MA Requires Internet Tax for 2002 Tax Season

Flamesplash writes "Yahoo! is running this story about how Taxachusetts has added an "internet" tax to it's 2002 state forms, 'this year's income tax form will have a new line item -- asking you to estimate and pay the sales tax on items you've purchased from out of state.' It should be noted that 'the law has been on the books since 1967. But only car and boat owners registering their vehicles in Massachusetts paid.'"

Comments

Taxachusetts

[cheezus]

er... I think you spelled that wrong. Everyone know's it's mas... um, massachoo... um, er.... mashachus...

aw, fuck it.

North Carolina

[doug]

For years we've had an item on our income taxes for anything bought out of state and no sales tax was paid. As I understand it, this was put in place because of catalog sales, but they specifically mention online shopping now. The idea is that if you haven't paid anyone sales tax for those good, income tax time is a good time to pay 6.5% (now 7%) to Raleigh.

The kicker is that if you don't have receipts, they estimate your out-of-state purchases at 1% of your gross income.

I hope that this nonsense goes the way of the "intangibles tax" fiasco, but as of last year it was still on the books. I guess I should check this year's forms to see if it still around.

Re:North Carolina

[smithmc]

The kicker is that if you don't have receipts, they estimate your out-of-state purchases at 1% of your gross income.

Sounds good to me! I spend way more than that on mail-order computer stuff, Amazon, online holiday shopping, etc. (I actually can't remember the last time I was in a store to buy something besides food and smokes.)

Re:North Carolina

[gfim]

The kicker is that if you don't have receipts, they estimate your out-of-state purchases at 1% of your gross income.

If you never buy anything out-of-state, it's pretty difficult to keep the receipts from those purchases!

Yea! Taxes!

[imsmith]

There just aren't enough taxes out there, we should get as many as we can.

I hope that my State does the same damn thing, in fact, I hope they set up direct deposit so I can pay them all my money for a small fee.

Next up, distributed treasury services, where all your accounts are just part of the State's accounts! Yea boyo, that would be just swell. :)

"Use tax" -- very old news

[MacAndrew]

It's just a variation on sales tax, present in many states as a "use tax" and mostly affecting mail-order. Very rarely enforced, and a tremendous number of people must violate it out of ignorance. The only major enforcement exception I can think of is purchasing cars -- in the Chicago area, out-of-state car dealers advertise their lower tax rates, but when you come back to IL they tag you on registering it. Chicago sales tax is now around 8%?

More interesting (to me :) is why we tolerate sales tax at all. You get taxed coming -- income tax -- and going -- sales tax. In theory maybe a sale tax is an incentive to save, but I think it's just a way to disguise the total tax burden. Kudos to the states that skip it, although some (Oregon) appear to be going bankrupt and may have to reconsider. The other approach is the value-added tax popular in Europe, like a national sales tax. I don't know how well it works.

Re:"Use tax" -- very old news

[leviramsey]

Sales taxes are also considered to be among the most regressive of taxes, because they equally affect the rich and the poor (if you look at the amounts of sales taxes paid as a percentage of gross income).

Massachusetts has one of the better implementations: food is not subject to the sales tax (if the store qualifies as a restaurant, then there is a "meals tax" which happens to have the same rate as the sales tax) and neither are prescription medicines (through the Commonwealth is implementing a fixed tax on pharmacists per prescription filled) or clothing (if the retail value of the articles or package thereof is less than $100... the portion above that is taxable). One interesting thing to come out of the tax regs, such as condoms are not taxable (they are considered by the Department of Revenue to be clothing).

Again, it should be stressed that this, for now, is being run strictly on the honor system, the state has no plans to audit that line on the tax return (though if you put something like "$0" down for it, it may raise some eyebrows).

Re:"Use tax" -- very old news

[MacAndrew]

Actually singling out food for different treatment is very common. I think I remember it in MA, IL, CA, NY, and VA. The poor spend a very high % of their income on food, so reducing or eliminating the supermarket food tax provides a more significant break to them than it does to others.

The VAT scheme provides a similar allowance -- 19.6% versus 5.5%.

