Oil prices are a tax-cut. So how about slashing Sales Taxes and Hotel Taxes?

Why does nobody - And I literally mean NOBODY - suggest slashing payroll taxes or raising the standard deduction? Seriously. It truly blows my mind. Basically people on Letsrun believe that when it comes to buying a bag twinkies, or some gadget made in communist china, or fossil fuels, we need to cut taxes. But on an American's hard earned labor? no we need to keep taxes on that.

A Thinking Man wrote:

The travel industry and trucking industry would be able to create more jobs if Hotel Taxes were slashed by 50%.

Retailers would be able to hire millions of new workers if Sales Taxes were slashed by 50%.

Discuss.

A Thinking Man wrote:

The travel industry and trucking industry would be able to create more jobs if Hotel Taxes were slashed by 50%.

Retailers would be able to hire millions of new workers if Sales Taxes were slashed by 50%.

Discuss.

I think you our grossly overestimating how many people could be hired by saving 2-3%. I am guessing it is more likely the Waltons would become more wealthy.

I work in the oil industry. Thank you for consuming.

Hotel tax is insignificant. Everybody buys gas, or buys products made from petroleum, but relatively few people rent a hotel room. A cut in this tax wouldn't budge the economy.

dddffddd wrote:

Hotel tax is insignificant. Everybody buys gas, or buys products made from petroleum, but relatively few people rent a hotel room. A cut in this tax wouldn't budge the economy.

I don't think so. Many cities are now charging 14%-17% hotel tax. The most common is above 10% to12%.

Also many cities assess a 20% tax on rental cars at the airport. Outside of the airport the tax is much less or is absent.

The bottem line is that every travel dollar spent on hotel and car rental taxes is a dollar taken from restaurants, fast food joints, bars, and malls.

Finite Dollars wrote:

dddffddd wrote:

Hotel tax is insignificant. Everybody buys gas, or buys products made from petroleum, but relatively few people rent a hotel room. A cut in this tax wouldn't budge the economy.

I don't think so. Many cities are now charging 14%-17% hotel tax. The most common is above 10% to12%.

You need to consider the scale. Look up how much money is spent on hotels vs gas and diesel every year. It's a drop in the bucket.

Cutting sales tax is impractical because it's state-regulated. And states actually have to have a balanced budget, so good luck cutting that back.

Finite Dollars wrote:

The bottem line is that every travel dollar spent on hotel and car rental taxes is a dollar taken from restaurants, fast food joints, bars, and malls.

Not so.

Business travelers do NOT cut their outlays for food, drink, etc because the taxes paid.

Leisure travelers can also adjust some other portion of their budget (including saving) besides other travel items so their trip is just the same.

Your "bottom line" makes a baseless assumption.

Cutting taxes on consumption wouldn't create any net jobs in the long term. Maybe it would stimulate the economy for a short time through a budget deficit and create some jobs. But jobs would be hit on the other side when inflation and interest rates went up.

Follow the money. lowering taxes on consumption would just help create a little more assumption. It wouldn't create jobs, nor would it even create more profits. Economists are in broad agree that sales taxes get passed on to the consumer.

Foreman is right. If you want to create jobs, cut taxes on jobs. Don't cut taxes on consumption or investment.

Oops. I meant lowering taxes on consumption would create more consumption. Not assumption. But who knows, maybe Americans would assume more with lower sales taxes.

Seeing the Obvious wrote:

Cutting taxes on consumption wouldn't create any net jobs in the long term. Maybe it would stimulate the economy for a short time through a budget deficit and create some jobs. But jobs would be hit on the other side when inflation and interest rates went up.

Follow the money. lowering taxes on consumption would just help create a little more assumption. It wouldn't create jobs, nor would it even create more profits. Economists are in broad agree that sales taxes get passed on to the consumer.

Foreman is right. If you want to create jobs, cut taxes on jobs. Don't cut taxes on consumption or investment.

genuine random a hole wrote:

Finite Dollars wrote:

The bottem line is that every travel dollar spent on hotel and car rental taxes is a dollar taken from restaurants, fast food joints, bars, and malls.

Not so.

Business travelers do NOT cut their outlays for food, drink, etc because the taxes paid.

Leisure travelers can also adjust some other portion of their budget (including saving) besides other travel items so their trip is just the same.

Your "bottom line" makes a baseless assumption.

Business travellers can only spend as much as their bosses allow and that changes based on how the company is doing. Thus every dollar a business traveller spends on taxes is a dollar not spent for food, drinks, fun and entertainment.

Corporate Controller wrote:

genuine random a hole wrote:

Not so.

Business travelers do NOT cut their outlays for food, drink, etc because the taxes paid.

Leisure travelers can also adjust some other portion of their budget (including saving) besides other travel items so their trip is just the same.

Your "bottom line" makes a baseless assumption.

Business travellers can only spend as much as their bosses allow and that changes based on how the company is doing. Thus every dollar a business traveller spends on taxes is a dollar not spent for food, drinks, fun and entertainment.

You contradict yourself. "How the company is doing" is not a function of hotel and rental taxes in a distant location.

Business DO try to cut travel costs. I have never heard of somebody hitting the road with some sort of set per diem that cover the entire day. Usually you are told to rent an appropriate car, stay at an appropriately priced hotel, then given a set allowance for the days meals. Business trying to cut traverl cost may try to downshift the level of carts and hotels, or more commonly, try to eliminate unnecessary trips.

ryan foreman wrote:

Why does nobody - And I literally mean NOBODY - suggest slashing payroll taxes or raising the standard deduction?

