Philadelphia is a town known for its scrappy sports teams and its passionate fans. We’ve collectively cheered our world champion Phillies and wrung our hands over last minute Eagles’ losses. We’ve booed the drafting of Donovan McNabb, cheered Brad Lidge, mourned our beloved Harry Kalas and thrown snowballs at Santa. We’ve stood along Kelly Drive and screamed for half-marathoner Ryan Hall and cyclist George Hincapie and endeavored to catch a glimpse of Bill Cosby at the Penn Relays.
It’s rare that the worlds of sports and art collide in Philly in any kind of remarkable way. Until last month, the biggest challenge as between the two was figuring out where to put the infamous Rocky statue: it’s not quite art but reportedly, art museum attendance plummeted when the statue was moved to the sports complex. (It’s now back home at the museum.)
But that was before Harrisburg got involved. The state budget deal, which allowed Philadelphia to increase its sales tax by a penny in an effort to keep the city going, has one teensy little provision that’s getting quite a bit of press: an extension of the state sales tax to cultural performances and venues. Cultural performances and venues applies to the arts and music – but not to sports or movies. So yes to taxing the Cezanne exhibit at the Philadelphia Museum of Art, no to taxing “Zombieland” at the cinema. Hmm.
The deal would call for the creation of a special new fund for cultural institutions and the arts, including museums, orchestras, dance venues, theaters and zoos, previously budgeted as part of the general fund. Money from the general fund to the arts has already been cut due to budgetary restrictions and some venues, like historical museums and sites, have seen their budgets eliminated.
The idea is that *some percentage* of the the new tax (lawmakers have been silent as to the exact amount) would be used to establish the fund – it’s a bit unclear where the rest of the money would go. State Republicans, who had previously opposed new taxes, insisted on the tax expansion in reaction to revenue shortfalls. Supporters of the arts looked to Gov. Rendell (D) for help, but he suggested that tax increases were inevitable, with his spokesman claiming “we cannot do a budget without pain.”
In a cash strapped year, with revenues down, cuts are to be expected. Many in the City, myself included, admitted that they would prefer to see an expansion of the sales tax to save the arts over cutting other services, like police. But why not movies and sporting events?
One city resident that I spoke with suggested that it felt like “rural Pennsylvania’s chance to thumb its nose at the City” since a majority of the tax would be created and spent in Philadelphia. An interesting take, for sure, but not quite accurate. The tax would apply across the board to arts and cultural venues in the state. It would not just affect the Philadelphia Museum of Art and the Pennsylvania Ballet but also the Elmwood Zoo and the Michener Art Museum. It would not, however, affect the Eagles or the Steelers. You have to wonder why not.
Groups across the state have been working to scale back the tax expansion with varying amounts of luck. There have been, at times, rumors that the tax may now exclude nonprofits but include for profits; that zoos and museums may be excluded; that concerts at stadiums may be included but those at an actual hall may not… Rumors, all, and nothing substantiated. In fact, at this point, we’re not at all quite sure what will come out of any compromise bill.
Of course, it’s worth noting that our neighbor to the north, New York, decided not to tack on an additional tax for tickets after those who worked in the arts noted the domino effect that the tax might have. Reduced ticket sales means fewer customers for restaurants, hotels and retail shops. Fewer customers means lost revenue – lost revenue means layoffs. Layoffs mean less wage and income taxes. You get the picture.
It’s easy to think that tax cuts – and tax increases – happen in a vacuum but they don’t. Taxes are an integral part of our day to day lives. How we choose to prioritize those taxes, I think, says a lot about us.
Congress should eliminate the current system altogether. Throw out the federal income tax because it’s too broken to be fixed.
In it’s place, I think we should pass something like the VAT in Europe: a federal sales tax. Think about it. Rather than penalize people for making more money, a federal sales tax would only apply when you spent money. Everyone spends money so everyone pays tax, instead of how it works now with the top taxpayers paying for everyone else. And everyone is paying the same rate.
I know that many people will say that a federal sales tax will be unfair to the poor, so I would suggest exempting necessities like food and medicine.
When you tax income, you are giving people a disincentive to make more money. This way, people can make more money without getting a penalty. But if they spend their money, it benefits everyone.
This works very well in most European countries. I think we should try it.
I heard on the radio that we will have to pay taxes on the money from the Cars for Clunkers. If so, I am really mad because nobody said we had to pay taxes on it. Is this true?
