Taxing Coupons?

[Clove]

State Moves to Tax Coupons and Sale Prices

February 28, 2011 · 4 comments

I have a very distinct recollection of how Thursdays worked in my house when I was a kid. You see, Thursdays were sales flyers days. My mom would look them over, comparing them to her grocery list and a big, fat stack of coupons she had carefully cut out from the prior Sunday (as well as under cereal boxtops and soup labels). My mom was thrifty. Very thrifty. And she was quite good at it. She had to be… There were five of us in the family, one of which was six foot tall and consumed a disturbing amount of dairy and citrus products in a week.

We could get in and out of a couple of stores under or at budget, thanks to a fancy LED calculator as big as my head, mom’s list and that stack of coupons. Wilson’s, our local grocery, offered double coupons on certain days: even better!

It was a skill I carried with me to law school. Once I managed to buy an entire cart’s worth of groceries for about $20, prompting the woman behind me to say, admiringly, “Girl, your momma raised you right.”

Indeed she did.

Lucky for us, we grew up in North Carolina and not in Connecticut.

Connecticut residents may soon learn that there’s no so lunch as a free – or discounted – lunch under Gov. Dannel Patrick Malloy (D). Malloy has proposed a new sales tax which would apply to the original price of a good or service, rather than the discounted price; this means that coupons and sales breaks would not apply for purposes of calculating the sales tax. Malloy figures this strategy will help close the deficit (*insert eye rolls from moms everywhere right here*).

Here’s how it would work… That cute pair of shoes at Macy’s you’ve been eying, waiting for the price to drop? Well, even if your $100 Calvins drop to $25, you’d be taxed on the original $100. That “50 cent off” coupon for dish detergent? It might be good at the Superfresh for purposes of a lower price at the register but you’re still on the hook for tax on the full priced item.

Wondering how much of a dent this nickel and dime tax will put in the deficit? Clearly not enough to justify the administrative headache. Malloy hopes the tax will bring in about $92 million over two years: the current deficit is $3.5 billion. The impact on the coffers works out to about 1% a year.

Is it worth it?

Better yet, is it legal?

Right now, not so much on either count. But that’s not stopping the governor.

And the tax increases won’t end with coupons and sales discounts. An existing law that allows a sales tax exemption for auto trade-ins is also on the hit list. Additionally, Malloy intends to raise the sales tax to 6.25% and eliminate the existing exemption for clothes and shoes.

It’s an interesting tactic for a governor who has been a vocal critic of the way that other governors have hoped to get out of fiscal crisis. Just last month, for example, Gov. Malloy railed against NJ Governor Chris Christie (R), saying, “[h]opefully I take a slightly more intellectual approach to this discussion than Governor Christie has demonstrated.”

Really, governor? Taxing sales items and coupons is what you consider a more intellectual approach to the budget crisis. Apparently, the discussions that go on at Yale, UConn and Quinnipiac are much, much different than I thought.

(Quick editor’s note: Readers who went to Yale have been quick to point out that Malloy did not go to Yale but rather, Boston College. I didn’t mean to imply that he went to Yale, Quinnipiac or UConn – merely that those are colleges and universities in Connecticut.)

Quite frankly, rather than an intellectual approach, this reeks of the desperate grab for state dollars that we’re seeing across the board in the US these days. Federal tax cuts make taxpayers happy. But what often goes unnoticed is that the federal government continues to mandate state programs that the states have to pay for – and the feds have cut dollars to those programs. So let’s do the math -> fed mandates + reasonable (or unreasonable, depending on your perspective) cost of state services + less federal money available + less state tax revenue in a down economy = a big problem.

If you believe Gov. Malloy, there’s an intellectual approach and a not-so-intellectual approach to the problem.

Guess which one Connecticut has chosen? Well, they’re filling the budget holes by taxing coupons, so you tell me.

http://www.taxgirl.com/state-moves-to-tax-coupons-and-sale-prices/This seems like a waste of effort. It's going to piss everyone off without bringing substantial results.

