Over the past few days there has been a rather heated debate concerning the effects of a consumption tax vs. a tax on income. Robert Wenzel wrote a piece criticizing Peter Schiff’s endorsement of Herman Cain’s 999 plan, and it went downhill from there. Robert Murphy jumped in and Murray Rothbard’s name was used to support both sides. Lew Rockwell posted links to all sides which can be seen here.
This all reminded me of a piece of news from last fall regarding sales taxes. About this time a year ago it was revealed that several area convenient stores were charging the incorrect amount of sales taxes. Customers were being charged almost 10% in taxes and the difference, about one percent, was being held by the stores, while the remainder was being forwarded to the state capitol. The issue came to light when a state senator looked at his receipt and saw the error.
He and the news reporters that covered the story were outraged that a business would do such a thing. “The unsuspecting, the innocent people are paying too much […] no one is watching out for them” Senator David Haley was quoted as saying. But what about the innocent people who, every time they pay for most anything, are forced to pay the sales taxes? No one watches out for them either.
The lawful sales tax is a ridiculous 8.925%. The government lays claim to nine percent of all commercial retail business and hardly anyone says a word. There’s no special investigation, no reporters head to the state house to expose the nefarious scheme; it’s all perfectly fine. But once a business, whether by accident or by design, over-charges customers by collecting too much in excise taxes, you’d better call the government to the rescue.
The irony here should be patently obvious. The benevolent government, the same government that institutes this thuggery, is supposed to come to the aid of the poor, over-taxed consumer? The state and local government instituted the tax in the first place, extorting money from consumers and imposing additional costs on venders. If they really cared about consumers they would remove the taxes and leave people alone.
In the end the business owner denied any intentional wrong doing and promised to donate the equivalent amount to a local charity as penance. If you thought it would end there you’d be wrong. Haley took it upon himself to prove Ludwig von Mises axiom true once again, that intervention begets intervention – he is pushing for more audits on small business tax records.