- Son of vocally anti-war BU prof is killed in Iraq.
That’s a particularly exquisite agony: To know that train has been coming down the tracks for four years; to know the war was a mistake; to know that your son’s heroism is being misused and abused by reckless, dangerous leaders — and then finally, to get the worst possible news.
- Menino vs. DiMasi: The Mayah may have brought some restauranteers onto the side of the local-option meals tax, promising property tax relief.
I really don’t understand the objections of restaurants to the meals tax, except that it’s their turf, a slippery slope, or any number of other specious arguments. The restaurants will be fine. No one’s going to pop Stouffer’s in the microwave just to avoid a 3% meals tax. Duh.
- Sally Pipes up: Some right-wing think-tank hack writes an op-ed decrying “a recipe for runaway spending” in the new health care law. Her evidence? Wow, we’ve already spent a whopping $13 million more to subsidize low-income folks!!!
It’s hard to type while slapping my forehead, but I’ll just point out the obvious: $13 million is chump-change in health care. For crying out loud, Medicaid (MassHealth) is some 23% of the state’s budget. And having people insured is way cheaper than having them uninsured.
Hey Globe — any chance you can find cleverer right-wing hacks?
is one of the stupidest pieces of writing I’ve ever seen published in the Globe. The “Pacific Research Institute,” for God’s sake?? Couldn’t the Globe find someone closer to home (PRI is of course headquartered in California) to criticize the health care law?
…stems from not knowing if adjacent cities/towns will ALSO charge the tax.
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In many ways, for restaurants, this is an instant replay of the smoking ban.
instead of your suburb to eat, but that extra $.60 on a thirty dollar tab is going to keep you dining locally?
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Given that people tip between 10 and 20%, even 3% is in the noise. It’s just not going to impact anybody’s decision to eat out vs. dine in, or to eat in one jurisdiction versus another.
I agree with you, but I don’t operate a restaurant with a wafer-thin margin either. Again, this is similar to the smoking ban, and some people WILL change venue for the 3%, esp. in higher end establishments.
That must explain why rental car agencies have all abandoned Boston for Brookline and Cambridge so that customers could avoid the $10 per rental convention center fee. Oh, wait, you say–why are there still rental agencies in Boston besides the obvious need at the airport? Perhaps price alone is not enough to drive all consumer decisions.
with other people’s money.
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Once there is the 3%, then what’s another 3, and then another three after that, and then maybe ten more?
1) Why “other people’s money”? Are you suggesting that stomv has never eaten at a restaurant and never plans to in the future?
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2) Is there any place in America which has a 24% tax on meals? This is what you seem to suggest will happen if we allow this plan to pass.
But that was just a recollection on his part, and I have no clue how to look it up.
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I have a BETTER idea – why not redirect a portion of the EXISTING percentage to the cities/towns instead of having an increase?
The sales tax in San Francisco is 8.25%. I don’t believe there is a specific restaurant tax in the city, and I certainly would have remembered if I was being taxed as much as I tipped when I lived there.
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Maybe he was thinking of the Hotel tax, which is 14%.
who is willing to tell you:
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I’d go to restaurant x instead of y, but if the price at restaurant x goes up by 3% [the max] and y stays the same [the min] I’d instead go to restaurant y.
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Find me one person. I don’t need their name, just the amount of the bill for x and y. I just find it hard to believe that anyone would choose to eat in a different town due to a 3% change in the bill, given that the variance for the bill itself is much higher than 3% (a $6.99 burger vs. a $8.99 supahburger is a 28% increase) not to mention the variance on tip is greater than 3% for most people.
If you want to make the case that the increased tax will result in less profit for businesses because people won’t dine out as much due to the 3% increase, that’s one thing. I have no idea what the marginal demand on dining is, although I suspect that it’s not very reactive to the 3% increase. You could argue slippery slope, although I don’t buy it. You could even argue that the people (those who actually pay the tax, not the restaurants) are overtaxed and therefore this tax increase proposal is inappropriate. Whether or not I agree with any of those lines of argument, I do think they’re sane. However, the claim that somebody will choose one a restaurant in one town over a restaurant in another town due to a 3% difference, given all of the other variables in the decision making process, seems just batcrap crazy to me.
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P.S. As Charley pointed out, it is my money too! Last year, my wife and I spent $2976.97 dining out locally — so we’d be on the hook for about $90.00 with the proposed new tax, if it were 3% in Boston, Brookline, Cambridge, Newton, and Somerville (where we do the vast majority of our dining).
