a hick-up. The state’s population is about 13 million people. So each person would save about $4 while the state coffers would be denied $50 million in sales tax. FOUR DOLLARS per person?? What is the big deal about that? Unless you have a family with 100 members, that is not a lot of savings!”

When Governor Quinn signed the bill in an elaborate ceremony at the Sears on State Street he stupidly said, "I think this is a landmark day for our state. It's going to help parents and families all across Illinois save money." This remark is dim-witted for two reasons. The first being that it is ludicrous to call a ten day sales tax moratorium, “LANDMARK.” If Quinn wants his administration to be remembered for something LANDMARK, I would hope his aspirations were higher than a ten day week suspension of sales tax! The second reason is that while families in Illinois will save a few dollars, it will end up costing them more in lost tax revenues. The nonpartisan Commission on Government Forecasting and Accountability estimates that the sales tax holiday would cost the state anywhere from $20.6 million to $67.1 million. Lose, lose for everybody!

Quinn also said, according to the Chicago Tribune,” stores may hire new workers to keep up with demand.” Again a stupid statement. Stores are not going to hire employees for TEN DAYS only! It would cost them too much money to train each worker and process the payroll for only TEN DAYS work! There will not be a single person hired because of the tax holiday.

The exact definition of a state sales tax holiday, according to the Illinois Department of Revenue “Is a 10-day period during which consumers can purchase certain items and pay sales tax at a reduced rate. Items include qualifying clothing and footwear with a retail selling price of less than $100 and certain school supplies used by students in the course of study. School supplies are not subject to the $100 threshold.” Also found on The Illinois Department of Revenue web site (

www.revenue.state.il.us) is a detailed list of what's included and what's not. One can visit the web site to see what is in and what is out, but some of it makes no sense! Crayons, glue, paste sticks, markers, pens, highlighters are among those art supplies that are exempt; but clay and glazes, acrylic, tempera, and oil paints, paintbrushes for artwork, sketch and drawing pads and watercolors are not. Who and how was the decision made to choose what is exempt or not? One would think that reference books, reference maps and globes, textbooks and workbooks would be essential school supplies and be exempt; but they’re not! Many states have varying sales tax holidays for diverse reasons. Voters like them because they are too stupid to do the math and see that their local economies are HURT, not HELPED by the moratoriums. So politicians have to vote for the sales tax suspensions just to keep their jobs. Of course, residents of Alaska, Delaware, Montana, New Hampshire and Oregon never pay sales taxes. Maybe we should be visiting www.onesimplemove.com and relocate to one of those states!