One weirdness in MA is the different taxation of "unearned income" like dividends. When I was there, it ran double the ordinary rate of 6%. If President Bush's proposed abolition of the dividend tax goes through, Mass. could well conclude it was reasonable to double its own taxation of dividends -- why let that money go to waste? :) (Thanks, I hadn't thought of that add'l argument against the tax break -- unless its backers really do intend to shift income to the states!)

I'm pretty sure MA had the highest cumulative taxes of anywhere I've lived.

Re:"Use tax" -- very old news

[babbage]

Expanding on your examples, the general rule seems to be that anything that all people *need* to get by -- clothing, supermarket food, medicine, and newspapers & magazines [Also, as leviramsey writes above, this isn't anything new. My impression (I am neither a lawyer nor an accountant, though both my dad & my fiance are accountants so I'm not *totally* talking out of my ass here :-) is that it has always been expected that Massachusetts residents would pay state sales taxes on out-of-state purchases, but this is generally unenforceable.

There are situations where you can't get around the tax though -- we recently went shopping in New Hampshire, partly because the item we were looking for was on sale, but also partly because NH doesn't have a sales tax. The salesman told us that if we picked up the item on site then we could buy it without paying the tax, but if it needed to be delivered into Massachusetts then they were required to collect the tax. I'm sure that many border-town retailers have to be able to handle this sort of thing.

So, applying this to internet transactions isn't a new thing, just a new application of an old thing. My dad could explain this better than I can, but it seems like (at least in theory) nearly all states structure their sales tax laws such that you just have to pay a tax to the state you reside in. (That's why catalogs & mail-order offers usually say something like "residents of AA, BB, and CC must pay sales tax" -- those are the states where they have a physical presence; for others it's assumed that the consumer will be honest & pay the same sales tax manually.)

The obvious problem with that is that most people don't report out-of-state purchases that they owe on, but at the same time most retailers don't report out-of-state purchases that they over-collected; my hunch is that as long as these two sides roughly cancel out the tax won't ever be widely enforced, but it's no big deal in that case. The exception is things like big ticket items, catalog purchases, and now internet sales -- mainly because all of these are easier to account for systematically, if the will is there to do it. It sounds like the only twist here is that MA is starting to ask people to start doing that.

Really though, we all knew this was coming, especially now with many state budgets in the red after years of prosperity. MA is doing particularly badly right now, but I know it's not the only one and probably not even the worst off. If internet sales taxes are inevitable this doesn't seem like the worst way to tip our toes in the pool...

Re:"Use tax" -- very old news

[babbage]

Sorry for the double-post -- accidently clicked submit, and there was a big typo in there. I'd delete the first one if I could... :-(

Expanding on your examples, the general rule seems to be that anything that all people *need* to get by -- clothing, supermarket food, medicine, and newspapers & magazines [<-- in order to be an informed member of society]-- are not subject to the sales tax. Anything that you can elect to buy or not buy -- most consumer goods, prepared foods (think of it as paying a tax on the service, not the food itself), books & other media, etc -- are subject to the 5% tax. It's not exactly progressive, but it does have some of the same logic of progressive luxury taxes.

Also, as leviramsey writes above, this isn't anything new. My impression (I am neither a lawyer nor an accountant, though both my dad & my fiance are accountants so I'm not *totally* talking out of my ass here :-) is that it has always been expected that Massachusetts residents would pay state sales taxes on out-of-state purchases, but this is generally unenforceable.

There are situations where you can't get around the tax though -- we recently went shopping in New Hampshire, partly because the item we were looking for was on sale, but also partly because NH doesn't have a sales tax. The salesman told us that if we picked up the item on site then we could buy it without paying the tax, but if it needed to be delivered into Massachusetts then they were required to collect the tax. I'm sure that many border-town retailers have to be able to handle this sort of thing.

So, applying this to internet transactions isn't a new thing, just a new application of an old thing. My dad could explain this better than I can, but it seems like (at least in theory) nearly all states structure their sales tax laws such that you just have to pay a tax to the state you reside in. (That's why catalogs & mail-order offers usually say something like "residents of AA, BB, and CC must pay sales tax" -- those are the states where they have a physical presence; for others it's assumed that the consumer will be honest & pay the same sales tax manually.)

