Pandemic shopping spree creates economic windfall for rural communities
Before the pandemic, many rural counties struggled to bring in enough taxes to fund services.
But a change in how we collect sales tax, followed by a pandemic, has turned things around for some of them, at least for now.
To understand what changed, you have to go back to 2008.
That’s when Washington state changed the way sales tax is collected. It would no longer be collected at the address of the store. Instead, it would be collected wherever the customer took possession of the goods.
James McCafferty is co-director of Western Washington University's Center for Economic and Business Research. He gives this example:
“Let’s think about Home Depot. If I go to Home Depot and buy a load of lumber and take it from the store, that transaction occurs at the store. But if I have them deliver that lumber, and they deliver it to my house, that transaction occurs in my driveway.”
Whenever you buy something, some of the sales tax goes to the state and some goes to the local community.
Hart Hodges teaches economics at Western Washington University. He's co-director of the Center for Economic and Business Research, along with James McCafferty.
Part of Hodges' job is to forecast what will happen with the economy in the Puget Sound region. He said stimulus money and reduced student loan payments have people feeling like they've got money to burn. But he warned that economic storms are on the horizon, and the good times will end, eventually. He said people would be wise to spend less and save more.