Showing posts with label Merchant. Show all posts
Showing posts with label Merchant. Show all posts

Tuesday, December 31, 2013

Federalist Papers No. 36. The Same Subject Continued (Concerning the General Power of Taxation)

From the New York Packet. Tuesday, January 8, 1788.

To the People of the State of New York:
WE HAVE seen that the result of the observations, to which the foregoing number has been principally devoted, is, that from the natural operation of the different interests and views of the various classes of the community, whether the representation of the people be more or less numerous, it will consist almost entirely of proprietors of land, of merchants, and of members of the learned professions, who will truly represent all those different interests and views. If it should be objected that we have seen other descriptions of men in the local legislatures, I answer that it is admitted there are exceptions to the rule, but not in sufficient number to influence the general complexion or character of the government. There are strong minds in every walk of life that will rise superior to the disadvantages of situation, and will command the tribute due to their merit, not only from the classes to which they particularly belong, but from the society in general. The door ought to be equally open to all; and I trust, for the credit of human nature, that we shall see examples of such vigorous plants flourishing in the soil of federal as well as of State legislation; but occasional instances of this sort will not render the reasoning founded upon the general course of things, less conclusive.
The subject might be placed in several other lights that would all lead to the same result; and in particular it might be asked, What greater affinity or relation of interest can be conceived between the carpenter and blacksmith, and the linen manufacturer or stocking weaver, than between the merchant and either of them? It is notorious that there are often as great rivalships between different branches of the mechanic or manufacturing arts as there are between any of the departments of labor and industry; so that, unless the representative body were to be far more numerous than would be consistent with any idea of regularity or wisdom in its deliberations, it is impossible that what seems to be the spirit of the objection we have been considering should ever be realized in practice. But I forbear to dwell any longer on a matter which has hitherto worn too loose a garb to admit even of an accurate inspection of its real shape or tendency.
There is another objection of a somewhat more precise nature that claims our attention. It has been asserted that a power of internal taxation in the national legislature could never be exercised with advantage, as well from the want of a sufficient knowledge of local circumstances, as from an interference between the revenue laws of the Union and of the particular States. The supposition of a want of proper knowledge seems to be entirely destitute of foundation. If any question is depending in a State legislature respecting one of the counties, which demands a knowledge of local details, how is it acquired? No doubt from the information of the members of the county. Cannot the like knowledge be obtained in the national legislature from the representatives of each State? And is it not to be presumed that the men who will generally be sent there will be possessed of the necessary degree of intelligence to be able to communicate that information? Is the knowledge of local circumstances, as applied to taxation, a minute topographical acquaintance with all the mountains, rivers, streams, highways, and bypaths in each State; or is it a general acquaintance with its situation and resources, with the state of its agriculture, commerce, manufactures, with the nature of its products and consumptions, with the different degrees and kinds of its wealth, property, and industry?
Nations in general, even under governments of the more popular kind, usually commit the administration of their finances to single men or to boards composed of a few individuals, who digest and prepare, in the first instance, the plans of taxation, which are afterwards passed into laws by the authority of the sovereign or legislature.
Inquisitive and enlightened statesmen are deemed everywhere best qualified to make a judicious selection of the objects proper for revenue; which is a clear indication, as far as the sense of mankind can have weight in the question, of the species of knowledge of local circumstances requisite to the purposes of taxation.
The taxes intended to be comprised under the general denomination of internal taxes may be subdivided into those of the DIRECT and those of the INDIRECT kind. Though the objection be made to both, yet the reasoning upon it seems to be confined to the former branch. And indeed, as to the latter, by which must be understood duties and excises on articles of consumption, one is at a loss to conceive what can be the nature of the difficulties apprehended. The knowledge relating to them must evidently be of a kind that will either be suggested by the nature of the article itself, or can easily be procured from any well-informed man, especially of the mercantile class. The circumstances that may distinguish its situation in one State from its situation in another must be few, simple, and easy to be comprehended. The principal thing to be attended to, would be to avoid those articles which had been previously appropriated to the use of a particular State; and there could be no difficulty in ascertaining the revenue system of each. This could always be known from the respective codes of laws, as well as from the information of the members from the several States.
