Yet another reason why I often wish I lived in Massachusettes

[40hz]

[attach]

[xtabber]

Amazon will also start collecting Massachusetts sales tax on Nov. 1, 2013.

I'd guess that within a few years, that will be the case with all states that have sales taxes, as it should be.

That said, sales taxes are one of the most regressive forms of taxation. To his credit, Governor Patrick has proposed to reduce the sales tax in Massachusetts and increase the income tax to make up for it.

Of course, you could always move to New Hampshire, which has neither sales nor income tax, but as a friend who moved there from New Jersey some years ago found out, they have many other ways of collecting from you (fees, excise and personal property taxes, etc.). He complained later that he was paying more overall in NH than in NJ, and getting far worse services to boot.

But, as a MA resident, who has also lived in CT, NJ and NY, I can assure you that Massachusetts does have a lower overall tax burden than those states, and generally better state services too.  So much for "Taxachusetts."

[40hz]

I'd guess that within a few years, that will be the case with all states that have sales taxes, as it should be.

Am I missing something here?

Of course, you could always move to New Hampshire...

Not likely. It's "Just like Alabama - but with snow" as the saying goes. Pretty place to visit. And the people are (mostly) very nice. But that's about it AFAIC.

But, as a MA resident, who has also lived in CT, NJ and NY, I can assure you that Massachusetts does have a lower overall tax burden than those states, and generally better state services too.  So much for "Taxachusetts."

Agree. It's not so much I object to paying taxes (I don't) but I do object to what they're sometimes used for.

In CT's case it's a problem because our government has plundered state employee pension funding and neglected critical infrastructure maintenance as long as it possibly could,. And now it's thrashing about for ways to recoup.

I lived in MA for six years and was always impressed with the level of services the state provided. I never once felt I wasn't getting good value for my tax dollars there. Which is more than I can say for my home state.

[Renegade]

Reminds me of the title of an old Judas Priest tune, "Never Satisfied". Different context though.

Also reminds me of a Beatles tune:

https://www.youtube.com/watch?v=Oyu5sFzWLk8

Reply (in the Basement): http://www.donationcoder.com/forum/index.php?topic=33931.0

(I'm surprised that I managed to remain this calm! )

[wraith808]

I'd guess that within a few years, that will be the case with all states that have sales taxes, as it should be.

Why should it be?  40 put it well- this is basically "an import duty on Amazon purchases with the cost to be born by its own residents."  It's purely to mollify the local retailers.

And really, I think that the retailers screwed themselves with this deal.  They said that Amazon competes on an unfair playing field- and they really will be.  That's why they gave in after so long lobbying against very successfully- they had a long game.  If you can order an item, and get it on the SAME DAY without going out, and be able to choose from a wider variety... yeah.  What will the local retailers cry about then?

And I'm not unsympathetic, working in retail through college for a small gaming shop, then part time for 10+ years after that.  You have to get creative, and give people a reason to buy from you, and most don't want to work for it.

Again, it's the litigator's version of competition, to compete based on blaming your opposition, rather than on your own merits.  It doesn't work, and in many cases, it accelerates your own decline.  As shown by the fact that at least in my case, I'm more pissed at the local business associations now after their 'success'.

[Stoic Joker]

As shown by the fact that at least in my case, I'm more pissed at the local business associations now after their 'success'.

+1 - It does sound a bit like (ultimately only the lawyers win) a pyrrhic victory doesn't it.

[xtabber]

I'd guess that within a few years, that will be the case with all states that have sales taxes, as it should be.

Am I missing something here?

As I noted, sales taxes are among the most regressive forms of taxation, and I personally think that they should be replaced with more progressive forms of revenue, like income, or preferably, wealth taxes.

But if a state does impose a sales tax, it should do so equally for all applicable sales. 

In every state that I am aware of that has a sales tax, if you make purchases and the merchant does not collect state sales tax. you are supposed to report this and pay "use tax" on the purchase.  That nobody actually does so (except for things like automobiles, where it can be enforced by requiring proof of tax payment in order to register a vehicle) just means that merchants that do not collect state and local sales taxes are helping people violate their state laws.