The obvious problem with that is that most people don't report out-of-state purchases that they owe on, but at the same time most retailers don't report out-of-state purchases that they over-collected; my hunch is that as long as these two sides roughly cancel out the tax won't ever be widely enforced, but it's no big deal in that case. The exception is things like big ticket items, catalog purchases, and now internet sales -- mainly because all of these are easier to account for systematically, if the will is there to do it. It sounds like the only twist here is that MA is starting to ask people to start doing that.

Really though, we all knew this was coming, especially now with many state budgets in the red after years of prosperity. MA is doing particularly badly right now, but I know it's not the only one and probably not even the worst off. If internet sales taxes are inevitable this doesn't seem like the worst way to tip our toes in the pool...

Re:"Use tax" -- very old news

[NDPTAL85]

MA is a New England state. The other NE states are, Maine, CT, Vermont, New Hampshire and Rhode Island. MA has neither the most nor the least amount of taxes. Its actually smack dab in the middle. Most people don't know this though because of our famous nickname of Taxachusetts.

Re:"Use tax" -- very old news

[Anonymous Coward]

...just about every state gets you when you register a car bought out-of-state when you first register it in your state of residence.

OR is running out of dough because they capped property taxes even more than CA did with Prop 13.
What is interesting is when someone from OR buys stuff in WA, they show their OR DL and do not have to pay sales tax...

VAT is evil. If you are a US citizen and go to Canada to buy stuff, you pay VAT upfront, but you get a chance to fill out a customs form to get a "rebate" of it (you have to mail it in, of course) back from Canada if you don't live in Canada.

Any hopes of the US Govt setting up a VAT with some promise of doling it correctly back to the states is...delusional.

Value Added Taxes don't work

[doug]

The idea of a VAT (or TVA if you're in France) is that if someone spends $10 on materials and sells it for $100, the VAT is applied to the 90% delta because that is the value you added to those $10 of materials. The idea is to avoid double taxation. In the end it is complicated, and the taxes get passed downstream to the final consumer anyway, so simply tax the whole damn thing at a lower rate and be done with it.

BTW: most european countries have VATs that would blow many American minds. The French lowered the TVA from 20.5% to the rock bottom rate of 18.5% (although it is only 5.5% for "essential items" like food). I prefer my 6.5% sales tax any day of the week.

The national aspect doesn't change much. The US is decentralized, so we pay locally. Europeans are centralized, so they pay nationally. Big whoop.

As for why tolerate the sales tax: well, the government a) needs money and b) is going to take it from you anyway. I'm not as interested in how they take it, but more on how much they take.

Re:Value Added Taxes don't work

[MacAndrew]

The US is decentralized, so we pay locally. Europeans are centralized, so they pay nationally.

Some U.S. states are as big as any country in Europe. So Europe's national looks a lot like some states' local. Also, the American federal gov't handles a lot of money, and imposes the vast majority of income taxation. I don't think it's clear who is more centralized.

Of course VAT's "work," though one can question efficiency. VAT's -- or "consumption tax" -- don't mean higher taxation. European taxes are generally much higher, but their citizens also expect a much higher level of services. VAT's are thought to encourage saving and investment; the American model is more to encourage greater consumption.

The usual purpose of imposing a lower rate on food is to reduce the regressive aspect of the tax. The poor tend to spend a higher fraction of their money on food. We have the same special food rate in many places in the U.S.

My point, anyway, was exactly that Americans pay more tax than they realize as they routinely overlook the sales tax. Among the various states, the income tax, sales tax, and property tax very a great deal. I'm not wild about the use tax, though it's basically fair, because of the record-keeping headache and that only especially honest people pay it.

Re:Value Added Taxes don't work

[doug]

In the US we pay taxes to both federal and state governments. When I lived in France, I never paid anything to the local departement except to register my car, and perhaps the habitation tax. This was so little that it was basically noise. But since France is more centralized than most of the others, maybe I shouldn't overgeneralize.

In my unscientific experience the VAT is just a complicated sales tax. It "works" in that it generates revenue for the government. I'm not convinced that it encourges savings.

I understand the social goal behind the 5.5% TVA, but the results are things like McDonalds having "drive through" windows on sidewalks because "food" is 5.5% and "dining out" is 18.5%. Does this count as "saving and investment"? :-)

I like your point that only honest people pay those taxes. I certainly feel like a schmuck when I fill in that field.

Re:Value Added Taxes don't work

[MacAndrew]

I like your point that only honest people pay those taxes. I certainly feel like a schmuck when I fill in that field.

