Wednesday, April 14, 2010

The numbers do not add up

Report: Sales tax collections hit 50-year-low

"For the opening months of 2009, early figures show an overall revenue decline of more than 12 percent, “a further dramatic worsening of fiscal conditions nationwide,” the (Rockefeller) institute said." The portion of this decline attributable to sales taxes is unknown, but the article notes that in the last quarter that line item was down 4%.

Compare and contrast this to the following:

Retail Sales Gain Steam While Inflation Stays at Bay

"The Commerce Department said on Wednesday total retail sales jumped 1.6 percent..."

Now, the last time I checked, there are very few places where a sales tax is not charged when something is bought at retail. So if follows that, if retails sales rise, sales tax collections must also rise. Yet the early numbers aren't showing a rise.

We're being told that in this quarter, sales are up and tax collections are down. This is is unlikely. I suggest that you watch for the revised Q1 numbers in a few weeks for both of these, and see what is adjusted up and what is adjusted down. It should be a very good data point to use in your future planning.

Me? I'm going to bet against the Commerce Department. Just a hunch I have.

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