The solution to bad laws is not to allow some people to get away with violating them, but to replace them with better laws.  The same goes for taxes.

[wraith808]

So, as 40 said, it's an excise tax levied on the inhabitants of the state, and borne by those same inhabitants.  Use tax is a bad idea to begin with.  The emphasis should be on removing unenforceable and taxes rather than forcing out of state retailers to collect them IMO.  And this wasn't for this purpose, it was to mollify local retailers.  The out of state retailers don't use the state's facilities, so it's not like it goes towards recompense for any such thing.  They are getting paid for doing nothing basically, and increasing the burden on the out of state commerce, i.e. Amazon has to deal with the use tax for many jurisdictions.  It also sets precedence for putting the same burden on operations that can't really afford to deal with the extra overhead. 

When some of these brick and mortar retailers that subsidize their local business with out of state commerce get hit with the same stick, I think you'll hear a different song being sung.

[tomos]

Do retailers in CT (etc.) not have to charge a sales tax?
Ah, okay, I understand a bit better now, it's cause they were out of state.

Guess I'm used to the fact that there's (supposed to be) sales tax on every transaction here - whether it's from outside the country or not (I'm comparing EU countries with US States).

Would be *very* happy to see it gone (19% here on non-food; I think it's 7% on food)

[40hz]

The solution to bad laws is not to allow some people to get away with violating them, but to replace them with better laws.  The same goes for taxes.

Ok. But considering how incredibly unresponsive to the wishes of its voters most legislatures are, exactly how does one bring that blissful thing about?

Because I've heard that exact same suggestion being made since about 1977. And so far, little if anything has come of it.

Interestingly, the gentlemen behind the creation of the United States had a very different notion of how to deal with this very issue. They considered it a moral necessity and the civic duty of people to evade or ignore unjust laws once all procedural attempts at remedy (and direct appeals to those in power) had been exhausted.

The clearest indication that a law is either unjust, or does not reflect the will of the people, is the degree to which it is ignored or flaunted by the general public.

Americans - and their legislators - should understand that better than most.

[wraith808]

^ Nicely stated and put as usual 40! 

[Renegade]

When some of these brick and mortar retailers that subsidize their local business with out of state commerce get hit with the same stick, I think you'll hear a different song being sung.

Was that supposed to be:

When some of these brick and mortar retailers that subsidize their local business with out of state commerce get hit with the same stick, I think you'll hear a different song being suing.

[wraith808]

Heh.  Possibly

[40hz]

I am also wondering what incentives from the state  Amazon had been offered (or suggested) in exchange for their coming to CT? Because I'm positive CT didn't approach them first.

Which makes me wonder if this is an emerging business strategy for Amazon and other big web retailers?

Consider: Amazon is in an ideal position to cut such deals. They can easily approach a state and tell them exactly how much sales tax revenue they're currently losing.

Then they can offer a 'sweetener:

"Gentlemen, Amazon will not only create x number of jobs and/or spend x dollars setting up a facility in your state. We will also become a local business operation. That will make all your resident's purchases subject to your local taxes under existing tax laws! Ka-ching baby! Even the Tea Party will have nothing to object to! ... But in exchange, we'd like x in tax breaks for x years. But don't worry. These breaks will pay for themselves in that your state will now be getting x dollars in sales tax revenue you wouldn't have otherwise. And best of all - everything made over the tax cut you'll be giving us will be pure gravy. Did somebody already say ka-ching?"

Love it! The better a customer the collective consumers of a state are, the better a bargaining chip they become for Amazon when approaching some tax and job hungry legislature.

Looks like the "Ugly American" has finally come to America.

Hmm... How does that song about being "sold down the river" go?

[Renegade]

Hmm... How does that song about being "sold down the river" go?

Can't say as I rightly recall. However, I'm quite sure everyone will be singing something similar pretty soon, and I know the guidelines are here.

[wraith808]

I am also wondering what incentives from the state Amazon had been offered (or suggested) in exchange for their coming to CT? Because I'm positive CT didn't approach them first.

Which makes me wonder if this is an emerging business strategy for Amazon and other big web retailers?

Consider: Amazon is in an ideal position to cut such deals. They can easily approach a state and tell them exactly how much sales tax revenue they're currently losing.