The objection, when applied to real property or to houses and lands, appears to have, at first sight, more foundation, but even in this view it will not bear a close examination. Land taxes are commonly laid in one of two modes, either by ACTUAL valuations, permanent or periodical, or by OCCASIONAL assessments, at the discretion, or according to the best judgment, of certain officers whose duty it is to make them. In either case, the EXECUTION of the business, which alone requires the knowledge of local details, must be devolved upon discreet persons in the character of commissioners or assessors, elected by the people or appointed by the government for the purpose. All that the law can do must be to name the persons or to prescribe the manner of their election or appointment, to fix their numbers and qualifications and to draw the general outlines of their powers and duties. And what is there in all this that cannot as well be performed by the national legislature as by a State legislature? The attention of either can only reach to general principles; local details, as already observed, must be referred to those who are to execute the plan.
But there is a simple point of view in which this matter may be placed that must be altogether satisfactory. The national legislature can make use of the SYSTEM OF EACH STATE WITHIN THAT STATE. The method of laying and collecting this species of taxes in each State can, in all its parts, be adopted and employed by the federal government.
Let it be recollected that the proportion of these taxes is not to be left to the discretion of the national legislature, but is to be determined by the numbers of each State, as described in the second section of the first article. An actual census or enumeration of the people must furnish the rule, a circumstance which effectually shuts the door to partiality or oppression. The abuse of this power of taxation seems to have been provided against with guarded circumspection. In addition to the precaution just mentioned, there is a provision that "all duties, imposts, and excises shall be UNIFORM throughout the United States."
It has been very properly observed by different speakers and writers on the side of the Constitution, that if the exercise of the power of internal taxation by the Union should be discovered on experiment to be really inconvenient, the federal government may then forbear the use of it, and have recourse to requisitions in its stead. By way of answer to this, it has been triumphantly asked, Why not in the first instance omit that ambiguous power, and rely upon the latter resource? Two solid answers may be given. The first is, that the exercise of that power, if convenient, will be preferable, because it will be more effectual; and it is impossible to prove in theory, or otherwise than by the experiment, that it cannot be advantageously exercised. The contrary, indeed, appears most probable. The second answer is, that the existence of such a power in the Constitution will have a strong influence in giving efficacy to requisitions. When the States know that the Union can apply itself without their agency, it will be a powerful motive for exertion on their part.
As to the interference of the revenue laws of the Union, and of its members, we have already seen that there can be no clashing or repugnancy of authority. The laws cannot, therefore, in a legal sense, interfere with each other; and it is far from impossible to avoid an interference even in the policy of their different systems. An effectual expedient for this purpose will be, mutually, to abstain from those objects which either side may have first had recourse to. As neither can CONTROL the other, each will have an obvious and sensible interest in this reciprocal forbearance. And where there is an IMMEDIATE common interest, we may safely count upon its operation. When the particular debts of the States are done away, and their expenses come to be limited within their natural compass, the possibility almost of interference will vanish. A small land tax will answer the purpose of the States, and will be their most simple and most fit resource.
Many spectres have been raised out of this power of internal taxation, to excite the apprehensions of the people: double sets of revenue officers, a duplication of their burdens by double taxations, and the frightful forms of odious and oppressive poll-taxes, have been played off with all the ingenious dexterity of political legerdemain.
As to the first point, there are two cases in which there can be no room for double sets of officers: one, where the right of imposing the tax is exclusively vested in the Union, which applies to the duties on imports; the other, where the object has not fallen under any State regulation or provision, which may be applicable to a variety of objects. In other cases, the probability is that the United States will either wholly abstain from the objects preoccupied for local purposes, or will make use of the State officers and State regulations for collecting the additional imposition. This will best answer the views of revenue, because it will save expense in the collection, and will best avoid any occasion of disgust to the State governments and to the people. At all events, here is a practicable expedient for avoiding such an inconvenience; and nothing more can be required than to show that evils predicted to not necessarily result from the plan.
As to any argument derived from a supposed system of influence, it is a sufficient answer to say that it ought not to be presumed; but the supposition is susceptible of a more precise answer. If such a spirit should infest the councils of the Union, the most certain road to the accomplishment of its aim would be to employ the State officers as much as possible, and to attach them to the Union by an accumulation of their emoluments. This would serve to turn the tide of State influence into the channels of the national government, instead of making federal influence flow in an opposite and adverse current. But all suppositions of this kind are invidious, and ought to be banished from the consideration of the great question before the people. They can answer no other end than to cast a mist over the truth.
