COLUMN: Taxes are a tool, not a toy

Five years ago I purchased some shoes during Iowa’s annual tax-free shopping weekend. The item qualified to be exempt of sales tax. I joked and still offered the store employee to pay the tax but she said they couldn’t do that. If they were participating, they had to make those eligible purchases sales-tax free.

I have never felt comfortable with the sales-tax free shopping days as another one was last Friday and Saturday. I get it as it is a way to get families with school-aged children to purchase the eligible items for the upcoming school year. It was also done to entice residents in border states to come over and shop more (Think Omaha, Nebraska, people going to Council Bluffs. People on the Illinois side of the Quad Cities go to Bettendorf or Davenport.) Several states have tax-free holidays now.

States with holidays are throughout the year, different amounts and for different eligible items. Alabama has one for hurricane preparedness.

For 363 days of the year we usually complain about taxes, in general. But for two days in Iowa, do we think we are getting a break? For a couple of days a year, we turn tax revenue into a toy, a gimmick.

Depending upon the source, I read the estimated sales tax not paid over the two days in Iowa is about $5 million. Although not every county has the same amounts of retail shopping places that have items that qualify, the average per county is $50,000. Creston may be a great example as it has stores with eligible items. Council Bluffs, Sioux City, West Des Moines and places like that skew the county average since the counties those towns are in have more people and stores with eligible items.

What would $50,000 do for Creston? It could have purchased a pickup for city of Creston crews. It could pay for engineering fees for a project, like the work planned for McKinley Park lake. That $50,000 could have been applied to Creston’s new fire truck. It may even fund a job, to get things accomplished. Unfortunately, it’s probably not enough to make a significant difference with street improvements. That’s for another day.

Again, the $50,000 average is only using easy math to start a conversation.

Many stores have also created rewards programs for repeat shoppers. I wouldn’t be surprised if those programs have a better offer than just sales tax amounts on $100. Remember those coupons we used to cut out or keep from the papers? (Some places still do that, thank you). I remember my wife keeping those $10 off coupons, or maybe more, in August when our children were in school and had needs. The amounts offered by stores were more impactful than just not paying the sales tax.

Over the past decade Iowa has acquired some big tech names to build here. Of course, we give them a property tax break or abatement over a period of time. Corporate welfare is a harsh phrase to use. Meanwhile, the small company or factory that has been in town since the horse-and-buggy days gets to see a new tax statement every year. I know of one Iowa town that did that to entice a store, only for it to close a few years later. City didn’t get anything.

How ironic the store got a property tax break, but still had its customers pay the sales tax. The store’s revenue intended for property tax was never considered to give the customers a break on the sales tax.

Maybe it’s not fair comparing property tax breaks to sales-tax holidays, but the principle still exists. Potential revenue was chosen not to be received.

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I say thank you to Raquel Linch for all the help during my time here as she left her position late last month in news at KSIB Radio. She was a pleasure to get to know and see at meetings and events. I never saw Raquel as competition as we were providing the same information to our area readers and listeners. Godspeed in your future Raquel.