Source: The Montana Tavern Times, Feb., 2005, published monthly by Continental Communications, 125 W. Granite St., Suite 102, Butte, MT 59701. By Cole Boehler, Editor/Publisher
The Montana Tavern Times I love Montana.
I love the magnificent plains with their stark and daunting beauty. I love our majestic mountains wearing snow on their peaks in July. I love the room we have to roam without being shoulder-to-shoulder with other roamers.
And I love the people here and the qualities they've inherited from generations of honest, hard-working, tough and independent forebears.
But we do, I think, possess a character flaw. And I believe that we may have inherited that from the generations who lived under the thumb of "The Company."
The Anaconda Mining Company, for all intents and purposes, owned the state - its minerals and timber and water, not to mention its government, courts, newspapers and workers. Under those circumstances, there was a widely held notion that it was okay to steal from The Company--punish the company--because The Company was stealing from the state and its citizens and sending our wealth to Wall Street.
Further, there seems to have been--and still is today, to some extent--the notion that anyone who's making a good living or getting wealthy must be doing something that's unfair or wrong and so should be punished by having their wealth and assets confiscated.
It is a jealousy of success. We seem to resent people or businesses that we perceive are thriving and growing and making good profits. With that resentment, we attack them and try to damage them.
I don't like that about Montanans.
We've got a state budget with a reported surplus nearing $300 million. So why are there those who are talking about doubling the gaming tax?
I appears to me that they believe some folks are making a decent living or, God forbid, getting wealthy and therefore deserve to be brought low. Yes, we have licensed businesses here that have excellent incomes, but most are mediocre, many are poor.
Licensed businesses had an average return of 8.5 percent in 2002, when studied by the Bureau of Business and Economic Research at the University of Montana. That had declined from 13.2 percent in 1997. They paid on average $30,000 each in gaming taxes in the last year and at least $74,000 in total taxes. They paid over $50 million in gaming taxes alone into the state last year, $3 million more than the year before. They each had average net margins (before capital costs, the cost of promotions and income tax) of $51,000.
Now we have the wealth confiscators--the "income transfer" advocates--planning to take another $30,000 a year from many of these Main Street businesses. Right, simply grab more than half of their annual income.
I'd venture to say that those who are proposing and backing a doubling of the gaming tax have never owned and operated a business. They equate business revenues with business profits: big revenues equal big profits, so goes the uninformed supposition.
Of course, that's ridiculous. Most often, along with big revenues come big expenses, big debts and low margins. These folks who believe in punishing success, only see the revenue side of the equation.
If my business had revenues of $1 million, some people would assume I had a handsome income. However, they would be wrong if my business had expenses of $999,000 or, worse yet, expenses of $1.1 million. Yet, some people would ignorantly propose I be heavily taxed because I had big revenues.
There are those who will claim Montana's 15 percent gaming gross revenue (sales) tax is low, though in several jurisdictions it is lower and in two, about half that much. These folks will not be taking into account the total tax picture. They will ignore differences in state real estate and equipment property tax rates and in income tax rates and other taxes that fall relatively heavily on our Montana small businesses.
The Illinois gaming industry is more than twice as big as Montana's and is comprised mostly of riverboat and dockside casinos with a full array of high-stakes gambling, from roulette to craps, blackjack to slot games. When that state doubled the high end of its gaming tax in 2002, employment in licensed business fell 17 percent (1,822 jobs were cut), wages paid to gaming workers fell $43 million (10 percent), gaming business revenues fell $91 million (5 percent), gaming business customer visits fell by 2.2 million (12 percent).
But, gaming tax collections rose by $53 million.
So, here's what Illinois got for their $53 million in additional tax collections: 1,822 lost jobs, $43 million in lost worker income, and $91 million in lost income for businesses. It doesn't exactly pencil out as a wise move, does it.
But this is what is really ironic: Just across the border in Indiana, with casinos featuring wide open high-stakes games like Illinois, they left gaming tax rates alone. Wages earned by gaming workers rose by $75 million, gaming business revenue rose by $129 million, customer visits rose by 2.9 million...and gaming tax collections--without a rate change--went up $158 million!
The damage caused in Illinois was certainly to the benefit of neighboring Indiana.
The Illinois scenario would play out similarly in Montana, except that I would expect the damage here to be more severe, given our licensees' already low and declining margins, and their inability to compensate with new games or changes in the wager and payout maximums--in other words, their pricing--which is set in statute.
Why do we insist on eating our own? Why prey on and punish 1,700 locally owned, mom 'n' pop businesses and 22,500 of our fellow workers? What can possibly be the real motivation behind these moves? Where is the rationale, especially given a $300 million budget surplus?
The idea is mean spirited, vengeful and it just makes no sense at all.