Vision 2025 Extension - Package Details

[cannon_fodder]

Regardless of my day job, I respectfully disagree.  

Sales Tax is already a point of delivery tax.  Take for instance a load of lumber or concrete ordered for a construction project.  The materials may be loaded from a yard in Broken Arrow however the tax is applied and remitted at the rate and point of delivery in say Glenpool... happens every day.

Glad you disagree, discussions without intelligent disagreements are really just rallies.

You are correct, intrastate transactions that involve a separate point of delivery will generally be taxed at the deliver point. All counties and cities are political subdivisions of the State of Oklahoma. The State can collect the tax and remit payment accordingly no matter where the sale "occurred."

However, Amazon's fulfillment center in Coffeyville (which is closing anyway) is NOT in the State of Oklahoma. Amazon does not have a sufficient physical presence in the State of Oklahoma to avail itself to the jurisdiction of the State of Oklahoma. As a matter of constitutional law, Oklahoma cannot collect taxes from Amazon unless the US Congress approves such taxation.  The law goes back to a 1992 case, Quill Corp. v. North Dakota, so there are arguments that the implications were simply unknown at the time and practicality would dictate a different outcome today; the other side of the argument is this ruling is a reason why e-commerce became a thriving business.

The argument goes way back to mail order catalogs, who were also generally exempt from sales tax without a physical presence in a state. So this isn't a new conversation, it goes back at least to the 1960s to a case called Bellas Hess, which was affirmed and heavily quoted in the above reference Quill decision (which is the current state of the law):

the Bellas Hess rule appears artificial at its edges: whether or not a State may compel a vendor to collect a sales or use tax may turn on the presence in the taxing State of a small sales force, plant, or office. This artificiality, however, is more than offset by the benefits of a clear rule. Such a rule firmly establishes the boundaries of legitimate state authority to impose a duty to collect sales and use taxes and reduces litigation concerning those taxes. This benefitis important, for as we have so frequently noted, our law in this area is something of a "quagmire" and the "application of constitutional principles to specific state statutes leaves much room for controversy and confusion and little in the way of precise guides to the States in the exercise of their indispensable power of taxation."

Moreover, a bright line rule in the area of sales and use taxes also encourages settled expectations and, in doing so, fosters investment by businesses and individuals. [n.9] Indeed, it is not unlikely that the mail order industry's dramatic growth over the last quarter century is due in part to the bright line exemption from state taxation created in Bellas Hess.

Quill Corp. v. North Dakota Internal citations omitted.

Basically, in order for Oklahoma to collect sales tax on Amazon et al. we need an act of Congress, probably a narrowly tailored act of Congress as it is sure to be challenged as a violation of due process (as it pertains to the act of Congress) and as a restraint on trade in violation of the commerce clause (as it pertains to individual state laws).

I do appreciate your proposed solution, a similar mechanism exists for collection of production tax revenue on beer - the distributor collects the tax and retains a percentage of the tax as a processing fee. However, as it applies to internet sales, I'm fairly confident we run into the exact same problem and then add a layer too it. Oklahoma can compel FedEx to comply with regulation, but it cannot compel Amazon to give the required information to FedEx, let alone remit payment to FedEx for the taxation portion. So we would still need an act of Congress, but we would likely have FedEx and Amazon lobbying against the effort (internet sales tax would very likely reduce the number of shipments FedEx delivers, and is not likely to be offset by percentage of sales tax remittance).

I'm not against a mechanism to collect sales tax on internet purchases. Taxes have made communities function for 3,000 years - its no different today. But the fix has to be comprehensive in nature and not burden start-ups too much. Given the Constitutional obsticles that there are 10,000 sales tax jurisdictions, a Federal solution appears to be the only way.

[Dspike]

Attempting to steer back on topic. What are the odds we actually vote on Vision extension in April? And if it delays to June or even November, how does that affect its chances at passing? Is there any chance low-water dams are dropped to make space for other items?

"A proposed overhaul to the way the Vision tax package is fundamentally structured may delay its appearance on the ballot, which has long been planned for April.

Councilors said last week they plan on Tuesday to make a full proposal — or at least introduce a plan for discussion — to address a gap in street funding that would occur under the current structure of Vision."

http://www.tulsaworld.com/homepagelatest/vision-overhaul-might-delay-april-vote/article_6aa57113-73da-5d00-b310-2dabc78a7666.html

[DTowner]

Glad you disagree, discussions without intelligent disagreements are really just rallies.

You are correct, intrastate transactions that involve a separate point of delivery will generally be taxed at the deliver point. All counties and cities are political subdivisions of the State of Oklahoma. The State can collect the tax and remit payment accordingly no matter where the sale "occurred."

