Remember the old computer game Lemonade Stand? Nostalgia. Now, let’s use that to demonstrate why there still isn’t a good explanation of how Epic Pass taxes will be divvied up between Summit County and Park City.

In Lemonade Stand, you make choices about prices and marketing to achieve success in the sugar-water business. Let’s complicate it by adding sales tax to it. We’ll start with you owning one lemonade stand in Lemonsville. Lemonsville has a 5% sales tax. You decide to make it easy on your customers and sell your lemonade for $1. You’ll simply subtract the tax out of the total. Sally comes up to buy a $1 glass of lemonade, pays $1.00, and about 5 cents of that is sales tax. The state will take their share of the 5 cents and Lemonsville gets the rest.

Your lemonade stand is doing great but you decide to take it into the 21st century sell an “all-you-can-drink” pass from your stand for $100. Sally loves the idea and comes and buys a pass from your stand. She pays $100.00, and about $5 of that is tax. The state takes their share and Lemonsville gets the rest.

Darn, your family has to move out of state. You are moving to Sugartown but you want to keep your lemonade stand open. So, you make a website to sell your passes and hire some of your classmates back in Lemonsville to run it. Passes are still $100 and Chip from Lemonsville buys the first one. He pays $100.00. The tax is still $5 because although your website is physically out of state in Sugartown, your lemonade stand is still in Lemonsville. That $5 goes to the state, they take their share, and Lemonsville gets the rest.

You are now rolling in the dough and decide to expand by buying someone else’s limeade stand in the neighboring town Lime City. Now you have a lemonade stand in Lemonsville, a limeade stand in Lime City, and you live in a completely other state. How are you going to maximize your profit? You decide to offer your “all-you-can-drink-pass” for $100 and make it work both for lemonade and limeade at your two stands.

Your accountant decides he better call you. He tells you that while Lemonsville’s sales tax is 5%, Lime City’s sales tax rate is 10%. So, you better account for it correctly. You say no problem. If someone buys a pass at my lemonade stand I’ll charge them 5% and if they buy the pass at my limeade stand, I’ll charge them 10% sales tax. Your accountant asks what rate you’ll charge if someone buys it online. You pause and say…uh…uh….

“I’ll divide that out based on which stand they use the pass at each time.” Your accountant replies, “how do you know how many times this year they are going to stop at your stand?” He continues, “so if they come once in June, what are you going to send to the state on June 30? All of it?” You reply “no”. “I’ll send some in July and the rest in August.” The accountant then says “what if that person never comes back in July? How much will you send?”

So, you ask your accountant what to do. He reminds you that you have included tax in your pass price and Lime City taxes costs more. He says it would be financially smart to find a way to make more taxes come through Lemonsville. He says you’ll make $5 more on every pass sold through Lemonsville. You think and think and think about a way to make it defensible to have Lemonsville taxes be collected a majority of the time. You decide to collect tax at the first place the pass is used. Your lemonade stand is bigger, opens earlier, and has more customers than your limeade stand. You might not save every penny but at least you’ll make more! And indeed you do.

Lime City is not happy but what can they do? Their sales tax revenues are down and they don’t have as much money as when the limeade stand was run locally. They talk to their accountant. He says “maybe you should have written to the State Tax Commission and got a ruling before this all started”. They say, “seriously, what should we do now?”. He responds, “Well, I guess you could raise taxes”.