The States Want to Tax a Tax!

The following is a perspective by postal commentator Gene Del Polito for Direct magazine. The views expressed are solely the author's

Well, it appears that the postal die has been cast. Congress has failed to enact a postal reform bill, despite the efforts of mailers and their representatives. Congress also has failed to do eliminate the P.L. 108-18 escrow of pension-reform savings that should have been given to the U.S. Postal Service. Consequently, businesses and consumers must now brace themselves for postal rate increases that will be historic in terms of their size as well as in their deleterious effects on the economy.

While mailers have benefitted from a very nice respite from the usual course of postal rate hikes, the rise in postal costs will pale in comparison to the size of the USPS' revenue resulting from the imposition of the Civil Service Retirement reform escrow. As a result, mailers will be paying postal rates that are far in excess of the Postal Service's actual need, simply because Congress and the Administration couldn't get their acts together.

Now that news alone might be bad enough, but there's another development that's looming just above the horizon that promises to make things even worse. Increasingly, state revenuers are looking for ways to fatten their tax coffers to make up for the revenue that's been lost in a lackluster economy. They're leaving no stone unturned, including the imposition of sales taxes on the postage that mailers must pay to have their mail processed and delivered by the Postal Service.

Think about it. State taxing authorities want to impose a sales tax on a "tax" (postage) you already pay to satisfy the requirements of a federal government agency. A tax upon a tax! This is nuts.

The direct mail industry is one that has a long history of doing everything it can to keep postal rates at their lowest possible levels. Now, the state tax authorities want to come along and slap a 4-10% surtax (depending on where you live) on top of the postage you have no choice but to pay because of the federal government's statutory monopoly over the carriage and delivery of mail.

And where is the Postal Service in all this? Heading for the hills. Thus far, postal executives have been silent about this "tax on a tax" despite the fact that sales taxing postage will only worsen the USPS' long-term fiscal viability because of the loss of more business to alternative media. Better than that, where are all of those "politically saavy" postal employee groups on this issue?

Kinda makes you wonder where we're heading as a nation. Stupid ideas and a dearth of leadership.