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3 months ago

Are sales taxes outdated for Alabama’s future economy?

Presidential tweets and a Supreme Court case have reignited the question of taxing internet sales. The Court in April heard arguments in South Dakota v. Wayfair regarding whether a retailer must have physical presence in a state to have to remit sales taxes. The physical presence rule goes back to 1967 and mail order catalogs.

E-commerce has been costing state and local governments tax revenue, as South Dakota argued in the case. But instead of trying to collect sales taxes online, perhaps we should abandon a 20th Century economy tax.

General sales taxes produced 23 percent of state and local tax revenues nationally in 2015, while “selective sales taxes” on gas, tobacco, and alcohol contributed another 11 percent. Alabama raises 48 percent of our tax revenue from these taxes. Abandoning sales taxes would open a chasm in Alabama government budgets.

Economics shows that we will have less of anything which we tax. Taxes affect our behavior, creating a cost beyond the revenue raised for the government. “Optimal tax theory” examines keeping this extra cost as low as possible while raising needed government revenue. Efficiency is not, of course, the only factor for evaluating taxes, as most of us also care about fairness.

First widely used in the 1930s, sales taxes readily funded local governments when most people shopped at stores near home. The local sales taxes Alabamians paid went to their city or county government. Times have changed.

Sales taxes have always had drawbacks. For one, they are regressive, meaning that taxes as a percentage of family income falls as income rises. Although economists disagree about how progressive taxes should be (with a progressive tax, payments as a percentage of income increase with income), few view regressive taxes as fair.

Beyond regressivity, services have also proven hard to tax. Malls and big box stores avoided a local sales tax by locating beyond the city limits. Consumer use taxes, enacted for purchases made without paying sales taxes, have proven cumbersome. High taxes on cigarettes have led to cross-border shopping and smuggling.

Online retailing worsened collection problems. Although Amazon now generally collects sales tax, universal collection will be neither easy nor cheap. Differential tax treatment of online and brick-and-mortar sellers raises economic and fairness concerns. Avoiding sales taxes helps keep inefficient online retailers in business. And brick-and-mortar retailers face unfair competition when consumers can avoid sales taxes online.

Internet shopping has improved life for shoppers and entrepreneurs. Shoppers can choose from sellers world-wide without leaving the house. Makers of unique products no longer need to rely on mail order catalogs, and social media groups promote the products to interested consumers. The cost of collecting sales taxes for small businesses, however, is substantial: 13 percent of tax revenues for small retailers, versus 2 percent for large retailers.

Public service ads today encourage people to shop local retailers to fund local government. But optimal tax theory says we should not let taxes distort economic activity too much. Should we potentially halt the evolution of e-commerce, and all the benefits this may bring, simply because local governments can more easily collect sales taxes from local stores?

Our city and county government provide valuable services like police and fire protection, streets, schools, and garbage collection. These services should be adequately funded. I also believe in federalism and want local governments to impose their own taxes. Having Washington collect more taxes and then fund local governments undermines federalism.

Alternatives exist for sales tax revenues. In Alabama, our lowest in the nation property taxes represent an alternative. We might want to try pollution taxes, which promise sound environmental policy and could fund government.

Should we substantially revamp our tax system? If sales tax collection does not stifle e-commerce, my concern becomes moot. Ultimately government in the United States is supposed to serve our interests. Perhaps sales taxes are as outdated as Sears, Toys-R-Us, and the famous retailers who collected them.

Daniel Sutter is the Charles G. Koch Professor of Economics with the Manuel H. Johnson Center for Political Economy at Troy University.

1 min ago

7 Things: Disgraced former FBI Agent Peter Strzok finally fired, 70 percent of Americans want the Mueller probe over, Rep. Mike Rogers says the Space Force is no joke and more …

7. A Mexican restaurant in Houston is under fire for daring to serve Attorney General Jeff Sessions

— El Tiempo Cantina posted a photo of Sessions and its owner on social media. It was immediately attacked for serving the AG. Eventually, the restaurant apologized for posting the photo and shut down their social media accounts.

— American liberals have decided that serving food to the wrong people is a crime punishable by loss of your livelihood in 2018

6. Alabama Senator Doug Jones makes absolutely no one happy with his incoherence on President Donald Trump’s Supreme Court nominee

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— Sen. Jones appeared at a town hall in Birmingham and the issue of Brett Kavanaugh arose. Jones seems to be hanging his hat on the fact that he can’t read his notes from his time in the Bush administration and therefore just can’t decide what to do on this vote.

