Governor Dayton proposed taxing auto-repair. Please oppose.

[Eric J in MN]

Dayton wants to lower the sales-tax rate to 5.5%, while vastly expanding what gets taxed.

One of the new things taxed would be auto-repair.

This is a bad idea. Taxing auto-repairs will make them more expensive and increase the number of drivers who postpone repairs. When someone has car trouble, it's better for everyone if that driver gets repairs the same day. If that person postpones repairs until after the next paycheck, it can endanger the driver, other drivers, and passengers.

This would be a regressive tax. Rich people have new cars which need few repairs. Ordinary people have old cars which need frequent repairs. This is also regressive, because when a rich person and an ordinary person pay a repair bill of the same amount, it's a much bigger percentage of the ordinary person's monthly income.

Please tell your State House Rep and State Senate Rep to keep Minnesota's sales tax as is. They can raise income taxes on the rich if they want more revenue.

Find email-addresses for your State Reps:
http://www.gis.leg.mn/OpenLayers/districts/

List of products-and-services which Dayton wants taxed which currently aren't taxed:
http://minnesota.publicradio.org/collections/special/columns/polinaut/archive/2013/01/the_specifics_o.shtml

[BainsBane]

1. The tax is on all services

Not just auto repair.

[Eric J in MN]

5. Yes, but for what purpose?

Why would slightly-lowering the sales-tax and applying it to both products and services be better than what we have now, just taxes on products?

[glinda]

2. I see more animals will die as a result of this also. This is wrong all the way around. I agree on

your point on car repair.

[Lydia Leftcoast]

3. As a translator, my market is the entire world, and I'm already facing

heavy downward pressure on prices. If I had to add to my rates to pay sales taxes, that would really hurt my competitiveness. If I had to "eat" the sales taxes, that would hurt, too.

There are times when I'm strongly tempted to move back to Oregon. I hate to sound like a right-winger, but such a tax would push me across the country. This one really WOULD hurt small businesses and independent contractors.

ON EDIT: There actually is one condition under which such a sales tax would be acceptable: if it were strictly dedicated to funding a single-payer health plan.

Otherwise, Minnesotans, it's been good to know you.

I have written to my state rep and state senator.

[BainsBane]

4. on delaying repair, that's bogus

Car repairs are expensive. We already pay tax on the parts. Now we'll pay tax on the service of the labor as well. The bit more we'll pay in tax is not going to cause people to put off repairs.

In general, sales taxes are regressive and I don't like them as a means of collective revenue, but I've seen complains from people in particular service industries such as yours, and I don't see it having an impact on your business. It already costs a packet to have one's car fixed. Sales tax is the least of the customers' concerns.

[Eric J in MN]

6. Example numbers

Suppose a man gets car repairs which cost $1,300 pre-taxes. Half-parts, half labor.

And that there isn't a city-tax on repairs in the city where he gets the repairs, and so only the state-tax applies.

The state's 6.875% sales tax on the parts will make the cost $1,344.69.

If this proposal goes through, the sales tax will be 5.5%, and applied to the whole bill.

The cost would be $1,371.50.

So the next time the man notices car trouble, he may remember his last repair bill as being about $1,400 instead of being about $1,300.

[BainsBane]

9. there already is sales tax on parts

Right? And after paying $1300 for repairs, $71.50 is the least of my worries. I'm not saying you don't deserve to be compensated for your labor, but the shocker there is the $1300 bucks.

I know I paid tax last week when I had my battery and oil changed. I didn't pay attention to what I paid tax on. I assumed I paid it on the whole bill, but I'd have to check the receipt to see. I put off a transmission flush, not because of tax but because they were going to charge me $150 and I was already paying over $200 for the rest. I couldn't tell you what the tax came to because that was the least of my worries. If am ever faced with a $1300 bill to service the car, I'm back to taking the bus. The sales tax isn't a factor.

The only time that concern over sales tax has played a role in my buying something was when I bought my car. I knew I had to calculate tax and registration into my budget because the former is substantial when buying a car because you drop so much money.