As to the suggestion of double taxation, the answer is plain. The wants of the Union are to be supplied in one way or another; if to be done by the authority of the federal government, it will not be to be done by that of the State government. The quantity of taxes to be paid by the community must be the same in either case; with this advantage, if the provision is to be made by the Union that the capital resource of commercial imposts, which is the most convenient branch of revenue, can be prudently improved to a much greater extent under federal than under State regulation, and of course will render it less necessary to recur to more inconvenient methods; and with this further advantage, that as far as there may be any real difficulty in the exercise of the power of internal taxation, it will impose a disposition to greater care in the choice and arrangement of the means; and must naturally tend to make it a fixed point of policy in the national administration to go as far as may be practicable in making the luxury of the rich tributary to the public treasury, in order to diminish the necessity of those impositions which might create dissatisfaction in the poorer and most numerous classes of the society. Happy it is when the interest which the government has in the preservation of its own power, coincides with a proper distribution of the public burdens, and tends to guard the least wealthy part of the community from oppression!
As to poll taxes, I, without scruple, confess my disapprobation of them; and though they have prevailed from an early period in those States(1) which have uniformly been the most tenacious of their rights, I should lament to see them introduced into practice under the national government. But does it follow because there is a power to lay them that they will actually be laid? Every State in the Union has power to impose taxes of this kind; and yet in several of them they are unknown in practice. Are the State governments to be stigmatized as tyrannies, because they possess this power? If they are not, with what propriety can the like power justify such a charge against the national government, or even be urged as an obstacle to its adoption? As little friendly as I am to the species of imposition, I still feel a thorough conviction that the power of having recourse to it ought to exist in the federal government. There are certain emergencies of nations, in which expedients, that in the ordinary state of things ought to be forborne, become essential to the public weal. And the government, from the possibility of such emergencies, ought ever to have the option of making use of them. The real scarcity of objects in this country, which may be considered as productive sources of revenue, is a reason peculiar to itself, for not abridging the discretion of the national councils in this respect. There may exist certain critical and tempestuous conjunctures of the State, in which a poll tax may become an inestimable resource. And as I know nothing to exempt this portion of the globe from the common calamities that have befallen other parts of it, I acknowledge my aversion to every project that is calculated to disarm the government of a single weapon, which in any possible contingency might be usefully employed for the general defense and security.
(I have now gone through the examination of such of the powers proposed to be vested in the United States, which may be considered as having an immediate relation to the energy of the government; and have endeavored to answer the principal objections which have been made to them. I have passed over in silence those minor authorities, which are either too inconsiderable to have been thought worthy of the hostilities of the opponents of the Constitution, or of too manifest propriety to admit of controversy. The mass of judiciary power, however, might have claimed an investigation under this head, had it not been for the consideration that its organization and its extent may be more advantageously considered in connection. This has determined me to refer it to the branch of our inquiries upon which we shall next enter.)(E1)
(I have now gone through the examination of those powers proposed to be conferred upon the federal government which relate more peculiarly to its energy, and to its efficiency for answering the great and primary objects of union. There are others which, though omitted here, will, in order to render the view of the subject more complete, be taken notice of under the next head of our inquiries. I flatter myself the progress already made will have sufficed to satisfy the candid and judicious part of the community that some of the objections which have been most strenuously urged against the Constitution, and which were most formidable in their first appearance, are not only destitute of substance, but if they had operated in the formation of the plan, would have rendered it incompetent to the great ends of public happiness and national prosperity. I equally flatter myself that a further and more critical investigation of the system will serve to recommend it still more to every sincere and disinterested advocate for good government and will leave no doubt with men of this character of the propriety and expediency of adopting it. Happy will it be for ourselves, and more honorable for human nature, if we have wisdom and virtue enough to set so glorious an example to mankind!)(E1)
PUBLIUS
1. The New England States.
E1. Two versions of this paragraph appear in different editions.