Seriously. It truly blows my mind. Basically people on Letsrun believe that when it comes to buying a bag twinkies, or some gadget made in communist china, or fossil fuels, we need to cut taxes. But on an American's hard earned labor? no we need to keep taxes on that.

You know that different sources of tax revenue go to different places.

Your talking about reducing the funding for social security and medicare over reducing the funding states uses like education and infrastructure.

And changing the standard deduction would be reducing the funding for federal services.

But I guess your point is pitting taxes on income vs. taxes on consumption.

Consumption is needed for any of this to work.

People won't have income to be taxed if people aren't spending enough.

Payroll tax hurts the average worker much more than the high earner because it has an upper limit to be taxed. But it also benefits them more.

There are all kinds of games you can play moving taxes and rates around.

But the main game is consumption and income which go hand in hand.

We need people to keep spending money and making money to keep the economy humming with jobs and tax revenue.

A consumption tax may make someone think twice about their spending.

I don't see how an income tax can make anyone think twice about trying to make more income.

genuine random a hole wrote:

Corporate Controller wrote:

Business travellers can only spend as much as their bosses allow and that changes based on how the company is doing. Thus every dollar a business traveller spends on taxes is a dollar not spent for food, drinks, fun and entertainment.

You contradict yourself. "How the company is doing" is not a function of hotel and rental taxes in a distant location.

Business DO try to cut travel costs. I have never heard of somebody hitting the road with some sort of set per diem that cover the entire day. Usually you are told to rent an appropriate car, stay at an appropriately priced hotel, then given a set allowance for the days meals. Business trying to cut traverl cost may try to downshift the level of carts and hotels, or more commonly, try to eliminate unnecessary trips.

Going to have to take the a hole's side on this one.

Of course that is the logic that you hear from the media. But with just a small amount of thought into it you know its B.S. The notion that different sources of revenue go to different places is absurd. Its all just one pool of money that goes towards government spending, and financing tax loopholes to subsidize various industries.

And no, my point was not pitting taxes on income vs taxes on consumption.

My point was that if you honestly care about jobs, then you would advocate cutting taxes on jobs. Not cutting taxes on corporations, not on consumption, not on investment, not on property taxes. Its really that simple. If businesses are providing value to society with product or services that is worth consuming, then its all good. Hard working Americans will have more money from their jobs to buy things.

Good idea. Best to incentivize, encourage, and prompt consumer spending by the total elimination of sales, tourist, and hotel taxation. Tourism is a major employer in most locales. It's all about jobe, stupid ;-)

CFO CEO CTO COO wrote:

Tourism is a major employer in most locales. It's all about jobe, stupid ;-)

Most? I'll give you "many", but not most. Carry on.

ryan foreman wrote:

Of course that is the logic that you hear from the media. But with just a small amount of thought into it you know its B.S. The notion that different sources of revenue go to different places is absurd. Its all just one pool of money that goes towards government spending, and financing tax loopholes to subsidize various industries.

And no, my point was not pitting taxes on income vs taxes on consumption.

My point was that if you honestly care about jobs, then you would advocate cutting taxes on jobs. Not cutting taxes on corporations, not on consumption, not on investment, not on property taxes. Its really that simple. If businesses are providing value to society with product or services that is worth consuming, then its all good. Hard working Americans will have more money from their jobs to buy things.

You could get rid of local governments and make it that way but it currently is not one pool of money.

A county in Virginia can not build a new high school with funding from FICA taxes or federal income taxes.

Tennessee sales tax will not figure into COLA for social security payments.

When you say you advocate cutting taxes on jobs (payroll taxes), you're just saying that you want to put more money in the hands of consumers to spend.

And that will work to stimulate spending.

But cutting taxes on consumption and cutting property taxes also puts more money in the hands of consumers so it should have the same effect that you are talking about.

I think I'm with you that cuts in corporate and investment taxes do not have the same stimulus effect.

They don't buy stuff with the extra money and they don't hire more. They just will use it to increase their net worth.

And they did do a payroll tax cut in 2011 and 2012 of 2%.

It went back in 2013.

The shortfall from these taxes to fund social security was transferred from the general fund.

That is where you would be right how federal taxes could be one pool of money.

But people didn't like the idea of debt financing for social security.

They want to treat it like it's a separate stash of money.

Once again, I'm not talking about putting more money in the hands of consumers. Because all things being equal we are talking about the same tax base. I'm saying cut taxes on jobs if you want to create jobs. Not cut taxes on consumption to create jobs.

The truth is that hiring people is a pain the a$$ for businesses. There is the wage itself. But then businesses have to train employees, physically accommodate them, They have to meet certain legal requirements. Many employers have to pay health insurance and 401Ks. Because all of this can get complicated businesses need to hire payroll services.

All that is a sunk cost before you even get to payroll taxes. Do you really wonder why there is systemic high unemployment and underemployment? Or why people have to work long hours and hate their life if they do get a full time job with benefits?

Moreover, all the above stuff are tax deductible expenses to a business. So higher corporate tax rates are not an obstacle to hiring. In fact lowering corporate tax rates would only be more of an incentive to not hire because it reduces the value of business tax deductions. It is the sheer amount of expense of hiring people that keeps businesses from hiring.

Obviously businesses can't get rid of the expenses for training and physically accommodating employees. There needs to be some kind of labor laws they have to comply with. But if you take away all the wage and payroll taxes and all the government mandated fringe benefits attached to jobs, then you will easily get to full employment. You would do it without all the Federal Reserve inflationary gimmicks and government "stimulus".