Cabaret Tax in Connecticut

[jnastynebr]

I work for a company that owns and operates fine dining establishments in NY, CT, and MA. Paying silly taxes on everything is just part of operating a business in the Northeast, but it has recently come to our attention that an entertainment tax of 3% has been proposed as part of the state's 1.4 Billion tax package. The tax would be charged to patrons who dine/drink in establishments that provide live music as entertainment. In addition to the 6.5% tax already imposed to Connecticut diners, an additional tax imposed on food and drink ordered during the performance would put total taxes at close to 10%.

Luckily the software systems implemented by many restaurants do not have temporary tax adjustment functions, which means that the additional tax would have to be added by hand. Local businesses have made enough of a stink about it that the proposal has been sidelined for now. However, the damage may be done, as restaurant/bar owners may be less likely to hire live bands if such a tax was ever implemented.

 

Here is a link, if you wish to read more:

http://www.ctnewsjunkie.com/ctnj.php/archives/entry/cabaret_tax_ixnayed/

[Bowdiddley]

Damn politicians! Going to ruin everything!

[Searcy]

Welcome to the Peoples Republic of CT....

[TommyK]

...,The tax would be charged to patrons who dine/drink in establishments that provide live music as entertainment. In addition to the 6.5% tax already imposed to Connecticut diners, an additional tax imposed on food and drink ordered during the performance would put total taxes at close to 10%.

 

Welcome to Illinois, aka Downstate Chicargo. You can thank Richard Daley, the Elder. It was an entertainment and lodging tax added to restaurants and hotels state wide to pay for McCormick Place. Hello.... it's already been built. But, the tax remains.

 

 

[DanvillRob]

Do you think a 3% tax will cause establishments to discontinue live music?

 

Since Conn. is so small, could it cause patrons to simply frequent clubs in NY or Mass? (NOT that either of those two states have reasonable taxes).

[Tman]

I thought they were increasing taxes on red wine.

[jnastynebr]

Do you think a 3% tax will cause establishments to discontinue live music?

 

Since Conn. is so small, could it cause patrons to simply frequent clubs in NY or Mass? (NOT that either of those two states have reasonable taxes).

One of the restaurants we represent has live acts almost nightly throughout the summer months. Early in the week, they essentially open the stage to several local acts. If the tax does go into effect, we will most likely only book our more popular acts on the weekends and cut early week entertainment. This has been discussed, but the tax has been sidelined for the moment.

On another note, I was also informed that an inventory tax is in place This means that any product that has not been sold at the end of the fiscal month will be taxed again. This essentially means that we cant stock up on frozen foods (fries, chicken fingers....) to get better deals from our wholesalers.

I also just found out that I will also be taxed for wearing my boxers around my own home.

[DanvillRob]

On another note, I was also informed that an inventory tax is in place This means that any product that has not been sold at the end of the fiscal month will be taxed again. This essentially means that we cant stock up on frozen foods (fries, chicken fingers....) to get better deals from our wholesalers.

 

Maybe the wholesellers can stock them for you at their warehouse, (which hopefully isn't in CT).

 

 

I also just found out that I will also be taxed for wearing my boxers around my own home.

 

Maybe that's not so much a tax as it is a fine!

 

[retrosurfer1959]

Yep the so called luxury taxes for supposedly non required things like liquor, cigarette's and entertainment as well as luxury items in general are very popular in todays government.

 

Makes them able to advertise it as only impacting those that choose that lifestyle and they should be able to afford it if it's a choice, they just don't ever think (or care) about who else it impacts. Use taxes are the other big area of available funds according to the public officials.

 

The next big wave will be use taxes that you are required to pay for anything that is used in a city or state irregardless of where it was purchased, this will also be huge especially for the internet where you buy a large item like a $5,000 dollar guitar online so there are no sales taxes but now the use tax kicks in and your basically required to pay sales tax in the state where you live because you guessed it that's where your going to use it hence the use tax.

 

And guess what else - those taxes already exist in most states and many cities, they just haven't figured out how to collect them from the little guys yet. Large companies like electric and gas companies already pay these taxes all across the country which they of course just pass on to the consumer.

 

if they ever figure out how to catch the average citizen and charge for theses taxes it will be another huge tax on people who buy over the internet just like the VAT in europe but between states.

 

It still our faults though we keep demanding more and more services from the government without wanting to pay additional fee's and the cost needs to be paid somewhere so until we stop demanding more parks, More pools, additional parks and recreation classes for our children along with perfect streets and landscaping and multiple day garbage pickups every week, and about 3x the number of police officers by population we had just 15 years ago we can all just hold on because these kind of taxes will just keep increasing.