It’s not about a named person. I can’t imagine that any one person knows what exactly their marginal benefit is from a meal at any particular restaurant. I go to the 99 in Woburn all the time, and I usually get a cheeseburger, which I believe is 7.99. Now, if it become 8.23 would I not go to that 9’s? Possibly, but the answer isn’t about me as an individual consumer, it is about thousands of consumers aggregating together into the market. No one would be able to come out and say at what price they would not go to the 9’s to get a burger, but you can bet your life that their is a certain point at which they will not go there.
If you really believe that 3% is meaningless, or that everyone is price-indifferent when it comes to dining out, why not raise the meal tax by 100%? I know it seems absurd, but if people are TRULY price indifferent, which your post indicates you believe, the tax rate does not matter, when we both know in reality a 100% meals tax would be ruinous to restaurants.
What the post really illustrates is liberal’s manic insistence that there are no negative consequences to higher tax rates. You think that if you tax people more, they will work just as hard as before, or that their behavior will not change at all, which is patently false.
He wasn’t arguing that people are price-indifferent. He was arguing that they are not so discriminating that 3% is going to sway their decision. I tend to agree — I guarantee you can’t find one person who can tell you the price of every item on the menu at every restaurant choice they have — people operate on the overall image of the cost of the restaurant, and if a restaurant raised its prices by 3%, people wouldn’t stop going there — they’d barely notice unless they were a heavy, heavy regular.
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What your post really illustrates is conservatives religious believe that ANY tax increase is ALWAYS negative, never positive. If a town raises its meals tax by 3% and adds more police to patrol the areas where the restaurants are, improving the public perception and therefore increasing traffic, wouldn’t that be a positive thing?
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I also find it really funny how conservatives state that if we increase the taxes on the rich, they’ll work less, but if we cut the wages of the poor, they’ll work harder.
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One source, one conservative pundit. Just one. Show me a single conservative pundit that’s ever claimed that if ‘we cut the wages of the poor, they’ll work harder.”
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Just one. Take your time.
I’ll admit I need a little time to come up with this one, because I didn’t quote anyone, but I have heard many pundits say what amounts to that — for example things like “people work harder to advance when they start out at a low wage”, etc.
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I have stitched that together into what I believe is a conservative mantra that wage suppression results in people working harder. I’ll gather my thoughts on this and post it when I do.
Ezra Klein had a great op-ed in the LA Times about the utility of taxes and how easy it is to complain about government after its been hobbled.
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“Undercapitalize a pizza joint and your customers will taste the poor ingredients, become frustrated by the long waits and grow repulsed by the grimy environs. Staff it with your unmotivated drinking buddies and the service will falter, as will the quality of the product. It’s no way to run a pizza place, and it’s certainly no way to run a government.”
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http://www.latimes.c…
My initial point was that the palpable indifference to the consequences of this tax hike lend themselves to infinite tax hikes.
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“Show me one consumer who wouldn’t go out to eat because of a 3% tax” quickly becomes “Show me one consumer that wouldn’t go out to eat because of an additional 3% tax” and so on.
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I wouldn’t be so skeptical if it weren’t so obvious that all these new taxes will be just pissed away.
Because the very definition of progressive is to advance in increments.
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Y’know, kind’a like how you boil a frog.
Remarkable that, despite some apparent background in basic economics, stomv unilaterally dismisses any notion that rules of elasticity, supply and demand don’t apply to ‘small’ increases.
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Assuming that’s true, where’s the extra $90 going to come from? Less savings, fewer meals out, cut back on stomy kids’ allowances? If you really think the government can spend the $90 better than you can spend it, why not send them a little extra.
It’s entirely possible that the $90, which the government will likely spend locally — will provide an economic benefit to stomv’s family by generating some local consumer activity — and will reduce some activity elsewhere, because maybe he’ll instead skip buying some cheap crap made in China.
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The effect is not always negative, it can go either way.
I have a degree.
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Furthermore, I didn’t unilaterally dismiss any notion of elasticity, but I did point out that for small dollar values, people don’t make economically rational decisions. This is well known and well documented. Examples include truncating the “cents” in a price, keeping a massive jar of coins in the bedroom, and people actually throwing pennies in the trash. Another example of irrationality is the person who will drive an extra 20 miles roundtrip to save $0.02/gallon on gas; even a 40 gallon fillup saves well less than the cost of extra gas for the trip.
