The MVET is NOT a sales tax. A sales tax is the tax that is charged on the SALE of items. Sales tax equalization is a process of distributing the sales tax revenue equally among communities.

So why does the loss of the MVET stop that?

Was the MVET used to pay the people who redistributed the money?

Just what is the deal?

If the MVET was used as sales tax for redistribution them there is a hell of a lot more wrong with this screwed up government than people suspected.

-- maddjak (maddjak@hotmail.com), November 19, 1999

Answers

Well, you have a very good point. It's a bit of a misnomer. The MVET was used to EQUALIZE the sales tax INEQUALITY. Subtle difference, but different. Cities with 'too small' a tax base to cover their own infrastructure (this is a whole other issue) got monies from the MVET cash cow, to help make up, or pad their budgets, where their own sales taxes weren't sufficing. This type of MVET reasoning, however, requires some serious research. Part of the need for sales-tax equalization is often created by a 'town' starting up that shouldn't be a 'town'. If a small neighborhood basically grows and is then incorporated when the entire town consists of dwellings, you're going to have a sales tax base problem. A town shouldn't incorporate itself unless it has the tax base to support itself. Otherwise, it should remain unincorporated and be supported by the county. This is a very deep subject, and has a potential for all kinds of budgetary arguments.

-- Paul Oss (jnaut@earthlink.net), November 19, 1999.

I don't feel REAL responsible for their self inflicted punishment. Since our representatives lead them down the primrose path, we should probably bail them out for a few years until they can dis- incorporate. NO WAY would I approve a permanent bailout. If they weren't willing to assume the expenses of incorporation, why should the rest of us. The people in Silverdale just (narrowly) voted against incorporation for that very reason. Where is the equity of forcing them, having prudently decided to not incorporate, subsidize University Place where they IMPRUDENTLY decided to incorporate?

-- Mark Stilson (mark842@hotmail.com), November 19, 1999.

Paul and Mark:

I think you still miss the point of sales tax equalization. Sales tax is not generated by the seller. It is generated from an assessment against the buyer. Where the sale takes place determines where the tax is collected, but not who paid it.

If a community has no retail base, the buyers need to travel to make most of their purchases; but they still pay the tax and should get some local services back for that payment. What part of that do you object to?

As for imprudently forming a city, sales tax equalization was created (at least in part) because cities that should be created for self governance and local control reasons, should not be impeded in doing that simply because of how the sales tax is collected. If the population is sufficient to justify creation of a city, that population is paying sales tax somewhere that their local city should get back to help serve them.

As for why the MVET was used to fund sales tax equalization, I don't have a clue. The state should find replacement funding when they meet in January. Unfortunately, no one knows what they will do; and some legislators may feel the vote actually had something to do with the programs that were funded by the MVET. I believe I mentioned the "no one knows" phrase a few times before the election. No programs are safe, but those with direct MVET funding are clearly most at-risk.

-- dbvz (dbvz@wa.freei.net), November 19, 1999.

dbvz:

Hmm, I read your message, carefully re-read my message, and yes, I think I understand sales tax equalization just fine. In fact, I'm kinda proud of myself because I didn't really support the concept of 695 in that message. It was, for me, somewhat unbiased. My comment about a town which incorporates which consists entirely of 'dwellings', was slightly less direct way of saying: "They ain't got no retail base. They's just gots houses" Meaning further, that theys must drives themselves somewheres else to buy their stuff. Understand it perfectly fine. My real point was this (forgive me for repeating myself a little):

If a group of people move out into the boonies because they like the quiet, peaceful surroundings of the country, and after time, A LOT more people move out there, because they too like the quiet, peaceful surroundings of the country, eventually, that area will become fairly highly populated. Ok, now. Once highly populated, they may, at some point, collectively feel that the county isn't providing them with enough infrastructure (sewage, police, etc.) so they decide to incorporate. Fine. Dandy. If you incorporate an area with no means to collect the revenues for running itself, well then, either you're gonna wither on the vine, or you're gonna take 'em from somewhere, er, someone else.