 

I watched a similar debate and vote at a public meeting last year on raising entertainment taxes and the vast majority of people present and voting were all for the tax increase as proposed or even higher than asked and over thirty of them stood up and they each said basically the same thing. Saying that they supported the increase because it would not effect them it would only effect the "other people" visitors and people with money because that's who went out and paid a lot of money for entertainment anyway. So an additional tax wouldn't hurt them very much and it would help all the "regular" hard working people. They kind of forget that it hurts the bar owners, the musicians, the waitresses, the bartenders the cooks, the delivery drivers and all the other people that depend on that income.

[damian]

Well, if the clubs say that the bands are just practicing, then the tax shouldn't apply....just sayin'.....

 

I think kids who get less than a B grade should be taxed........

 

I think that each of VODKA STEVE's posts should be taxed, seeing as how TAXING they are........

[Searcy]

But high taxes are great! It's how we get all this cool free stuff!

[milod]

Government in general loves taxes because it allows bureaucrats to increase the numbers of government employees and therefore their own prestige. The fact that fewer people are working at productive endeavors and increasing the gap between haves and have-nots is irrelevant.

 

Whatever.

 

That's the weakness of "democracy" too, in that folks want what they don't have to pay for as long as they figure others will pay. Yet... they fail to see things in terms of macroeconomics.

 

m

[DanvillRob]

Government in general loves taxes because it allows bureaucrats to increase the numbers of government employees and therefore their own prestige. The fact that fewer people are working at productive endeavors and increasing the gap between haves and have-nots is irrelevant.

 

Whatever.

 

That's the weakness of "democracy" too, in that folks want what they don't have to pay for as long as they figure others will pay. Yet... they fail to see things in terms of macroeconomics.

 

m

 

 

Oh, Milo..... you might have opened a can-o-worms here!

 

Don't ya think that once people figure out they can vote themselves $, we're headed down a bad path...and once more than 50% of the people who vote aren't invested in the funding of government, (i.e. pay taxes), the recipe for disaster is eminent!

[jnastynebr]

Before we get completely off track, my intent was to examine these policies' effects on musicians and the businesses that provide them a venue. No one likes paying taxes.

[BigKahune]

.

This reminds me of when ASCAP went nuts a few years ago. They literally killed live music in small venues like bars and restaurants. The music scene in my area is no where near what it was in the 70s and 80s and 90s. I'm not sure a 3% tax would have an effect like that, but it's a chilling warning that the Cabaret Tax could go higher and really cause damage to the music scene in CT.

[DanvillRob]

.

This reminds me of when ASCAP went nuts a few years ago. They literally killed live music in small venues like bars and restaurants. The music scene in my area is no where near what it was in the 70s and 80s and 90s. I'm not sure a 3% tax would have an effect like that, but it's a chilling warning that the Cabaret Tax could go higher and really cause damage to the music scene in CT.

 

I've had a couple of songs bootlegged and put out on CD's and vinyl over the years..... I never bothered with it, since the money was so small. However, Ace Records, in London stopped the distribution of Pebbles 11 CD due to it including one of our songs. Fortunately, I was able to buy a couple of copies before they became extinct!

[milod]

I hope that my comment was seen as a cultural rather than specifically partisan political one.

 

For one thing, state taxes in states where there is a large tourism industry do tend to have more "bed and booze" sorts of taxes than elsewhere. We have a "second penny" sales tax where I live that comes from that. On the other hand, it helped us build a nice new set of corrals and arena and doubled our grandstand space at the rodeo grounds.

 

I know in some places there's already a higher tax structure - mostly states where there are larger "indigent" populations and politicians who represent them when it comes to benefits.

 

But I think ASCAP and BMI have far more to do with cutting live entertainment - and the general economic circumstances all around us.

 

The problem in pro taxation circles as opposed to budget cut circles is that they tend to see "sin" and "wealthier" folks as targets forgetting the potential larger economic impact.

 

OTOH, one might make a case that saving government jobs of various sorts also helps maintain consumer spending... The big weakness is that government jobs seldom are cash creators. So one gets into philosophical as well as economic arguments.

 

It's a tough deal all around that is not terribly simple.

 

Personally I still tend mostly to blame ASCAP and BMI.

 

m

[Andy R]

To me it is all just filling a hole with dirt we got from digging another hole...

