You could make a good argument that this is the worst possible time to call for cutting the sales tax in Nassau County.
State officials are currently scurrying to develop a plan to minimize the cost to state taxpayers of the GOP tax plan, which limits federal deductions for state and local taxes to $10,000.
Nassau’s fiscal control board has imposed $18 million in spending cuts on all departments in the 2018 budget after county officials failed to impose the cuts themselves.
And the new county executive, Laura Curran, is seeking to develop a fix to a county assessment system that is inaccurate, unfair and costly to taxpayers and Nassau.
But we’re going to make the case for a cut in Nassau County’s sales tax anyway. And even argue that these circumstances make this a good time to make the call.
Let’s start with the rate. The combined sales tax rate for Nassau County is 8.625 percent, of which 4 percent goes to the state and 4.25 percent goes to Nassau County, with many cities and local governments adding up to 0.375 percent more.
The 8.625 percent rate is higher than 79 percent of the counties in New York State and 82 percent of counties nationwide.
This allowed Nassau to collect nearly $1.130 billion in revenue in 2016, the largest source of revenue to the county.
But the sales tax has two problems – it is unfair and it is unpredictable.
The county has faced several shortfalls since 2010 because sales tax revenue has fallen below county projections due to the internet and downturns in the economy.
More problematic is the unfairness of the sales tax.
The sales tax is unfair to consumers because it is regressive and falls most heavily on lower income people.
It is also unfair to brick-and-mortar stores, which face an uneven playing field with online businesses. The brick-and-mortar stores have to collect sales taxes on all consumers, but many of their internet competitors don’t.
This makes buying at a local store — which is paying local property taxes, hiring local people and often supporting community events — more expensive than buying on internet sites based outside New York. This is known as a big competitive disadvantage.
You often hear about how the internet is putting brick-and-mortar stores out of business. This can be seen in the many empty storefronts across local shopping districts.
True, part of that may be service, part may be convenience, but lower prices are certainly another reason.
To be fair, sales tax is already collected on internet sales when a third-party seller is located in New York. And in 2008 New York passed the so-called Amazon tax that levies sales taxes on items sold through the Washington state-based retailer as well as other major online retailers.
But the sales tax hasn’t applied to items sold on other sites, including Amazon’s “marketplace,” which is described as a platform or conduit for thousands of other online retailers, many of which are mom-and-pop stores.
Last year, the state Legislature rejected a plan by Gov. Andrew Cuomo to require online marketplace providers that process a minimum of $100 million in sales a year from New York buyers to collect sales tax on behalf of third parties from outside New York.
The decision, made as part of budget deliberations, was hailed by online shoppers and blasted by New York retailers who accused the Legislature of caving in to out-of-state dot-coms worth billions of dollars.
Republican state legislators led the charge against the proposal, arguing that it would add to residents’ tax burden.
Fair enough. But why not then extend the benefits enjoyed by out-of-state dot-coms to New York State retailers by cutting the sales tax here.
If they won’t, Nassau County should – at least on the portion of the sales tax controlled by the county.
In Nassau County, a variety of industrial development agencies, including one operated by the county, give businesses — often larger and politically connected — millions of dollars in tax breaks to relocate or expand in Nassau County with highly questionable results.
Why not help Nassau’s small businesses by helping create a more even playing field with internet sites? It is worth noting that this would also help Nassau businesses compete with those in New York City, which don’t have to deal with Nassau’s high property taxes.
Yes, the county would have to come up with a very large alternative source of revenue to replace the sales tax.
But consider the benefits to local businesses and shopping districts.
Elected officials are always saying local businesses are the backbone of our communities and the No. 1 source of new jobs. But the tax breaks always seem to go to the big guys.
Here’s a great way for our officials to prove they actually believe what they are saying about small businesses.