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Friday, May 10, 2013

Crossroads To Opportunity Or Failure - What Legacy Will We Leave?

We recently sent a letter to the Board of Supervisors that is meant to be read by Ted Wilmot and the Board.  The letter is below.  We can complain about the new ordinance 10-26 all we want but what good is it if we do not try and see if we can assist the county on getting it right and getting something passed that we can all be proud of.  This is a crossroads area where something incredible can happen for everyone in the county or become a major disaster.


This message is meant mostly for Ted Wilmot, however, each of you will be able to benefit from the information contained. This is regarding Gloucester County Ordinance 10-26 just published along with all the state laws that pertain to 58.1-3717. From what I am able to see you are actually shooting yourselves in the foot on numerous levels that are either going to restrict your ability to collect taxes or flood the roadways with gypsies. Both are very possible the way you are presently presenting the new ordinance.

Let me explain as the key is in section C of 58.1-3717. Let's look at this then I will break it down for each of you.

  1. Any tax imposed pursuant to § 58.1-3703 on peddlers and itinerant merchants shall not exceed $500 per year. Dealers in precious metals shall be taxed at rates provided in § .
What this means is that in lieu of someone paying taxes on income made, this acts like a pre paid tax. If you take an event like the Daffodil festival and throw all 160 plus vendors under a blanket umbrella $500.00 tax and then exempt yourself from having to pay those taxes, you eliminate your right to collect taxes from all of those vendors. You can not send out follow up forms to collect any taxes, you gave up that right under the umbrella and then didn't even pay yourselves.
Had you collected the $500.00 from someone else, you would collect less than $3.50 per merchant total and again would forfeit the right to send out follow up tax forms. If you try and charge each vendor a $500.00 prepaid tax, you will not have one vendor show up to something like the Daffodil festival. Most of the merchants would be hard pressed to make that in profit for the weekend. You would kill any chance for anyone to earn money.
The taxes we are talking about are taxes on gross sales receipts for sales in this area. What first must be established for 2014 is a proper amount of taxes on gross sales receipts for Gloucester from retail sales in Gloucester County. We are NOT talking about sales taxes required by the state and any additional 4% local prepared food taxes. When you have an event like the Daffodil Festival, you stand to collect much more than $500.00 in gross sales receipt taxes and you are already sending out the form for collecting state sales taxes anyway. You are only adding in a few lines to determine how much each merchant at the event owes after the event for gross sales receipts. (Like 32 cents per $100.00 in gross sales).
That is what needs to first be established in a uniform way. What the percentage of gross sales receipt taxes each merchant would be required to pay. That percentage can change from different types of merchants. Food sales can have either a higher or lower percentage than consumer goods retail sales.
A blanket $500.00 tax would be beneficial if used on a smaller event where it is held for say a weekend and there were only 50 vendors with only say about 7,000 people expected to attend.
A Dillon Rule Violation occurs when you restrict the merchant to 5 days or less. You can limit the event, but not the merchant. If you charge a merchant an advanced fee, that fee is good for the entire year. Another Dillon Rule violation is using the term vendor. It's not used by the state and has a new meaning these days than it once had. Vendor now is part of the supply chain for wholesale purposes, and exempt from the accompanied state laws.
Here is where you have some issues. If you grant a $500.00 tax license fee to someone, you do not have the ability to restrict them. I can then go out on 17 where 3 parking spaces are available, such as by Burger King on 17 and sell ugly oil paintings of Elvis for 11 and a half months and there is nothing you can do about it. You sold me a license to do so. You also have restricted your ability to collect gross sales receipt taxes from my sales. (Thank you). This law allows people to conduct sales as a regular brick and mortar business without having the expense of a brick and mortar overhead. All I have to do is put up a tent each day. (This has both good and bad potentials).
Here is what I see as a solution to the issues presently being worked on. For the 2014 Daffodil Festival, instead of thinking you need to charge each merchant a maximum $500.00 prepaid tax, you can charge each merchant a prepaid fee such as $10.00 per retail merchant and $20.00 per food merchant. No blanket, no follow up on gross sales receipts, no issues and everyone is happy. Chances are very high that you will collect more revenue this way and no one will be upset by it. But you have to set up the tax base structure to do so first.
Limitations. Restricting the amount of days a prepaid tax on a merchant can be done if it is based on a rate that would justify the restriction. Example, I want to sell ugly oil paintings of Elvis for 2 weeks. I have no idea what my sales receipts may be as this is the first time I ever tried this business idea. A $30.00 license tax would not be unreasonable and would clearly define the time limits. That the state laws allow from what I have read. The merchant or in reality peddler, would still owe and be responsible for collecting and paying state taxes, but would not be responsible for gross receipts sales taxes.
