Two of last week’s headlines will impact southwest Alabama’s economy significantly, in myriad ways.
Those two major news events: Gov. Kay Ivey’s decision not to pony up $5 million to bring Amtrak passenger rail service back to Mobile, and a 5-4 United States Supreme Court decision paving the way for local and state governments to levy taxes on online purchases.
With one, we were told Alabama is taking a step from the national stage (even though the technology it uses dates back to the 19th century). With the other, we were told it is just fairness catching up with modern technology.
Ivey’s Amtrak announcement was not entirely unexpected. There may even have been some behind-the-scenes lobbying against the resumption of Amtrak service by the Alabama State Port Authority.
What was more surprising was how upset people got over her decision to deny funding.
It’s as if Mobile was on the verge of unveiling a new motto: “Come for the site of the Western Hemisphere’s first Mardi Gras celebration, but don’t stay too long because you might miss the 3 a.m. train to New Orleans’ Mardi Gras celebration.”
The reaction was curious, to say the least. Local politicians eagerly anticipated Ivey’s announcement because, for some reason, they figured Amtrak would be a massive boon for the local economy.
Would it have been that big? Were people going to line up downtown to buy tickets for limited-service rides to Louisiana with stops in Pascagoula, Biloxi, Gulfport and Bay St. Louis? As traffic zooms along Interstate 10, this hypothetical train ride that was supposed to be a big shot in the arm to Alabama’s Gulf Coast will slow to a safe 35 mph as you pass through the center of places such as Gautier, Ocean Springs and Pass Christian.
Is this really what Mobile needs in 2018, a mode of transit that people used before automobiles and airplanes? Is there even a demand for it?
It doesn’t take a mathematical genius to do the arithmetic. Passenger rail service might have brought in some tourism dollars. (Emphasis on “might.”) There is a probably an economic impact study somewhere that can make the case that government-subsidized transportation such as Amtrak has benefits.
Meanwhile, also last week, the Supreme Court found the honest and trustworthy leaders in local Alabama government have the authority to make your online purchases more expensive if they see fit. The court ruling did not receive as much attention as the Amtrak announcement, but state leaders have hailed the decision as a win for Alabama.
“[T]he Supreme Court’s ruling related to online sales taxes is a common-sense approach that modernizes existing limitations on the taxation of e-commerce sales and will facilitate collections in our global, technology-driven economy,” Ivey said in a statement you could almost hear her say in her slow, Southern drawl. “The change effected by the Court’s decision will promote parity between our state’s brick-and-mortar businesses and competing out-of-state sellers.”
But it is more complicated than that. According to the U.S. Census Bureau, there are nearly 40,000 municipalities in America. Most of them charge a sales tax. Now online retailers will have to devise a way for the proper collection of sales tax.
Never mind that, given Alabama’s antiquated state Constitution, sales taxes are higher here than most places in the country. Now that brick-and-mortar retailers do not have to compete with online retailers, there is less of an incentive to correct this flaw in our state’s governance.
Never mind that you, the consumer, are going to pay more in taxes. That’s money the government is going to be able to spread around for all the goodness the government creates.
And, of course, we have “parity.” Let’s be honest — if parity were a concern, why didn’t our elected leaders genuinely look for ways to decrease the sales tax burden, as a way to increase competition, before this opinion? If you give local governments the ability to levy a tax on a business in a faraway jurisdiction, what is the incentive to make it fair?
Want to buy some specialized piece of equipment for your business that none of the nearby brick-and-mortar retailers have in stock? You’ll be paying local sales tax because, “It is only fair.”
The campaign season features a lot of juggling political footballs — armed personnel in schools, long-due highway projects and apparently a desire to return to the first half of the 20th century to travel from point A to point B.
Nothing is going to impact your life more than how these politicians — many of whom are running this election cycle — will choose to use this new sales tax power. This is true, even if you do not make online purchases; the market forces attendant to levying sales taxes on online goods could still impact prices locally.
If suddenly demand goes up for “Product Y” at local stores because there is no incentive to buy it online to avoid taxes, then the price of “Product Y” will increase to meet that demand.
Be upset with Kay Ivey over her Amtrak decision if you must. But do not wait until after November to inquire about her goals for the new taxes on online sales. She will have less incentive not to raise taxes post-election.