Sales tax reform - the hard way

      Rube Goldberg was a cartoonist famous for drawing hilariously complex machines designed to do the simplest things.  These days, whenever government tries to do something that should be oh-so-simple, the final result ends up looking like a Goldberg machine. 

      Today's example is sales taxes here in my home state of Texas.  Note that this scenario could happen in ANY state that collects sales taxes (as most states do).

      So the Texas legislature has come to the realization that sales taxes have all sorts of negative repercussions.  (All taxes do, of course, but today we're focusing on sales taxes, which is a big revenue source here in Texas, which has no state income tax.)  The bad stuff includes running businesses and potential taxpayers away to other states with lower taxes, and of course taking money out of people's pockets that they otherwise need for essentials like food, housing, etc.

      The latest effort by the legislature to mitigate the damage involves sales taxes on yachts.  (This news article caught my attention because, as many know, I am planning on buying a yacht next year).  The Republican politician noted - correctly, I might add - that Texans are buying, storing, and maintaining their boats in more tax-friendly states like Florida.  If we could keep all this boat-related business here in Texas, it could create about 600 jobs.

      Ok, so far, so good.  But a look at the details quickly shows how he totally botched up this simple notion.  It seems that his bill only applies to top-of-the-market yachts, those bought by the super-rich who don't flinch at plunking down $millions for a boat.  Specifically, it caps sales taxes at about $19 thousand.  Therefore, not being one of the super-rich, this bill doesn't do a darn thing for me.  Just that sales tax cap represents nearly half of my entire boat-buying budget!  And I'm safe to say that I'm not the only one in this proverbial boat-that-never-got-out-of-the-dock group.

     Why oh why oh why must politicians do things the hard way?  If they want to stimulate economic activity in boat-related businesses via the tax code, then why not just reduce the sales tax RATE?  Then it would be useful to EVERYBODY, not just the super-rich.

     Closely related to the yacht boondoggle is the "Sales Tax Holiday".  It occurs around back-to-school time in the fall when sales taxes on many items are suspended for one day, courtesy of the state legislature.  Here again, what started out as a great idea - reducing the sales tax burden, especially when the back-to-school bills pile up - is totally botched.  The problem is that it only benefits families that can re-arrange their shopping schedule to do the bulk of it all on one day.  Not everyone can do that; work, transportation issues, other time commitments, and paycheck cycles all constrain shopping schedules.  Plus, the huge crowds at the stores make it impractical to plan anything but a LARGE shopping excursion.

      So again:  if you want to ease the sales tax burden, especially on the lower end of the economic spectrum, then why not just simply reduce the tax RATE and make it effective all year long?  Why must the end result end up looking Goldberg-esque?  Unfortunately, I know the answer:  that would be too SIMPLE!