[LMingrone]

Connecticut's budget is a complete clusterfuck. We used to be a State that put as much money into education as we could. Now, schools are closing. The housing market is screwed (as an example: my last house was valued around $600,000 in 2001, and sold for $269,000 last year). Unless you want to work in sales, the job market is gone.

This coupon thing is just plain stupid. My In-laws feed five kids by coupon cutting. I'm talking about a receipt that's ten feet long with a $0 total. They are coupon wizards. I'll take a picture of their store room next time I go over there. It looks like Costo in their basement. They are gonna be pissed.

[ClydeR]

Why shouldn't you tax whatever medium of exchange people use to make their purchases? If you paid for your stuff with chickens, like they do in certain parts of Nevada, you should still have to pay sales tax on the value of the chickens.

[AnticorRifling]

Why shouldn't you tax whatever medium of exchange people use to make their purchases? If you paid for your stuff with chickens, like they do in certain parts of Nevada, you should still have to pay sales tax on the value of the chickens.

Except if you pay with a chicken leg you should be taxed on the chicken leg not the whole chicken.

You're failing this thread Clyde.

[Suppa Hobbit Mage]

It's stupid. Taxes are already being paid on the value of the product sold to a consumer. He just wants to change the taxes to be on gross fee rather than net.

Instead of taxing consumers more, he should focus on balancing his budget not by increasing taxes, but by reducing spend and improving processes which result in reduced spend.

[Ardwen]

Let them collect the taxes in unused coupons, we all see those coupons for profucts noone wants, let the state use those coupons if they want the coupon tax.

[Keller]

It's not a barter, Clyde, because the coupons are not valuable.

There is definitely imputed income to the coupon user. They spent time researching the coupons, printing/cutting them, organizing them, and then ultimately shopping with them. At the end of the day, the coupon user put in X hours for $Y of value. But if we tax imputed income, where does it stop?

Do we tax people for mowing their own lawn instead of hiring a neighborhood kid? Do we tax people that hire their neighborhood kid to mow their lawn instead of a professional lawn service?

It is really a silly idea, in my opinion.

[crb]

Blue state ftw.

[Latrinsorm]

But if we tax imputed income, where does it stop?...Hitler?
Instead of taxing consumers more, he should focus on balancing his budget not by increasing taxes, but by reducing spend and improving processes which result in reduced spend.Governor Malloy is pursuing a broad-based budget balancing strategy. He is increasing taxes to a degree, reducing spending to a degree, negotiating with unions, etc. etc.

Nobody's going to be happy that they have to pay more or receive less, but everybody is going to have to if we're going to have a viable solution to budget imbalance.

[ClydeR]

It's not a barter, Clyde, because the coupons are not valuable.

I guess it depends on whether we're talking about a manufacturer coupon or a retailer coupon. If a customer uses a coupon from a manufacturer, like Kelloggs, then the amount received by the retailer is the full price of the merchandise, with part of the price coming from the customer and part from the manufacturer. If a customer uses a coupon from the retailer, then the retailer is just giving the customer a discount.

The article does not go into detail, but I bet the Connecticut plan is to tax the full purchase price, including manufacturer coupons but not retailer coupons, received by the retailer, like a lot of other states do. That way, you're treated the same no matter if you pay with cash, manufacturer coupons or Nevada chickens.

If they're going to tax retailer coupons, then that would be dumb.


There is definitely imputed income to the coupon user. They spent time researching the coupons, printing/cutting them, organizing them, and then ultimately shopping with them. At the end of the day, the coupon user put in X hours for $Y of value. But if we tax imputed income, where does it stop?

It's a sales tax, not an income tax.

[Tgo01]

Obviously the writer of this article is just trying to score political points, the nerve of mentioning that he is a Democrat.

[Parkbandit]

Obviously the writer of this article is just trying to score political points, the nerve of mentioning that he is a Democrat.

LULZ

[Clove]

The article does not go into detail...How much detail were you looking for, a copy of the bill?

Malloy has proposed a new sales tax which would apply to the original price of a good or service, rather than the discounted price; this means that coupons and sales breaks would not apply for purposes of calculating the sales tax. Malloy figures this strategy will help close the deficit (*insert eye rolls from moms everywhere right here*).

