Be it enacted by the Legislature of the State of Kansas:

Section 1.  No person shall be allowed to run for public office in the state of Kansas who
a.   cannot show that he or she has passed a high-school-level class in economics; or
b.   cannot pass the test shown in Section 2 below.

Section 2.  Test for Economic Proficiency

Q.1 In an effort to raise tax revenue, a legislature has doubled the sales tax on a certain product. What is the most likely outcome of this measure?
a.   Tax revenues from this item will more than double since people like luxury items, and increased price is seen as an indication of luxury.
b.   Tax revenues on this item will double.
c.   Tax revenues on this item will rise only slightly because many consumers will no longer buy the product.
d.   Tax revenues from this item will rise slightly. Businesses making and selling this product will see their sales drop because many consumers will no longer buy the item. There is a possibility that some employees from these businesses will be laid off, and the increased tax revenue will need to be spent on additional social services.

Q.2  The Franchise Tax, a tax imposed on businesses for the privilege of doing business (Choose as many as apply.)
a.   Provides additional revenue for social services.
b.   Discourages some small businesses, businesses which would have provided jobs to those now receiving social services, from even opening their doors in the first place.
c.   Is among the highest in the nation in Kansas.
d.   Can make the difference between whether a small and marginally successful business can continue to operate.

Q3.  Having a lot of people working for the government
a.   Is a good idea because there are more people working.
b.   Is a good idea because providing jobs is a legitimate function of government.
c.   Sucks wealth out of the economy because the only way to pay for more government employees is to raise taxes.

Q.4  True or false? The longer a person stays in Congress, the more government spending he or she votes for.

Q.5  A city government wants to hand tax money to a private developer to come into the community and build things.
a.   This is a good idea economically because it provides jobs.
b.   This is a good idea socially because it makes things prettier.
c.   There is no way to know whether this is a good economic idea because the money being handed to the developer is not creating additional wealth. Instead, the money was taken away from local citizens, and there is no way to determine what additional wealth would have been created in the community by the people who owned that money in the first place.

Q.6  If a small business employs 10 full-time minimum-wage workers, and the minimum wage is raised by 50 cents an hour, how much additional yearly expense will the small business incur?
a.   About $100
b.   About $1000
c.   About $10,000
d.   None, because the business owner will lay off several people.
e.   About $10,000, but that’s okay because the business can raise the price of its products to compensate, an increase that will likely be paid by consumers who are earning minimum wage.
f.   About $10,000, but that’s okay because the politicians can correctly claim they didn’t raise taxes.

~~~~~

If you’re a small business owner, you already know the correct answers to these questions. If you don’t know what the correct answers are, I suggest you go talk with a small-business owner and find out.

KsSmallBiz.com, January 7, 2007

Posted by Sharon under Libertarianism | 2 Comments »

Okay, it’s official. Some state legislators are saying, out loud, in actual words, that the government has an obligation to protect us from ourselves.

The subject is the payday loan industry, those handy little stores sitting on the corners of many cities, which will lend you money until your next paycheck. According to an NPR story, the interest rate for these short-term loans is the equivalent of over 300% per year. Very high indeed.

The story goes on to say that the State of Ohio is in the process of crafting legislation that would put a cap on the interest rate this industry can charge.

Not surprisingly, consumer advocacy groups back the legislation, and have brought forth borrowers who have got themselves into serious financial trouble to testify. The implication is that their trouble is caused by the payday loan industry.

Also not surprisingly, the lobbyist for the industry points out that bounced check fees, late fees on utilities, and disconnect fees are even higher. She claims that payday loans are a solution, not the problem, and that the legislation will put them out of business.

Okay, got it: there are two sides to this issue.

And here is where it gets really interesting. The proposed legislation goes on to create a statewide data base of borrowers. Each of them would be limited to four loans per year, with an upper limit on the amount of each loan.

One legislator was quoted as saying that if the payday loan companies left Ohio, other institutions with better deals for consumers might step in and fill the gap. In fact, the proposed legislation would provide incentives for charities and credit unions to provide short-term loans.

Jon Husted, Speaker of the House of the Ohio House of Representatives, said, “We make bad financial decisions…. So now the government has to step in and try to save us from ourselves. Literally.”

I have not read the legislation, but the article makes no mention of offering incentives to the payday loan industry to lower its rates. Instead, the lawmakers seem bent on driving one perfectly legal industry out of business, and then taking taxpayer money to subsidize a prettier and more sympathetic industry into filling the gap.

There is also no mention of encouraging the charities, consumer groups, and maybe even the credit unions to educate people who consistently make lousy financial decision so that maybe, one day, they will actually, legitimately, qualify for lower-rate loans.

Posted by Sharon under Libertarianism | No Comments »

It has been brought to my attention that the registration function for this blog has not been working properly.  People trying to register were asked, as usual, to identify squiggly numbers and letters, and no matter what they keyed in, they were wrong.

It’s my understanding that this feature can be added to software so that evil automatic-registration devices cannot get on here and say rude things to me.  You have to prove you’re a human being, and evil automatic-registration devices are not clever enough to read squiggles.

My technically-proficient friend who knows about this stuff and set this up for me has removed that particular requirement from the registration screen, and we seem to be good to go.

Now, I want you to know that I was (and am) majorly worried about rude machinery.  But I guess I’ll chance it for the privilege of hearing from you squiggle-reading humans.

So — men, women, and machines — welcome.  Again.

Just don’t say anything rude, okay?

Posted by Sharon under Uncategorized | 2 Comments »

The presidential candidates are talking about a Gas Tax Holiday.  After all, anything to help out the consumer, right?  Here’s another viewpoint.