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The fact is that people aren’t sensitive to small price changes in any linear type fashion. There are sticky points (the 99s, and intervals of 5 or 10), and the rest of the points have little influence in action. Part of this is irrationality, and part of it is the human “understanding” that the total cost of going out to a restaurant includes the time and financial cost of transportation, the wide range of possible bills due to different choices on the menu, the range of possible tips due to different levels in service (and possible bills), etc. 3% is a small bit of that total range, and therefore doesn’t play any significant role in choosing just what restaurant to frequent.
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There’s nothing to assume — that’s exactly what we spent in restaurants. I keep accountant-quality records. That $90 will come from savings — but what will I get for it? In my opinion, more than $90 worth of value in the form of better public schools, sidewalks, parks, police protection, fire protection, etc. Of course, this only works if everyone chips in; otherwise that $90 worth of improvements gets spread throughout town and not just spent in my neighborhood; to get the full value I need everybody to chip in their share, so that the total benefits per person town wide more closely approximate the contributions that people town wide are making. That’s how taxes work. The glib “why don’t you just pay more” only works if you’re willing to glibly use less government services for wanting lower taxes. So, feel free to avoid using the roads this week. It’s the same foolish argument in a negative direction after all.
I read you comment to say that 3% is too small to affect demand. Correct that if I’m wrong.
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Then you say, the new meals tax would cost you $90 per anum and you anticipate taking that from savings.
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Isn’t it conceiveable that some people will choose not to take the extra cash from earnings or savings but rather will choose to eat out 1, 2, 3… less per year? If so–and my hypothesis seems very, very likely–then 3% meals tax will in fact affect demand and reduce revenues for restaurants. No?
And we’re now running in circles. I posted above…
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I’m not arguing that folks won’t reduce their dining somewhat due to the 3% increase. For folks who live paycheck to paycheck, there’s only so much money to spend, and if some of it is going to pay for the tax, it’s not buying another Wendy’s Cheeseburger.
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My argument is that the variance in how much is spent at a restaurant in a single instance is far higher than 3% — I’d argue it’s closer to 30-40% including tip variance. As such, the argument that people would choose a restaurant in one municipality over one in another due to a [maximum] 3% tax difference is crazytalk.
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In aggregate [time and population], will people spend less on dining than they would were it not for the 3%? Sure. It’d be impossible to argue that demand for restaurants is perfectly inelastic. I’ve never made that claim, although you seem to be making that claim for me.
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In that same vein, our sales tax is bad for all retail, our gas tax is bad for all service stations, our building permit fees are bad for all contractors, our postal fees are bad for all aspiring postal carriers, our student athlete fees bad for aspiring professional athletes, etc. That doesn’t mean that we as a society don’t need to fund our government in order for it to be effective. We as a society have latitude on just how we want to go about doing it, and no proposal will be viewed as “fair” to all parties.
And a student who gets far better grades in Econ than accounting, I’m going to have to agree with you wholeheartedly. Although I think taxes are a bad call and would cut them for any reason, I don’t think that this tax will cause a shift in the demand curve.
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I do have an aching feeling that the money from this tax will get lost in the big Massachusetts money-eating monster though. That’s my only real problem.
There are some economists who might disagree with you:
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source
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Mankiw’s “guess” is no better than ours, appeals to authority notwithstanding.
Since the tax may or may not adversely affect restaurant’s business, let’s guess that it won’t and raise taxes accordingly.
Charlie, if he could ever get off the MTA, should go to a restaurant in Montreal, NYC or Toronto and try to estimate what his meal will cost. The multi-level tiers of tax upon tax will inflate his estimate from any where from 15 to 25%. Who suffers? The servers as they get stiffed with lower and lower tips. The restaurants lose a few customers here and there and before long, whoops, there goes your profit margin.
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3% becomes 5% becomes 7%. It is the slippery slope all over again. The voracious dotard Menino should not be the mayor. I don’t think the man can say mayor. He is a national embarrassment. He makes Howie Carr slightly relevant. You want some extra revenue? Tax his malapropisms. There’s millions in it I tell ya.
Okay, I can speak for Montreal, having lived there so long.
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Montreal has a 7.5% federal tax on all goods and services, and a 7.5% provincial tax on top of that (literally…they tax the tax). No meals tax in there at all. Didn’t change my tipping…part of it is just that Americans are pretty well the best tippers in the world.
the best restaurants in America are located in towns like Chicago, San Francisco and New York, both of which have significant meals tax (9.75%, 8.25% and 8.25%).
