Autobiography - The Galindo Group

Ram Galindo THE MAKING OF AN AMERICAN Page 220
In Texas the current sales tax is 8.25 % of the invoice cost. When buying any
equipment, parts or supplies the private owner is obliged to pay the state 6.25 % of the
cost of his purchase and the city of its residence up to 2 %. Its tax-exempt counterpart
contributes nothing. When a customer signs up as a member, the private club charges
8.25 % tax on all dues. The tax-exempt charges nothing and remits nothing to the state
or city. This not only creates a significant increase in operating costs for the private
person, but also hurts the state’s revenues, which must seek other taxes from the same
tax-paying groups that are already overtaxed.
Even worse, at year’s end the local school district, city, county, hospital district, fire
district, drainage district, junior college and other ad-valorem taxing authorities together
demand a property tax payment sometimes in excess of 3.9 % of the gross market
value of the private club installations. The tax-exempt entity pays nothing. This by itself
is an overwhelming imposition on the businessperson trying to deliver a service against
such unfair competition. What is equally bad however, is the loss of revenue for local
governments. Every one of these local taxing authorities turns around and makes up
that loss by taxing again, at a higher rate, the already overtaxed private investor.
Finally, if by extreme better management and great good luck, the private club is able to
make a profit, the federal government taxes it immediately. By inference it follows that if
in the face of these overwhelming negative odds some private clubs are able to make a
profit, the tax-exempts most certainly must make a greater surplus. Yet, none of it is
taken by anybody. As long as it observes the bureaucratic rules and definitions of “notfor-profit,”
these surpluses remain entirely for its own use, as only it sees best to use.
This is the dream of the American system! Should we all now claim tax-exempt status?
The fact that this sector of the economy continues to grow unabated seems to indicate
that more and more people are doing so.
As all informed Americans know, Senator Phil Gramm has been a very incisive and
courageous figure among our national leaders. His perception of the relative weight of
factions lobbying politicians is equally shrewd. When I brought this issue up to his
attention his response was, “Touching the YMCA is getting too close to touching Mother
Church.” He declined to do anything about it, and I still wonder why Mother Church
herself should be tax exempt. This effort demonstrated to me then, and I have not
changed my mind today, that practically all of our laws are made reality by the most
powerful lobbies. Neither the grassroots, the legislators or the executive power, will
pass a law without the input of the lobby. I see this shifting of law-making power as a
potentially serious soft spot on the armor plate that protects our system.
Obviously, this business model glares with unfairness and it must be changed lest
everyone file for tax-exempt status. The difficulty is not in understanding the message.
Everyone who sees it understands it. The difficulty lies in disseminating it among the
right people. The tax-exempt lobby has been around for a long time and at its top it
connects industries as basic and disparate as health, education, housing,
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