Secret Tax Policy

If reports are true in the Daily Paper, Idaho has a secret tax system administered by a commission which grants sales tax breaks to some businesses, but not others.

Ken Dey, the reincarnated business editor at the Daily Paper broke a major story Thursday when he revealed a secret tax deal between the Idaho Tax Commission and Cabela’s.

We all know the quiet way to avoid the Idaho sales tax–now at 6%–is to buy out of state. The GUARDIAN even made mention of the potential loss of revenues if there was a big shift to out of state and internet shopping.

Catalog merchants with physical locations in state like CostCo, R.E.I., Sears and many others collect and pay sales tax. However, the big guns at the outdoor store don’t play by the same rules. They claim it is such a wonderful benefit to have a Cabela’s store that catalog sales should not be taxed.

They got the Idaho Tax Commission to agree that catalog sales are a different company than the retail outlet–despite the same merchandise, company name, etc.

One would think that a store specializing in hunting supplies would be able to recognize that if , “It looks like a duck, walks like a duck, and flies like a duck, chances are it IS A DUCK.”

In their zeal to attract more business, more jobs, more cars, more people, our government agents constantly make concessions to the big boys. This one is simply wrong–if not illegal.

This deal is so wrapped in camouflage the only you can find it is by smell. The tax commission refused to discuss or show the daily paper the concession deal and would not even confirm or deny it exists. That folks, is secret government cloaked in camo.

We don’t want to know any confidential tax return information. This is a SECRET POLICY which Ken Dey has revealed. How many other secret private deals has this commission struck. Does your neighbor get an exemption from income tax because he is richer than you? Secrecy in tax policy destroys any faith we may have in our government. They won’t even tell us the rules!

Comments & Discussion

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  1. The Tax thing goes on everywhere in this country…. Just be happy that most of the economy is still on the books. Remember when our great President Jimmy bought out Chrysler?? only to save them for the German’s to buy. Stand in front of the bus… or drive it. Your Choice.

  2. J, you sound like a youngster who doesn’t know the difference between right and wrong. If you are driving the bus expect a “reckless driving charge.” I won’t ride on your bus. We are all grateful for the Ken Dey’s and GUARDIANS of this world who shine light on the dark deeds of those who believe the ends justify the means.

    FYI, Chrysler got a loan (which was a mistake) from congress and they were not bought. You were probably too young to remember.

  3. Hmmm …
    Seems to me there’s a place on the Idaho state income tax form where you’re supposed to list any purchases you made via mail or otherwise and didn’t pay sales tax on, then send the amount of money equivalent to the tax to the state of Idaho. (I heard a rumor that somebody actually did that once, and the state tax worker nearly fainted.)

    I never could figure that law out anyway. If I’m visiting in another state and buy something, or buy it via mail after I get home, either way I can’t see how Idaho can have any right to the sales tax.

    As for Cabela’s — sounds like they could put a public-access computer in the store, then people could come in, look around, find what they want to buy, then sit down at the computer and order it online to save on the sales tax. You reckon anybody really would do that, though? 🙂

    Yep, our many layers of government keep playing games. And congrats to Ken for picking up on this one. Seems The Boise Guardian has some compeition for uncovering the dirty underbelly of our officials. (You don’t suppose somebody finally actually told The Spaceman that a major part of a newspaper’s job is to be a watchdog, do you?)

    Anyway, don’t worry, Guardian — you’ll stay ahead of the Daily Paper on a lot of this, so just keep digging away.

  4. I’m with you Mr. Logic. Its one thing to be a cynic but allowing it to result in apathy is, well, pathetic. Thanks Guardian, I glossed that article in the paper. Backroom deals between big money interests and politicians/bureaucrats should be exposed to the light of day and the educated among us should be angered.

    Bad example J, the Chrysler bailout was debated in Congress, not arranged in secret. The fact that it prevented a major US employer from sending thousands of Americans looking for work played a role. I don’t think Cabela’s is in danger of going under but seeks to exploit a politically imposed economic advantage over the local mom and pop outdoor stores based upon the Walmart business model of bullying local government into providing these artificial economic concessions. And I thought the bailout consisted of loan guarantees not actual loans. Either way I don’t see this secret deal as benefitting either our local economy or our long term interests.

  5. If the “Cabelas policy” is good for Cabela’s AND IDAHO, doesn’t it stand to reason that ALL mail/internet merchants, who happen to have a street address in Idaho, could also benefit?

    I might be slightly more likely to buy something at or (or – Dell has a call center down in the Magic Valley, so Dell collects Idaho sales tax) if it were 5% less. Maybe that would help Idaho… maybe not.

