gopsdragon
01-14-03, 01:35 PM
Liberals always say taxation doesn't effect (or even affect for that matter) behavior. Then how does this happen?
In another story (see below) tax the rich scheme is expected to lose so much money for the state that we are already projecting another increase in the sales tax next year.
Californians duck sales tax by shopping across border in Oregon
Siskiyou County businesses suffer as residents head north for bargains
Wyatt Buchanan, Chronicle Staff Writer Tuesday, January 14, 2003
--------------------------------------------------------------------------------
Medford, Ore. -- If you want to see a place where California's sales tax is embraced, even celebrated, visit this southern Oregon city -- where buying anything means getting a deal.
In Medford, as in all of Oregon, sales tax is a concept as foreign to the locals as a self-serve gas pump. Oregonians who buy a $4.99 sandwich with a $5 bill get change, albeit a penny, and the state gets squat.
And Californians, who pay some of the highest sales taxes in the nation and who are no dummies, invade the place every weekend to shop.
"We're surprised they don't ban Californians from Oregon," said Curtessa Martinez, who drove 45 minutes up Interstate 5 with her family of four from Yreka to buy baby shower gifts at the Wal-Mart here.
The trip to this regional center 50 miles north of the California state line could become even more lucrative, as Gov. Gray Davis has proposed pushing the state's sales tax up another percentage point.
The Martinezes do almost all their shopping in Medford, and like most Californians interviewed here this past weekend, they spend a couple hundred dollars every trip. That means about $20 pocketed by avoiding a sales tax, plus money saved from products that cost less in Medford than in smaller California towns.
They even stayed Friday night at a motel -- a bargain at $45 a night -- to maximize their time in the city.
They come twice a month, stocking up at Target, Wal-Mart and the grocery store. The gas tank in their old four-door sedan also gets filled for 40 cents less per gallon at Oregon's gas stations -- full-service, as mandated by state law.
"We're kind of like people who live in the backcountry who go in for supplies," said Michael Martinez, 24.
Neighbors, friends and family do the same.
"Oh, yeah, that's the thing to do," Curtessa Martinez said.
Medford is the major city in the Rogue River Valley, with towns like Ashland and Grants Pass nearby. While the city has a population of 64,000, it's the regional center for nine counties that hold about half a million people. The local chamber of commerce recently began a campaign declaring Medford "The Center of It All."
CHAIN STORES ABOUND
There is a Costco, a Circuit City, a mall with 100 shops, many enormous grocery stores and a slew of chain restaurants and merchants common in commercial areas.
The number of cars with California plates navigating parking lots on a given Saturday, though outnumbered by Oregonians, is significant.
For Medford, California's high sales tax and any possible increase in that tax translates into one word in the local dialect: Cha-ching!
Local officials don't directly track the amount of money coming in from California, but that sum could be as much as $10 million a year, said Gordon Safley, executive director of Southern Oregon Regional Economic Development Inc.
"That's good for our economy because new money comes in, circulates five or six times and a little rubs off everywhere," Safley said.
The city has the third-highest tax receipts in the state for hotel stays, as shoppers often turn their trip into a weekend getaway, said Brad Hicks, President and CEO of the Medford/Jackson County Chamber of Commerce.
The Rogue Valley Mall gets 8 million visitors a year, he said.
Mary Davis, who drove three hours from Redding with her husband, buys clothes and makeup at the mall.
Any jump in California's sales tax would mean more trips north, Davis said.
"All our friends agree," she said.
The Rodriguez family drives from Yreka to Medford to shop for groceries at Food 4 Less, shaving about $30 off their grocery bill.
"You're not going to be rich, but it helps you get by," said Gabriel Rodriguez.
As he walks through the store, Rodriguez, who works at the Wal-Mart in Yreka, points to items on the shelves and notes how much more they cost in California. There's toilet paper, he said, which "costs 70 cents less for a dozen rolls."
