Note: This letter was also subsequently published as an “Opinion” in the 2/19/2010 issue of the Gilbert Republic.
So, the Gilbert Town Council wants a quarter cent tax increase. Those who think “it won’t hurt business,” or that “it’s only going to cost an average family $100-$200 more per year so big deal” either don’t understand or refuse to accept basic economics and how this applies in the real world of the private sector.
The most critical reality is what this deepening recession has done to the average Gilbert family. For example, Gilbert Family Jones, working in the private sector, have received a 25-50% reduction in their income. So, they cut spending to match their income. They terminate cable. They stop patronizing the nicer local restaurants in favor of XYZ Cafe. They didn’t buy as many Christmas presents at the Gilbert stores, and stopped their local landscaping service. They hold off on some household projects, so make no purchases at Ace Hardware. No vacation this year; no new clothes. They can’t afford to trade in their old car and will keep it running. They raise the deductibles on all insurance policies. So far, so good. They are barely breaking even, but they are surviving without going into their savings. But the Town Council removed the rental tax exemption, and Family Jones’s rent went up “a little bit.” With the addition of the sales tax increase, their grocery bill went up, and the cost of every other purchase went up “just a little bit.” To ensure they are still making ends meet, what do they do? Do they drive to another town to make purchases where the taxes are less? No. They spend less. Now, Mr. and Mrs. Jones stop patronizing their local XYZ Café. Does the Town get more tax money out of them? No. How is XYZ Café faring?
How does the decrease in spending by Gilbert Family Jones, multiplied by many more families just like them, affect business? When families have less money to spend, businesses fold, especially businesses that are not providing the essentials. Look at the clear evidence. Take a very hard look at the empty storefronts throughout Gilbert. Each of those storefronts represent the loss of somebody’s life savings. The Town depended on the profits from those private sector businesses. Also, any business that has a commercial lease pays TPT (transaction privilege tax). That’s “sales tax.” An additional tax means their monthly rent went up “a little bit.”
The combination of lowering income, higher taxes, and higher expenses has a domino effect throughout the economy to create a recession.
Does anyone on the Town Council except Council Member Jenn Daniels and Mayor John Lewis see that the Town’s revenues go up only when a businesses’ profits go up? Do the rest of the Council members imagine that businesses are improving? Do they think our incomes, which depend on profitable businesses, are improving? No, quite the opposite.