Tax hike no cause for hysterics

Get your fainting couches ready. Clovis’ taxes are going up Saturday.

July 1 marks the first day of a “one-eighth” hike — the first of three possible after the state phased out the “hold harmless” program that reimbursed municipalities when food and medicine were exempted from gross receipts taxes.

I’m not saying governments shouldn’t operate efficiently. I’m saying when we get into hysterics over a tax hike of a quarter per $200 spent, it’s tough to take us seriously when we have grievances over bigger things.

One man disagreed, and called me soon after the increase was approved.

“The city’s going to lose revenue, not gain it,” the caller said. “Everybody’s going to buy their groceries in Farwell because their tax is 7.75 percent (compared to 8.1875 for Clovis).”

Not really. I reminded him groceries weren’t taxed in New Mexico.

“Well, they’ll buy their clothes in Farwell.”

Not really, because reality. Farwell has great stores and better people, but a bigger city means more shopping options.

Let’s say I wanted a specific pair of shoes with a $100 retail price tag.

A half-dozen stores at Clovis’ mall might carry them. Maybe they’ll compete for my business, so I can pick the better price — or the less irritating staff if prices are equal.

What’s my expectation the discount store in Farwell would carry those shoes, or discount them without competition for 10 miles?

I’ll always remember the time my parents and I nearly ran out of gas in Garryowen, Montana, and the only gas station in a 50-mile radius charged an extra 25 cents per gallon of gas and an extra dollar per soda. Proximity drives prices.

Still, assume libertarian fairy dust eliminates real market conditions and the shoes are $100 before tax everywhere. They’re $108.19 in Clovis and $107.75 in Farwell. Why drive 20 miles and spend $1.40 in gas to save 44 cents?

We get short-sighted on wage increases too. “Wage increases do nothing because prices will rise by the same amount.”

Not really, because math. If Bob’s Sandwiches sells 100 sandwiches in an hour for $4 each and pays its eight employees $8 an hour, Bob has $400 in incoming sales and $64 in outgoing wages. If Bob wanted to double wages, he doesn’t have to make an extra $400 in sales to cover the extra $64 in wages.

There’s more to it than that, clearly, but wages are just one factor in a price point. Pretend I go grocery shopping and milk goes from $2.50 to $5 a gallon — but cereal, eggs, peanut butter and bread are still the same price. It’s fair to say my grocery bill went up, but not to say the dairy industry doubled it.

Still up in arms? At least be a smart shopper. A good fainting couch is $600 before tax, but it’s going to cost 75 cents more in Clovis than Farwell. Just double-check on delivery costs.

Kevin Wilson is managing editor for the Clovis office of The Eastern New Mexico News. Contact him at: [email protected]