Taxing The Other Guy
March 1st, 2008
A good friend of mine (a strident Democrat) wrote this morning with a touch of indignation after going to see Marcia Ball last night at the Railhead theatre. It turned out the $5 tickets said “LET Included” on them, and the internet receipt from his online purchase had the tickets priced at $4 with a $1 “facility fee.”
My friend thought that the way the showroom had structured it, they were escaping the LET, and doing so in such a manner that the entertainer would be shorted.
I disagreed that the venue was cheating on the LET. It is completely legit to include a tax in the total price to consumers. I did agree that the entertainer was getting less money because of the LET tax.
To me, this is a perfect illustration of how taxation works. With very few expections (and those exceptions are all short-term) tax hikes on “the other guy” or on “businesses” always end up coming out of the pocket of customers and employees.
In the case at hand, you have a long-time Las Vegas business model - find someone with talent, sign them to perform in your showroom for a low ticket price (usually supplemented by additional payment from the venue owner) in order to attract people who will generate profits when they purchase food and drink, and hope they hit the slot machines on their way in and/or out of the theatre. If all goes well, the performer gets paid well, the venue owner sees some profit, and the customers have a good time.
Update that business model to 2008 - and you have the performer working for $4 tickets instead of $5 tickets, and my friend John annoyed (enough to email me the morning after) that his full $5 is no longer supporting the performer. John is still paying the same, but he incurred the opportunity cost associated with scanning his ticket stubs and emailing me this morning.
Only 40-cents of his fifth buck (10% of $4) will fund state government. The other 60-cents goes for the venue to modify its ticketing software to accommodate the tax, and hire accountants, lawyers and clerks to deal with proving and paying the tax. Meanwhile, the venue-owner isn’t making any more or less money off the deal, because he had raised drink prices to my friend and his wife in order to pay for the increased liquor tax the Legislature passed at the same time they cranked up the LET.
You can’t tax the other guy. In the end, it’s only you.
March 1st, 2008 at 9:37 am
[…] Taxing The Other Guy […]
March 3rd, 2008 at 8:15 pm
Big government believers always are dumbfounded when they think they change one part of the economic equation and then think they can overrule the natural economic forces that are in play.
Whether it is raising taxes or an attempt to fix pricing, the economic equation will always adjust to counteract those events.
Raising taxes will result in a combination of
a) Reducing the value of product to the customer and/or
b) Increasing the cost of the product to the customer and/or
c) Eliminating that product from the market (business goes out-of-business) and/or
d) Encourages the development of an underground black market that bypasses the tax
Government attempts to fix pricing almost always
a) Rations an inferior version pf the product to a select group of customers
b) Encourages the development of an underground black market that bypasses the price fix
March 8th, 2008 at 1:04 am
And I love the $0.60 cent allotment to raise the $0.40 - brilliant. I smell Titus and her buddies on that one.
She’s right on one thing, voters here largely are at the bottom of the intelligence list anyway if they believe our schools are in any way “underfunded”
March 8th, 2008 at 5:23 am
Kenny Guinn claimed that his tax increases wouldn’t hurt the economy. What a lie. Tell that to the musicians who lost their jobs due to Dina Taxus 10% live entertainment tax. Tell that to all of the homeowners who got socked with extra property taxes, tell that to every Nevadan who pays the highest license plate fees in the US with the most unfair method of valueing a car I’ve ever heard of.
March 13th, 2008 at 8:02 pm
I continue to ask, “What happened to ALL THE MONEY rrealized by the .25 percent TAX HIKE enacted to GREATLY EXPAND LV Metro Police?
Was the money (and still continuing ) put in the General Fund and used for other purposes? The County Commissioners wanted that but wrote a letter saying the money would STRICTLY BE USED FOR POLICE. I’d bet a Dollar to a DONUT it went for RAISES rather than for EXPANSION! Just like the school money,,,RAISES WERE GIVEN and to heck with student needs! The USUAL Liberal way.