How Pennsylvania Is Vaporizing Tax Revenue, and Your Tax Money Too.

There is a state tax that was recently approved (around page 51 or so it begins here) that effects working citizens in Pennsylvania in a very large way. In Short, any PA business owner who deals in vape supplies of any kind, must pay a flat 40% tax on their entire inventory on Oct. 1st, and must begin paying a 40% wholesale tax on all inventory purchased thereafter.

Forty. Percent.

The Laffer Curve (Pictured) illustrates a concept around an ideal tax rate. In the middle there, is the perfect spot. The tax rate would be considered not too high and not too low. Before this tax went through, vaping in PA would have been securely towards the top of that curve. 

Laffer Curve - Demonstrating Tax rate vs. Revenue - the approved 40% tax sends existing tax revenue straight down that hill to the right.

Laffer Curve - Demonstrating Tax rate vs. Revenue - the approved 40% tax sends existing tax revenue straight down that hill to the right.

There are stores all across PA that employ thousands of individuals, of all ages. It has been my experience that these aren't minimum wage jobs either. These employees are all paying state income taxes. The businesses are generating 6% sales tax on everything they sell. Plus property taxes for their stores, taxes paid on profits, etc. What's not to like, right?

The approved tax has been touted to make Pennsylvania an additional 13.3 million dollars in tax revenue. This is hysterical.

Look at the Laffer Curve again. As the tax rate rises, the achieved revenue goes back down. Hmmm. I wonder if a sudden 40% tax hike could achieve such a result? (that should be read with the most possible sarcasm.) And in this case, it is completely accurate. Here's why:

This 40% tax is far more than most of these small business owners operating in this state can handle. (Actually, Can you think of any business that would survive a sudden 40% tax on all assets?) Result? They will have to close. And as a result, their employees will no longer be employed. So, now we've lost sales tax, income tax, property tax... We've now lost all of that revenue. In addition, closed businesses can't pay a 40% tax on inventory that doesn't exist. Lets not forget that all of those unemployed could justifiably seek public assistance. Now this tax has started costing everyone money! This doesn't just effect the vaping world, this will impact everyone who pays taxes!

I don't know what the motivation was for passing this tax, but it is quite clear that it was malicious in nature. Maybe because it was hurting tobacco money (likely), maybe a lobbyist got their claws (cash) into the right person? I don't know. What I do know is that it was approved by a Democratic Governor, but also by a lot of Republican congressmen. Say what you will about either party, but the fact is, this was a bi-partisan effort to tax innocent people out of a livelihood. Nobody is innocent here.

If you'd like to oppose this harmful tax, I'd be grateful - more info at CASAA