Why is it that a TV sold by national retail stores is the same price in Seattle, Washington, Morris Plains, New Jersey, and Casper, Wyoming, or for that matter, how about a hamburger, a cup of coffee or a tube of toothpaste?
The brilliance of national retail is due in large part to the first genius who thought of uniform pricing of goods across the nation. We ordinary mortals would never have thought of it. Our thinking would be to have higher prices in New Jersey to cover their high taxes. We would look at Wyoming with their low taxes, and hopefully, we would drop our prices to give the folks a break, and maybe even consider moving there! But no, genius decided to set the price exactly the same in New Jersey AND Wyoming, keeping it simple by dumping all expenses, including taxes, into one big bucket and spreading the contents out evenly across the nation. That’s how it came to pass that Wyoming consumers began paying our share of Washington’s gross receipts tax and New Jersey’s property tax.
In a state that prides itself on being business friendly, with no corporate tax other than on energy producers (but who’s counting them), the discovery that we’re part of the smoothing mechanism that makes all taxpayers across the country equal, well, let’s say it’s eye opening. Knowing this explains why national corporations have no incentive to move their headquarters to Wyoming. Easier just to stay put and use Wyoming’s low tax structure to average down their tax expenses using uniform pricing.
An honest look at ourselves reveals our love affair with national retail. I sense that none of you are too upset over hidden taxes, especially when they are couched inconspicuously inside a low price guarantee. This love affair, however, comes with a cost. National retail means bigger government. It brings new and longer streets, more police and fire protection, more free education for their employees’ children and greater access to health and safety net programs. These costs, of course, are to be paid above and beyond the low price guarantee. So who should pay?
While everyone sits around short-arming the bill, the question is, does national retail have any specific responsibility to support the public burden their world creates?
I believe so. I proposed the National Retail Fairness Act during the recent legislative session. The goal of the bill was to recapture part of hidden taxes by imposing a net income tax on retail corporations with more than 100 shareholders, a little slice of their national net income, to help close the gap in school funding. To put that in context, 100 shareholders and less is the federal tax definition of small business. Since the bill passed the House but did not pass the Senate, the conversation continues.
As you know, corporations don’t pay taxes, people do. The beautiful thing about national spreading of costs is that the bucket pours both ways. The additional taxes paid to Wyoming would be significantly diluted in the big national bucket, causing virtually no effect on the prices of goods.
2019 marks the 50th anniversary of the corporate tax imposed on the energy sector, called the severance tax. Governor Stan Hathaway and the 40th Legislature had the courage to see the world as it was then. Today, the Hathaway legacy pays for the greatest share of all state government, along with a scholarship program that bears the Hathaway name.
When oil prices drop and coal demand diminishes, people think that the Legislature should reduce the size of government to match the lower tax revenue. Unfortunately, the streets of national retail don’t shrink, the demands for public services don’t diminish, the need to educate our children doesn’t stop.
Can you see the world as it is today? Modern corporations know and understand the relationship between taxation, livable cities and great education systems. Our education funding gap is over 300 million dollars. Forty-eight states currently tax national retail.
Now you know.