Surprise, Surprise, The City Is Running Out Of $$$

[tim huntzinger]

1/3 of folk may purchase online and 99.99% not report it, but if the law sez you are supposed to than you a tax cheat.  Doing the right thing means doing the right thing even when no one is watching.  Especially if you are doing so specifically to avoid paying City taxes.

[Wilbur]

quote:Originally posted by tim huntzinger

1/3 of folk may purchase online and 99.99% not report it, but if the law sez you are supposed to than you a tax cheat.  Doing the right thing means doing the right thing even when no one is watching.  Especially if you are doing so specifically to avoid paying City taxes.

Give that man a cigar!!  What a novel concept.  Doing the right thing simply because it is the right thing to do.  Everyone else keeps government employees employed.

[shadows]

The simple way to make the majority of the city employees happy as well as putting new life in the economy would be raise all city employees salaries and cap them at $100,000 dollars yearly.   With our asking budget of $550 million dollars we could spend the balance of 150 million dollars on budgeting it out for the necessities we cannot get along without.  Then we would be helping the suburbs out where 40% of the employees live and can spend their hundred thousand dollars buying from their neighborhood merchants.  In the meanwhile we take the strain off the heads of the trust of looking at ways to buy things we don't need.

[Conan71]

My, my.  Such self-righteous indignation.  So Wilbur and Tim, are you reporting every single tangible good you have bought while out of state, that you brought back home with you and now resides in your residence?  Did you file your use tax report by the 15th of the month when it was due?

According to the Oklahoma tax code, it's not just internet purchases.  Here is a summary of the law:

"Use Tax: The Oklahoma Use Tax is a 4.5 percent levy on the purchase price of tangible personal property, including pre-paid transportation, purchased outside Oklahoma and stored, used, or otherwise consumed within the state. Oklahoma sales tax cannot be imposed on a sale, which occurred in another state, but the Use Tax applies when the taxable item is brought into Oklahoma for use.

Municipalities and counties that levy a sales tax are also authorized to levy use tax in addition to the 4.5 percent state use tax on out-of-state purchases on which Oklahoma sales tax has not been paid. The municipal or county use tax may not exceed an existing local sales tax. Effective January 1, 1999, counties can enact a county use tax if they already have a county sales tax in effect.

Use Tax reports and remittance to the Oklahoma Tax Commission must be postmarked on or before the 15th of the month in which they are due. A report that is not timely filed will be assessed interest and penalty from the 15th of the month."

Here's all 212 pages of it:

http://www.tax.ok.gov/rules/rule6505.pdf

Are you guys properly filling out the forms and submitting them by the 15th of the month?  There is a good chance every Oklahoman could be a felon based on this law.

The way the law is written, not only does it apply to internet purchases, but even if you bring back nick-nacks from a vacation in Arizona, Branson, or where ever you are required to pay use tax.

If you paid a lower sales tax rate on that purchase, you are required to pay the difference in the tax rate it was purchased and what you would have paid if purchased in the city where the item now resides or is used.

[tim huntzinger]

(Derogatory commentary removed)

[Editor]

Civility, please.

[Wilbur]

So Wilbur and Tim, are you reporting every single tangible good you have bought while out of state...

I actually buy very little over the internet, and those few purchases I did make, the seller charged me the same amount of sales tax as if I purchased the item locally.  As to how that seller remits the tax to the state/local entity, I don't know.

And I think (I'm not positive, so go easy on me if I'm wrong), but use taxes are not applicable to nick nack items a person buys on vacation.  They are applicable to more tangible items.

[Conan71]

Tangible goods are pretty much anything you don't eat or drink while you are on the road, or personal services.  Tangible is basically anything you can hold in your hand.  Quite literally, you could be expected to remit tax on a T-shirt, that is a tangible item.

It doesn't seem to be well-defined by reading the tax code so that could leave it up to the interpretation of the OTC.

Here's the point, before this discussion took off into a left turn:

The vast majority of Oklahoma citizens who buy something from Bass Pro Shops in Springfield don't think twice about remitting the difference to the state and the state knows it's not going to happen either.

Neither does the average person who buys a stereo receiver off eBay.  

There are two reasons people shop online: convenience and to save money.  Anyone who says not having to pay sales tax on an item wasn't a consideration isn't being honest.  

Not trying to start a flame-out with you but I'm a bit skeptical of anyone collecting sales tax from you if you didn't live in the same state that item was sold in.  I can honestly say I've never seen it happen.

I bought a pool cleaner from a guy somewhere out in western Oklahoma off eBay last spring.  He's a commercial enterprise so he had to charge me sales tax which is all fine and good.  However, had he shipped that same item to Kansas, Texas or wherever, he's not required to collect it.

I find the use tax to be one of the more un-enforceable parts of our tax code.  With the massive explosion in e-commerce over the last ten years why are we writing tax laws which are difficult to comply with, impossible to enforce 100% compliance, and difficult for the average individual to understand the applicability to their own situation?

Instead of the income tax cut the legislature just passed, and instead of creating a bunch of new choice sales tax exemptions every year (I agree with exemption on purchasing for re-sale and to an extent for non-profits and materials for manufacturing), why put a reporting and accounting burden on people who might only have a total use tax liability of $50 or so a year?