    What’s that funny smell?

  6. Mr. L, I don’t disagree entirely with either you or The G. Just have a realistic attitude about stuff…is no perfect world just efforts to reach it. I agree the light of day should be cast upon wrong. What is wrong is often harder to grasp especially when money is involved, and also so many don’t care to notice. When the human condition is factored in things are not so black and white. ie. Is a tax break for the betterment of the many or a few—says who? etc.

    Not perfect, but I’m pleanty old enough…did watch the very first Nightline…Jimmy giving away the Panama Canal (now controled by China?) most of the VN war….all the Moon-shots.

    Most important is that these agreements not be secret… must keep as much as possible on the books. Biggest risk to this country is the lame appathy of average voter to not use their power, thus leaving it to those who do participate. But about that bus called “society”….you are riding it now…either seated or stuck to the front. Unless you live in a little tent in the woods.

  7. Bert Farber
    Aug 31, 2006, 2:26 pm

    at least Cabela’s didn’t get no free parkin’ spots like that there Office Depot in BoooDooo

  8. I overheard this conversation the other night…

    Idaho Commerce/Labor/Tax representative: A state with low wages and cheap real estate!

    Big Biz Dude : Nice!

    ICLTR: A state controlled by one party that holds meetings in secret at the Legislature!

    BBD: Nicer!!

    ICLTR: A state where you control what you pay and when, if ever, you have to pay it!

    BBD: Nicest!!! We’ll move here for sure!

    ICTLR: Great – Heres the wool to pull over peoples eyes!

  9. Correct me if I’m wrong, but no state can charge sales tax on interstate transactions, since interstate commerce is regulated by the federal government according to the US constitution. After all, if the seller’s state could claim the right to regulate the sale and tax it, so could the other state. Right?

    It also seems to me that this arrangement with a specific business is a blatant violation of the US constitution’s “equal protection” clause.

    EDITOR NOTE–You are right on both counts. However, the US courts have ruled that if a company has a physical presence (“nexis”) in a state they have to pay sales tax. See the comment about a computer in the store idea.

  10. So, yesterday, property tax was bad, and sales tax was good. But today, sales tax is bad if you are a hook and bullet store, but good if you are a backpack store.

    The sales tax also seems to be OK if you pay locally, but bad if your pay via internet.

    Open question, if I pay via credit card at a local store, the card validation process takes my information to another state to credit my account. Does that constitute grounds for exempting credit card purchases from sales tax?

    On a slightly different tack, in the past, when I came to the line on my income tax return that asks me to estimate my out of state purchases and submit the appropriate amount of sales tax, I always felt conspicuous entering $0.00. I usually kicked in a couple of bucks just to eliminate the audit flag. To that end, I would like to thank the folks at the tax commission for easing my guilt. In the future, if the seller is out of state, the nexis is gone, and $0.00 it is.

    In fact, it might be argued that the very question should be removed from the tax form. It sounds like it would be impossible to enforce. Also, do I hear the words “Class Action Lawsuit” being wispered. An attorney with some time on their hands might be interested in trying to get a refund for all the people, like me, who felt obliged to kick in the odd dollar or two?

  11. One of the biggest things needing light on the sales tax issue are all the farm exemptions. Ever wonder why so many farmers and ranchers drive huge empty diesel trucks? Thats right, fillerup with tax free diesel from the tank we use to fill the tractors Ma. To heck with those city folk, they can pay for the high priced stuff.
    The Idaho Code is full of loop holes big enough to throw a calf through or a full camo duck blind now. Idahoans keep electing the politicians who make the rules as they go because these are the guys protecting them from abortions, environmentalists, stem cell research, terrorists fighting in our streets, and delivering freedom to each and everyone of us.

    Don’t forget to figure the sales tax on all the illegal drugs you sold while you are working on your Idaho income tax form. They ask for that too. Hope you kept your receipts.

  12. Cabelas strategy is not new. They have suceeded everywhere in negotiating this policy.

    “Cabela’s argues that its retail business is separate from the catalog business.
    In the 19 states where Cabela’s has requested similar exemptions, all were granted.”

    If states are to allow preferential treatment in such cases maybe the Store should provide an economic analysis. Maine has a sales tax of 5% and the people of Maine order $10 million from Cabelas. The State would be forgoing $500,000 in extra revenue if they allow Cabelas preferential treatment. The first year of operation would generate $55 million in sales at the store alone not to mention the 180 full time jobs, 140 part jobs and surrounding businesses.

    Seems to me sounds like the town of Scarborough and Maine have alot to lose out, if Cabelas pulls the plug.