Now, I don't have the inclination to get into the moral, philosophical questions of a group of individuals, choosing to live in a rural area, and then incorporating, then demanding revenue from the rest of the state population because they don't have any Pay'n Saves to generate sales to the local population, thus generating tax revenues. In fact, I'm not necessarily wholly against the concept of sales tax sharing-- mainly because I DO understand the nuances of retail base, vs zoning, vs single family dwellings, etc., and the difficulty of people getting the needed infrastructure where the tax base may be unavailable, due to zoning.

Why was the MVET used for tax equalization? Because it was a HUUUUUUGE cash cow of dollars. Plain and simple. Does that make it evil, in and of itself? No. It's just a simple fact. There aren't many places in the budget that take in LAAAAARRRRGGGEEE amounts of cash from one single source. That's why politicians 'liked' the mvet. It was an easy place to go to when they needed to fund stuff. And that was the rise and fall of the MVET roman empire. It was too attractive to leave alone. They just couldn't leave it alone. They had to start diverting MVET dollars into all sorts of programs which never should have been funded by it. Now they've lost it, and they're left holding the bag.

If it were me, and of course, I had a lot more time to study the particulars of the issue, I would probably raise the STATE portion of sales tax, and use THAT for sales tax equalization. But again, this has less to do with 695, and much more to do with HOW governments tax, not how MUCH they tax.

-- Paul Oss (jnaut@earthlink.net), November 19, 1999.

I think you still miss the point of sales tax equalization. I DONT THINK THAT I DO.

Sales tax is not generated by the seller. It is generated from an assessment against the buyer. WHO DOESNT KNOW THAT? What rock have they been hiding under?

Where the sale takes place determines where the tax is collected, but not who paid it. NO KIDDING.

If a community has no retail base, the buyers need to travel to make most of their purchases; but they still pay the tax and should get some local services back for that payment. WHY? They utilized the resources of the locality where they made the purchase. That locality paid for police and fire services to the store they purchased it from. That locality built the roads and provided the sewers, water, etc. Someone paid for the establishment they bought the purchase in. Someone paid for transporting it there. It was a voluntary purchase. Why should someone else subsidize them for their purchase?

What part of that do you object to? PRETTY MUCH ALL OF IT, ACTUALLY.

As for imprudently forming a city, sales tax equalization was created (at least in part) because cities that should be created for self governance and local control reasons, should not be impeded in doing that simply because of how the sales tax is collected. THEY CAN SELF GOVERN AS PART OF A COUNTY. If they vote to incorporate, they are voting that they are willing to pay the price of incorporation. I dont know of any inalienable right to be a city.

If the population is sufficient to justify creation of a city, that population is paying sales tax somewhere that their local city should get back to help serve them. BULLSH*T. If my subdivision of 600 people decides that we want to become a city, do you believe that the rest of the state is required to subsidize us? How about if we were 1200? 2000? At what point do I have an inalienable right to have someone else fund my poor business decision. Whats the magic number?

-- Mark Stilson (mark842@hotmail.com), November 19, 1999.

I'm not sure why we are arguing now about the logic behind using some of MVET for sales tax equalization. WE VOTERS made that choice, when we passed Referendum 49, and told the legislature we didn't want them to make decisions on where it should go in the future.

-- Bob Dick (bdick@harbornet.com), November 20, 1999.

Mark:

We seem to disagree again. It seems clear to me that those that pay a tax should benefit from the tax, at least as much as is reasonably possible. That is why property tax revenue is generally oriented to deliver property services, and sales tax is oriented to deliver services to people, etc. That was one of the objections to the MVET, that it was not adequately oriented to deliver services related to vehicles. I am not saying that the collection point shouldn't get some sales tax revenue. They do that. All I am saying is that collection through the seller is just the collection method. The buyers paid it, and should benefit from those taxes they paid. That is not a subsidy.