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scratches head
I lived in Chicago for four years. Chicago restaurants beat the pants off of Boston restaurants, by and large. Sorry, that’s just how I see it … and eat it.
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Clearly, the higher the meals tax, the better the food. There’s just no other explanation. 😉
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This is a ludicrous argument. Who here has EVER gone into a restaurant, been surprised at how much the bill was, and decided to stiff the server because of it? Please, raise your hand and be mocked.
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In fact, your theory of servers bearing the elasticity would seem to imply that servers in high-end restaurants would be suffering while servers in cheap restaurants would be raking it in. Based on people I know who have worked in restaurants, I believe that reality is 100% opposite that.
the way I look at it the tax is 5% now, when I add another 3% it goes to 8%. Go to McDonalds in NH and buy a 99 cent double cheeseburger and hand the cashier a $1 bill. You will not get the burger because it really costs $1.07. Here it costs $1.04. This is probably one of the only taxes that is higher in NH than in MA. Do we really need to catch up to them in this tax? All of the other ones aren’t enough? I am glad you are so rich. You say there will be zero impact from this tax. If this is so then why not let Boston impose a 5 or 10% tax on your quiche or latte. Hell, why not 15%? When is enough, enough? Never, I guess when dealing with people like you.
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Rich people can afford to tip, just ask someone who waits at the Capitol Grille or Abe & Louis. Poor people and those with moderate income also like to go out to eat occasionally. They are the ones who could agonize over how much to leave for a tip. Ever see people who break out their calculators at the table? Ever see the tip calculators on cell phones? If you don’t think there is an impact on the poor to increasing taxes, then I propose a tax on people with their heads stuffed up their backsides because you should pay for your pomposity.
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NoPolitician? NoMathematician you mean.
They pay for health inspection, road, sewers, wastewaer, etc. – with no guarantee the state will help with any of it (most of us live outside the heavily subsidized MWRA).
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So why not cut loose 1% to the hosting municipality?
…that you already know the answer to? That 1% is already spent on the state level. Redirect it and it will have to be made up somehow. Sometimes, new taxes are actually necessary. Better, isn’t it for it to be a voluntary one? No one has to eat out, and it will be easily absorbed by most who choose to do so.
A compromise measure that would lower the sales tax on meals to 3 or 4 percent, and allow cities and towns to levy their own additional tax on top of that up to 3 percent.
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Municipalities that want low meals taxes can have them.
Those that want high meals taxes can also have them.
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This is as much about local control of pursestrings as it is about taxes. Personally, I think that localities should have as many options on the table as possible.
I have no idea how much revenue comes from that 1 or 2% of sales tax on restaurants — but where will the shortfall come from?
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Also, how would it effect the MBTA contribution on the 175ish cities and towns who contribute?
Stomv – how does restaurant tax play into MBTA levy?
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Only the served communities pay that levy, while the tax would be statewide.
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Unless you are alluding to the fact that the entire state subsidizes the MBTA and MWRA rates?
if so, my comment is crap.
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If not, then one fifth of the tax collected (1% of the whole) within the 175ish communities that have MBTA service goes to the MBTA. The remaining 4% go to the “general budget.” If you’re in one of the 175ish towns that doesn’t have MBTA service, than all 5% go to the “general budget.”
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So, for the 175ish MBTA municipalities, would the MBTA still get it’s current amount (1% of the overall sale), or would they get 1/5th of the new rate (say, 1/5*3%), thereby cutting MBTA funding?
In any case, the end result would be less revenue for the general budget and less revenue for the MBTA. How to make up that shortfall?
They ARE seperate taxes, and the DLS will have the answer…to be cont….
but it’s really just accounting-magic.
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I didn’t find anything elegant on mass.gov, but I did find this unsourced wiki article.
But doesn’t part of the sales tax go to local aid?
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If that’s the case, then this can be done in a fairly revenue neutral way since a portion of the restaurant tax would also go into a local aid fund.
If gasoline keeps it present path towards 4 bucks a gallon, the meals tax won’t matter because average folks won’t be driving to Boston for a night of dining out.!
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In fact they won’t be driving anywhere for a night out of dining.
walk
cycle
rollerblade
skateboard
bus
subway
commuter rail
ferry
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your way to your favorite dining location. (yes, that’s what I do, and I don’t live in Boston)
some sweaty rollerblader sitting beside me in a restaurant.