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Chicago Trib Author takes Issue with Hidden Taxes: Says Hide them Even Better

The headline I read today was “New charge on dinner tab is in bad taste.”  The opening paragraphs seemed to set the stage for the article:

Nothing succeeds in the travel industry like a bad idea. The latest hidden mandatory add-on is a “health” charge added to restaurant bills. As far as I know, this scam cropped up first in San Francisco, but you can count on it to spread.

The rationale for this one is to cover the employers’ mandatory contribution to the City’s “Healthy San Francisco” health-coverage system. The charge actually is levied on employers, but at least some restaurants are adding a few dollars or percentage points to each customer’s bill to cover this charge.

Reading this, I assumed that the ‘scam’ was going to be the new charge levied on employers to cover their ‘mandatory contribution’ to a city’s health-coverage system.  Boy was I wrong!

Ed Perkins protests, “Employees’ health insurance is no less of a cost of doing business than rent, property taxes, food costs, security services and all the other inputs businesses require to operate. To single out health care for a separate surcharge is unwarranted.”

Is Mr. Perkins suggesting that the restaurants are not passing these costs down to the consumer, too?  Later on he asks,

“What can you do to avoid this fee?”

I can only surmise from this that Mr. Perkins is a liberal who is badly out of touch with the real world.  If the restaurants and hotels are to stay in business, they need to make a profit.  That means, by definition, generating revenue that exceeds expenses.  What can be done to avoid this fee? Nothing.  Obviously, the business, whatever it is, will have to increase its prices in order to compensate for the new expenses, just like it had to raise prices to cover the old expenses.

Mr. Perkins’ logic here is badly flawed and can only be redeemed in two ways.

1.  He thinks the ‘scam’ is letting people know about the new expense.   What these businesses ought to do is simply mark their prices higher without telling anyone that the reason they have gone up is to cover government mandates on their operations, thus presenting to consumers the ‘true’ price.

2.  He thinks the businesses should simply allow the new expenses to cut into the profit margin, without raising prices at all.

From reading his article, I can’t tell which of these two propositions is the one that he really thinks ought to happen.  He is very upset that restaurants would levy this fee and blame it on the government, but apart from urging these businesses to ‘drop’ this fee, his solution is ambiguous.  It could be either of the above, or both.

If it is the latter then of course we have the basic progressive argument.  It would result in the closure of restaurants, hotels, grocery stores, and so on, because at some point businesses decide that the profit- if there is any- isn’t enough to justify going on.  Progressives like to decide for everyone else what is a ‘sustainable’ profit- but then, they aren’t the ones who actually decide (yet- that’s why they’re in favor of nationalization of the means of production).  The point is that #2 is ultimately the death of any and all businesses.  I presume, perhaps incorrectly, that Mr. Perkins does not want to see these businesses go away.

Personally, I think #1 is where he is leaning.  I am certainly with him on decrying ‘hidden’ fees that pop up all over the place.   They are on my phone bill, at the gas station, and present when I rent a car.  They are on my electric bill, and my heating bill.  They are on my grocery receipt- there it is called a ‘sales tax.’  However, if we self-righteously demand that these businesses roll these ‘hidden fees’ into the price stated to us, how is this not to make them even more hidden than before?

If my salad is presented to me as $1.10 or as $1 plus ten cents tax, I still fork over the $1.10!  The only difference is that in the latter case, I understand that ten cents of my bill is passing right through the business and going right to the government.   In the former case, I have no immediate grasp of how government mandates are impacting me on a daily basis.  In short, Mr. Perkins would seem to want to take ‘hidden mandatory’ fees and hide them even better.

I personally would welcome much more disclosure about the various kinds of costs I’m paying on account of government interference.  I think that if more people understood how much of their income was going straight through to the government every day there would be turmoil in the street.   Between property taxes, sales taxes, permits, licenses, income taxes, and then the hoops businesses have to go through to stay in business, the real figure is almost certainly very high.

All of these extra expenses ultimately come out of our pocket, even if they are initially directed at the businesses.   A company like Walmart pays 41% of their profit in taxes.  Is this taxing the rich?  Heck no.  All those lower income people that Progressives say they are protecting from taxes are the ones who pay that 41%- rolled up in the price of their item.

And then you pay sales tax.

Honestly, I think it’s time we put all these costs out there.  Let the consumer know.  Let Mr. Perkins know.  In the meantime, be amazed that any businesses are still open as it is.

Final thought on principle… Mr. Perkins is right that companies already have to pay for electricity, heat, and product, and they don’t alert people to the fact that their bill is paying for these specific items.   However, I would maintain that there is a big difference between money that passes through to other businesses, where market forces are doing their work and truly are the cost of doing business, and money that passes through to the government which is not subject to market forces and can enforce their claim with an iron hand… and rely on the fact that nobody knows what they’re doing to us…


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