Posted on 12/30/2009 4:36:39 PM PST by blam
State Sales Tax Numbers: The Truth Appears
Wednesday, December 30, 2009
Posted by Karl Denninger in Macro Economics at 10:44
Leave it to the WSJ to report the truth - and then try to paper over it:
Sales taxes declined 9% to $70 billion in the third quarter compared with the year-ago period, the Census Bureau said. Income taxes plunged 12% to about $58 billion. Together, sales and income taxes make up roughly half of state and local tax revenue.
The WSJ then goes on to opine:
State and local tax revenues tend to lag behind the downturns as well as the upturns in the economy because of the time it takes for collections to catch up with depressed store sales and diminished incomes.
This is true for income taxes.
It is absolutely false when it comes to sales taxes.
As someone who ran a registered establishment for more than a decade that was responsible for filing and paying sales taxes (I signed more returns "under penalty of perjury" than I can count during those years!) I can state that it is an absolute fact that sales tax returns are filed and monies are remitted MONTHLY - if there is an upturn in business - an actual upturn - it shows up NOT MORE THAN ONE MONTH LATER in sales tax receipts. Period.
There has been no recovery in final retail demand and the proof is right here in the form of sales tax remittances.
Don't be fooled.
Retail down 9% means what ?? approx 4% overall down?? Sure different than 2.x% up isn’t it. Maybe I’ll watch some CNBC tomorrow for a few hours of happy talk.
You are correct. Kinda tuff to collect sales tax from all those small businesses in strip malls that are shut down...
Here’s the Census Bureau report, it has details for all the states...
http://www.census.gov/prod/2009pubs/qtaxbr-q093.pdf
SC is only state with increase in sales tax revenues... did they raise their rate?
The WSJ is the only paper I get now (I burn airline miles for my subscription), but year after year the likelihood of my re-suscribing goes down.
I prefer IBD.
I don’t read the WSJ for investment news; how is the IBD for national/international news & opinion?
Some of the state numbers are quite strange. The General State Sales tax down 12.2% in Texas? I thought their economic conditions weren’t too bad.
Another unusual number: the Corporate Net Income Tax down 114.9% in Iowa. How can something go down by more than 100%? Maybe if their prior period tax revenue was 10 million, then -114.9% would imply a current period revenue of negative 1.49 million (i.e., a refund)?
I should add that the WSJ often enough supplies information that finds its way into talks I give. For example, on 9/11/2006 they ran a front-page article on what cap-n-trade did to the German economy, and that became the lead-off for a series of talks I finally retired this year.
To explain the discrepancy, the growth must have been in financials and services that have no sales tax.
Then there are the state projects with stimulus funds that are also tax free are sales for contractors.
How’s that for explainin”?
but they said consumer spending was up 1.9% in november and the stock market rallied hard core when that info came out. sorry to say but i think the house of cards is just about to fall over and the biggest depression man could ever imagine will be here
http://geraldcelentechannel.blogspot.com/2009/12/2010-predictions-linda-moulton-george.html
Good information.
Lower sales tax receipts in Texas could be explained this way...
Conservative retail business owners ticked off by the “where’s my pie” voters decide to not declare the full total of their cash receipts.
It’s good for all those things, albeit relatively concise compared to WSJ. Both the news and the op-ed sections lack a left-wing slant, and the investment advise is useful, too. It’s one of the few remaining things in the print media that I can read without a jaundiced eye.
I suspect you’re right on the cash sale reporting, but also overlooked is the surge in online purchases. I buy just about everything except groceries online these days and most of that is (still) free of sales taxes. I doubt if I’m alone. Between the hassle of going to the store, lousy customer service, and much better online prices, there’s little incentive to patronize most brick-and-mortar stores.
Thanks very much! I will look into a subscription.
Going Going Gone
Who is John Galt?
The public is applying pressure where it can in all the ways that it can.
That explaination works for me ... I was just guesstimating the percentage split wholesale/retail.
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