The tax of least resistance, Part II

Now the House is batting about a 7% state sales tax, according to the Globe.

In my last entry, I stated that the sales tax is a tax of least resistance. Here is a more in depth reason why it is, and why I prefer it over all other taxes.

You can avoid paying gas taxes by taking public transportation. Having ridden the T for over 25 years, I can tell you that taking the T can be pretty convenient. If you work in Downtown Boston, the trip from Hyde Park to South Station is about 14 minutes. The travel time via car is 35 minutes. If I-95 had been built through Hyde Park, the trip to Downtown Boston would take about 7 minutes total - a 50% reduction in time.

I commute to Watertown, which from Hyde Park is a 15 mile journey. I now have to factor in a commuter rail ride, a Red Line ride, and a trackless trolley ride. The best time I have commuted from Hyde Park to Watertown is 42 minutes. With MBTA delays, crowded buses, traffic and the like, my commute ranges from 1 hour to 1-1/2 hours, all for that 15 miles.

By car, the distance is about 10 miles, and the travel time is about 25-30 minutes. On a 20 mile per gallon gas tank and gas at $2.00 per gallon, my one-way cost is $1.00. If the gas tax is hiked 20 cents, my cost goes up to $1.10. If I paid everything with cash - no CharlieCard discount - my cost would be $7.75 one way, based on a $4.25 commuter rail fare, $2.00 subway fare, and a $1.50 bus ride. So to avoid a 19-25 cent per gallon gas tax, instead of paying $2-2.20 a day, I would now be forking over at least $10 a day just to make that 15 mile journey, up to $15.50.

The per-day costs do go down considerably if you do buy a monthly pass. For example, a $59 LinkPass would cost you $2.95 for each of the 20 days you use it, or $2 a day if you use it all 30 days - a savings of $3 a day. A $135 Zone 1 pass would cost $6.75 a day per 20 days or $4.50 for 30 days. For the most expensive pass - Zone 8 at $250 - 20 days would be $12.50 a day and 30 days would be $8.33 a day.

The basic point is this: for all that effort to "get cars off the road" due to a hike in the gas tax, people will now pay much more to ride the T to avoid the gas tax if they pay cash and don't have a monthly pass. That means people who can't afford a monthly pass - read: the poor - will end up paying more to ride the T - sending them to their cars for a cheaper, quicker ride. For all that effort to get cars off the road due to a higher gas tax, more people will avoid taking the T because it is prohibitively expensive because they can't afford the passes, and end up driving anyway. Pretty much a zero sum game.

The sales tax, however, cannot be avoided. Everyone - rich, poor, middle class - cannot wriggle out of paying a sales tax at the cash register, and only under certain circumstances, such as food and clothing. A person paying $200 for an iPod pays $10 in sales tax now. If the 7% sales tax goes through, they will now pay $14 in tax - an extra $4 or 40%. If you buy a laptop for $1,000, you would pay $50 now, but $70 if the tax passes. You can still head to New Hampshire and buy your goodies tax-free, but if you're planning to eat at the food court, New Hampshire has an 8% "prepared meals" tax, which carries a 60% premium over our current meals tax of 5%.

A higher sales tax also takes money from people who pay very little in income taxes - either those who don't earn enough and get tax credits, or those who participate in dubious activities and have their monies set up to avoid a huge tax bite - like offshore bank accounts, money paid "under the table" and the like. If you can buy a $60,000 Corvette on your gains - illicit or not - you can fork over $4,200 in sales tax to the state. If you can buy a $3 million home in a gated community, there's no reason to shell out $21,000 to the Commonwealth.

There are a lot of people who think they are entitled to everything without paying a single penny, or that the state can vacuum all the money out of our pockets through nuisance taxes. If the state is absolutely serious about getting money into our coffers to remain solvent and to avoid cuts in service, it has to take that risk of angering the public. The public must participate one way or another - either by begrudgingly paying more in sales tax, or flipping the switch for the opponent of those who voted for the sales tax, gas tax, or any type of tax.

The passive-aggressive approach hasn't and won't work.