I don't think that was the case.  I think it was the opposite.  For many years, Amazon has been lobbying and spending money to keep taxes from being levied on out of state purchases.  That's why they shipped from central processing locations.  Then, all of a sudden, they stopped lobbying the federal government to resist changes, as they saw that they were spending a lot of money on this, and certain states have actively created legislation to force the issue, and they're fighting on multiple fronts.  So they shifted plans.

Look at the change in amendment to the agreement with Amazon and VA:

Amendment Language:

2. That the provisions of this act shall be effective on the sooner of September 1, 2013, or the effective date of federal legislation authorizing states to require a seller to collect taxes on sales of goods to in-state purchasers without regard to the location of the seller.  If however, that federal law is enacted prior to August 15, 2013, and the effective date of that legislation is on or prior to January 1, 2014, the provisions of this act shall be effective January 1, 2014.

Emphasis mine.  They're fighting a war on multiple levels.  This allows them to circumvent it, and make gains in the process- they are able to do something that they've been actively avoiding (making smaller distribution centers which cost less to maintain, and allow their distribution network to be able to get product to consumers)

[40hz]

Emphasis mine.  They're fighting a war on multiple levels.

Agree. But I also think this move is a well thought out transitional strategy.

Too many states are getting increasingly strident about the sales tax issue. And with the federal government cutting state level funding now that so much has been spent on homeland security and the never ending war on terror, the money needs to come from somebody. And the feds are not about to introduce new taxes if they can possibly avoid it. Nor do the states want to do the same.

Unfortunately, the common practice of cutting back on state funding to its own municipalities is reaching a limit now that the municipalities are pushing back because their property and local taxes have been increased to the absolute threshold of what their residents can still afford to pay.

So the current state of affairs with online retailers not charging sales tax is a temporary one at best. And it will be a quick tech fix on most order entry servers once they're required to collect it. So it's not as if it impractical or not doable from an order processing perspective. It's just a sku + zipcode + tax table lookup + calculation loop on their system. No big huhu. This stuff is old hat - and the code has already been written anyway. The computer handles the heavy lifting so it's really just a "set & maintain a tax database" thing.

About the only tricky part will be if somebody in state A buys something - but has it shipped to an address in state B. In most places that wouldn't be taxable under current 'destination-based' sales tax laws. In my state something purchased with the intent of shipping it out of state within 30 days, and actually shipped within that grace period, is usually exempt since we're a destination-based state for sales tax purposes.

I think Amazon saw the writing on the wall and decided to move quickly to capitalize on the current state of affairs while it still existed.

A year or so from now, when charging sales tax is the norm, there won't be any point to approaching states to cut a deal. Unless somebody gets enterprising and gets most states to switch over to 'origin-based' sales taxes. If that happens, then it becomes a very attractive proposition to get a business like Amazon in-state. Because under that scenario, the hosting state would (theoretically) receive sales taxes on ALL the transactions.

(Note: It wouldn't really be that simple. But it would still be advantageous to be the hosting state for a mega-retailer. And for far more than just the 'job creation' opportunities.)

[CWuestefeld]

As I noted, sales taxes are among the most regressive forms of taxation, and I personally think that they should be replaced with more progressive forms of revenue, like income, or preferably, wealth taxes.

This isn't true, sales taxes are not perticularly regressive. And most economists will tell you that, moral questions aside, they're probably the best way to do taxes.

In America, the most regressive taxes are Social Security and Medicare. That's because wealthy people tend to live longer; while young black men (unfortunately) live much shorter (because they're far more likely to be murdered, what with gang violence, drug culture, etc.; note that I'm not saying this is inherent to being black, but it's the result of the situation they find themselves stuck in). The result is that SS is significantly a machine for transferring money from young black men to rich old white ladies. THAT is regressive.

And many common deductions, particularly on mortgage interest, are regressive. And egregiously so, because they're forcing people who can't afford to buy a house to make up the difference from the people who were lucky enough to get to that level.

