Lee Holloway’s Financial Chops On Display

Charlie Sykes has it:

Milwaukee County Board Chairman Lee Holloway issued the following analysis after the County Executive vetoed an advisory referendum on taxes and claimed a small increase in the sales tax (and decrease in the property tax) would create a tax island in Milwaukee County. The County Executive chose a Greenfield camera store to make the announcement.

At today’s gas prices, a 1-cent increase in the sales tax would not create a tax island. For a camera costing $500, the sales tax in Milwaukee County would rise by $5. But, factoring in our current gasoline prices, it would be slightly more costly for many Milwaukee County residents to drive to the nearest camera stores in Waukesha County .

Yes, it is possible to construct a scenario where the gas prices offset a tax increase to make it less likely that someone would leave the county to make a purchase.  Also note that Holloway used mileage calculations from downtown.  If a person lives nearer to the edges of the county, the fuel cost could be almost negligible.  But let me share some other scenarios where the tax will hurt Milwaukee County:

- For people who have a major purchase to make, like appliances, a vehicle, furniture, major electronics, etc., the sales tax increase would more than justify a trip to Brookfield Square.

- People who either work or travel frequently to other counties for other reasons can easily stop outside of the county for a purchase since they are already there.

- People who want to open a retail business and can open it in the county or right outside of the county are more likely to open it outside of the county.

I could go on, but it goes without saying that being a tax island is not a good thing. 

Furthermore, I have more respect for those who argue for the tax increase on principle rather than trying to pretend that it won’t cost people any more money.

All of that being said, I say GO FOR IT, Milwaukee!  My county could use the economic boost. 

1. People who want to open a retail business and can open it in the county or right outside of the county are more likely to open it outside of the county.

   My county could use the economic boost.

   Kind of interesting that Washington County did see a bounce in sales tax revenue because the Meno Falls (Waukesha County) WalMart moved a few blocks north to Germantown (Washington County) & the new WalMart in Hartford was built on the Washington County side of the Dodge/Washington County line.  But that is .5% sales tax, 1.5% sounds severe.

   Maybe Milwaukee County residents can escape the sales tax on big purchases by going somewhere else, but I pity those who are going to be making the “nickle & dime” purchases on a daily basis - take someone who spends $5.00 a day for lunch at a fast food place - they won’t drive extra to buy lunch, but take $25/week times 50 weeks, you are talking extra $12.00 right there.  Or think of the miscellaneous sundry expenses - greeting cards, snacks for the kids, etc.

   Posted by on July 17, 2008 at 1238 hrs




2. All valid arguments, but when it comes to purchases, I think most people will go where they want to based on convenience, sale prices, merchandise availability, etc. and not let a slight difference in sales tax affect that decision. If the sales tax difference were a full percentage point or more, that might give consumers pause. I know that if I’m browsing in a Chicago store that we also have up here, the difference in sales tax makes me much more likely to wait and make the purchase back home, unless the item is outrageously cheap.

   A multi-county regional sales tax to support a regional transportation system would make more sense, but I’ll support this because I know how badly it’s needed in the county.

   Posted by on July 17, 2008 at 1252 hrs




3. Now, remember this convoluted logic comes from a guy who also feels it makes sense to sell a house to the city and keep the title.

   Posted by on July 17, 2008 at 1335 hrs




4. People drive 10 miles to save two cents on a gallon of gas - do you really think they aren’t going to drive to Brookfield Square instead of Mayfair to save $1.50 for every $100 they spend?

   Posted by on July 17, 2008 at 1414 hrs




5. Bill & mht, the folks who are penny-wise but pound-foolish will always be with us. My point is that the proposed increase is not large enough to modify consumer behavior in most cases.

   Look at how high gas prices had to get before sales of gas guzzlers started to slump!

   Posted by on July 17, 2008 at 1450 hrs




6. Vehicles are taxed where they are titled, not where they are purchased.  Same would go for furniture that is delivered.

   Not that I want my county to raise the sales tax, but in the interest of accuracy, I had to comment.

   I would guess that electronics and jewelry would be the biggest items that would draw people across county lines.

   Posted by on July 17, 2008 at 1516 hrs




7. Holloway and all the tax-loving idiots (yes, they are idiots - if they like taxes so much, why don’t they pay extra taxes voluntarily?) don’t take into account those in Milwaukee who would be in Waukesha or somewhere with lower taxes anyway (work, pleasure).  Then, there is no money spent on gas in Holloway’s already-weak analysis.  I live in Chicago, home of the country’s highest sales taxes (10.25%).  I travel to Madison twice a month to visit family.  Since I’m already there, I buy most of my household goods in Dane County (5.5% tax rate).  No extra gas money, and I save hundreds of dollars.  That is money in my pocket that I can then spend as I see fit - not in the hands of Todd Stroger and all the corrupt pols here in Illinois.  When will politicians learn (don’t answer) that people avoid paying higher taxes.  Income, sales, inheritance, all of em.

   Posted by on July 17, 2008 at 1905 hrs




8. Owen,

   Aside from not knowing that sales taxes on vehicles are paid to the County in which you live and not in which you buy the car, I’m glad to see you appear to be coming around to the idea that the people’s opinion should be courted, as in the death penalty advisory referendum (which somehow was not taxpayer subsidized poll) you previously supported.

   Combining transit with the parks into one question was a big, big mistake.

   Posted by on July 17, 2008 at 2049 hrs




9. Michael,

   Thanks for the reminder.  I forgot that about the cars.  I was assuming no delivery on the furniture, but point taken.

   Posted by Owen on July 17, 2008 at 2114 hrs




10. Holloway’s logic is quite faulty.  A smart shopper wouldn’t first go to Art’s Camera in Greenfield, then go out of the county, then return to Art’s on his or her way back home.

    A more-realistic example is somebody living at 35th and North (smack dab in the middle of Holloway’s district) deciding on whether to go to the Best Buy in Wauwatosa (far closer than Art’s) or the Best Buy in Brookfield.  With a moderately fuel-efficient vehicle, I figure that the tax savings on a $167 purchase would offset the cost of the additional gas burned.

    For the fans of public transit, it gets even better (or worse for Holloway and the teat-suckers in the Courthouse) - a $50 purchase is enough to justify the trip across 124th St.

    Posted by steveegg on July 17, 2008 at 2154 hrs