However, Amazon's fulfillment center in Coffeyville (which is closing anyway) is NOT in the State of Oklahoma. Amazon does not have a sufficient physical presence in the State of Oklahoma to avail itself to the jurisdiction of the State of Oklahoma. As a matter of constitutional law, Oklahoma cannot collect taxes from Amazon unless the US Congress approves such taxation.  The law goes back to a 1992 case, Quill Corp. v. North Dakota, so there are arguments that the implications were simply unknown at the time and practicality would dictate a different outcome today; the other side of the argument is this ruling is a reason why e-commerce became a thriving business.

The argument goes way back to mail order catalogs, who were also generally exempt from sales tax without a physical presence in a state. So this isn't a new conversation, it goes back at least to the 1960s to a case called Bellas Hess, which was affirmed and heavily quoted in the above reference Quill decision (which is the current state of the law):
Quill Corp. v. North Dakota Internal citations omitted.

Basically, in order for Oklahoma to collect sales tax on Amazon et al. we need an act of Congress, probably a narrowly tailored act of Congress as it is sure to be challenged as a violation of due process (as it pertains to the act of Congress) and as a restraint on trade in violation of the commerce clause (as it pertains to individual state laws).

I do appreciate your proposed solution, a similar mechanism exists for collection of production tax revenue on beer - the distributor collects the tax and retains a percentage of the tax as a processing fee. However, as it applies to internet sales, I'm fairly confident we run into the exact same problem and then add a layer too it. Oklahoma can compel FedEx to comply with regulation, but it cannot compel Amazon to give the required information to FedEx, let alone remit payment to FedEx for the taxation portion. So we would still need an act of Congress, but we would likely have FedEx and Amazon lobbying against the effort (internet sales tax would very likely reduce the number of shipments FedEx delivers, and is not likely to be offset by percentage of sales tax remittance).

I'm not against a mechanism to collect sales tax on internet purchases. Taxes have made communities function for 3,000 years - its no different today. But the fix has to be comprehensive in nature and not burden start-ups too much. Given the Constitutional obsticles that there are 10,000 sales tax jurisdictions, a Federal solution appears to be the only way.

Technically, all sales taxes are charged to and paid by the purchaser.  Where the seller is located in or has a sufficient presence in the state, the state requires the seller to collect the sales tax from the purchaser and remit the tax to the state.  Where the seller is not located in or does not have sufficient presence in the state to be subject to the state law requiring the purchaser collect the tax, the purchaser is still liable for the tax.  It is called "use tax" and it is owed on every internet, telephone or mail order purchase you make in which the seller does not collect Oklahoma sales tax (for the reason stated above).  The problem is that the use tax is the most disobeyed tax law and the state has no reasonable way of enforcing it.  Nonetheless, if you aren't paying use taxes on those purchases you make, you are a tax scofflaw and are cheating Oklahoma and Tulsa out of tax revenue rightfully owed.

[Conan71]

Attempting to steer back on topic. What are the odds we actually vote on Vision extension in April? And if it delays to June or even November, how does that affect its chances at passing? Is there any chance low-water dams are dropped to make space for other items?

"A proposed overhaul to the way the Vision tax package is fundamentally structured may delay its appearance on the ballot, which has long been planned for April.

Councilors said last week they plan on Tuesday to make a full proposal — or at least introduce a plan for discussion — to address a gap in street funding that would occur under the current structure of Vision."

http://www.tulsaworld.com/homepagelatest/vision-overhaul-might-delay-april-vote/article_6aa57113-73da-5d00-b310-2dabc78a7666.html

Would I be correct in guessing that the haste behind getting a ballot together by April was to essentially have a seamless transition from the original V-2025 tax and this one so as not to have the appearance of a "tax increase"?

We've proven in the past we would tolerate a tax increase for improved amenities or street repairs so I don't understand why the words "tax increase" are viewed as such an anathema down at City Hall or the Capitol. 

Fiscal conservatism isn't just cutting or keeping taxes low.  It also means being a good and efficient steward of public resources.  If it costs more to maintain public resources or there are amenities which make a city a better place to live and more desirable for companies to stake more jobs there, that is a responsible stewardship.

[TulsaGoldenHurriCAN]

Attempting to steer back on topic. What are the odds we actually vote on Vision extension in April? And if it delays to June or even November, how does that affect its chances at passing? Is there any chance low-water dams are dropped to make space for other items?

I hope they do some "soul-searching" on this and come up with a proposal which could pass.

• * Either get significant matching funds from Riverspirit/Jenks/Bixby or trim it to just the Zink dam overhaul (which by itself should pass easily and would compliment the Gathering Place).
• * Reduce the Gilcrease amount
• * Remove the funding for the Air National Guard
• * Add some of the actual visionary projects which weren't from large already-established organizations or the counsel/mayor.
• * Some good projects to add: The Art Deco Museum, "Raw Space" at the Evans/brownfield site, maybe a reduced version of the Pearl project to mitigate flooding and enhance near downtown

[swake]

I hope they do some "soul-searching" on this and come up with a proposal which could pass.

