Budget & Tax
Trent England | May 2, 2017
Why government should pay sales tax
Should sales taxes be paid by everyone? Most people probably think so. After all, if the answer is yes, the policy is pretty simple and transparent. If the answer is no, then politicians have a lot of power to pick winners and losers.
Unfortunately, generations of Oklahoma politicians have littered state law with sales tax exemptions (73 according to the Tax Commission). Many of these go to good people and sympathetic organizations doing important work. Some are harder to understand, like exemptions for cable television companies or “events relating to robotics.”
Government also exempts itself from sales taxes. This might seem harmless—after all, why make government pay taxes to itself? But this is perhaps the most perverse policy of all.
Steve Anderson, an OCPA fellow, has written about his work on the issue while he was budget director for the state of Kansas. He points out that applying sales taxes to government purchasing would help to “disincentivize government spending [and] level the playing field for Oklahoma businesses.”
When government pays no sales taxes, it distorts comparisons between the costs of private services-providers and government, as OCPA President Jonathan Small pointed out in a recent Journal Record column. It gives government an unfair advantage where it competes with private businesses or organizations.
In fact, the sales tax exemption works like a penalty for government contracting out services. Just like businesses often hire other businesses to provide things like office cleaning, security, or maintenance, government agencies can sometimes reduce costs or maintain greater flexibility by contracting for services. In Oklahoma, however, “purchases made by a contractor in fulfilling a State contract are taxable to the contractor.” This turns the sales tax exemption into a kind of penalty on those agencies that try to contract out for services.
David and Ann Brown Distinguished Fellow
Trent England is the David and Ann Brown Distinguished Fellow at the Oklahoma Council of Public Affairs, where he previously served as executive vice president. He is also the founder and executive director of Save Our States, which educates Americans about the importance of the Electoral College. England is a producer of the feature-length documentary “Safeguard: An Electoral College Story.” He has appeared three times on Fox & Friends and is a frequent guest on media programs from coast to coast. He is the author of Why We Must Defend the Electoral College and a contributor to The Heritage Guide to the Constitution and One Nation Under Arrest: How Crazy Laws, Rogue Prosecutors, and Activist Judges Threaten Your Liberty. His writing has also appeared in the Wall Street Journal, USA Today, Washington Times, Hillsdale College's Imprimis speech digest, and other publications. Trent formerly hosted morning drive-time radio in Oklahoma City and has filled for various radio hosts including Ben Shapiro. A former legal policy analyst at The Heritage Foundation, he holds a law degree from The George Mason University School of Law and a bachelor of arts in government from Claremont McKenna College.