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Our legislature will soon be in session again to find ways to finance highways and prisons, both of which we need to accommodate some of the economic development that we've already endured.
Already there is talk of a sales tax on services, which are the growing sector in the Colorado economy. As a self-employed free-lance writer, I'm in the service business. Naturally, I think the idea stinks.
For one thing, I don't see how the state can define a service. If I take some drapes to the dry-cleaner, or go consult a local attorney, that's clearly a service, and I suppose such transactions would be easy to identify and tax.
The same would hold true if I wrote a résumé or sales letter for someone in town. It's a service which would presumably be subject to the 3 percent state sales tax and the 3 percent local sales tax. So far, it makes sense.
I also write columns and sell them to the Post. But what I actually sell the Post is a limited license to publish material I have created. Is that a service? And if it is, does the transaction occur in Salida, with its 6 percent tax, or Denver, with 7.2 percent, or just in Colorado, with 3 percent?
This gets even trickier if I write an article for a
magazine in Florida or California. Will there be a tax on
this service
of licensing a publisher to disseminate
copyrighted material?
And what, then, of book royalties? I suppose I could feel flattered that our legislature considers it a service for someone to write adult westerns, but I'm curious as to how this would fit the definition of a service. Just what have I done, for whom? The presumed beneficiary is the book buyer, and he already pays a sales tax on the book.
But in all these cases, I've done exactly the same thing -- put one word after the other. Which is a taxable service and which isn't?
If all these activities are taxable services, then I'm
going to become an unpaid employee of the Colorado
Department of Revenue. It will be my job to collect taxes
for the state. Among my childhood what I will be when I
grow up
fantasies, tax collector
was never on
the list.
Just how do I go about collecting the service tax?
Magazine generally pay set fees for articles; it's not as
though I could send a statement that says $400 for the
article, plus $12 for the 3 percent Colorado tax on
services, net $412.
In practice, I'd just have to absorb that 3 percent.
Thus the service tax
would actually be an income
tax. As taxes go, it would be even more regressive and
unfair as the Social Security self-employment tax. You can
claim business expense deductions before the 14 percent
Social Security bite hits your jugular, but the service tax
would come right off the top, before any deductions.
Even worse than the money, perhaps, is the time. There would be all these reports to fill out every month, with fines, imprisonment and seized bank accounts looming if the forms were not returned in strict accordance with the Department of Revenue's sacred schedule.
I have not noticed that the state has offered to pay me for that time, and I have not mastered the art of doing two things at once. The time I spend with government paperwork is time I have to take away from two productive pursuits: 1) writing things, which already provides the state with some money from income taxes and sales taxes on my equipment and supply purchases, and 2) trying to raise children who won't grow up to need prisons or other forms of state support.
Here we have a governor and legislature dedicated to economic development. And we have a tax proposal that is going to make doing business in Colorado even more complex and expensive. Isn't this an interesting way to stimulate business activity here?
Now I realize that I'm just whining here as I plead my special interest. Every Colorado retailer already goes through most of the horrors that I've just described with the service tax.
Knowing our legislature, they'll probably pass the tax, and explain that it was done in the interest of fairness. If one sector of the economy suffers from the state tax system, then change the laws so that everybody suffers. That may be stupid and counterproductive, but it will be fair, right?
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