• * Either get significant matching funds from Riverspirit/Jenks/Bixby or trim it to just the Zink dam overhaul (which by itself should pass easily and would compliment the Gathering Place).
• * Reduce the Gilcrease amount
• * Remove the funding for the Air National Guard
• * Add some of the actual visionary projects which weren't from large already-established organizations or the counsel/mayor.
• * Some good projects to add: The Art Deco Museum, "Raw Space" at the Evans/brownfield site, maybe a reduced version of the Pearl project to mitigate flooding and enhance near downtown

I believe the current amount for the south dam and related work is 50% of the total cost.

[Conan71]

Glad you disagree, discussions without intelligent disagreements are really just rallies.

Here's an interesting thing to digest:

We charge Tulsa sales tax when a customer sends their truck or contracted truck from Dallas (or NYC, or Denver, or San Francisco, etc.) to pick up their new boiler unless they have a valid Oklahoma tax exemption certificate.  When we arrange the shipping and the trucking company we contract with delivers the boiler to the customer in Dallas, they remit no sales tax to us.  We all get that, right?

If I sell a boiler to someone in Wichita and they send their truck or contracted truck to pick it up, they pay Tulsa sales tax.  If the boiler is shipped to them on a truck we contracted, we collect sales tax at whatever Wichita & the state of Kansas rates are and remit it to the state of Kansas.  We don't maintain an office in Kansas, yet we are required to file monthly sales tax reports to the state of Kansas.  We have a fair amount of customers in the southern part of Kansas but virtually every part they buy goes via UPS and unless they have a re-sale or manufacturer's exemption, we collect and remit the tax to the Kansas Treasurer.

I was asking our office manager how this came about and she said it was in place before she started here 20 years ago.  We've never maintained a Kansas office.  It makes me wonder if the Amazon warehouse had been in Nowata if the state of Kansas would have forced Amazon to report sales to them.

[Conan71]

I hope they do some "soul-searching" on this and come up with a proposal which could pass.

• * Either get significant matching funds from Riverspirit/Jenks/Bixby or trim it to just the Zink dam overhaul (which by itself should pass easily and would compliment the Gathering Place).
• * Reduce the Gilcrease amount
• * Remove the funding for the Air National Guard
• * Add some of the actual visionary projects which weren't from large already-established organizations or the counsel/mayor.
• * Some good projects to add: The Art Deco Museum, "Raw Space" at the Evans/brownfield site, maybe a reduced version of the Pearl project to mitigate flooding and enhance near downtown

They claimed at one of the town halls that the Air Guard base would get matching funds from the Feds for upgrades for the next generation fighter.  The F-16 is being phased out and I don't recall which one they said Tulsa would be trying to get.  Essentially, the line is if the city does not pony up its "fair share" the feds could shutter the base because it would be obsolete without the funding for upgrades.

[cannon_fodder]

Technically, all sales taxes are charged to and paid by the purchaser.  Where the seller is located in or has a sufficient presence in the state, the state requires the seller to collect the sales tax from the purchaser and remit the tax to the state. . .

Technically, I used the word "collect taxes" when referring to amazon. I even referenced FedEx "remitting payment" and discussed the manner in which to collect sales tax revenue on internet purchases. You'll note I never once said that any retailer would be required to "pay" any sales tax. My language was precise for the very reasons you pointed out.

Interesting side not to this side note (in an attempt to keep the topic on a tangent) - Oklahoma could adopt a Service Tax to augment the sales tax.  Lawn mowing, attorney services, cable TV, etc. etc. etc. - millions of taxable transactions. Now, I'm not advocating for this as I have barely begun to think of the consequences, but we always sit back and think of ways of getting more sales tax revenue and ignore other revenue streams.

[Conan71]

Technically, I used the word "collect taxes" when referring to amazon. I even referenced FedEx "remitting payment" and discussed the manner in which to collect sales tax revenue on internet purchases. You'll note I never once said that any retailer would be required to "pay" any sales tax. My language was precise for the very reasons you pointed out.

Interesting side not to this side note (in an attempt to keep the topic on a tangent) - Oklahoma could adopt a Service Tax to augment the sales tax.  Lawn mowing, attorney services, cable TV, etc. etc. etc. - millions of taxable transactions. Now, I'm not advocating for this as I have barely begun to think of the consequences, but we always sit back and think of ways of getting more sales tax revenue and ignore other revenue streams.

Actually, a service tax might make pretty good sense.  It would be much more stable as you can't get your grass mowed on-line, you can't get your lawn mower repaired on line, and you can't replace a sewer line on line.

If your toilet seal is leaking and you don't have plumbing know-how, it's not like you are going to continue to allow toilet effluent to leak all over the floor just because there's now a tax associated with having it fixed.  It's not a tax that would make out of state competition more attractive.