Other items can bring a lot more in savings. At Circuit City, Cory Hoffland of Montague, Siskiyou County, figures she saved $300 by purchasing her computer and software 60 miles north in Oregon.
Salesman Justin Haas does not have much trouble persuading Californians to part with their money at the store, where computers and television sets are popular with out-of-staters.
"People buy a TV, and then say they might as well buy a DVD player because they saved that much in (sales) tax," Haas said.
He has no qualms with the weekend Californian invasion.
"It keeps me employed," he said.
There is another side to all of this, though, specifically the other side of the state line and the shops Californians drive past on their way to Oregon.
EMPTY STOREFRONTS
"You oughta look at our empty storefronts throughout the county. It's had a tremendous impact," said Siskiyou County Supervisor Bill Hoy.
He refers to the shopping migration as a "bleeding effect" and said the county instituted a policy two years ago of buying supplies locally whenever possible. The supervisors hoped the move would set an example for citizens, he said.
"I don't know if it helped," Hoy said.
More shops would be a tremendous boon to the county, helping to reduce the 9 percent unemployment rate and putting revenue from sales taxes in county coffers, Hoy said.
Citizens buying items out of state are supposed to notify California of their purchases and pay a use tax on them, though it's an obscure law. None of the shoppers interviewed last weekend knew of the rule, nor did Hoy.
Californians have a lot harder time getting around reporting the tax on one big-ticket item: cars. The state requires residents to pay any skipped taxes when they register their vehicle, and it pays attention to where the car was purchased.
Oregon is one of just five states without a sales tax: Montana, Alaska, Delaware and New Hampshire are the others.
From time to time, Oregon has talked about introducing a sales tax of its own -- there's a plan on the table now in the state legislature, in fact -- but the prospect is viewed as unlikely.
Citizens have voted down such a tax nine times on the ballot and would undoubtedly make that an even 10, said Hicks, the chamber of commerce official.
"It's like (full service) gas or the deposit on bottles -- there are just some things ingrained in the fabric of Oregon," he said. "They don't have to be rational. It's, 'Dammit, this is how we look at the world and we don't want to consider anything different.' "
http://sfgate.com/cgi-bin/article.cgi?f=/c/a/2003/01/14/MN222850.DTL
DAVIS GRAY BUDGET FINANCES CALIFORNIA SALES TAX
By Dan Morain, Times Staff Writer
SACRAMENTO -- Gov. Gray Davis, who last week proposed a one-cent sales tax hike, is contemplating another increase next year to make up for what analysts believe will be a drop in revenue from higher income taxes on wealthy Californians, according to a state Department of Finance memo.
The proposal for a sales tax increase would cost California consumers a collective $4.5 billion annually in an effort to close a projected shortfall in next year's state budget. But a Department of Finance memo sent to legislative budget writers shows that, starting next year, the increase could rise to 1.125 cents, costing consumers an extra $900 million a year. The memo was not disclosed during the budget unveiling last week.
Davis is proposing a tax hike package of more than $8 billion as part of his plan to shift an array of health programs to local government. The state would help local government pay for the programs by earmarking the added sales tax revenue to counties, along with taxes on cigarettes and high incomes.
The extra income tax is expected to raise $2.5 billion this year. But experts with the state Department of Finance estimate that, for a variety of complex reasons, the take from the income tax hike would fall to $1.8 billion in 2004. They characterized their estimate as conservative. As a result, they propose a hike after the first year to make up for the expected drop in revenue.
The memo outlining the governor's tax initiatives says the sales tax rate would need to rise by 1.125 cents "in 2004-05 and beyond ... in order to provide sufficient revenue to local governments, because the revenue from the higher income tax rates declines substantially in 2004-2005."
The memo, prepared by the department's finance and economic research unit, is addressed to legislative budget staff members and was distributed Friday.
Outgoing department Director Timothy Gage said that, although he had not seen the memo, the possibility of raising the sales tax more is "one of the possible approaches" being considered by the Davis administration. "We need to have a conversation about what is going to yield the $8.2 billion," Gage said.