— Conservatives continue to pressure Jones to make his position known. Meanwhile, a Democrat at this town hall heckled Jones and then threw a pair of plush lips at him telling him to “Kiss my ass” if he votes to confirm.

5. Democrats continue embracing socialism while thinking less of capitalism

— The Democratic Party’s embrace of socialism is nothing new. Fifty-seven percent of Democrats view socialism positively, which has changed little since 2010. Only 16 percent of Republicans view socialism positively.

— The party’s view of capitalism continues to decline with only 46 percent viewing the American economic system positively.

4. Governor Kay Ivey continues to talk about issues while her opponent talks about debates

— Gov. Ivey’s focus on education and business matters, she touts investment in pre-K and that Alabama was named the nation’s “Best Business Climate” in the nation.

— Democrat nominee, and former AEA field representative, Walt Maddox continues to release videos about a debate that is just never going to happen.

3. Rep. Mike Rogers (R-Saks) makes it clear that Trump and Congress are serious about the Space Force

— While the idea of the Space Force has been mocked because it is an idea from the Trump administration, Alabama’s Rogers believes this new agency is very important. He said, “China set up their own separate space service a year and a half ago, and Russia reorganized before that — we are way behind the curve on it”.

— Rogers drove the point home that space is important to our war-fighting capabilities, saying, “People have to understand that we have become heavily dependent on space to fight and win wars, that’s our eyes and ears for the military.”

2. Sixty-six percent of Americans want the Mueller probe wrapped up

— Polling released this morning show that Americans want special counsel Robert Mueller’s investigation wrapped up. This crosses party lines with Democrats and Republicans wanting it over for different reasons.

— The poll also shows 70 percent of Americans think Trump should testify “if asked.” Only 34 percent approve of how Trump has handled this investigation, and Trump’s approval rating is now at 42 percent (higher than Reagan, Clinton and Carter at this point).

1. Embattled FBI Agent Peter Strzok becomes the latest official fired by the FBI

— While the focus is on the anti-Trump e-mails that the agent sent to his lover, there are other issues including him sending a sensitive search warrant to his personal e-mail account, and he made the decision to drag his feet to examine new e-mails related to the Clinton investigation.

— The FBI clearly had some issues in their handling of these investigations in late 2016, Congressman Jim Jordan (R-OH) pointed out how disastrous that period has been for the FBI with a tweet that laid bare all the discipline issues within the FBI with former Director James Comey and Deputy Director Andrew McCabe being fired, Chief Counsel James Baker and FBI Counsel Lisa Page being demoted. All of these issues stemmed from the Clinton/Trump investigations.

46 mins ago

Alabama AG Steve Marshall challenges reporting on new ‘In God We Trust’ law

Alabama Attorney General Steve Marshall on Monday pushed back on a recent report by the Associated Press that asserted the state’s new law allowing “In God We Trust” to be displayed in public schools is “expected” to face legal challenges.

In March, the state legislature approved a bill that took effect June 1 allowing such displays on public property, giving Alabama schools the right to exhibit the national motto.

However, critics are speaking out against the move, calling it “a constant push for theocracy,” as media outlets like AL.com and the Asssociated Press validate their outcry.

In a statement, Marshall challenged their assertions and strongly backed the law.

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“We don’t anticipate any lawsuits over this issue,” he told Yellowhammer News.

Marshall continued, “‘In God We Trust’ is the official national motto, adopted by an Act of Congress and displayed on the nation’s currency as well as in the chamber of the U.S. House of Representatives. A lawsuit against a school displaying the national motto would be laughed out of court.”

Alabama’s attorney general also called out critics for not being focused on the real challenges facing public schools.

“Frankly, in a time when schools are increasingly the targets of violence, it is hard to understand how one could argue that a renewed emphasis on our nation’s religious heritage through the display of ‘In God We Trust’ or the recitation of the Pledge of Allegiance could be detrimental to our students,” Marshall added.

The legislation’s sponsor, state Rep. David Standridge (R-Hayden), recently decried the controversy that outside groups and the media have made out of the law.

