The Sheridan Index

Sheridan stopped by yesterday and in true form, my dear friend had another brainchild. This time the topic was taxes.

According to Sheridan, we taxpayers operate in a vacuum. We know when taxes go up in our own boroughs, municipalities, townships, cities and states. We also know when the Federal government decides to take more of our earned income.

“What we don’t know, what we are entitled to know and what the media fails to report is the tax situation in boroughs, munis, townships, cities and states across the country,” Sheridan told me. “What we need is a Dow Jones equivalent of American taxation.”

“You’ve lost me. Why should I care about local taxes in places I don’t even visit?” I asked.

Sheridan shook his head in disbelief. “Doesn’t the cost of everything you buy bother you?”

“So what’s the game plan?” I asked, settling in for a long conversation.

“First we need a list of places where factories that produce things we buy are located, making sure that a cross section of industry is represented. For instance, candy bars would put Hershey, Pa., on our list. Baseball bats are made in Louisville, Ky., so Louisville could be considered a candidate. Then there’s Racine, Wis., where S.C. Johnson Wax, maker of Pledge® furniture polish, Raid® bug spray and other household must-haves, is headquartered; Vidalia, Ga., a prime source of onions; the entire state of North Carolina where furniture-making is centered and so on. For cars, we have several choices depending on brand preference such as Maryville, Ohio, for Honda buffs,” Sheridan said, looking up from his folder.

“What about electronics, tennis shoes— stuff that’s made in other countries?” I asked. “We live in a global market, you know.”

Sheridan nodded and shuffled papers in his folder. “So we concentrate on corporate headquarter sites. Regardless of what happens in other countries, American corporations still have to pay the American tax piper. And, since a company views its tax obligation as a cost of doing business, it passes that cost on to its customers,” Sheridan explained.

“What do you do with this list?” I asked. “How do you narrow it down?”

Sheridan looked pensive for several minutes. I thought I had burst his bubble until he said, “The final list will be based on market share to ensure that the most frequently purchased items in key categories are represented. You know: toiletries, food, cleaning products, clothing, sporting goods, appliances, medicine, cars...”

“So unlike the Dow Jones Industrial Average, your list would change frequently to reflect buying trends?”

“Correct,” Sheridan said, nodding. “After finalizing the initial list of companies by key category, we publish the tax situation for each company location. And therein lies the key. Just as the Dow Jones Industrial Average tells us how stocks are performing, my tax index will alert average Americans to possible price increases and help them budget household expenses. They’ll know, for instance, that when such-and-such school district raises mill rates, this will be passed on to them in the form of higher prices by companies located in that school district.”

“And if that mill hike is combined with any other taxes imposed by the corporation’s home state plus any increases in local taxes...”

“It’s starting to make sense, isn’t it?” said Sheridan.

“With this kind of information, consumers will be able to brace themselves for higher prices. This index of yours may be the answer to the question, ‘What happened to all of my hard-earned money?’,” I said.

“The Sheridan Consumer Tax Index would be announced on news broadcasts and printed in the financial sections of newspapers. An entire cottage industry could be launched,” said Sheridan.

“What prompted this?” I asked. “Visions of a slot on CNN?”

“Everyday someone’s telling me that taxes or rates are going up, yet the increase will only cost me a penny a letter, $20 a year, $1.47 per month, a quarter an hour, just a nickel a gallon; etc., etc., etc.,” Sheridan said. “These ‘only’ types forget they’re not the only ‘onlys’ queuing up for my money. ”

“Before I buy into this completely, walk me through an example,” I said.

Sheridan nodded, then thought for a moment. “Okay. Say I need a new Mr. Wash-It washing machine. The Mr. Wash-It Company is based in Oklahoma. If the state of Oklahoma decides to increase the rate Oklahoma-based corporations have to pay for unemployment compensation, Mr. Wash-It products are going to cost more. If the school district in which the Mr. Wash-It Company sits raises property taxes because it needs to build a new high school, Mr. Wash-It products are going to cost more. Why? Stockholders want profits. To pay higher taxes and still protect profit margins, the Mr. Wash-It Company has three choices: cut manufacturing costs, move production to a lower-tax site or raise prices. Raising prices is the easiest route.”

“I hate to admit it, but you may be onto something,” I said.

Sheridan grinned. “What politician in his right mind would propose a tax increase when the entire country has just learned that 85 percent of the counties in the United States have increased property taxes, 47 of the 50 states have announced higher gasoline taxes and all but 19 school districts will be charging residents more for the privilege of owning property?”

It was my turn to smile. “A patriot who’s been advised that the average American has been asked to part with only 100 percent of his income? Now, where does Kimberly Clark make Kleenex®?” I asked. “We’ll want to include them on the list since tissue consumption in the halls of budget committees across the country is about to increase tenfold.”