Seems the PA budget deal has a new tax on museums (and symphonies and smokers).

Rendell's appetite for pork requires "revenue" (speaking as a bureaucrat and a former Office of the Budget employee, I despise the term "tax revenue"-there's nothing earned when its obtained by threat of incarceration or loss of property).

Here's how PA politics works in brief:

In a recent vote, the Pennsylvania House voted to increase the marriage license fee from $3 to $28 - only the increase was to be used for "domestic violence" programs within the Department of Public Welfare. (as an aside, DPW is a favorite target of Auditor General Jack Wagner) Essentially this turns marriage licenses from a user fee to a tax on marriage.

The irony is that most domestic violence occurs not among married couples, but at a higher rate among those cohabitating "without benefit of clergy", so newly married folks will be paying the entire bill to mitigate a problem they largely aren't responsible for creating. When State Rep. Daryl Metcalfe spoke out against the marriage tax,The left of center group Keystone Progress has attacked Rep. Metcalfe with a missive, saying he supports domestic violence, "Rep. Metcalfe clearly has a problem with preventing domestic violence in Pennsylvania."

If there was ever an example of the old saw about how a man shouldn't see his laws or sausages being made...

Now for some economic analysis: I'd bet that museum visitation has a elasticity of demand greater than 1, especially in this environment. Greater than 1 means demand is "elastic". Such a condition means that units demanded go down by a greater percentage than the price increase. Except in this case, the museums are the beneficiary of the price increase-but the people under the dome won't get as much take as they expect. So if there's a 6% tax(the rate except in Philly & Pittsburgh where its 7%), expect better than a 6% drop in visitation.

Even cigarettes, long assumed to be inelastic, have shown greater decreases in sales as the result of recent tax hikes than expected..

Snide chuckling as I think how the property tax rebate that was supposed to come from legalized gambling has sort of been lost or forgotten, or how alcohol sold in PA comes with an 18% emergency tax (what emergency tax you ask? Why the '36 Johnstown Food).

Well, income taxes were a temporary measure to pay off the Spanish American War debt.........over a century later and we're not quite there yet.

I seriously don't mind paying higher taxes IF what I get in return is of greater utility than what could be delivered otherwise by private interests at lower cost, or what I need but private industry has no incentive to deliver. We're all somewhat involved in gray areas where private and public interests intersect and cross over - publicly funded museums and economic development projects (Steamtown and CATS come to mind) and private tax exempt institutions (501C3s).

I'm thinking our for-profit, private tourist operations might hurt more than the nonprofits or public guys, but depending on a lot of variables your mileage may vary. Well, who opens a private museum without a nonprofit status with the idea of making a killing anyhow? Tourist attraction, sure.......but are taxes to be raised on tourist attractions as well?

Pennsylvania seems to have not overhauled its tax structure to reflect the loss of major industry as the overwhelming majority of its economic engine. Rather than completely tear down and rebuild in a more aplicable structure for a postindustrial economy, they are working on bandaids that they can stick on while few people are looking. Since the majority of our citizens aren't patrons of museums or symphonies, an easy target.

dave

As superheater could elaborate, Pennsylvania is completely hidebound by secretive disclosure laws that only a lobbyist could love; governance and revenue structures that are locked up by an ancient constitution which is practicaly immune to amendment; historic animosity between Harrisburg and the "first-class" cities; a tradition of "walk-around-money", corruption; etc.

I'm not painting it too darkly. Civic-minded people from other states become silent in the face of Pennsylvania's moribund structures. California's referendum structure is perhaps more ungovernable, and New Jersey and California are famous for legislating Paradise. But Pennsylvania can make fair-minded citizens rend their garments ...

For-profit railroads that offer excursion service will most likely duck this. However, some revenue streams apart from the train ride itself may be characterized as "an amusement."