Look again at the statement in C, it says. Maximum tax that an itinerant merchant can be charged is $500.00. It does not say we recommend you charge each itinerant merchant the maximum license tax of $500.00. The state is NOT looking to hurt businesses. It's not in anyone's best interest to make doing business in the state near impossible. You do that you have no tax base left and county employees all become unpaid volunteers. Will you show up for work tomorrow if you know that you are now not getting paid?
Again, you shoot yourselves in the foot by exempting non profit organizations that bring in for profit merchants into a sales event. It's not the non profit that is hurt by the taxes. The non profit remains a non profit no matter what and nothing has to be added into 10-26 over it. You are leaving much needed tax revenue on the table by creating a blanket that removes your ability to collect gross revenue sales receipt taxes from the merchants.
If you want to help the non profits, then you determine a correct blanket that they can prepay and then they can add in those fees into the setup space charged each merchant. Then the merchant isn't responsible for taxes on gross sales receipts. Otherwise, go for the gross sales receipts taxes owed.
These laws were designed to make life easier for both local governments as well as businesses. Not restrict them and make everything harder and more expensive. It has the ability to increase the tax revenue base. More events mean more money for the county. Understand?
Here is where I think everyone gets confused. This was a dual purpose law that addressed a number of issues in the past. Going to the old door to door rug sucker salesperson, counties were not able to collect proper gross receipt sales taxes on retailers that entered into various counties. People were also fed up with door to door salespeople. This law initially allowed localities to create an assessment value on door to door companies which created an accounting nightmare for all of them. They were all forced to discontinue door to door sales because they then had to break up total sales and account for sales in each county and pay each county it's share of gross sales receipts earned in that locality. It became cost prohibitive.
You can't get rid of these laws or the door to door salespeople come back. You can structure new uses for the laws to help localities however. Event planning is perfect here. You have a tool to help you promote more events, hence increase tax revenues, not destroy the potential. Virginia is considered business friendly, not anti business. Now the confusion should be cleared up.
What you have here are tools if used properly become a wonderful new friend. Use them the wrong way and you have a nightmare where everyone loses. Anyone want to buy an ugly oil painting of Elvis? I can't seem to unload this stock anywhere.
The job an attorney does well is create ambiguous meaning to words. That's what all the college training is really about. I spent hours and hours going over these laws and was able to create a real nasty monster over it all. I was being ambiguous. I had to step back and look at the entire picture as a whole to see what it really meant. Now I am actually excited over all the possibilities, not threatened by them. I realized that it's not ambiguous after all. While I was being ambiguous, I saw the threat that anyone in a sales position can fall under these laws and an abusive ordinance could make criminals out of ordinary working people. And that is a reality. This is a great example of why our country is in such a mess and why government continues to grow and not shrink.
Ambiguity has many nasty potentials. What the county actually has here is what I would imagine anyone in government got into the job for to begin with. Something very exciting and not threatening. Re work the ordinance with the proper groundwork laid first and you have one of the most incredible tools at your fingertips that you can be proud to scream out to everyone about.
You can actually lay the groundwork for alternative forms of business to incubate from. Test the grounds at a low cost. This is an opportunity for Gloucester to take a very serious statewide lead on and change the nation. I would hazard a guess that most localities have no clue how these laws really work or should be applied. Step up and show them. What legacy would you leave behind? One where you worked against business that destroyed your tax base? Or one that you built a mountain of cash from because you saw the right opportunity for everyone to win and structured the right framework for that to happen? I already know where you can increase your revenues right away from structuring the ordinance properly, but will not divulge such until I see it done and at reasonable rates.
As far as 58.1-3717 actually applying to event planning, it has nothing to do with it. An event can be held that has no merchants and no admittance fees or financial collections this licensing tax would in no way apply. But I would imagine you all understand that. Entertainment events held to bring people into a particular store or area is very beneficial and raises gross sales receipts. It should be encouraged. It should also be planned properly for the intended purpose. Street entertainers should also be encouraged. Imagine having people sitting around playing guitars in the courthouse circle. It's like a free concert. It attracts people. If people throw money in their cases, look the other way.
Allow local merchants to set up tables at the courthouse circle area to sell foods and drinks at local concerts. If it works, charge them a small fee in the future for the space and it allows people to get to know the local merchants. Everyone wins. More events, more opportunities more revenues. Don't wait for opportunities, make them. Not everything will work. Or it may work some days and fail in others. You have no idea until you try.

