Earlier today, we got an interesting e-mail from the Pennsylvania Budget and Policy Center. The group, which favors increasing revenue instead of more cuts to the state budget, wants you to pay attention to something called the "Sales Tax Vendor Discount."
You'd likely be outraged if you were told the state had some 1,500 workers who simply stood around and watched computers do their work for them. In reality, that's how the sales tax "vendor discount" program - conceived back when receipts were tabulated by hand by men wearing green eyeshades and armbands - works out today.
Say what? Essentially, retailers are allowed to keep 1 percent of their sales tax bill if they file their taxes on time. The loophole, which cost Pennsylvania $74 million last year, dates back to when businesses had to pay large numbers of employees to do the calculations. However, those jobs have mostly been replaced with automated systems that track the total sales tax bill throughout the year. As the e-mail points out, no one else gets a tax break for filing on time. And, according to PBPC's research, the discount overwhelmingly favors larger corporations over small businesses because the discount is based on volume of sales.
It's an important issue, but we were especially intrigued by how PBPC decided to frame the debate. There has been a lot of talk about reform lately, especially downsizing the size and cost of the state legislature. However, as this e-mail reminds us, some of the most outrageous actions by state government are completely legal and don't easily fold into other reform proposals.
We think the important thing is that government reform should have a very broad meaning. It's easy to get outraged over the size of the legislature or the high salaries of lawmakers. However, it's also vital to remember that reform can go beyond changing how the legislature operates and other political changes. It should also mean updating out-of-date laws, including ones that serve the interest of big business over ordinary taxpayers.