[Lydia Leftcoast]

8. Example numbers from me

Translators are paid by the word, either per word of source text or word of output. I used to be able to suss out the client's budget and make a per-word offer that satisfied both parties. In the past two or three years, India has gotten into Japanese-English translation in a big way, and clients have started to argue pennies per word. The competition from India, where they think that 1/3 of my standard rate gives them a great standard of living, has already taken away a lot of routine work. If I say, "I'm going to be adding x% to the final bill," I'm going to lose out.

One of the largest translation companies in the world, accounting for 50% or more of my business in some months, pays a per word rate, period. It does not accept billing for tax, which means that I would have to eat the difference.

[BainsBane]

10. your case seems more of a concern to me

because you face international competition. Auto repair businesses and hair salons don't.

I'm not saying I approve of the proposal. As I said, sales taxes are regressive and thus draw disproportionately from those who earn the least. But I think some business owners are over-reacting about the effect on their businesses. The auto repair situation is one such case. I can't see that having an impact on the OP's business.

I do like the governor's renewal of a financial commitment to education. I certainly am open to hearing about fairer ways to pay for that.

[Lydia Leftcoast]

12. One of my friends who sells books by mail order pointed out that sales tax is not applied

to out-of-state orders. (I've noticed also that Amazon UK doesn't charge VAT when I buy DVDs from them.)

Perhaps the same would be true of services sold to out-of-state or international customers?

[BainsBane]

13. yes, it should be

absolutely. I'm no tax lawyer mind you, but I believe you're right.

[kickysnana]

7. LeVander pennies. Temporary tax ca 1970. Wrong headed then. Wrong headed now.

Regressive. Hard on small businesses. Expensive to manage.

[progree]

11. A tax on services is a tax on mostly local labor. A tax on goods = tax on imports to a large extent

So I like the tax system the way it is, except well lower sales tax rates (SALES TAXES ARE BY FAR THE MOST REGRESSIVE TAXES) and raise the income tax rates (INCOME TAXES ARE FAR MORE PROGRESSIVE). A former state rep of mine sent me something showing the regressivity / progressivity of all Minnesota's taxes, and the difference was amazing between sales tax and income taxes.

Just to be clear, I am strongly opposed to sales taxes on services.

[geardaddy]

14. Just emailed my rep.

I'm an independent contractor and this could kill my business.

[progree]

15. Apologist meme: "it will just spread the sales tax burden around more fairly"

Last edited Thu Jan 31, 2013, 10:08 PM - Edit history (2)

No, wrong, it is a way to raise $1 billion in additional sales tax revenue over the next biennium by raising the most regressive of all taxes. That is huge -- $500 million/year in a state with a 5.4 million population or about $92/year per man, woman, and child. Or about $230/year per average household (the average Minnesota household is about 2.5 persons).

From what I read, the Dayton's sales tax proposal is projected to increase sales tax revenues overall by $1 billion over 2 years -- enough to wipe out the projected deficit over the coming biennium. So we are going to balance the budget by raising the sales tax -- by far the most regressive of all the major taxes? We are balancing the budget disproportionately on the backs of lower income people -- the ones who are proportionately hit the hardest by consumption taxes? Does that sound "Democratic" to you? It sure as hell doesn't to me. Nor progressive. What is our new slogan supposed to be -- "Progressivity through Regressivity!". Or "Regressivity Now! Progressivity Some Day We Hope We Hope Rah Rah Rah!"



(I wish it was just $15, and not $230/household/year)

Why do Democratic legislators and governors keep raising sales taxes? Because they are political cowards in my opinion. It's the easiest one to raise because people are told that any proposed rise in the sales tax is just a fraction of a cent on the dollar or some-such nonsense whereas when an income tax increase is proposed (by FAR the most progressive of the major taxes), everyone immediately thinks of the pain of filling out their 1040's and M-1's.

As I mentioned in another posting, a sales tax on services is overwhelmingly a tax on local labor -- not good for local jobs to say the least. Whereas the existing sales tax on non-food goods is mostly a tax on goods from outside Minnesota and outside the U.S.