Great potential idea!

[Dspike]

(1) Gilcrease's amount is so high because TU is providing matching funds for almost all of the amount. Leveraging Vision funds via matching offers was a criterion in choosing projects.
(2) Passing a bill in 2016 should allow proponents to run on the "it's not a tax increase" platform because the tax does not expire until Dec. 31, 2016. So a June or November vote would not change that.
(3) However, April would have been the lowest turnout date. Like school board elections, tax votes are purposefully placed on dates with low turnout. That way the only motivated voters are those in favor of the projects. June will be higher turnout, especially if the Mayoral race is that date (i.e. if 3 or more people file to run for Mayor). And November, of course, will be the highest turnout.

If the Council or other Vision extension proponents were confident in their assessment of what is important to Tulsans, then they could put each major category on separate ballots in November when turnout will be high. Public safety; low-water dams; economic development projects; public transit.

Regardless, I personally am happy to see them take it slow and weigh projects against each other. I'm just still unclear how low-water dams end up being worth so much when you put them next to much cheaper projects like RawSpace, the transit hub, the uncovering of creeks proposal, Deco museum, etc. I guess the Mayor and Councilor Bynum are just really dedicated to "water in the river" because I don't hear anyone reassessing whether now is the right time for a $150-200M aesthetic project.

[DTowner]

Technically, I used the word "collect taxes" when referring to amazon. I even referenced FedEx "remitting payment" and discussed the manner in which to collect sales tax revenue on internet purchases. You'll note I never once said that any retailer would be required to "pay" any sales tax. My language was precise for the very reasons you pointed out.

Interesting side not to this side note (in an attempt to keep the topic on a tangent) - Oklahoma could adopt a Service Tax to augment the sales tax.  Lawn mowing, attorney services, cable TV, etc. etc. etc. - millions of taxable transactions. Now, I'm not advocating for this as I have barely begun to think of the consequences, but we always sit back and think of ways of getting more sales tax revenue and ignore other revenue streams.

Your leg work in describing the issue was very useful - I just added the clarifying point.  I find it annoying when people think of internet purchases as "tax free" when it really just means they are tax cheats who won't get caught but who nonetheless loudly complain about the poor quality of city streets and local government services.

[DTowner]

(1) Gilcrease's amount is so high because TU is providing matching funds for almost all of the amount. Leveraging Vision funds via matching offers was a criterion in choosing projects.
(2) Passing a bill in 2016 should allow proponents to run on the "it's not a tax increase" platform because the tax does not expire until Dec. 31, 2016. So a June or November vote would not change that.
(3) However, April would have been the lowest turnout date. Like school board elections, tax votes are purposefully placed on dates with low turnout. That way the only motivated voters are those in favor of the projects. June will be higher turnout, especially if the Mayoral race is that date (i.e. if 3 or more people file to run for Mayor). And November, of course, will be the highest turnout.

If the Council or other Vision extension proponents were confident in their assessment of what is important to Tulsans, then they could put each major category on separate ballots in November when turnout will be high. Public safety; low-water dams; economic development projects; public transit.

Regardless, I personally am happy to see them take it slow and weigh projects against each other. I'm just still unclear how low-water dams end up being worth so much when you put them next to much cheaper projects like RawSpace, the transit hub, the uncovering of creeks proposal, Deco museum, etc. I guess the Mayor and Councilor Bynum are just really dedicated to "water in the river" because I don't hear anyone reassessing whether now is the right time for a $150-200M aesthetic project.

Without getting into specifics of the projects, I would much rather see the overall package trimmed back so that the tax extension would only be for 8 years (10 years at the most).  A package this large locks us in for way too long and gives us no way to adapt to short-term and medium-term changes to development opportunities, the economy or the city.

[Bamboo World]

...I personally am happy to see them take it slow and weigh projects against each other. I'm just still unclear how low-water dams end up being worth so much when you put them next to much cheaper projects like RawSpace, the transit hub, the uncovering of creeks proposal, Deco museum, etc.

I think the election(s) should be delayed until after the issues are hashed out, and I don't think the Council and the public are capable of ironing out the wrinkles by Feb 4.

New low-water dams are a bad idea, in my opinion.  If new dams are combined with anything else on any ballot, I'll vote NO.

Without getting into specifics of the projects, I would much rather see the overall package trimmed back so that the tax extension would only be for 8 years (10 years at the most).  A package this large locks us in for way too long and gives us no way to adapt to short-term and medium-term changes to development opportunities, the economy or the city.

A term even shorter than eight years would be better.

[RecycleMichael]

What are the odds we actually vote on Vision extension in April? And if it delays to June or even November, how does that affect its chances at passing?

I hope April. I am ready. I have flipped a coin enough times to see a trend.