The Sales Tax and the Lower Income People of Broome County

By Dave Duncan

The Press & Sun-Bulletin recently printed two articles that inform the reader that the amount of dollars collected from the sales tax in Broome County declined sharply in the first quarter of 2014. This decline, if continued into the next three quarters, will lead to some major cut backs in services provided to the residents of the county.

The Sales Tax is an Attack on Lower Income Residents

What is not explained in these Press & Sun-Bulletin articles is the nature of the sales tax. The sales tax is a regressive tax in that it is collected on basic goods and services that all people need. When purchasing these basic goods and services lower income people spend a greater percentage of their income than wealthier people, which results in sales taxes taking a higher percentage of low income peoples’ earnings.

Income tax rates, however, are based on a graduated basis. The higher the income the higher the tax rate. Income taxes have a minimal level at which lower income people are exempt from any payment. Sales taxes, however, are regressive because everyone pays the same amount no matter the income level. A pair of socks, a meal at a fast food restaurant, a gallon of gasoline, all cost the lower income purchaser the same amount as it does the wealthier person. This is a punishment for being low income.Unsurprisingly, the Greater Binghamton Coalition, a group representing corporate interests and headed by Marc Newman, has advocated increasing sales taxes for years, while calling for slashing property taxes.

This regressive sales tax is the greatest source of income in the Broome County budget. Who Pays the Sales Tax—-Who Does Not?

In their short sightedness our county Executive Preston and the County Legislators based the 2014 Broome County budget on the amount of sales taxes collected during 2012 and 2013. Those years saw people of the area trying to rebuild their homes following the disastrous floods of 2011. In putting their homes back together residents spent vast sums on building materials. A sales tax was applied to the purchase of all these materials. So people already in a tough position because of the effects of the flood were also saddled with sales tax.

Planned Cuts in the County Budget—An All Out Attack on the Poor

Since lower income people pay a higher percentage of their income on sales taxes and these same people have run out of money to spend, cuts are coming to the County Budget. What services should be cut back? County Executive Preston and some legislators have decided to cut those services used mostly by the poor. Suggestions from our county “leadership” include cutting back on the hours that the Department of Social Services is open, downsizing Mental Health services and cutting back on the transportation budget.

Sales Tax Is Not Applied to Industrial Development Agency Projects.

Many big corporations in Broome County have been given hundreds of millions of dollars of public support to “create” jobs even though the Broome County sponsored Industrial Development Agency has never counted the jobs “created.” The BCIDA has been cited by NYS on numerous occasions for this failure. The State has also charged the BCIDA with improprieties with its Board of Directors, when they approved a project in which a board member had a financial stake. The BCIDA consistently ignores the State’s admonishment.

Among the numerous tax breaks given by the BCIDA is the elimination of the sales tax on all approved new projects. The Broome County Industrial Park is filled with businesses that paid no sales tax on the materials used to construct their facilities and on the machinery and other furnishings that were placed in them. ThePress & Sun-Bulletin built a $30+ million facility in Johnson City and paid no sales tax and neither do BCIDA sponsored projects today. The County Executive and a number of County Legislators sit on the BCIDA Board of Directors. They approve sales tax breaks for the wealthy but not for those flooded out.

We Don’t Need to Attack the Poor by Cutting Services

We cannot blame this tax shortfall on the “conservative” Republicans or the “liberal” Democrats – they all share the blame equally. Their hearts and votes belong to the corporations. To solve the problem a law should be passed that all IDA projects pay their fair share of sales taxes and property taxes. The massive amount of public funds and tax breaks given to corporations here in Broome County is the source of the greater share of our fiscal problems. Our County Executive and Legislators must put the blame where it belongs and change the system that attacks the many for the benefit of a wealthy few.

 

 

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