From the "fact or fiction" page on this site: (http://lifetel.com/tabs/factfiction.htm)

"Besides, the $500 million per year in "lost revenue" will be pumped right back into our state's economy and cause a huge surge in sales tax and business tax revenue."

Could someone please explain how the sales tax on $500 million will offset the loss of $500 million? Sales tax starts at 6.5% all the way up to about 8%, right?

$500 million not paid on MVET, if "pumped right back into our state's economy" generates -- let's be generous here and say 8% across the board -- $40 million dollars in revenue. That's about $460 million dollars in lost revenue, hardly balancing out. Depending on your particular slant on things, that may be good or bad. All I'm saying is that it doesn't offset the way the wording implies. Any comments on this?

-- Jonathan (hepcat@oz.net), October 11, 1999

Answers

No, no comments, except that, uh...yeah...your right.

We want change also, But we're not crazy. (Like the Libertarins)

Vote No on I-695

-- Mikey (mkpow62@silverlink.net), October 11, 1999.

I actually could care less if one dime of the MVET is made up by sales tax.

Much of it depends on the spin... what you call $460 million in "lost revenue," I call $460 million dollars in taxpayer relief.

Westin

"People that are really very weird can get into sensitive positions and have a tremendous impact on history." -- Vice President Al Gore

-- Westin (86se4sp@my-deja.com), October 11, 1999.

No, one cannot predict with great certainty what will happen with sales tax revenue. However, you have to consider customer psychology. It is quite conceivable that people will be so happy about I-695 passing, that they will purchase "big-ticket" items. In other words, even though I only save $500 on my taxes, I go out and purchase items totalling several thousands of dollars, if not tens of thousands of dollars (i.e., a new car).

For example, if you were to plot the price of gasoline to consumer confidence, you could see a strong correlation to the price of gas going below a $1 and consumer optimism reaching new highs. And, the higher consumer confidence leads to significantly higher purchases, way out or proportion to the money saved by the consumer at the gas pump.

I-695 will restore people's sense that freedom is not dying. Coupled with the allure of the new millenium, the consumer is poised to make big purchases.

Hence, you can easily expect to see sales tax revenues climb 25 - 50%.

-- Matthew M. Warren (mattinsky@msn.com), October 11, 1999.

"Hence, you can easily expect to see sales tax revenues climb 25 - 50%. " Make sure your accountant gets paid up front BEFORE he does your taxes.

-- Gary Henriksen (henrik@harbornet.com), October 11, 1999.

Simple answer about the economic stimulation.

True the sales tax on $500 million is not equal to $500 million. But anytime the PEOPLE are allowed to KEEP their $500 million and spend it as they see fit there is economic stimulation and growth.

Anytime the $500 million (or any other amount for that matter) is relinquished to the government there is economic retardation.

-- maddjak (maddjak@hotmail.com), October 11, 1999.

matthew--a fairly large snip.

"I-695 will restore people's sense that freedom is not dying. Coupled with the allure of the new millenium, the consumer is poised to make big purchases. Hence, you can easily expect to see sales tax revenues climb 25 - 50%."

For those who are interested in understanding the economic theory behind the phenomenon you just described, the technical name for this effect is the Laffer curve and it is (was?) a staple of supply-side economics. As an economic theory, it came under heavy criticism (IMO unjustly) in the early 90s.

In my opinion, your statistics are far too optimistic. That being said, the original poster's statistics are naive as they don't account for any "turnover" in revenue.

original poster--"All I'm saying is that it doesn't offset the way the wording implies. Any comments on this?"

I think I just read the wording you're referencing. If so, while it does say it will "cause a huge surge in sales tax and business tax revenue, I don't see the implication anywhere that it will offset the revenue loss. We could probably argue about what "huge" means tho'.

-- Brad (knotwell@my-deja.com), October 11, 1999.

A September 26 Seattle Times article said that Mr. Sohn, the state economist, is not forecasting any sudden surge in consumer spending that could cover a revenue loss the passage of I-695 would likely create.

Plus, the article also reported that the $1 billion "surplus" will soon dry up, and once it's gone - it's gone for good. That means that the hole created by I-695 won't be filled by sales tax revenues, OR the "surplus."

BTW - Sales tax money goes to the state general fund  there is no guarantee that it will find its way back to transportation and local government! So, comparing MVET funds to sales tax is like comparing apples to oranges.

-- Diana (washingtonian@hotmail.com), October 11, 1999.

"That means that the hole created by I-695 won't be filled by sales tax revenues, OR the "surplus." " That's GREAT. THE INTENTION WAS TO REDUCE GOVERNMENT BY 2%, NOT JUST FIND ANOTHER POCKET TO PICK TO CONTINUE BUSINESS AS USUAL.

-- Craig Carson (craigcar@crosswinds.net), October 11, 1999.

All this talk of replacing "lost" revenue is caused by cognitive dissonance on the part of the tax addicts in gov't. They are like a jackass hit in the head by an axe handle;they're stunned for a while but still stubborn as hell.

They will still be in a daze on nov 3, like any addict faced with a loss of their drug of choice,other peoples money.

politicians credo "SCREWING THE TAXPAYER IS THE BEST SEX IN THE WORLD"

-- Ricardo (ricardoxxx@home.com), October 11, 1999.

Some of the above calculations miss something I think may need to be considered. Spending by state and local governments is subject to sales tax. Spending by state and local employees is subject to sales tax. That $500 Million (or perhaps its $800 Million) per year will not generate much if any NEW sales tax revenue for any level of government. Instead of sales tax being generated by a city purchase or by a city employee purchase, when the city does not have the money to buy directly or employ staff who buy it will be generated by someone else who makes a purchase. You may still consider that a good thing, but don't count on any off-setting sales tax windfall.

-- dbvz (dbvz@wa.freei.net), October 11, 1999.