No Runny Eggs

The repository of one hard-boiled egg from the south suburbs of Milwaukee, Wisconsin (and the occassional guest-blogger). The ramblings within may or may not offend, shock and awe you, but they are what I (or my guest-bloggers) think.

Wile Lee Holloway, economic super genius

by @ 21:48 on July 17, 2008. Filed under Business, Politics - Milwaukee County, Taxes.

(H/T – Owen, basically just so I can send the trackback to the discussion there)

Charlie Sykes has the text of a press release from Milwaukee County Board Chair Lee “Thug” Holloway purporting to claim that, even with a 1-percentage-point increase in the sales tax in Milwaukee County, it would still be “cheaper” to shop in Milwaukee County than in surrounding counties:

FACTS PROVE COUNTY EXECUTIVE’S "˜TAX ISLAND’ CLAIM IS FALSE

Adjusted for gas prices, most County residents would still get better deal within Milwaukee County

Milwaukee, WI – Milwaukee County Board Chairman Lee Holloway issued the following analysis after the County Executive vetoed an advisory referendum on taxes and claimed a small increase in the sales tax (and decrease in the property tax) would create a tax island in Milwaukee County. The County Executive chose a Greenfield camera store to make the announcement.

At today’s gas prices, a 1-cent increase in the sales tax would not create a tax island. For a camera costing $500, the sales tax in Milwaukee County would rise by $5. But, factoring in our current gasoline prices, it would be slightly more costly for many Milwaukee County residents to drive to the nearest camera stores in Waukesha County . Using the County Executive’s example of Art’s Cameras Plus on S. 76th Street in Greenfield, the nearest comparable camera stores outside of Milwaukee County are:

* Art’s Cameras Plus, 2130 W. Silvernail Road, Pewaukee (18 miles)

* Best Buy, 19555 W Bluemound Rd, Brookfield (14 miles)

* Mike Crivello’s Camera & Imaging Center, 18110 W. Bluemound Road, Brookfield (12 miles)

At a minimum, the nearest camera store outside of Milwaukee County is 24 miles roundtrip from Art’s Greenfield location. If an average vehicle gets 20 miles/gallon and fuel is $4.29/gallon, then the $5 in sales tax savings for a $500 camera would be offset by an increase in fuel of $5.14, making the Waukesha County purchase slightly more expensive than purchasing at the Art’s Camera store in Greenfield .

If the customer would choose to drive to the Art’s Camera location in Pewaukee (36 miles roundtrip from the Greenfield location), fuel costs would increase by $7.72, making the Milwaukee County purchase $2.72 cheaper.

Let’s send the train into the explosives shed, shall we? First, what idiot would drive from his or her residence to Art’s Camera in Greenfield, head out of the county, then return to Art’s Camera in Greenfield on his or her way back home? That difference in mileage would properly be the difference of driving from one’s residence to Art’s Camera in Greenfield and back and driving from one’s residence to an out-of-the-county store and back.

Second, Holloway forgot that the sales tax in Milwaukee County is already 0.5 percentage points higher than it is in Waukesha County (or Racine County, for that matter). Thus, if Holloway got his way, it would be an additional $1.50 per $100 spent, not $1 per $100 spent.

Now, let’s take a more-realistic example of somebody living at 35th and North, smack dab in the middle of Holloway’s district. I’ll even make it easier for Holloway by taking the Greenfield Art’s Camera out of the equation and substituting the far-closer Wauwatosa Best Buy. For the hypothetical resident looking for a camera, it’s a 10-mile round-trip to the Wauwatosa Best Buy and a 27-mile round-trip to the Brookfield Best Buy.

Here comes the tricky part; the trip to the Wauwatosa Best Buy is entirely on city streets, while the trip to the Brookfield Best Buy is mostly on the freeway (roughly 20 miles). As most vehicles get better gas mileage on the highway (Toyota and Ford hybrids excepted), it’s not accurate to simply say that the trip to Brookfield is 17 miles longer and use the same gas mileage estimate for both. Therefore, let’s use my car, a 2004 Subaru Outback Sport, as the vehicle of choice for that resident. It is rated at 21 mpg in the city and 28 mpg on the highway, using the EPA estimate from that year. My experience has been that, for once, the EPA is pretty close to accurate.

The trip to Wauwatosa (10 city miles divided by 21 city mpg) would take about 0.48 gallons, which, using the Holloway estimate of $4.29/gallon, would cost $2.06. The trip to Brookfield (20 highway miles divided by 28 highway mpg, plus 7 city miles divided by 21 city mpg) would take 1.05 gallons and cost $4.50. Going to Brookfield would cost an additional $2.44. That would make the trip out to Brookfield worth it with a camera pre-tax price of $162.67 or higher.

It gets even better for that resident (and uglier for Holloway) if public transportation is used. The MCTS fare is $2 each way to Wauwatosa, or $4 total. The combined MCTS/Waukesha Metro Transit fares, including a $0.25 zone fee for taking Rt. 10 west of 124th St. and a $0.25 transfer fee between the two bus systems is $2.50 out to Brookfield and $2.25 back, or $4.75 total. If that resident wanted to spend more than $50 and take public transportation, he or she would be better off going out of the county.

It would be a boon to communities surrounding Milwaukee County, especially Waukesha and Racine, which do not impose the 0.5% county sales tax that Milwaukee, Ozaukee and Washington Counties impose.

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