Here’s how it would work… That cute pair of shoes at Macy’s you’ve been eying, waiting for the price to drop? Well, even if your $100 Calvins drop to $25, you’d be taxed on the original $100. That “50 cent off” coupon for dish detergent? It might be good at the Superfresh for purposes of a lower price at the register but you’re still on the hook for tax on the full priced item.

[Clove]

Luckily this proposal died fast, but it's an example of some of the moronic ideas the government will entertain. Thank God for freedom of the press.

HARTFORD, Conn. (AP) _ The governor’s proposal to tax goods based on the price before a coupon is applied appears to be dead, according to Senate President Donald Williams Jr.

Williams told The Associated Press on Tuesday that the proposal “almost certainly” won’t be part of the tax package voted out of the General Assembly’s Finance Revenue and Bonding Committee. The panel faces an April 27 deadline.

“Folks recognize that it’s burdensome and it also hurts folks who are trying to save money in every way that they can,” said Williams, a Democrat from Brooklyn. He said a number of legislators received complaints about Gov. Dannel P. Malloy’s proposal from constituents who are devotees of coupons.

“There are a lot of folks, including middle-income folks, who are struggling with this economy, who rely on coupons to try and keep down their household expenses,” he said.

Malloy, a Democrat, has proposed about $1.5 billion in tax increases for the new fiscal year beginning July 1 to help cover a projected $3.5 billion deficit. He proposed rolling back a number of exemptions from the state sales tax, including the little-known exemption on coupons. The tax was expected to provide the state with $92 million in revenue over Malloy’s proposed two-year, $40 billion budget.

Benjamin Barnes, Malloy’s budget director, admitted he wasn’t a fan of the proposal but said the administration is forced to examine numerous tax exemptions currently on the books because of the state’s fiscal woes.

Malloy’s proposal applied to only non-food items. But avid couponers said they rely on the discounts to help pay for items such as cleaning supplies and clothing.

Williams said the tax package to be voted on by the Democratic-controlled finance committee will somehow make up the loss of the coupon tax revenue. Malloy has said that if state lawmakers don’t like his tax proposals, they should come up with alternatives to cover the difference. Williams said the committee leaders have been meeting with Barnes on possible changes to Malloy’s plan.

Besides the coupon tax, Williams said he expects a portion of the local property tax credit against the personal income tax, which Malloy’s budget scrapped, will be preserved. He said proposed taxes affecting the boating industry, gasoline and auto sales, as well as the overall sales tax rate, remain unresolved.

[Suppa Hobbit Mage]

...Hitler?Governor Malloy is pursuing a broad-based budget balancing strategy. He is increasing taxes to a degree, reducing spending to a degree, negotiating with unions, etc. etc.

Nobody's going to be happy that they have to pay more or receive less, but everybody is going to have to if we're going to have a viable solution to budget imbalance.

I've no doubt that people won't be happy paying more and receiving less, I cannot imagine where they would be. Maybe indifferent, but not happy.

Now, I'm not at all saying a "broad-based budget balancing strategy" is bad. I'm saying the coupon aspect of it is stupid. The economy is doing poorly, and you want to increase taxes on the people who are most likely to need coupons and discounts most (those who use them) and the thrifty? If taxes must be raised (and I fundamentally disagree with that) put higher taxes on "luxury" items like cigarettes, alcohol, things people may want but don't need.

Coupons are so broad a category I don't think you can distinguish between luxury and needed items easily, so I think it's a poor choice. Just this mans opinion though.

[LMingrone]

put higher taxes on "luxury" items like cigarettes, alcohol, things people may want but don't need.

Connecticut is actually lowering taxes on cigarettes. Keep the poor even poorerer. Y U so stupid Connecticut?

[Latrinsorm]

I've no doubt that people won't be happy paying more and receiving less, I cannot imagine where they would be. Maybe indifferent, but not happy.

