At the Car Wash

Years ago, I attended a round-table discussion with the late Congressman from Iowa, Leonard Boswell. He wanted to know what small businesses needed to compete. Most people at the meeting talked about taxes, paperwork, etc., while one business owner replied “customers.” I never thought of it before that day, but that reply made the most sense. How to acquire more customers is probably not something the government can assist with.

Operating a small business is tough. A locally-owned bookstore must compete with Amazon. A family-owned restaurant has to compete with McDonald’s, Chipotle, and IHOP. And locally-owned gas stations are a thing of the past. It is my opinion that the fastest growing small business is that of washing cars.

Driving east on Hickman Road in Des Moines one afternoon, I noticed a previously vacant lot had construction activity. My first thought was that it might be a new small business. “That’s good,” I thought. A few days later I was driving on East Fourteenth Street and saw the construction of a similar building with similar colors. I paid closer attention and realized a new car wash was being erected. It was an identical match to the building on Hickman Road. It dawned on me: “How many car washes does Des Moines need?”

When I was actively lobbying at the Iowa Capitol, a man named Bill Smith befriended me. Actually, he was the third lobbyist at the Capitol that year whose name happened to be Bill Smith. The other two Smiths were Iowans and at least one of the Bills lobbied issues similar to the ones I worked on. Why this particular Smith wanted to buy my lunch occasionally perplexes me to this day. I suspect he was using receipts to show his client that he was speaking with legislators. Usually, legislators in Iowa cannot accept a meal from a lobbyist because of cost limitations (and the potential for being outed for having a lack of ethics). Bill must have noticed that I enjoy eating. I tried not to accept his generosity, but his money to the cashier was far quicker than the eye. His issue was to eliminate sales tax on car washes. I knew that, and I would have opposed that matter if I had a client who cared. He sat with me at a table in the cafeteria, so I imagine he also wanted to talk to someone interesting. There is no doubt that I was an interesting character. That’s probably why most people didn’t want to sit with me.

I don’t know how he accomplished his goal since I never saw him talk to a legislator, but a provision in a bill toward the end of the session included his brief lobbying success.

NEW SUBSECTION. 96. The sales price from the sale of water, electricity, chemicals, solvents, sorbents, or reagents to a retailer to be used in providing a service that includes a vehicle wash and wax, which vehicle wash and wax service is subject to section 423.2, subsection 6.

The language above was enacted and is added to the rest of the one-hundred nine [109] exemptions from state sales tax.  The exemption allows car wash owners to avoid paying sales tax on “water, electricity, chemicals, solvents, sorbents, or reagents to a retailer to be used in providing a service that includes a vehicle wash and wax.”

Prior to May 25, 2012, every five dollars you paid to wash your vehicle had 30 cents deducted from the owner’s profit to pay a sales tax. It’s even more significant in the Des Moines area now since the sales tax rate has increased to seven percent from the six percent rate of 2012. It’s not just the increase in nickels and dimes flowing into the pockets of car wash owners, there’s also an added benefit of not having to comply with the monthly sales tax paperwork.

However, like Walter and Skyler White in Breaking Bad, I also have to think that many of these so-called small businesses might be laundering more than automobiles.

No wonder car washes in Des Moines are sprouting up faster than coffee kiosks.

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