Keep the income tax rate where it is or even raise it a 1/4 point and remit some of it back to the cities.  E-commerce is only going to continue to flourish and more and more revenue that used to find it's way into brick-and-mortar stores is going to go out of state and with that, sales tax revenue.  

Depending on over a million citizens to keep records and correctly report the money spent out of state is ludicrous.

[Chicken Little]

from Tulsa World:

quote: Official: City switching to business mode

"The revenue game is written against the city. Those rules were set back in 1971 and have never been changed," Himelfarb said.

"If you were running a business and you were sitting in 2007 and operating under bylaws that were written in 1971 and working against you, I think there would be discussion on whether you should be revisiting the rules," he said.

Himelfarb said a business in the city's financial situation would try to redirect what it is doing economically.

"What you probably would do if you were a business is sell out or merge with the people who make the rules of the game, which is the state or county, because then basically you're generating the revenue they live off anyway, so what's the point?" he said.

There ya have it from the Mayor's own private-sector guy.  If the City was a business, it would have sold out a long time ago.  The County and State "fix" the prices, so there's really no way to compete.  It wouldn't bother me a bit if the county and city merged...if that's what it takes for Tulsa to get out of this malaise and on track for a prosperous future.

Maybe that is actually what they are doing, piece by piece, with this Fire Department District proposal and now maybe this EMSA District, too.  Hey, if that's what it takes.

[MH2010]

I don't understand why the mayor doesn't propose a "Public Safety" tax that would go for police, fire and EMSA.  That way all three split a penny.  OKC did this and it worked well.

[Chicken Little]

quote:Originally posted by MH2010

I don't understand why the mayor doesn't propose a "Public Safety" tax that would go for police, fire and EMSA.  That way all three split a penny.  OKC did this and it worked well.

You should read over Martinson's report from page one of this thread.  The real problem with the city raising another penny is that, whether they need it or not, it will drive sales tax to 9.5%, which would be CRAZY high, like national laughing stock, high.  That's because, between the State and County, they have already drive sales tax up an additional 5.5%.

In a perfect world, the State, which is enjoying record revenues because of other taxes like oil and gas, would remit a penny back to the cities for public safety.  But instead, the legislators are slashing income tax...making the state even more dependent on sales tax in the end.  I think that, in the long run, actions like this by the State are setting us up for a future disastor.

I really like your idea though...it has a politically palpable name.  Dufus's on this board wouldn't respond to "save our cities"  but save our cops...that's another story.

[AVERAGE JOE]

quote:Originally posted by MH2010

I don't understand why the mayor doesn't propose a "Public Safety" tax that would go for police, fire and EMSA.  That way all three split a penny.  OKC did this and it worked well.

That could have some traction with the voters, but the problem is that the sales tax rate is stretched to its limit. I don't think the people would go for a 9.5 cent sales tax.

This is one of the reasons why you hear complaints about the county getting in the sales tax business (they currently collect slightly more than a penny in sales taxes). The County is allowed by state law to levy property taxes for general operating revenue, but the City isn't. All the City has available to them for general operating revenue is the sales tax and utilities. So the County is muscling in on the City's potential revenue stream instead of funding their operations through a little bump in property taxes.

If the practical limit on sales tax that the voters will tolerate is around 8.5 cents, the County collecting their penny erodes the ability of the City to fund its services through one of the only two means available. Unless the voters decide to support a sales tax over 9 cents, the City will be stuck with the same 3 cent share for several years to come.

Of course, the bigger issue is that the City is getting 3% of a stagnant or decreasing retail sales base due to all the retail growth in the burbs. For that reason, I'd be hesitant to try to continue funding such critical services as police, fire and ambulance on something as volatile and mobile as sales taxes.

Heck, the paper reported this weekend that the sales tax remittance for March was down across the region because of the ice storms. People couldn't leave their houses to go buy things, so the city has 5% less to spend on police, fire and ambulance service than anticipated. That's a flawed system.

[Chicken Little]

That's a nice way of saying it, AJ.  The sales tax is already at its "practical limit".

[inteller]

the city should annex all county land and merge the county and city governments.  That way there would be no more fighting over that penny that the county gets.  It would all go to Tulsa.  It would also turn the tables on BA, Bixby, et al who have been mooching off the county for things they don't want to provide on their outskirts.

Jacksonville Florida did this and it cut out the whole county vs city crap.

at the same time they should disband the Tulsa METRO chamber and create a TULSA Chamber.  That way Tulsa could look out for ITS interests and not the "metro area's" interest.

[AVERAGE JOE]

quote:Originally posted by inteller

the city should annex all county land and merge the county and city governments.  That way there would be no more fighting over that penny that the county gets.  It would all go to Tulsa.  It would also turn the tables on BA, Bixby, et al who have been mooching off the county for things they don't want to provide on their outskirts.

Jacksonville Florida did this and it cut out the whole county vs city crap.

at the same time they should disband the Tulsa METRO chamber and create a TULSA Chamber.  That way Tulsa could look out for ITS interests and not the "metro area's" interest.

These are solid ideas with considerable merit. Incidentally, the city recognized the inherent problem with the metro chamber. That's why they resurrected the city's Economic Development Commission, the one headed up by Don Himelfarb.