Our Update Not Sent To The County.
  I once again read the newspaper article on how this all came about.  It was brought about by the commissioner of revenue, Kevin Wilson.  Mr Wilson did not read 58.1-3717 properly and did not further read 58.1-3703 afterwards that explains all of this.  I'm not blaming or faulting anyone.  I spent hours reading and re reading all the laws.  The second key was in 58.1-3703 that confirmed the gross sales receipts tax collection mentioned above.  These laws are tricky and not easy to understand.  On the one hand, Mr Wilson was not wrong about the merchants should prove they are legally entitled to do business in the state of Virginia, but that should have been in the application for reserving space ahead of time.  The $500.00 fee was way off though.  The reason it was never done in the past?  It was better to collect the revenue on the gross sales receipts.  It's one or the other.  Not both.
  I had a great teacher growing up.  This guy sat the entire class down and he took out a book of matches.  He said, I know you all know how to light a match, and we did, but pretend I am an alien from another world and explain to me how to light a match.  We could not do it.  Every step we told him to take, he took like an idiot alien.  It was amazing.  When you are looking at law, you have to try and get into the head of the person who wrote it to try and figure out what they were really trying to communicate because many times it's like trying to explain to aliens how to light a match.  You can show them, but if you were texting them, they would never get it.  So you dig for keys.  Oftentimes, your education gets right in your way.  It's right in front of you but if your mind is not in the right frame, you miss it over and over and over again.
  We hope this helps county officials to get everything straight.  Again, it's one thing to complain, it's another to get involved and help out when it's needed.  Before we asked them what legacy they wanted to leave, we asked that of ourselves.  I am continuing to look into all the laws surrounding this matter as this is a new area for me.  I am not an attorney by any means but I am capable of reading and understanding law in many areas.  There are some very complex laws here that need further work.  
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