California's sales tax rate now ranges from 7.25% in some rural counties to 8.5% in Los Angeles and 8.75% in San Francisco. Under the Davis proposal unveiled last week, the sales tax in Los Angeles County would rise to 9.5% in July. With the extra increase contemplated in the memo, the rate would rise to 9.625% in 2004.
The Finance Department also anticipates that the cigarette tax would result in an 11% drop in smoking. As a result, cigarette tax revenue would fall from $1.17 billion in the 2003-04 fiscal year to $1.07 billion in 2004-05.
State law requires that any tax hike be approved by two-thirds of both houses of the Legislature. Davis' tax proposals face opposition from some Democrats and most, if not all, Republicans in the Legislature, and from an array of business lobbyists.
Voicing opposition to all three proposed tax hikes, Senate Budget Committee member Dick Ackerman (R-Irvine) on Monday pointed to the extra sales tax contemplated for 2004, and charged that Davis is failing to "properly advertise" his tax package.
"He is misleading the public," Ackerman said. "He is misleading the Legislature, which is not a good thing to do. I had assumed it was 1%."
Democrats are particularly skeptical of the sales tax hike, believing it would fall hardest on people with the least income.
"There ought to be other places to go look for revenue," said Sen. Gil Cedillo (D-Los Angeles), the chairman of the Senate Revenue and Taxation Committee. "The sales tax is not the most equitable. In many ways, it is the more regressive of the taxes."
Davis has said that he patterned his tax package after one pushed by his Republican predecessor, Gov. Pete Wilson. Wilson agreed to raise sales taxes and to increase income taxes on the wealthiest Californians during the recession in the early 1990s as he struggled to close what he then described as a $14-billion budget gap.
But Wilson abolished the extra income tax, once the financial crisis eased, and Davis' Department of Finance noted that both the higher income tax rates and the sales tax increase would be permanent.
http://www.latimes.com/news/local/la-me-tax14jan14,0,4305703.story?coll=la%2Dheadlines%2Dc alifornia
In another story (see below) tax the rich scheme is expected to lose so much money for the state that we are already projecting another increase in the sales tax next year.
Californians duck sales tax by shopping across border in Oregon
Siskiyou County businesses suffer as residents head north for bargains
Wyatt Buchanan, Chronicle Staff Writer Tuesday, January 14, 2003
--------------------------------------------------------------------------------
Medford, Ore. -- If you want to see a place where California's sales tax is embraced, even celebrated, visit this southern Oregon city -- where buying anything means getting a deal.
In Medford, as in all of Oregon, sales tax is a concept as foreign to the locals as a self-serve gas pump. Oregonians who buy a $4.99 sandwich with a $5 bill get change, albeit a penny, and the state gets squat.
And Californians, who pay some of the highest sales taxes in the nation and who are no dummies, invade the place every weekend to shop.
"We're surprised they don't ban Californians from Oregon," said Curtessa Martinez, who drove 45 minutes up Interstate 5 with her family of four from Yreka to buy baby shower gifts at the Wal-Mart here.
The trip to this regional center 50 miles north of the California state line could become even more lucrative, as Gov. Gray Davis has proposed pushing the state's sales tax up another percentage point.
The Martinezes do almost all their shopping in Medford, and like most Californians interviewed here this past weekend, they spend a couple hundred dollars every trip. That means about $20 pocketed by avoiding a sales tax, plus money saved from products that cost less in Medford than in smaller California towns.
They even stayed Friday night at a motel -- a bargain at $45 a night -- to maximize their time in the city.
They come twice a month, stocking up at Target, Wal-Mart and the grocery store. The gas tank in their old four-door sedan also gets filled for 40 cents less per gallon at Oregon's gas stations -- full-service, as mandated by state law.
"We're kind of like people who live in the backcountry who go in for supplies," said Michael Martinez, 24.
Neighbors, friends and family do the same.