Now, I'm not at all saying a "broad-based budget balancing strategy" is bad. I'm saying the coupon aspect of it is stupid. The economy is doing poorly, and you want to increase taxes on the people who are most likely to need coupons and discounts most (those who use them) and the thrifty? If taxes must be raised (and I fundamentally disagree with that) put higher taxes on "luxury" items like cigarettes, alcohol, things people may want but don't need.

Coupons are so broad a category I don't think you can distinguish between luxury and needed items easily, so I think it's a poor choice. Just this mans opinion though.What people need is exactly the point. If the government can't increase revenue, it must cut spending, and history has demonstrated very clearly that there must be government welfare or lots of people die. The people who are using coupons are not the least needy, but they are also not the most.

It's also worth pointing out that the cost to each coupon user is tiny. The (outlandish) example in the article of getting a $100 pair of shoes for $25 means the coupon user would have to pay $4.50 more. The (realistic) example in the article of a $0.50 coupon means the coupon user would pay 3 cents more. People aren't upset about the actual numbers, they're upset only about the principle. That's a really selfish position to take, and one that is becoming increasingly untenable in our economic climate.

[Bobmuhthol]

If the government can't increase revenue, it must cut spending

Actually, it must increase offer amounts at the Treasury auctions. Which it has.

[LMingrone]

Uhhh, if a company wants to promote themselves with coupons, let them pay the tax. Coupons are only marketing. I'd rather not pay for a company's marketing. (I only use coupons for cat food)

[Stanley Burrell]

Connecticut is actually lowering taxes on cigarettes. Keep the poor even poorerer. Y U so stupid Connecticut?

I have noticed a disturbing trend on the amount of lotto tickets being purchased by separate individuals. And they aren't 315 years old and/or minorities.

[ClydeR]

How much detail were you looking for, a copy of the bill?

Yes, that would be good.

[LMingrone]

I have noticed a disturbing trend on the amount of lotto tickets being purchased by separate individuals. And they aren't 315 years old and/or minorities.


I bought a lotto ticket for the first time in years this week. 4-2-3!!!!!!!!!!!!!!!!!!!

[Stanley Burrell]

:help:

[Tgo01]

It's also worth pointing out that the cost to each coupon user is tiny. The (outlandish) example in the article of getting a $100 pair of shoes for $25 means the coupon user would have to pay $4.50 more.

Why is that outlandish? You have never seen shoes for 75% off before?

[Latrinsorm]

None worth buying.

[AnticorRifling]

Did you check the men's section?

[Clove]

What people need is exactly the point. If the government can't increase revenue, it must cut spending, and history has demonstrated very clearly that there must be government welfare or lots of people die. The people who are using coupons are not the least needy, but they are also not the most.

It's also worth pointing out that the cost to each coupon user is tiny. The (outlandish) example in the article of getting a $100 pair of shoes for $25 means the coupon user would have to pay $4.50 more. The (realistic) example in the article of a $0.50 coupon means the coupon user would pay 3 cents more. People aren't upset about the actual numbers, they're upset only about the principle. That's a really selfish position to take, and one that is becoming increasingly untenable in our economic climate.Increasing the basic cost of living particularly to the lower and middle class while encouraging people to make more purchases in neighboring states (which isn't too inconveniencing in a state you can travel through in 3 hours or less) for the potential to impact 1% of your deficit annually may not be the most ineffective tax plan, but it's in the hall of fame.

[Parkbandit]

Did you check the men's section?

http://www.lowbird.com/data/images/2008/01/lol.gif

[Latrinsorm]

Did you check the men's section?There would be no shoes worth buying there, hello.
Increasing the basic cost of living particularly to the lower and middle class while encouraging people to make more purchases in neighboring states (which isn't too inconveniencing in a state you can travel through in 3 hours or less) for the potential to impact 1% of your deficit annually may not be the most ineffective tax plan, but it's in the hall of fame.You seem to have a dramatically inflated estimate of how much of a cost increase this proposal represents. I am sure people would try to avoid this taxation, as they do every other type. This is not a good reason against making a new tax.

[Parkbandit]

You seem to have a dramatically inflated estimate of how much of a cost increase this proposal represents. I am sure people would try to avoid this taxation, as they do every other type. This is not a good reason against making a new tax.