Ah yes, the famed "schmuck tax." Good thing I'm not a schmuck. :)

You forgot local taxes. That makes 3 gov't entities. I looked up the French tax system and see local business tax and property tax, which you probably paid through rent and purchasing services. The web page says France gets 50% of its revenue from the VAT. " The standard rate of VAT on the sale of goods and services is 19.6%, but lower rates are applicable in many cases. In particular, the rate is 5.5% for food, some agricultural products, medicine (5.5% or 2.5%), books, hotels, public transport, newspapers and magazines (5.5% or 2.1%), some types of entertainment, etc."

More on France -- I'm looking at a table and see that the U.K., France, and Italy are pretty crowded at 60 million each; reunified Germany is over 80. (Wow, look at the variation in infant mortality ... more stuff.) The U.S. is closing in on 300 million I think, and of course is geographically much larger. But economically, the U.S. is *really* big. I recently checked California and found that at population of 34 million, if on its own it would form the world's sixth largest economy.

Tax theory is complicated, I know only a little bit of it, and I mentioned even less. I think it's pretty fascinating, though, to see what was intended versus how it plays out. The method of taxation definitely influences behavior, adding a layer of policy choices to the basic task of raising money. Neutrality is impossible, though a friend of a friend thinks everyone should simply get an identical bill for their share of the bill. An interesting puzzle is the effect of Pres. Bush's abolition of the dividend tax, aside from the obvious one of benefitting the wealthy.

There is a similar notion called "tax incidence" that looks at who takes the ultimate hit from a new tax. For things like corporate or VAT, it's not always the consumer because in some circumstances the company can't pass it along and takes the hit in its profits. Even if the end-user pays the tax, maybe they turn around and pressure their employer for more money. And so on, and so on.

In California, I remember there was a slightly different tax rate if you bought your donuts to eat in or take out. Kind of silly.

Use Tax

[crow]

They call it a "use tax." So if they find that I purchased something out-of-state with less than 5% sales tax (the MA rate; I'm a MA resident), do they have to prove that I used it in MA before they can charge me with tax evasion? Most of my Amazon purchases were given as gifts to relatives out of state; many of them were shipped directly to them, and none of them were removed from their packaging in MA.

Safe, unless...

[waytoomuchcoffee]

As long as they don't tie this together with the World's most accurate lie detector I will be Ok...

Old hat...

[Geraden]

Michigan has had this as well, and hyped it a couple of years ago.

Use Tax

[the eric conspiracy]

New Jersey has had a widely ignored use tax on its forms for many years.

I'd never pay it.

[Anonymous Coward]

I would never pay this. When I buy something online, I don't necessarily know where the company is headquartered. It could be out of the country (how would I pay proper tax on THAT?) or it may be across this country. Or it may be a few miles from my house.

I mean, I buy shit from amazon and random computer supply shops online all the time. Probably a couple dozen purchases a month. But I couldn't even guess where Amazon is at or most of the other places I buy from.

Re:I'd never pay it.

[cdipierr]

Yes, but either way, you owe North Carolina for this, not the place where you bought it from. Hence why it's on the state tax form.

The tax is *NOT* 1% of the gross income as the previous poster stated. I don't recall the exact #, but it's on the order of 0.1% based on what TurboTax has calculated for me over the last few years.

There is also a separate field where you're supposed to pay 10% of purchases over $1000, but I doubt anyone really fills that in (and besides, computer equipment isn't that expensive anymore).

Anyway, TANSTAAFL.

Re:I'd never pay it.

[Alsee]

Yes, but either way, you owe North Carolina for this, not the place where you bought it from.

Yeah, but if you bought it from a store in North Carolina then the store is responsible for collectting the tax and you wind up paying the same tax a second time.

-

Re:I'd never pay it.

[cdipierr]

No.

The tax form explicitly states *OUT OF STATE* purchases. If you bought it from a website that was in state, they already charged you tax (as stated on your receipt). Crucial.com is a good example of this. These count as instate purchases, and hence you're not charged a second time.

Re:I'd never pay it.

[Alsee]

The tax form explicitly states *OUT OF STATE* purchases.

Yeah, but someone was saying when he buys online he has no idea where they are located. It can also be an issue when a company has a presence in more then one state. Either of those could potentially lead to double taxing.

