A Texan tale
Recently, I went to a lovely lake wedding in HipsterTown, TX where I picked up these sweet couture country kicks at the Boot Shop.
The Boot Shop was buzzing with fat pocketed tourists and hunky handsome well informed gentle(sales)men. Once Travis (my gentlesalesmen) escorted me to the counter after attentively assisting me with picking out these perfect leopard print beauties, he casually made the following proposal:
“Ms Diva (he called me by my first name, but that’s what I heard) would you like to have these boots shipped to you? If so, you don’t have to pay the sales tax” … Travis smiles.
Completely hypnotized by his hospitality and implied respect for my financially conciseness consumerism, I happily reply “Yes please!” …I blush.
I have to confess, while this may look like the beginning of a steamy romance novel between Ms Diva and Texas Travis entitled ‘Fifty Shades of Boots’, I’ve actually seduced you to discuss Travis’ indecent proposal to evade sales taxes. Therefore, you are on notice that the following sections include a few numbers, the word ‘tax’ several times, and a promising moral dilemma.
Let’s breakdown Travis’ seemingly simple and considerate proposal, the boots cost 400 bucks (don’t judge me, they fit like a glove and Travis says they will last a lifetime), the sales tax rate in HipsterTown, TX is around 8 percent and the shipping cost was 20 bucks. My abacus tells me that I saved a whopping 12 bucks on this transaction, 32 in sales tax evasion savings less 20 in shipping costs. Still with me? Essentially, I’ve taken 32 dollars away from the Texas government programs such as schools, roads, and hospitals and given 20 dollars to UPS.
The moral dilemma
Is Travis’ proposal immoral? It’s only 32 bucks, a rounding error on the Texas government balance sheet. The amount may be small, but I’m sure that Travis has made this offer to more than one customer that day, in fact, I’m confident that this is the common practice among Travis’ fellow gentlesalesmen at the Boot Shop as well as several other shops in Texas. If several customers accept this offer, you can imagine that this tax lose to Texas can get quite large. Just in case your imagination isn’t working, let’s look at some more numbers.
The Boot Shop, a thriving business with several locations, is easily a multi million dollar establishment. This means that for every million dollars of revenue, where tax evading customers accepted the Travis like offer, that the Texas schools, roads, and hospitals lose out on 80 thousand dollars of funding. This is called a ‘tax gap’, the difference between what should be collected in taxes and what’s actually collected. Politicians often use this term while campaigning, does ‘I promise to close the tax gap,’ ring any bells?
Now, am I immoral for accepting Travis’ offer? The benefit to me is 12 bucks, the cost of a decent Seattle happy hour cocktail that can be easily knocked back within 30 minutes. While I do enjoy my share of over-priced libations, I didn’t accept the offer for the savings. As a tax professional, I rest easy at night because I actively protest the use of sales tax for government funding because it is a ‘regressive’ tax. A regressive tax is one that taxes us puppets disproportionately more than the puppeteers, as a percentage of our hard-earned income.
I’ll stop here at regressive tax…as you have either clicked the back button on your browser or fallen asleep on your keyboard from tax word fatigue. Still interested? Want to hear more on regressive tax and its audacious doppelganger ‘progressive’ tax? Please recommend this post and follow me on Medium🤓