Bean suggested I toss this up there, and he's correct. This is an interesting development, and one I don't completely understand.
Here's what I don't get. Why should I pay Massachusetts a sales tax for an item I bought in New Hampshire?
I'm not an anti-tax guy, I get that we need to pay taxes in order to maintain society and all that. But I think the government needs to give in order to get. And what exactly does Massachusetts state government give me to warrant taxing my NH purchases?
It provides no infrastructure to support the NH stores, no police or fire protection. It doesn't educate the sales force or perform any related function at all. So what justifies the tax? Is this simply a case of tax because it can?
I'm sure this is driven partly by the desire to level the playing field between the two states. No doubt, Mass is trying to grab at ever dollar it can. I hate the notion of taxing online sales, but I can understand that Mass and the city maintain the roads for the trucks that delivers the package. The delivery truck could be seen as an extension of the store.
But what right does it have to tax the dollars I spend in NH? Is this based upon my use of the road to get to those stores? If that's the case, maybe the state should grab a piece of the action when The Boy goes to visit his grandparents in Maine. Perhaps I should mail a piece of his chocolate turkey to DOR.
Thoughts?
16 comments:
Hey Tom thanks for posting about this. I initially caught wind of this a couple of days ago and it got me pretty fired up. That the Commonwealth has the nerve to try and force a NH store to assess a sales tax to MA residents is preposterous. What's next, a checkpoint on Routes 1, 95, 93 and 3 to search our cars for goods? You touched on all of the right arguments against this absurdity, so I won't be redundant. I will, however, continue to buy my big ticket items, including tv's and computers, in NH.
While I think that MA is sorta crazy to try to enforce taxation through NH vendors, we are all supposed to pay what's called use tax (not that I use Wikipedia for all my tax advice) on products we purchase outside the state for which we do not pay sales tax. Technically, any non-taxed internet purchase falls in this category along with anything we buy on a visit to our neighbor to the north. It gets declared on your state income tax form. I am 100% certain that most, if not all, consumers don't do this.
But I will tell you from personal experience that the State does go after businesses that don't pay their use tax. I was at a company went through a use tax audit. It turns that since had purchased *all* our computer equipment via tax-free mail order we were on the hook for five figures of taxes and penalty. Ouch.
More useful than that wikipedia link I gave you. Here's the Mass Department of Revenue info for consumers.
You really expect MA to just let revenue flow freely into NH? Especially NOW??
We here all have the ability to drive for 15 mins. and be in a state w/no sales tax. People in most other states don't have that ability (a luxury, really) - so what makes us so special?
And doesn't it say in the story that it's a requirement? Yes, it does!
Massachusetts residents are required to pay a "user tax" on New Hampshire-bought items that would have been subject to a 5 percent sales tax had they been bought in Massachusetts.
Does that mean it's a law? I'm confused!
Thanks, Sunday Cook, I'm less confused now. You're right - MA is sorta crazy.
The Massachusetts state government will do anything aside from reducing its size and firing politically connected employees.
Why, oh why, didn't you guys vote away the state income tax and force cuts?
A lot of states have sales and use tax laws. Most of them, like Massachusetts, don't tend to enforce payments by individuals.
I have to say though that I've always been bemused by my fellow MA residents' enthusiasm for driving to NH for a tax-free deal.
I grew up in NJ, where the sales *and use* tax was 6% (it's now 7%). If we went across state borders it was to New York City (8.375% in sales and use tax) or to Pennsylvania (6%). To me, the Commonwealth's 5% is a bargain.
I still think Massachusetts is being the teeniest bit wackadoo by trying to enforce the vendor provision and going after Town Fair Tire. It's interesting to see how ticked people are getting about something they are supposed to be doing anyway.
Good point Cook. Our friend PKL is holding back a bit. For a long time he's maintained that government would be a lot smaller--and taxes a lot lower--if people actually had to write a check to the US or federal government instead of just enduring the paycheck deductions.
And I agree the Taxachusetts label isn't deserved. Our tax burden isn't as high as in many states, but people around here do like to complain. I guess it's the weather. Still, if I need to drive 20 minutes North or South to buy an expensive item, I'll probably go north. (Course I did buy this laptop at the Danvers Best Buy instead of the one in Portmouth.)
I appreciate the education on the use tax. It just doesn't seem quite fair to me. How is my watching a TV in Massachusetts a taxable action?
Ah Tom, the DOR doesn't care if you *watch* your NH-purchased television in Massachusetts. They only care if you buy a TV to use (as a cat rest, for instance) in Massachusetts. I think the personal use part of it can be really hard to enforce, which is why they don't usually do it. (For instance, what if I bought a TV in NH and then gave it to my sister, who lives in Virginia, as a gift. Who is liable for that use tax? Messy messy.)
Tires do seem like an easier purchase to track - especially if they're installed on a vehicle with Mass tags. But I think this Town Fair Lawsuit will end up getting thrown out or failing. However, I do anticipate a new rash of use tax audits at Massachusetts businesses.
Wouldn't it be simpler and more lucrative for the state to place a tax on blogs?
Tax by the word, or course.
James Shanley
Paid as a sales tax or income tax?
Either way I'm good.
I haven't read all the (other) comments but Massachusetts already pay sales tax on out of state purchases (including internet purchases) when they do they file heir state income tax return. I imagine the compliance rate is pretty low and naturally the state would want to find better ways to collect this tax. Sales tax has nothing to do with what services the state provides to retailers; it is merely a way of taxing people on how much they consume, which is usually an indication of their wealth and thus their ability to pay. It's a form of progressive taxation that I personally approve of.
Neither.
Either a property tax (taking up space), or a bandwidth tax (using up capacity).
If this is too complicated, we could always just institute a tax on cats.
James Shanley
Ummm ... hold one just one moment, Mr. Shanley! Either way, I'm screwed ... (pardon my language).
Gillian: Perhaps it time to trade in your cat for a hermit crab. Hermit crabs have a very, very powerful lobbying group (Its a well known fact that every state and federal legislator, the Supreme Court,the UN, the IMF, and even The Vault, are but witless Zombie Tools of the Hermit Crab Lobby. Linden LaRouche is not under their control, as he IS a hermit crab.), and so shall remain tax free, now and forever.
They eat less, too.
James Shanley
If you do love hermit crabs, I suggest you visit BOAT CAMP, a fine a nautically themed educational institution.
BOAT CAMP's touch tank is chock-full-of-hermit crabs and other creatures of the sea.
If you have kids I can't think of better way to spend Monday, Tuesday or Friday mornings. And I hear they do birthday parties too!
Just a delight for the whole entire family. And it's right next to Plum Island Roasters, one of the finest purveyors of coffee in the city, which will open its second location in Amesbury next week.
Eek...I hope this shameless plug doesn't subject me to a Goodwill Tax or a "Suck Up Looking for a Discount" Tax
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