-

Ohio

[Samus]

FWIW Ohio has this too. Its been around since about 99 or so. Every year there is usually a small blurb about how many millions were collected from it. I think last year was about 2.5 million and its expected to increase this year. I've payed towards it too but I doubt I remembered everything I bought and its exact value. I especially doubt I remembered anything I would have bought during the begining of the year.

Rather rediculous

[cgenman]

Perhaps it is the silly notion of only taxing that which is enforceable, but having purchased online too numerous to count amount of items of too little value to care, I fail to see how this passed without some sort of minimum price. Right now a chocolate company in California is sending samples for about the price of a cup of coffee. This is why sales tax is extracted at the point of sale, not n months after such a thing has occurred.

It's ironic that very few states are enforcing this... This has to be the one tax burden that the states realize is both unenforceable but also impossible to comply with.

Why didn't we kick out this law when we got rid of the one banning tattooing?

Re:Rather rediculous

[Deagol]

There are so many things that get taxed, it's silly. The "use tax" means pretty much everything that the government hasn't covered already by licensing and regulation.

If I buy a product from out of state over the web, I "owe" money to my state for it.

If I buy something at a garage sale, I'm supposed to report that.

If I barter a deal, I'm supposed to report it's value. That is, if I say to my plumber friend, "I'll upgrade your shop's point-of-sale system, will you fix a leaky faucet for me?" I'm supposed to report the value of his service ($40/hr, for the example of my local plumber). Note with irony, that you're not allowed to deduct that same professional time if you donate it. So if I put in 20 free hours (what I would normally bill at $50/hr) this year re-wiring a local school's computer labs for some charity, I can't deduct that $1000 the same way if I wrote a check for $1000 to that same school as a donation.

Taxes are funny, annoying creatures.

Moratorium on internet sales tax

[norwoodites]

I thought there was moratorium on internet sales tax imposed by the federal government?

Re:Moratorium on internet sales tax

[clonebarkins]

A moratorium on Federal taxing of the internet, yes. I don't believe this affects how states can tax.

government tax rate is 100% ~ a small rant

[zogger]

--government tax rate is 100% of the money out there. It's not any percentage lower. Joe sixpack makes a wage, they call that "income" and it gets taxed. Joe sixpack purchases items, they get sales taxed. That money then gets paid out upstream and downstream, to different employees, to suppliers,etc, etc who pay their income and sales taxes on it. After just a few hand-offs, ALL the money has been taxed, then it gets retaxed again and again.

It's a scam. "Government" as it exists now is nothing more than a self perpetuating extortion racket, with a few services-bones thrown at us in at a wasteful level to "justify" the ripoff. It doesn't have to be that way, but for sure that's what it's morphed into. Just LOOK at the IT jobs thread running, who's bragging the most numbers-wise about their "secure lifetime jobs with bennies and pensions"? The GOVERNMENT employees. WHY? Why can't we put a limit on government "service" and make it SERVICE, with a years served CAP then back to the private sector, and NO PENSIONS. As it stands now, there is NO incentive for government ANYWHERE at any level to get smaller or become efficient or top stay within it's constitutional bounds, as anyone elected is still in the system and looking for that pension and the salary. There's NO incentive for governmental workers-either hired on, elected, or appointed- to "vote" to have their jobs eliminated. They might mumble, "ya, there's some waste, we could trim a job here and there", but it's ALWAYS some other guys job, NOT theirs! There's no incentive for "lawmakers" to eliminate their jobs or to make things streamlined or more efficient, because that puts them out of a job! "Careers" in government is the major problem!

I say a one time law, ten years max governmental service, any combination of jobs, then BUH BYE, back to private sector, no pension unless you saved your own money somehow, same as anyone else. sure, you can get paid fair, similar to whatever the private sector reasonable norm is for a similar job, no probs, but NO life time 'career' and especially eliminate DOUBLE DIPPING, the two pension scam that so many governmental workers pull off. And ZILCH for politicians. We don't NEED goombah blowhards in the senate and house for decades, nor in the bureaucracy.