  13. I wonder why Cabella even bothered to negotiate with the tax commission. They could have simply followed the Commissioner Yzaguirre model.

    I don’t remember all the details, but it seems to me he collected the taxes and used them for his own purposes. When he got caught he turned the funds over, reluctantly, and never faced prosecution.

    With guys like that in office, it should not be any surprise that the taxes a company pays, if any, are negotiable.

  14. Thistle, are you trying to obfuscate? This isn’t about the type of merchandise being sold (bullets or backpacks). It’s about equality and transparency.

    One of the principles of a “just state” is that the law applies equally to everybody. Nobody gets special treatment. Nobody is above the law. WHY should this business get a sales tax break that nobody else gets?

    The other issue is transparancy: Don’t you think the people should know what the government is doing? Shouldn’t the government conduct it’s business up front and on the table? Come on, security and privacy aren’t at issue here…

    It would be easy for a cynic to believe that this deal was made and kept secret because of some … “sugar”.

  15. Sorry for the confusion Razz,

    I am on your side all the way. I was trying for a note of irony but, apparently, I am not a very good writer.

    One point I inneffectually tried to make is that, beyond not being trransparent, they seem to be completely arbitrary. One sporting goods store gets a good deal, another doesn’t. One discount store gets a good deal, another doesn’t. They shouldn’t do it in secret, but even then, I would expect a certain amount of consistency.

    Sometimes, when I am feeling generous, I think the reason many of Idaho’s “leaders” do so much of their work in secret is not because they are dispensing special deals, but simply because they don’t want their constituents to know how totally incompetent they are.

    In a past life my employment reuired me to monitor the revenue and taxation committee at the legislature. In that capacity I heard the phrase, “all we want is a level playing field” countless times. The trouble is, they are total hypocrits. They have never cared about openness and it is once again demonstrated that they don’t give a rat’s rectum about fairness.

    To paraphrase one of the opeing lines in the movie The War of the Roses; What have you got if you have members of Idaho’s legislature and administration dead at the bottom of Luckly Peakl? Answer – An excellent start.

  16. Dearest Government Leaders,

    Please give a good deal to a Super Target Store out to the SW….this Walmart on overland is getting slower and ickier every day.

    I hope WM didn’t pay too much for the improvements…. I’ve never seen such bad workmanship…. storng indicator to me that WM box stores are on autopilot.

  17. I sat at the computer yesterday and did some on-line shopping at the Apple Store. Purchased a new MacBook and paid $69.80 in sales tax, yet they are not in Idaho. But then, I am quite unable to use my MacBook to hunt, fish, trap or kill (ie to feel like a real MAN, an IDAHO MAN). nope. So I guess I do not deserve a break from sales tax.

  18. I ‘ve lived in Idaho 7 years and all I can say is you have a state legislature controlled by a totally corrupt one-party system that refuses to represent the people. Secret tax deals are a small part of the rot…This state government has created the largest number of citizens living in poverty as well as a majority unable to get basic health care. Idaho has more of it’s citizens in prison at any one time than most other states. Idaho is the onl;y state that refuses to recompense those suffering from cancer from past nuclear testing.

    In short… the Idaho state legislature is one of the most pathetic,un-American groups any one could possibly be confronted by.

  19. Hey, Joe, I have lived here a lot longer than you, but I couldn’t have stated the problems better than you. Get out your lantern and start looking for an honest man. Take a really big lunch, dinner, breakfast, etc. you’ll need it.

  20. The bottom line is that if I order from the Cabela’s catalog, I’m saving 6%. In my view, that’s good, and I appreciate Cabela’s standing up for their consumers. I’d love to save 6% on my next Dell purchase as well. I hope they make the same move.

    EDITOR NOTE–We can only assume you declare the purchase on your Idaho Income tax form and send the boys at the tax commission their 6% as required.

  21. Since I haven’t done my own tax return in many years it has only come to my attention in the last couple of years that I am supposed to keep track of catalog or internet purchases. While I have a nice bookkeeping program on my computer it has never been set up to keep track of books bought from Amazon from those bought at Borders. What kind of records do those idiots (at the tax commission) think the average citizens keep? Most people I know don’t even reconcile their bank account (if they only knew how many mistakes banks make) much less keep track of whether they got the blue sweater from Coldwater Creek’s catalog and the red one from Macys at the mall. I suppose some of the catalog companies do collect sales tax – most of us wouldn’t notice unless we had a very large purchase. It is stupid to have laws on the books that are unenforcible.

  22. I into a local store to purchase a part for a hobby. They asked how I would be paying, “CASH” I said. He asked if I would like to pay sales tax and I said no. I love Cash.

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