A Roundup:Taxation Without Justice

Taxes Seldom Reflect Principles of Justice

Dean Stansel is a fiscal policy analyst at the Cato Institute, Washington, D.C.

Thanks to CCH Inc. (formerly Commerce Clearinghouse) for their assistance gathering data on city taxes.

How much justice is in our tax codes? Consider this sampling of some goods and services taxed in the United States today:

  • 2 percent on the lease or rental of linens and garments. (Alabama)
  • 5 percent on entertainment and information services provided by telephone. (New York State)
  • 41.3 percent on imported grapefruit juice. (U.S.)
  • 1 percent on the mortgage to finance a building, when the amount is less than $500,000; 1.125 percent when the amount is over $500,000—this in addition to similar taxes imposed by the state. (New York City)
  • 7 percent on admission fees to movies, plays, and other amusements. (Chicago)
  • 1 percent on urine-testing materials, syringes, insulin, needles for diabetics, and medical appliances for human use. (Illinois)
  • 3.75 percent on gross receipts earned by retailers licensed to sell Christmas trees. (Los Angeles)
  • 9.5 percent on imported pimentos. (U.S.)
  • $4 per employee per month, paid by companies employing 50 or more full-time people who earn over $900 per quarter. (Chicago)
  • 0.3 percent of taxable gross income generated by water-softening and -conditioning businesses. (Indiana)
  • 1 percent on semen used for artificial insemination of animals. (North Carolina)
  • 9 percent on drinks sold at soda fountains. (Chicago)
  • Up to 38 percent on imported soda-lime glasses. (U.S.)
  • 0.08 percent on oysters; 2.1 percent on food fish generally; 3.15 percent for pink and sockeye salmon; 5.25 percent on chinook, coho, and chum salmon. (Washington)
  • 151.2 percent on imported parts for inexpensive watches. (U.S.)
  • 38 cents per ton on asphalt manufactured for one’s own use. (Florida)
  • 50 percent on the cost of repairing a U.S.-registered ship in a foreign port. (U.S.)
  • $2 per gas pump for a company’s first 50 pumps, and up to $10 per pump when a company has more than 600 pumps. (North Carolina)
  • 36.3 percent on imported in-shell peanuts. (U.S.)
  • 15 cents per bale of cotton ginned. (Mississippi)
  • 25 percent on fees for mooring or docking a boat. (Chicago)
  • 0.5 percent of U.S. government sugar subsidies received by a sugar producer. (Hawaii)
  • 33 percent on imported wool-blend fabric. (U.S.)
  • 21 cents per gallon of gasoline. This is on top of state and federal gasoline taxes. (Cook County, Illinois)
  • 4.5 percent of gross receipts from the sale of any motor vehicle to a member of the U.S. Armed Forces who is on full-time active duty in the state but a permanent resident of another state. (Connecticut)
  • 41.9 percent on cheap imported brandy, selling for less than $2.38 per liter. (U.S.)
  • $2 per day per hotel room costing over $40 a day, added to a guest’s bill (on top of city and state sales taxes). (New York City)
  • 3 percent on the sale of food through coin-operated vending machines. (Alabama)
  • $25 per year plus $150 per amusement device (like a video game), paid by amusement businesses. (New York City)
  • 3.75 percent of gross income earned by individuals licensed to work as an auctioneer and conduct business at antiques shows. (Los Angeles)
  • $10 for each store which is part of a chain with fewer than ten stores, and $550 per store which is part of a chain with over 500 stores. (Louisiana)
  • 50 percent of gross income of urban mass transportation companies. (Wisconsin)
  • 4.5 percent of base rent, due from companies which pay more than $40,000 per year to lease office space in Manhattan below 96th Street. (New York City)

As the randomness of these examples suggests, taxes seldom reflect any principles of justice that people can understand. Rather, taxes are the consequence of intense lobbying to gain special privileges and push as many burdens as possible on other taxpayers. The less of this, the better!