"Oh, yeah, that's the thing to do," Curtessa Martinez said.
Medford is the major city in the Rogue River Valley, with towns like Ashland and Grants Pass nearby. While the city has a population of 64,000, it's the regional center for nine counties that hold about half a million people. The local chamber of commerce recently began a campaign declaring Medford "The Center of It All."
CHAIN STORES ABOUND
There is a Costco, a Circuit City, a mall with 100 shops, many enormous grocery stores and a slew of chain restaurants and merchants common in commercial areas.
The number of cars with California plates navigating parking lots on a given Saturday, though outnumbered by Oregonians, is significant.
For Medford, California's high sales tax and any possible increase in that tax translates into one word in the local dialect: Cha-ching!
Local officials don't directly track the amount of money coming in from California, but that sum could be as much as $10 million a year, said Gordon Safley, executive director of Southern Oregon Regional Economic Development Inc.
"That's good for our economy because new money comes in, circulates five or six times and a little rubs off everywhere," Safley said.
The city has the third-highest tax receipts in the state for hotel stays, as shoppers often turn their trip into a weekend getaway, said Brad Hicks, President and CEO of the Medford/Jackson County Chamber of Commerce.
The Rogue Valley Mall gets 8 million visitors a year, he said.
Mary Davis, who drove three hours from Redding with her husband, buys clothes and makeup at the mall.
Any jump in California's sales tax would mean more trips north, Davis said.
"All our friends agree," she said.
The Rodriguez family drives from Yreka to Medford to shop for groceries at Food 4 Less, shaving about $30 off their grocery bill.
"You're not going to be rich, but it helps you get by," said Gabriel Rodriguez.
As he walks through the store, Rodriguez, who works at the Wal-Mart in Yreka, points to items on the shelves and notes how much more they cost in California. There's toilet paper, he said, which "costs 70 cents less for a dozen rolls."
Other items can bring a lot more in savings. At Circuit City, Cory Hoffland of Montague, Siskiyou County, figures she saved $300 by purchasing her computer and software 60 miles north in Oregon.
Salesman Justin Haas does not have much trouble persuading Californians to part with their money at the store, where computers and television sets are popular with out-of-staters.
"People buy a TV, and then say they might as well buy a DVD player because they saved that much in (sales) tax," Haas said.
He has no qualms with the weekend Californian invasion.
"It keeps me employed," he said.
There is another side to all of this, though, specifically the other side of the state line and the shops Californians drive past on their way to Oregon.
EMPTY STOREFRONTS
"You oughta look at our empty storefronts throughout the county. It's had a tremendous impact," said Siskiyou County Supervisor Bill Hoy.
He refers to the shopping migration as a "bleeding effect" and said the county instituted a policy two years ago of buying supplies locally whenever possible. The supervisors hoped the move would set an example for citizens, he said.
"I don't know if it helped," Hoy said.
More shops would be a tremendous boon to the county, helping to reduce the 9 percent unemployment rate and putting revenue from sales taxes in county coffers, Hoy said.
Citizens buying items out of state are supposed to notify California of their purchases and pay a use tax on them, though it's an obscure law. None of the shoppers interviewed last weekend knew of the rule, nor did Hoy.
Californians have a lot harder time getting around reporting the tax on one big-ticket item: cars. The state requires residents to pay any skipped taxes when they register their vehicle, and it pays attention to where the car was purchased.
Oregon is one of just five states without a sales tax: Montana, Alaska, Delaware and New Hampshire are the others.
From time to time, Oregon has talked about introducing a sales tax of its own -- there's a plan on the table now in the state legislature, in fact -- but the prospect is viewed as unlikely.
Citizens have voted down such a tax nine times on the ballot and would undoubtedly make that an even 10, said Hicks, the chamber of commerce official.