As for when a city should be formed, the general rule is a population of 8 - 10,000 people now. The Boundary Review Board considers such proposals, and the economic viability of the city, before they incorporate. Their viability included (until now) the expectation that sales tax equalization will continue. The amount of the sales tax equalization payments to small cities was always somewhat uncertain.

None of this is new. The tax structure and the systems that try to make it fair, are complex; and were developed over decades. 695 did nothing to change any of that, except for the MVET as a revenue source. If you think sales tax equalization is unfair, you will have a hard sell but give it a try. Contact your legislators or write another initiative. Until then, that is the system we have. The only thing 695 did was remove the current funding source for the program. It did not change the priorities of government, or the fairness issues that caused the program to exist.

I hope the state finds other funding to maintain most of the MVET programs, including sales tax equalization. It makes the most sense for the state to dedicate some of the state revenue from sales tax to fund equalization, but no one knows what the legislature will do or how soon they will do it. Until then, local communities are dealing with some major problems created by the passage of 695. It never was just a 2% revenue cut, for most of them.

-- dbvz (dbvz@wa.freei.net), November 20, 1999.

Not saying it is new. I am saying that if the "city" is not viable on a stand-alone basis, it shouldn't be incorporated. When you incorporate a city, you add another layer of government. If the advantages of that to the people involved are inadequate to justify their paying the taxes necessary to maintain it, they shouldn't vote to incorporate. All overhead id costly. Don't understand why someone in an unincorporated area in eastern Washington should be expected to assist paying gor University Place to have more elected officials and a higher level of services. I have no problem if the people in University Place want that, let them pay for it themselves with local option sales tax increases, increased property taxes, or whate

-- (mark842@hotmail.com), November 20, 1999.

Mark:

And I believe they are paying for it themselves, in sales tax they pay that they should get back from the state. Every city gets their sales tax revenue from the state, because that is where the sellers send it. How it comes back is an arbitrary decision, and where the seller happened to be located is not a better basis for that than where the buyer happens to live.

Your example is misleading. A better one is in King County, where the new residential community of Sammamish would get back some of the sales tax from purchases by their residents in Bellevue, Seattle, Redmond, etc.

-- dbvz (dbvz@wa.freei.net), November 20, 1999.

PS:

New local cities in King County are doing more with less. The taxes that went to King County before incorporation, are generally able to duplicate and then improve on, the level of service the area had been getting from the county government. The city structure did not add a layer of government. It replaced an expensive, distant and often unresponsive government; with a city government that is leaner, more accessable, and much more responsive to the needs of the community.

Big government is like an elephant. To get any kind of reaction you first need to get its attention. If you are a relatively small community, sometimes that is hard to do. Sometimes when you get attention, the reaction you get is nothing like what you wanted. With a local government, when the mayor or a city councilman lives down the street, your problems are his problems.

-- dbvz (dbvz@wa.freei.net), November 21, 1999.

dbvz wrote: "Big government is like an elephant. To get any kind of reaction you first need to get its attention. If you are a relatively small community, sometimes that is hard to do. Sometimes when you get attention, the reaction you get is nothing like what you wanted."

You said it.

-- Paul Oss (jnaut@earthlink.net), November 21, 1999.

"With a local government, when the mayor or a city councilman lives down the street, your problems are his problems." Yeah. And he's part of the overhead of government, people devotred to process, not to production. If you want him bad enough to pay for him, that's great. But I don't think I ought to be paying out of my pocket, if I don't live in that incorporated area.

-- Craig Carson (craigcar@crosswinds.net), November 21, 1999.

Craig:

Process is what politics is all about. It is the method for the general public to access the elected representatives, who control the public employees. Politics becomes "bad" when the process doesn't work, and the elected representatives are either not accessable, or don't have control of the public employees.

I believe the best government is that which is closest to the people they serve; so neither the elected officials, nor the public employees, can hide from the general public or blame "the system" when things go wrong.

You can call the local elected officials (city or county) overhead if you want, since they don't personally maintain the streets or cut the grass in the parks; but they are a necessary overhead.

-- dbvz (dbvz@wa.freei.net), November 22, 1999.