And here's a real radical notion, NO voting for office that effects where you are employed. Work for the feds, no voting in federal election, but you can vote state or local. Work for the state, no voting while employed by the state for any state office, and etc, all levels. And then make it a crime called "bribery" for any governmental employee to accept donations, contributions, gifts, whatever, it's bribery, pure and simple, everyone knows it, so let's treat it like that, "lobbying" that results in transfer of money or goods and services to a governmental employee is bribery, even one penny's worth. And that goes triple for the professional politician class of governmental "workers".

Enough's enough on the wealth transference at the point of a gun. Tonight some puppet marionette moron went on and on about "terrorism" on the TV, NOPE, the real terrorists are the ones who seek to enrich themselves for generations with YOUR wealth, and take it using threats of violence.

Taxachussetts came pretty close to eliminating it's sales tax in a referndum this year, hopefully next time they WILL. The only way to shrink government is to cut off most of it's funding, and that's IT. that'sd the only thing that will sink in, just MAKE it more efficient by eliminating the largesse. "Voting" for better, more honest, more efficient "government" has been a colossal failure and it's getting worse and worse every election. Taking away the money is the only thing that will work in the long run, and making service an honorable patriotic thing to do, with the emphasis on "service", which starts with educating children to our real history and historical positive values. You can see it in the private sector, merely "throwing money and warm bodfies" at a project most of the time doesn't work, that'sd wasteful stupid panic mode, and you can see companies fail when they do it. Government on the other hand screws up, then DEMANDS more money to fix their screw-ups, and it never ends! /rant

WTF?

[haplo21112]

God I hate this fucking state! I can't even imagine, what I may or may not have purchased, i don't even keep those sorts of records...

Simpsons reference

[Anonymous Coward]

It was also on the books that ducks shall wear long pants.

TRIPLE TRAXATION????

[Tuxinatorium]

First, a third goes to income tax. Then, 8% goes to sales tax on something you baught on vacation in another state. And now, Taxachusetts wants to take 8% more on top of that, leaving even the middle class with less than half their money left over after all taxes are accounted for.

Re:TRIPLE TRAXATION????

[aap]

There's a credit for taxes you paid to other states, if those states have similar credits for taxes their residents paid to MA.

Re:government tax rate is 100% ~ a small rant

[stm2]

That's funny. In Argentina we have a 21% sales tax (yes, 21%). And public services (hospital, education, and so on) really sucks!!!. I mean, go to a public hospital (with 50% poverty rate, most people go to public hospital) and you will have to wait hours in a line at 6 AM. There's NO security, I can get killed any time by anyone.
So I don't know what are you complaining about.

sales tax

[ironfroggy]

Why do i have to pay it? What am I actually paying the government for in relation to how much money I spend on merchandise and services?

Re:government tax rate is 100% ~ a small rant

[ronfar]

Well, at least the Feds can travel in unparalleled luxury while the rest of us suffer....

Fancy hotels give federal travelers a break

ahem

[Anonymous Coward]

I believe the correct, full name is the Commiewealth of Taxachusetts

Re:government tax rate is 100% ~ a small rant

[Anonymous Coward]

As with most rants they are mostly incorrect. There are several factors which eliminate the 100% tax feedback system. The big two are the savings rate, the rate at which each American saves, and the export rate. Every dollar saved and every dollar sent to another country is essentialy taken out of the equation.

It pays for...

[yerricde]

What am I actually paying the government for in relation to how much money I spend on merchandise and services?

Your state income tax pays for at least the following:

• Roads on which to deliver goods.
• Programs to develop businesses that sell goods and services.
• Education to teach people how to produce goods and services.

Re:It pays for...

[ethereal]

The last two should get money from the state that you ordered the item from, though, not from your state. That is, if I order a book delivered to IL from CA, the business development and education occurred in CA, and so CA should get to charge the tax for that, right?

For the first item, why don't they just tax delivery companies instead? That way UPS can pass the tax on to me, and I don't have to keep all these receipts.

Use tax is just the state governments weaseling into interstate commerce where they don't belong. I'm surprised no one's challenged it on those grounds yet.

Come on up to NH

[bill_mcgonigle]

More interesting (to me :) is why we tolerate sales tax at all. You get taxed coming -- income tax -- and going -- sales tax.

We don't tolerate it here. We have neither sales tax nor income tax. There's a property tax, a tax on interest and dividends > $1000 (hopefully will go away with national) and business profits. Oh, and an 8% 'temporary' tax on hotels and prepared meals. A couple highways down south have toll booths too.