"It's like (full service) gas or the deposit on bottles -- there are just some things ingrained in the fabric of Oregon," he said. "They don't have to be rational. It's, 'Dammit, this is how we look at the world and we don't want to consider anything different.' "
http://sfgate.com/cgi-bin/article.cgi?f=/c/a/2003/01/14/MN222850.DTL
DAVIS GRAY BUDGET FINANCES CALIFORNIA SALES TAX
By Dan Morain, Times Staff Writer
SACRAMENTO -- Gov. Gray Davis, who last week proposed a one-cent sales tax hike, is contemplating another increase next year to make up for what analysts believe will be a drop in revenue from higher income taxes on wealthy Californians, according to a state Department of Finance memo.
The proposal for a sales tax increase would cost California consumers a collective $4.5 billion annually in an effort to close a projected shortfall in next year's state budget. But a Department of Finance memo sent to legislative budget writers shows that, starting next year, the increase could rise to 1.125 cents, costing consumers an extra $900 million a year. The memo was not disclosed during the budget unveiling last week.
Davis is proposing a tax hike package of more than $8 billion as part of his plan to shift an array of health programs to local government. The state would help local government pay for the programs by earmarking the added sales tax revenue to counties, along with taxes on cigarettes and high incomes.
The extra income tax is expected to raise $2.5 billion this year. But experts with the state Department of Finance estimate that, for a variety of complex reasons, the take from the income tax hike would fall to $1.8 billion in 2004. They characterized their estimate as conservative. As a result, they propose a hike after the first year to make up for the expected drop in revenue.
The memo outlining the governor's tax initiatives says the sales tax rate would need to rise by 1.125 cents "in 2004-05 and beyond ... in order to provide sufficient revenue to local governments, because the revenue from the higher income tax rates declines substantially in 2004-2005."
The memo, prepared by the department's finance and economic research unit, is addressed to legislative budget staff members and was distributed Friday.
Outgoing department Director Timothy Gage said that, although he had not seen the memo, the possibility of raising the sales tax more is "one of the possible approaches" being considered by the Davis administration. "We need to have a conversation about what is going to yield the $8.2 billion," Gage said.
California's sales tax rate now ranges from 7.25% in some rural counties to 8.5% in Los Angeles and 8.75% in San Francisco. Under the Davis proposal unveiled last week, the sales tax in Los Angeles County would rise to 9.5% in July. With the extra increase contemplated in the memo, the rate would rise to 9.625% in 2004.
The Finance Department also anticipates that the cigarette tax would result in an 11% drop in smoking. As a result, cigarette tax revenue would fall from $1.17 billion in the 2003-04 fiscal year to $1.07 billion in 2004-05.
State law requires that any tax hike be approved by two-thirds of both houses of the Legislature. Davis' tax proposals face opposition from some Democrats and most, if not all, Republicans in the Legislature, and from an array of business lobbyists.
Voicing opposition to all three proposed tax hikes, Senate Budget Committee member Dick Ackerman (R-Irvine) on Monday pointed to the extra sales tax contemplated for 2004, and charged that Davis is failing to "properly advertise" his tax package.
"He is misleading the public," Ackerman said. "He is misleading the Legislature, which is not a good thing to do. I had assumed it was 1%."
Democrats are particularly skeptical of the sales tax hike, believing it would fall hardest on people with the least income.
"There ought to be other places to go look for revenue," said Sen. Gil Cedillo (D-Los Angeles), the chairman of the Senate Revenue and Taxation Committee. "The sales tax is not the most equitable. In many ways, it is the more regressive of the taxes."
Davis has said that he patterned his tax package after one pushed by his Republican predecessor, Gov. Pete Wilson. Wilson agreed to raise sales taxes and to increase income taxes on the wealthiest Californians during the recession in the early 1990s as he struggled to close what he then described as a $14-billion budget gap.
But Wilson abolished the extra income tax, once the financial crisis eased, and Davis' Department of Finance noted that both the higher income tax rates and the sales tax increase would be permanent.
http://www.latimes.com/news/local/la-me-tax14jan14,0,4305703.story?coll=la%2Dheadlines%2Dc alifornia