So SS is entirely regressive. A standard tax fee for all people (say, $X,000 per person) is regression-neutral: everyone has to pay exactly the same amount, so it's neither regressive nor progressive. A flat income tax (e.g., 11% of your income) is progressive, because those making more money have to pay more money. Our marginally-increasing income tax you might think of as being doubly-progressive, because its progressive scales up super-linearly.

By way of comparison, Ben Franklin's idea was that rich people should pay more, because it's the job of the government to protect ourselves and our property; so if you've got more property, you're getting more of the government's services, thus you should pay more. So if you make twice as much, you should pay twice as much. But that's a FLAT tax rate, not America's current system of marginally-increasing rates.

Sales taxes are not regressive in this way, because they don't get lower for richer people. If you're picturing an ostentatious millionaire living off the backs of the poor, that's not accurate. That rich guy is going to be buying all sorts of fancy cars, expensive wine, etc., that the poor can't even afford. And he's paying the sales tax on that.

The good thing here is that there's a loophole to the sales tax: just don't spend the money, but invest it instead. And the thing about saving is that it's actually an investment: your savings will be turned into the money for someone else's mortgage, or paying to start up a new business, or to invest in newer more efficient equipment for an exist business or something like that. And all those investments are helping other people achieve their own goals, creating jobs, etc.

The end effect of taxes is that when you tax something, you wind up having less of it (and conversely, removing the tax will generally result in greater demand for it). The governments understand this, and frequently use this fact intentionally, such as increases in cigarette taxes to get people to quit smoking.

This is why income tax is a bad thing. We don't want to discourage people from making an income (i.e., working): we want to encourage them to work, to produce more. But at the margins, there are people saying "it's not worth me working any more time, because the amount I will make after taxes isn't going to pay for my childcare" or something like that. And that decreases total productivity.

A "wealth tax" is essentially the same thing, since wealth is just the accumulation of income over time. And the way to avoid that wealth tax would be to spend more -- and just as with a sales tax, we don't want to be encouraging the commercial, consumerist economy.

We want people to buy what they need to achieve their own ends, and to save (i.e., invest) the rest in order to enable the rest of society to pursue their dreams.

EDIT: added some clarifications

[wraith808]

So the current state of affairs with online retailers not charging sales tax is a temporary one at best. And it will be a quick tech fix on most order entry servers once they're required to collect it. So it's not as if it impractical or not doable from an order processing perspective. It's just a sku + zipcode + tax table lookup + calculation loop on their system. No big huhu. This stuff is old hat - and the code has already been written anyway. The computer handles the heavy lifting so it's really just a "set & maintain a tax database" thing.

About the only tricky part will be if somebody in state A buys something - but has it shipped to an address in state B. In most places that wouldn't be taxable under current 'destination-based' sales tax laws. In my state something purchased with the intent of shipping it out of state within 30 days, and actually shipped within that grace period, is usually exempt since we're a destination-based state for sales tax purposes.

Currently, in most states that I know of, you are charged tax even if you purchase online if you reside in a state that they have a presence in.  That's what Amazon (and Woot) already got slammed for; not charging tax on purchases by TX residents.

The second part is the part that I was referring to as a burden, especially on small business.  When I worked in retail, we only shipped to certain places because of it- we had the tax codes for a few places in the system; others were just out of luck.  To much trouble maintaining that.

[Tinman57]

  The brick and mortar shops think this is great.  Well, it is for them, because now you'll wind up paying more for an item online than you would locally after shipping, handling and tax.
  It's bad enough that we are all overtaxed as it is, and our good ol' gov't gives it away by the billions to other countries, now the states can get in on the action.
  Here's one I just can't understand, buy a car, pay state taxes.  Yeah, understandeable.  Now sell that car a year later and whoever buys it has to pay state taxes all over again.  How is this fair that you have to pay taxes on something that was already taxed once?
  When Amazon sells something, they are already paying federal taxes figured into the price.  Now let's add state taxes to the mix, and now those online deals aren't such a good deal anymore.

[wraith808]

Amazon still will be.  They've already tackled this in advance, especially for people like me that don't live in the city.  To go anywhere and buy something, I have to go 40 minutes to the city, look around, get it, and come back home.  Or, I pay $70 a year for Prime, and then I can buy it on Amazon for less, and get it tomorrow in most cases.  They're actually changing that tomorrow to today.  That's what the local distribution centers are for.  It also saves me the collateral damage of getting stuff I don't need because I'm already at the store.