Alabama will also decide in November whether the state’s 117-year-old constitution should be changed to allow public schools to display the Ten Commandments when voters have a referendum on Amendment One on the general election ballot.

“My hope is they have the Ten Commandments in the schools all over the state of Alabama as well as the Declaration of Independence, the Constitution and the historical documents that go with this country,” said Dean Young, chairman of the Ten Commandments political action committee, which is pushing the amendment.

He added, “That way, children will be able to see and ask, ‘What are these documents’ and a teacher can say, ‘Those are the Ten Commandments and they come from God and this is what they say.'”

The critics claim the national political climate, including the leadership of President Donald Trump, is fueling renewed efforts to incorporate Christianity into the public realm.

“It’s a tsunami of Christian national laws in our country right now,” said Annie Laurie Gaylord, co-president of the Freedom from Religion Foundation, per the Associated Press.

“The upcoming election will say a lot about the direction of our nation,” she added.

Sean Ross is a staff writer for Yellowhammer News. You can follow him on Twitter @sean_yhn

1 hour ago

Alabama leaders react after Trump gives troops largest pay raise in years

President Donald Trump on Monday afternoon signed the National Defense Authorization Act (NDAA) for fiscal year 2019, which gives American military personnel their largest pay raise in nine years.

“We must protect those who protect us,” President Trump said in a press release. “When our service members are in uniform, it is our obligation to ensure that they have the finest equipment, the finest training, care, and resources — better than any military on earth.

The White House emphasized that the 2019 NDAA is a sure-fire sign that the President is delivering on his campaign pledge to rebuild the American military, honor the nation’s service members, prepare for all potential threats, and stand with the country’s allies and defense partners worldwide.

Members of Alabama’s Congressional Delegation agree and enthusiastically voiced their support on Twitter, as did the state’s Republican Party.

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“Proud that @POTUS has signed the #FY19NDAA into law,” Senator Richard Shelby said. “It is vital that we continue to prioritize our national security by ensuring that our military is highly trained and well-equipped to best protect our great nation.”

The office of Rep. Bradley Byrne (AL-1) released a lengthy statement, which in part highlights the leading role Byrne played in the bill as a member of both the House Armed Services Committee and the House-Senate Conference Committee.

“The strategy of peace through strength requires us to continue to produce and procure the best tools and resources possible,” Byrne said.

He also applauded the many important provisions of the 2019 NDAA that specifically benefit Alabama, including his district in the southwest part of the state.

“The bill authorizes the construction of three Littoral Combat Ships (LCS), which are built by Austal USA in Mobile,” Byrne outlined. He added that he was “proud” of this victory for his district.

Byrne’s colleague in southeast Alabama joined him in lauding the latest NDAA’s signing.

“I’m so pleased that @POTUS will sign the #FY19NDAA into law today,” Rep. Martha Roby (AL-2) said on Twitter. “This important measure continues to rebuild our nation’s military and provides proper support to those who wear the uniform.”

 

Sean Ross is a staff writer for Yellowhammer News. You can follow him on Twitter @sean_yhn

Marion Mayor uses tools to prep residents for AlabamaWorks Success Plus Initiative

By: Dexter Hinton, Mayor of Marion, Alabama

When I was elected in late 2016 as Mayor of Marion, I knew there were certain areas in which our town needed to improve. One was education and work preparedness for those who did not want to attend a four-year college. We had gaps that needed to be filled.

As an Industrial Maintenance and Robotics Instructor at the Career Center in Greene County, I know what resources are available to assist those seeking a job or a skills education. When people come to the center, our team has a plethora of tests, assessments, job listings, resume-building sessions and other items at our disposal to help folks get the right position or training that matches their needs or abilities.

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As Mayor, I realized we needed to get educational tools to Marion residents, especially after Moller Tech announced that it would be locating in Bibb County, adjacent to Perry County, and bringing 222 jobs with it. But with a small town like Marion (population 3,432) not having a dedicated resource center, we didn’t quite know how to unite the two. Then one day, I attended a Central AlabamaWorks meeting and saw AIDT’s mobile unit, which is the Department of Commerce’s skills education center on wheels.

I spoke with Mikki Ruttan, director of Central AlabamaWorks, after the meeting and asked her about the possibility of getting the unit to our area. I learned it could be customized for the needs of its audience. After numerous discussions with other local leaders, we selected basic resume building and a Ready-to-Work course as the initial offerings. I knew the mobile unit would be key in obtaining career readiness for the citizens of Marion. I also felt that our citizens would welcome the chance to improve their skills and knowledge base.

