The tax you don’t pay

Back in October, Paul and I drove through Casper, Wyoming on our way home from the Midwest. A billboard caught my eye: “Support the three percent lodging tax. It’s the tax you don’t pay,” it read. I sat there, stunned, realizing how emblematic of human stupidity that billboard was. Do people believe these things? They must, or politicians wouldn’t try it.

Everyone is certainly capable of understanding basic economics. Most people have to create or at least follow a household budget at some point in their lives. In fact, humans are incredibly good at basic reasoning, and we’re certainly able to take a long view. We design and organize enormous buildings and cities. We wage wars that span decades. We plan space missions. Forget those big things, though. We raise children and plan for their futures. We purchase houses with long-term mortgages. We plan for our own deaths and can even be terrorized into living a certain way based on our convictions about an afterlife. Our ability to think past the next five minutes, the next day, the next month, the next year, the next decade, even past our own deaths, is one of those things few other animals possess — and most of the other critters that do it, do it by instinct. We have the luxury of reasoning, of processing our thoughts.

But when it comes to, for example, a state budget or taxes, people play dumb.

People willfully ignore what they know to be true because it’s unpleasant and inconvenient. With one breath they’ll lament the sorry state of public education or demand a magical bullet train, and in the next, they’ll oppose new taxes to pay for those enhancements. California is particularly egregious compared to other places we’ve lived, but everyone everywhere suffers from this type of cognitive dissonance.

And that’s because being able to process a long-term view isn’t the same as actually being willing to do it. We are happy to plan when it’s for career or family, but when it comes to government taxation or budgets, we bury our heads in the sand. We really want someone else to solve the problem; we want someone else somewhere else to pay for our irresponsibility.

I’m sorry, Casper, Wyoming, but there’s no magical method of revenue generation that will spare your residents. Raising taxes on lodging (already disproportionately high in Wyoming) will reduce tourism (one of Wyoming’s very few industries, thanks to Yellowstone), which will have a ripple effect on other businesses, like hotel service, fast food, truck stops, and gas stations. Hits to those industries will create further ripples as affected people stop buying as many groceries, cars, homes, and luxuries and eventually leave for other cities and states with better work opportunities. The effect may not be immediate or enormous or direct like taxation, but nothing in economics happens in a vacuum, and since humans are well-equipped to understand that long-term view, we all know that you know better.

Next time, we’re driving through Colorado.

Share this article on...

There are no comments, yet.

Why don’t you be the first? Come on, you know you want to!

Leave a Comment