[40hz]

A standard tax fee for all people (say, $X,000 per person) is regression-neutral: everyone has to pay exactly the same amount, so it's neither regressive nor progressive. A flat income tax (e.g., 11% of your income) is progressive, because those making more money have to pay more money. Our marginally-increasing income tax you might think of as being doubly-progressive, because its progressive scales up super-linearly.

Possibly. But only if you ignore the fact a flat fee or percentage disproportionately impacts those in lower income levels who can least afford the hit.

By example a flat fee type tax of $5000 per person presents a much greater hit on a person's standard of living if they're only making $15,080 (min wage x 2080 hrs) annually than it does somebody making $50,000. It's 33% vs 10% of their respective incomes.

A flat percentage does much the same except in a less obvious manner. If we were to go with a hypothetical flat percentage of 15% on income then the minimum wage earner would pay $2,262 leaving a disposable (rounded) income of 12,800. The 50k earner would pay $7,500. But that would leave them with a disposable income of $42,500.

Now if you consider the potential lifestyles of these two flat percentage taxpayers, it becomes very obvious that even as little as a few hundred dollar per year would yield significantly greater and measurable benefit (i.e. more or better food, uninsured medical expenses, etc.) to the lower earner than the higher one.

The difference in lifestyle between a multi-millionaire and a billionaire isn't all that great. Between somebody making $15k a year and somebody making $35k it's huge.

So once again, a flat rate will still adversely impact those earners in the lower income brackets. Especially since costs for food, minimal housing, transportation, and medical care - along with most other necessities - are much the same no matter what your income level. And the thing that differentiates the needy from the affluent is how well their disposable income can cover such necessities - and how much surplus is left over for luxuries or higher quality goods and services.

Is this "fair?"

I don't know since what constitutes "fairness" and "equality" depends on who you ask. There are arguments that say the poor disproportionately access public services and benefits and therefor "get back" more of what they contribute via taxes. There are others who argue (not without cause) that if there weren't such arbitrary and illogical discrepancies in wage levels, there would be significantly less need for so many publicly supported social services...and so it goes.

No easy answers.

And in this particular case, I don't think that a "flat" tax (despite it surface appeal) is really an answer - unless you have a fundamentally socialist system and with a regulated economy where prices are controlled and much of what is privately provided in the USA would be handled by the government.

But socialist systems also tend to stifle innovation and dampen individual achievement and ambition (because why bother?) so that's not an easy answer either...

One real problem with the US system is that we currently have a hodge-podge of socialist and non-socialist programs and practices which gives us the worst of both politico-economic philosophies.



It just goes on and on.

Economics isn't called "the Dismal Science" for nothing.

-----

Addendum: FWIW, sales tax is a flat tax - and it also hits the lower income bracket harder than it does the higher wage earners. That's been one of the biggest arguments against the "fairness" of sales tax when it's put on necessities such as: food, non-perscription medication and health products, non-luxury forms of clothing, etc.

[Renegade]

+1 for 40hz there.

And in this particular case, I don't think that a "flat" tax (despite it surface appeal) is really an answer - unless you have a fundamentally socialist system and with a regulated economy where prices are controlled and much of what is privately provided in the USA would be handled by the government.

Then we get around to how the extreme left and right wrap around and there's no real difference between socialism and fascism. My how things get even messier~!

Yep. No easy answers at all.

[40hz]

^Nope. If there were, we'd already have them - and probably be doing it.

Or (knowing how people sometimes behave) maybe not?

[40hz]

Then we get around to how the extreme left and right wrap around and there's no real difference between socialism and fascism.

A professor of mine once said that if you take Hegel's Philosophy of Right, and go to the extreme right with it, you arrive at fascism. If taken to the extreme left, you end up with socialism.

It's your basic yin-yang.

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from the 40hz Dictionary:

Yin-yang (n.) -  ancient symbol representing the pattern formed when everything is going down the drain.

[attachthumb=#]  [attachthumb=#]

                                    Coincidence?