Sales tax is always an interesting topic. There is always the political angle of “we pay too much in taxes” and the whole “do we get value for taxes we pay.” These are all reasonable arguments that I love to watch as part of policy debates. When I start to look at data, call it the exploratory phase, I like to run graphs and other data analysis by others as much as I can. (This usually means my wife gets asked to check my work.) Now I caution this is still exploratory, so I am not ready to make big conclusions without significant caveats. Let’s start with a simple look at the collection amounts.
Not a huge surprise the larger city with larger retail sector and larger population has more in sales tax collections. I’ll scale this in a later post and we will see the outcome. Both cities experience an increase over time, though clearly Fargo experiences what I would almost term a discrete jump to a higher average level, possibly with higher volatility. Now something clearer in the next two graphs is a remarkable stability, or at least to my eyes.
In monthly percentage change the two graphs are remarkably similar. In fact averages values for the monthly percentage change are very close for the two cities (though compounding will make the level gap widen over this time horizon). With this graph in hand I decided to look at the difference between the two cities to see what it tells us.
Positive gap implies more tax revenue in Fargo. Big surprise. What I am surprised about is that the gap stays fairly stable after 2010. Sure there is plenty of volatility and bouncing around but it seems to be a pretty stable cyclic pattern. This has interesting implications for the growth in the two cities. Stable gap in tax collection would seem to imply Grand Forks is not falling further behind. That is not likely the general perception of many. Why is this the case? Still working on that one.