Deposits and Taxes

As a few of you know, I live near the Michigan-Indiana border. There are certain benefits to living in such an area particularly when it comes to money.

This is a can of coke. Michigan has a bottle deposit law which requires a consumer to pay an additional 10¢ on every unit. So if I bought a case of Coke, I'd pay $2.40 in deposits. If I bought a 12-pack, I'd pay $1.20. The purpose of the law is to encourage recycling because when you return your bottles, you get the deposit back. It's a very successful program. An estimated 95-98% of soda cans make it back for recyling and roadside litter has been reduced by 84%.

Some people use the deposit system to make money. When I was at Michigan State, there was a well known guy who rode a bike around campus collecting discarded cans and bottles. It wasn't unusual to see him come into a lecture room after class had been let out where he would scour the room for bottles left behind. Sometimes, I'd see him with three garbage sized bags full of cans. How much he could make in a day, I never knew. Sadly, Ernie the Can Man died a few years back. While most of us never knew his name while he lived, he was missed by the MSU community.

Anyways, yesterday I bought a case of Coke that was on sale at an Indiana store for $3.96. Indiana does not have a bottle deposit system. This particular store, however, gets its soda (we call it "pop" here) shipments from a Michigan warehouse. So the case that I bought had the deposit stamp on them. I wasn't charged a deposit though. So if I take those cans that I bought in Indiana and returned them here in Michigan, I would get that $2.40 deposit without having paid it in the first place. Let's do some math:

+$3.96 -- Price of 24 can case of Coke
+$0.24 -- Indiana sales tax at 6%
+$4.20 -- Total bill
-$2.40 -- The deposit I could get back by redeeming in Michigan
+$1.80 -- The end cost to me for 24 cans of coke

That amounts to 7.5¢/can. What a deal!

Had I bought that case at the sister store in Michigan I would have paid 17.5¢/can.

I must say that redeeming those cans in Michigan would be illegal since I didn't pay into the deposit fund. And I'm not saying that I do it. However, it's not like Michigan would know since there aren't anything on those cans to suggest they weren't bought in this state.

Taking advantage of the deposit system isn't the only thing available to Michiganders living near Indiana, there are lower tobacco prices across the border. I don't smoke, so that isn't a plus for me. But, the gas tax is. Michigan's gasoline tax is 35.2¢/gal with an additional 6% sales tax (double taxation anyone? Actually, triple taxation because of state tax+federal tax+sales tax). Indiana's tax is 31¢/gal with an additional 6% sales tax. It may not seem like much but there is a noticeable change in gas prices as you get further away from the the border in either direction.

There is a bill in the Michigan House of Representatives to raise the gas tax by 9¢. Another part of that bill is to increase the registration fee by 50%. I paid $109 last month for my car to pay for road projects in Detroit. Now they want me to plop down another fifty bucks to improve roads I'll never drive on. Frak that. I'm already planning on buying my gas at the Wal-mart gas station in Indiana (where I get a 3¢/gal discount). I'm telling you-- Hoosierland is looking better and better all the time.

And the governor and legislators continue to look for a way to attract new businesses and residents. Idiots. As Simon said, "Last one out of Michigan, turn off the lights!"