I recently took the family on a day trip from DC to Philadelphia. On the to-do list, after the Liberty bell, etc, was the Franklin Institute to see 60000 and another exhibit. Given the hit-an-run nature of the visit, the door cost into Franklin was a deal killer for the limited things we wanted to see. Making this cost higher would make it more difficult as I'm unlikely to put out the cost of the travel just for a full day at Franklin. It would also reduce the chance I'd make a quick visit across the street to PRM at Strasburg when I'm visiting SRR.

Bob

Perhaps a follow up question to the latest post might be how will it affect support organizations (SO)? More and more a financial/personnel support burden is being incurred by these groups. Some of these are even rising to the challenge of assuming operations when the parent institution is being closed.

Will ever rising costs and an increased tax burden on the parent institution in turn effect the SO? One of the reasons I joined the Friends of the RRMPA is my frequency of visit. Will membership rise now?

Joshua

Don't bet on it. Retroactive attempts to collect amusement taxes on the Entertrainment Line operation on the Maryland Midland out of Union Bridge put the final nail in their coffin (after the gutting of their bank accounts by their "factor", but that is another story)

Steve

Superheater didn't mention that the tax is a 6% sales tax, I suppose on top of the existing state and local sales taxes. Of all the business entities out there, museums and non profits have the hardest time generating sales revenue and as a result are usually given tax exemptions as a way to promote their worthy missions.

I am so glad that I live over the border in Ohio!

http://www.pennlive.com/editorials/inde ... ticke.html

http://www.pittsburghlive.com/x/pittsbu ... ss&feed=10

Pennsylvania has some of the best railroad heritage in the country. Lets hope that this type of nonsense does not prevail. There is a lot to loose.

Steve, was that the position of the Maryland Dept of Revenue or PA? I am not familiar with that operation.

I am sorry to hear that you will not walk across the street to visit the Railroad Museum of Pennsyvania; it is one of the great railroad museums in the country. Between the the state staff and the Friends of the RR Museum staff; do a great job!

Ted Miles

I doubt the sales tax will be applied to State agencies, such as the Railroad Museum of Pennsylvania. Most states don't tax themselves! Although it is Pennsylvania....

And across the street at the Stasburg Rail Road, they may be able to continue their position ( at least of many years ago) that they are a railroad and their tickets cannot be taxed by the state or local entities. They always had a one way fare to bolster that argument.

???

Steve,

That was the position of the Comptroller of Maryland. In MD, the municipalities may charge entertainment tax, but the Comptroller collects it. What was even more ludicrous was that individual municipalities may charge separately; and I believe that both Westminster and New Windsor were trying to dip into the (empty) trough.

When Entertrainment was a fully owned subsidiary of the Maryland Midland, I believe they could have prevailed on the STB (ICC) considerations, but once the MMID spun them off, they were fair game.

Steve

(trick question: pronounce "comptroller".)

In the past, we've been accused by local officials who had no knowledge of interstate commerce for hauling freight "in order to duck the amusement tax ..." We thought we hauled freight for the revenue that it produced, but I guess the tax man has a different world view.

I'll pass on trying to pronounce comptroller - it's Friday afternoon. Have a great weekend!

A bit off course from the initial discussion about the convoluted machinery of the Pennsylvania legislature, but just to clarify, the "EnterTrainment Line" was never owned by the Maryland Midland - MMID operated excursions for their own account before selling the equipment and an operating franchise to outside investors, d/b/a The EnterTrainment Line. As I recall, the state of Maryland did go after MMID for amusement taxes and the railroad decided it was cheaper to pay than to argue, thus establishing an unfortunate precedent that was not helpful when subsequent owners of the passenger operation were challenged by the state over the tax issue.

Pennsylvania at one time had a gross receipts tax on "intrastate" railroad revenues. It was repealed after the revenue department abruptly adopted a novel definition of "intrastate" and stirred a ruckus with the short line community (and more importantly, with the steel industry, which owned several short lines).

Alan Maples