[jnastynebr]

Oh man.......Dont even get me started on BMI. One of the previous owners of a restaurant we now operate (the one that I mentioned earlier) was being sued by BMI for royalties when he sold it to us. I actually dealt with them for the first time this year, and it was not pleasant. They walked in off the street and wanted 3K in royalties. At the time the restaurant was going through renovations and rebranding, so it wasnt making much money yet. We eventually agreed to pay them $2,300 to back off, but in my mind, that is about at the level of thugs extorting "protection money".

Bottom line, its not going to take much more for us just to say "F it", and scrap live entertainment at this venue. We run other restaurants that are much more sucessful, but this is one is not doing as well, and it would be nice if we could book some live shows to bring in some patrons.

Its just frustrating to aquire a "project" restaurant that has changed hands 3 times in five years and have everyone treat it like a cash cow. Now the state wants to tax our patrons 10% for live jazz during Sunday brunch.

[BigKahune]

.

J -

 

I got a cousin in Cleveland that went through the same crap with his restaurant. He finally quit live music because of the royalty costs. That's just what happened in my area. What a shame.

 

For those that have releases bringing in royalties, I don't begrudge that. I just wish in the case of live music, an agreement could be made on a royalty structure for live music that would help keep the smaller live venues open.

[milod]

ASCAP and BMI are almost exactly that, thugs, as far as I can see. They collectively even claim folk music hundreds of years old as "theirs" and you're guilty until proven innocent if they decide to destroy you with a lawsuit.

 

Only "name" folks with big corporate participants regularly heard on broadcast and who are directly involved in BMI and ASCAP ever see royalties even as much as the "agents" who roam the nation and kill small live music venues.

 

As for taxes up to 10 percent, any small business has something similar if you consider taxes on taxes, etc.

 

I'm not really joking when I say, too, that the most successful businesses nowadays aren't those that create the best product or services, but those that have the best tax accountants.

 

m

[Kelvinator]

 

if they ever figure out how to catch the average citizen and charge for theses taxes it will be another huge tax on people who buy over the internet just like the VAT in europe but between states.

 

 

I own a small business in PA and buy most of my supplies from Internet sources - simply because they are not available locally. A couple of years ago, the state demanded use tax be paid on all Internet purchases. If you don't declare Internet or out of state purchases - they will do it for you. They would just estimate what you could have spent and tax you accordingly (and believe me - the state's estimate is not conservative). We had to go back through 2 years of receipts and pay the back taxes, and now have to remit monthly use tax along with our sales tax.

 

It won't be long before they do the same for personal purchases - declare them yourself or we'll be happy to do it for you!

[milod]

Most U.S. states do have a similar "use tax" that requires purchasers to pay their equivalent sales tax.

 

Delaware, Alaska, Montana, New Hampshire and Oregon are exceptions. Businesses, obviously, are more likely to be hit by enforcement.

 

There's also a move toward a federal law requiring a national standard sales tax that would be collected in e-commerce as though the selling business had nexus within the purchaser's "state." A number of states made some changes to their sales tax tables some years ago and it's kinda been left hanging lately.

 

m

[DanvillRob]

Most U.S. states do have a similar "use tax" that requires purchasers to pay their equivalent sales tax.

 

Delaware, Alaska, Montana, New Hampshire and Oregon are exceptions. Businesses, obviously, are more likely to be hit by enforcement.

 

There's also a move toward a federal law requiring a national standard sales tax that would be collected in e-commerce as though the selling business had nexus within the purchaser's "state." A number of states made some changes to their sales tax tables some years ago and it's kinda been left hanging lately.

 

m

 

Right now the Fed's collect 24% of our GDP. Historically it's closer to 18-19%, (regardless of the tax rate).

 

That leaves 76% to cover state & local taxes....plus, of course, that nagging stuff like food and shelter.

 

When they tax businesses for internet purchases, there's a better than even chance the business doesn't go to the basement and print up some money...they get it the only place they can...from whoever uses their good and services. There's no choice but to wrap the taxes they pay into the cost of whatever they're selling.

 

Increase taxes on gas..... fuel becomes more expensive, (and of course every product that ships using fuel.....which is pretty much everything ... goes up too). So who pays...us, of course.

 

It's clear to me that if there was a zero tax rate, the feds would get zero tax revenue. It's just as clear that a 100% tax rate would also result in zero tax revenue. Somewhere between the two is what the constant fight is over.

[milod]

Rob...

 

My guess is that at some point the feds will convince Americans that all taxes would more efficiently be collected at the federal level with a standard sort of federal taxation. Then the fun begins. I figure I'll be dead by then, but I think some on this board are quite likely to see moves toward that increase in their lifetimes.

 

m