There isn't a good reason for making this new tax either... so let's lean to the side of less stupid.

[Jarvan]

There isn't a good reason for making this new tax either... so let's lean to the side of less stupid.


You Forget PB, Those evil rich coupon cutters should share their wealth! How dare they try to save money feeding and clothing their family. Don't they know the state has to do all those good deeds they do? Like.. err.. well.. It doesn't matter. Your Un-American if you don't want to pay more in taxes!

[Tgo01]

I think they should start taxing the value of food samples they give away at grocery stores. Imagine the dozens of dollars the state could raise in taxes!

[Hazado]

They should tax frivolous lawsuits. That would make some good money.

[Clove]

There would be no shoes worth buying there, hello.You seem to have a dramatically inflated estimate of how much of a cost increase this proposal represents. I am sure people would try to avoid this taxation, as they do every other type. This is not a good reason against making a new tax.No, I don't. 1) It impedes business in the state 2) It increases the cost of living, especially on the lower and middle classes 3) at best it would eliminate 1% of CT's deficit per year. It was a bad idea and it was killed in infancy because of it.

And frankly you underestimate the effect even small discounts can have on consumer behavior. Ask anyone who owns a store on the PA/DE or MA/NH border. Stop n Shop offers discount fuel via reward points that can be used on one fill-up once a week. The base savings is .05 a gallon and (in my circle) I've never heard of anyone wracking up more than a 20 or 30 cent discount in reward points. So 20 cents off to the gallon saves you a $3.60 on your 18 gallon fill-up once a week. Guess which gas station has a line around the block?

[Latrinsorm]

How dare they try to save money feeding and clothing their family.Food coupons were never part of the proposal. :)
No, I don't. 1) It impedes business in the state 2) It increases the cost of living, especially on the lower and middle classes 3) at best it would eliminate 1% of CT's deficit per year. It was a bad idea and it was killed in infancy because of it.Then I re-direct Governor Malloy's challenge to lawmakers to you. Recognizing that spending is also being cut, let us hear your tax proposal that:

1. Does not impede business.
2. Does not increase the cost of living.
3. Eliminates more than 1% of the deficit.
Guess which gas station has a line around the block?My guess is the one surrounded by people who are unfamiliar with the concept of opportunity cost.

[Clove]

Food coupons were never part of the proposal. :)Then I re-direct Governor Malloy's challenge to lawmakers to you. Recognizing that spending is also being cut, let us hear your tax proposal that:

1. Does not impede business.
2. Does not increase the cost of living.
3. Eliminates more than 1% of the deficit.My guess is the one surrounded by people who are unfamiliar with the concept of opportunity cost.
Latrin, you're not really proposing that this tax plan was the best possible way to raise taxes are you? I've pointed out the flaws in the proposal, the onus is not on me to come up with a better plan.

However, for starters they'll be eliminating a property tax exemption and I expect property taxes to go up. This will increase the cost of business but not impede consumer behavior on local businesses. The property tax increase will also have a greater effect on the wealthy than the poor; less property, less taxes.

Tax increases are necessary but there are smarter, more effective ways to go about it and stupid, even disasterously stupid ways to go about it.

[Clove]

My guess is the one surrounded by people who are unfamiliar with the concept of opportunity cost.To say that consumers aren't stupid doesn't change the fact that very small savings have significant effects on their behavior.

[Kembal]

To say that consumers aren't stupid doesn't change the fact that very small savings have significant effects on their behavior.

I'd have to go with Clove on this. This isn't a good tax to use, and broad sales taxes are inherently regressive.

[Gan]

Did you check the men's section?

BAZINGA!

[~Rocktar~]

What people need is exactly the point. If the government can't increase revenue, it must cut spending, and history has demonstrated very clearly that there must be government welfare or lots of people die.

And when would that be? Is there a point in which a large number of people suddenly died because welfare for them was ended? I am pretty sure that the answer is no and I am also pretty sure you and others of your ilk are making the ASSumption that without welfare all those on it would die. if it never existed, I can effectively argue that those people either would not exist, or would have found other means to support themselves.