Taxgirl says:
A number of web sites and um, what’s the word, liarsopportunistspolitical wonks media personalities, have indeed taken to the airwaves to try and stir the pot a little with respect to the CARS program. It certainly gets attention to scream that the program is some kind of secret tax-raising scheme. Only, they’re wrong.
Dealers are required to report the reimbursement from NHTSA as part of their gross income. This makes sense – they’re still grossing the same amount after the reimbursement. For example, if a dealer sells a $25,000 car to a customer for $22,000 ($25,000 less the CARS “discount” of $3,000), and the dealer next receives a check from NHTSA for $3,000, the dealer has still grossed $25,000. No harm, no foul. There’s no “extra” tax on the dealer, as has been reported. It’s the same reporting requirement as before.
But what about sales tax? I’ve heard a bunch of folks arguing this both ways. Most states are not including the CARS portion for purposes of sales tax; there are a handful of states that are taking the position that the entire sale price, including the CARS portion, is subject to sales tax. You can check out which states using this handy chart from Lexis. I doubt you’ll be surprised: it’s more or less the usual suspects. The good news? If you live in one of those states, you can take advantage of the new car sales tax deduction.
I hope that clears things up!
Like any good lawyer, I need to add a disclaimer: Unfortunately, it is impossible to give comprehensive tax advice over the internet, no matter how well researched or written. Before relying on any information given on this site, contact a tax professional to discuss your particular situation.
I know, I know… It’s still summertime. But retailers are counting on the fact that parents are already thinking about school for fall. My newspapers and inboxes have been stuffed to the gills already with “back to school” ads and specials.
In a tough economic climate, retailers are hoping for every extra incentive they can find to boost spending. Traditionally, many states host a “sales tax holiday” at the end of July/beginning of August meant to spur consumer interest in back to school supplies and clothing a bit early. Some states, already facing gaping holes in their budgets are opting out of sales tax holidays; nonetheless, there are still 15 states on tap with programs this year. Those states are: Alabama, Connecticut, Georgia, Iowa, Louisiana, Mississippi, Missouri, New Mexico, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, Virginia and West Virginia.
In the past, I’ve included a handy dandy chart showing what items are affected by sales tax holidays. This year, however, I’m deferring to Don’t Mess With Taxes and Wallet Pop – each has a great chart summarizing what items are eligible for the break and what the limits are from state to state.
It’s worth noting that some states haven’t yet made up their minds (I’m talking about you, Massachusetts). I’ll keep you posted if there are any changes.
Taxpayer asks:
hi taxgirl , i have a question, i bought a 2009 nissan on january 17 2009,do i qualify for the sales tax deduction?
Taxgirl says:
Don’t hate me but no. The law says that the new car must be purchased after February 16, 2009 and before January 1, 2010, to qualify for the deduction.
But [...]
Taxpayer asks:
In your articles about the states, you keep saying that sales tax is regressive. But since everybody is paying the same percent, doesn’t that make it a flat tax which means it’s not regressive? I’m confused.
Taxgirl says:
Good question!
Most sales taxes are flat rate taxes in that the same percentage is levied on [...]
The beginning of summer often means cookouts, trips to the shore and camping. For many (including my parents), it also means the beginning of hurricane season.
Hurricane season begins June 1 and lasts through the end of October. Thankfully, NOAA (National Oceanic and Atmospheric Administration) forecasters predict a nearly normal Atlantic hurricane season for [...]
It’s Fix the Tax Code Friday!
Earlier today, I posted a piece on the new ruling in the UK that Pringles, made mostly of things “other than potato” or not, would be considered a snack food that does not meet an exemption for purposes of sales tax/VAT.
In many countries, states and municipalities, foods are exempt from [...]
Yesterday, the Lowe’s sale paper arrived at our house. The pictures of healthy plants on the front page convinced me to rush out and buy gardening stuff (granted, it doesn’t usually take much convincing). But instead of heading for the big box of Lowe’s, we went to Greensgrow Nursery, which I joke is [...]
The mayor of Fargo, ND, has announced a special election, set for June 30, to vote on a tax which will fund permanent flood control measures.
Mayor Dennis Walaker, joined by City Commissioner Tim Mahoney, has proposed an increase of a half-cent sales tax that would start next year and run for 20 years. The [...]