After dozens of conversations, we got the mobile unit scheduled this past April. We posted and delivered flyers all over the city, announcing when and where the unit would be located, and we created a Facebook page. We had no idea what kind of response we would have for this type of educational opportunity. But, our citizens realized how such training could give them a leg up in the job market. As a result, they turned out in droves to learn more and better position themselves for entry into the job market, or to simply upgrade their skill set.

With Gov. Kay Ivey’s Success Plus initiative rollout a few months ago, I knew we had to get our citizens more training to help them, and our state, reach the goal of 500,000 people with post-high-school credentials by 2025. The mobile training unit seemed like the perfect way to deliver those opportunities to our residents.

After some discussion, we were able to get the unit at The Lincoln School. We focused the training on Ready-to-Work. The classes filled immediately, and a waiting list soon formed. Our people were eager to gain knowledge to improve their lives and that of their families. Once they completed the course, they received credentials as an Alabama Certified Worker; a Career Readiness certificate; a free three-credit-hour course at Wallace Community College Selma (if they had a high school diploma); three credits toward a high school diploma (if they didn’t have one); and a referral to the Selma Career Center for free certificates or degree information from WCC in welding, industrial maintenance, electrical technology or nursing.

The unit has been so popular with our citizens that two classrooms are now being refurbished at The Lincoln School specifically for AIDT courses. This means we will have a permanent place for our people to get not only Ready-to-Work training, but also training in other much-needed professions offered by Wallace, such as cosmetology, carpentry, welding, automotive technician and others.

The excitement continues to build for our city. In fact, AIDT has already completed one Ready-to-Work training with several graduates who have received employment.

With the extra effort by Central AlabamaWorks, AIDT, the Career Centers and the Alabama Community College System – combined with the excitement and work ethic of our citizens – I know Marionites can and will be a valued part of the Success Plus endeavor. I look forward to seeing what our citizens can achieve for themselves, their families and our community.

2 hours ago

Alabama Department of Revenue changes rules to comply with 2013 red tape law

Five years after the Alabama Legislature passed a law to cut red tape, state agencies are still culling their regulations.

Tuesday, the Alabama Department of Revenue will hold a hearing in Montgomery on a proposal to repeal a regulation concerning a property tax break the legislature gave to senior citizens in Baldwin County who meet certain qualifications.

The tax agency wrote a new rule in 2008 because the original rule referenced dates that no longer are valid. But the old regulation remains on the books. The Red Tape Reduction Act of 2013 requires that regulation to be formally eliminated, and that requires a hearing at the agency’s headquarters in Montgomery.

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“We’ve had to go back and look at all of our regulations to clear up all the rules,” said Frank Miles, a spokesman for the agency.

The red tap law that passed five years ago requires any agency that proposes a regulation that might adversely impact a business to prepare an economic impact statement and file it with the Joint Committee on Administrative Regulation Review.

Lawmakers at the time said they had received complaints from companies that red tape was consuming time and energy that could be put into the core business and creating jobs.

The law also requires existing rules and regulations to be reviewed every five years. Agencies are required to post information related to proposed and existing reviews.

The Baldwin County regulation in question refers to Oct. 1, 2005 — any residence constructed after that date would not qualify for the senior discount. It also cites Oct. 1, 2006 — the date at which property taxes would be frozen for taxpayers 65 and older who had lived in their homes for at least 10 years.

The superseding 2008 regulation deleted references to specific dates and now simply states that the tax break is available to folks 65 and older who have lived in the same home for at least 10 years.

The tax agency will take up two other proposed rules changes on Tuesday. The first is a new rule clarifying the procedures for a tax lien auction and tax lien sale. The regulation lays out procedures for collecting delinquent property taxes. The rule requires county tax officials to determine which method to use no later than Oct. 1 when property taxes become due.

The second proposed rule is an amendment to regulations concerning tobacco manufacturers and salesmen. For instance, it changes “should” to “shall” in text related to a requirement that salesmen be informed of the illegality of transferring unstamped tobacco between wholesalers and in their vehicles.

@BrendanKKirby is a senior political reporter at LifeZette and author of “Wicked Mobile.”