~~~~~

At one time my little business, Senior Ease, was a store in Fairlawn Plaza. Barcodes were still fairly new, and we didn’t use them. I paid a rather large amount of money for a nifty cash register that could be programmed to do many things. It took some time, but I finally entered the name of each item we carried along with its item number and price. Then I told the machine what the sales tax rate for Topeka was, and we were all set to go.

When we rang up a purchase, the clerk entered the item numbers for the customer’s purchase, and the machine did the rest. It totaled the price of the items purchased, figured the tax and added that amount, and told the clerk how much change to return to the customer. It printed out a spiffy piece of paper telling the customers the name of the products purchased and giving all the financial data. It even printed my cute little thank-you message at the bottom of the receipt.

If I remember correctly, the tax rate changed once while I owned that store. I had to get out the programming manual to do it, but I changed the tax rate the evening before the new rate went into effect. It took me about 3 minutes.

That cash register worked very well for us, and is still working well for the business that bought it from me.

Every year there is talk in the Kansas legislature of proclaiming a Sales Tax Holiday. This sounds like such a good idea that it is almost irresistible to lawmakers. Who, after all, could be opposed to a day in which consumers would not be required to pay sales tax?

I could. I am.

In the September 12, 2006 issue of KsSmallBiz.com we published a thoughtful article by Jonathan Williams, tax policy fellow with the Flint Hills Center for Public Policy, in which he presented sound economic arguments against this burgeoning practice. It is not my purpose here to duplicate his efforts. Rather, I am concerned with the virtually insurmountable logistical problem such a day would present to small retailers.

Typically, these Sales Tax Holidays take place on one day or over a weekend toward the end of summer, and are intended to give relief to consumers shopping for school supplies. Items exempted from sales tax are usually clothing and supplies costing less than $100 each.

How to determine which items are exempt and which are not is a problem we won’t touch here. Suffice it to say that on one web site I visited, a web site touting and explaining the proposed sales tax holiday for another state, belts with buckles were tax exempt, but belt buckles were not. Baseball and football jerseys were tax exempt, but football pants were not.

It’s true that my little store didn’t carry anything that could remotely be considered school supplies, but we did carry clothing. If the Kansas legislature had declared a Sales Tax Holiday while my store was open, I would have had to reprogram my cash register before every purchase of clothing. If the customer had purchased, let’s say, both a dress and a walker tote, we would have been required to ring them up separately and reprogram the cash register between the two items. I don’t see a way around that, since the web sites I visited make it quite clear that it is a criminal offense for a retailer, on the Sales Tax Holiday, to charge tax on exempt items or fail to charge it on non-exempt items. Or maybe we could have purchased a second cash register for just that day.

I have written before that it ought to be possible to open a small business with nothing more than a product or service to sell, a pad of paper and a pencil, and a cash box. Foolhardy, perhaps, but possible. It is not acceptable for the legislature to enact laws that make it impossible to conduct business without investing in technology.

Interestingly, in this case, a merchant with nothing more than a cash box and a calculator would fare better than a retailer with a cash register like the one I had. For all I know, the more sophisticated systems in use by large stores can be programmed to handle an idiotic idea like Sales Tax Holidays. It’s the countless small Kansas retailers who would be tempted to not even open the front door that morning.

The politicians who advocate inflicting this dreadful idea on the small business community might be able to convince a few shoppers they have kissed a frog and are handing the consumers a handsome prince.

The businesses that are left floundering around in the pond scum see it very differently.

KsSmallBiz.com, October 2, 2008

Posted by Sharon under Libertarianism | No Comments »