We also have a very small, low-service goverment, which is how we like it. It's not surprising that we had the highest percentage of tech workers during the dot-boom.

Some people claim our property taxes are high, but I pay the same rate on my 32 acres as my parents in NJ do, and they have dozens of other taxes.

Re:Come on up to NH

[MacAndrew]

I dunno, that "live free or die" thing makes me nervous. ;-)

(For the uninformed, that's a reference to their license plate, not social practice.)

Isn't NH still debating secession? It used to. Before you jusge other states too harshly, your citizens are relatively well-off, giving room for relatively lower taxes that net relatively high revenue. I imagine property in NH is worth a lot more than property in Mississippi, for example.

It's a cool state, though I kinda liked Vermont, too. I know, communists. I like Maine, too. Hey, it's a nice place to live, and I envy you. (Though i do like Virginia, too. Once you've lived enough places you get flexible.)

Our property tax rate is just under 1%, and our assessments are unfortunately accurate and very high -- I live close to DC.

That state dividend tax -- I wouldn't be at all surprised to see some states RAISE that tax if the nat'l one is abolished. It's a golden opportunity to seize some revenue without anyon seeing their total tax bills go up, and a lot of states need the money right now thanks to the economy..... Now, if the economy were to improve ... I guess that's talking crazy. ;-)

Re:Come on up to NH

[bill_mcgonigle]

I dunno, that "live free or die" thing makes me nervous.

Actually, it's what makes us feel safe. Here's Article 10 of our Bill of Rights:

Right of Revolution. Government being instituted for the common benefit, protection, and security, of the whole community, and not for the private interest or emolument of any one man, family, or class of men; therefore, whenever the ends of government are perverted, and public liberty manifestly endangered, and all other means of redress are ineffectual, the people may, and of right ought to reform the old, or establish a new government. The doctrine of nonresistance ag ainst arbitrary power, and oppression, is absurd, slavish, and destructive of the good and happiness of mankind.

So far so good.

Isn't NH still debating secession?

Hmm? I've heard both Vermont and Quebec debating this, but never in NH (at least in the 11 years I've been here).

your citizens are relatively well-off, giving room for relatively lower taxes that net relatively high revenue.

There are plenty of poor rural citizens, trailer parks, etc. There are still many towns where most homes on a good chunk of land sell for under $100K. I'm sure Mississippi is lower, but I think that argument can be made for any state. What keeps the taxes low are a low level of services. That means low, controlled spending. It's a good way to run a government.

Food for thought -- taxes suck ass.

[Anonymous Coward]

For grins, I decided to pull out my Mr. Anal Rententive hat for 2003 and use GNUCash to track every penny I earn/spend this year, with excruciating detail.

For example, I can tell you how much my family has spent on dairy products thus far ($73.87 total, with $5.57 going to half-n-half for my tea and coffee), tax not included.

I also break down all of the taxes I pay everywhere. From income witholding, to sales and gasoline tax, to various taxes levied on utilities. It's totally insane:

Total income received so far: $4328.34. Total taxes paid: 772.03. Percentage of my paycheck extorted from me: 17.8%. That's not even accurate, as I save a lot of money and I haven't spent the rest of the remainder. I've only actually spent $2310.32 so far, of which is a whopping 33.4% for taxes.

Mind you, I'm married, have 2 kids and own 3 pieces of real estate, and dump a bit of money into savings bonds -- quite the example of a middle class household. I get child tax credits, can deduct interest on my properties, and my health insurance is deducted from my paycheck pre-tax. Over the past 3 years, I've upped my withholding exemptions to 8 so that I damned near break even come tax return time, so my tax figure above includes my witholdings (which should be dead-on). No interest-free loans for my government, thankyouverymuch.

People without property or kids, those who are single, or those who are simply much lower income must simly get raped by the Tax Man. They must pay 30%-to-50% when all is said and done. It's insane, I tell you.

It's so damned irritating, that I've given serious consideration to simply picking up a job that will maximize (after deductions/credit) the earned income credit, just out of spite to The Man. Our family is heading that way already (being very frugal types, as it is), so it's quite possible to achieve. The maximum adjusted earned income you can get (in 2002) and get the maximum EIC of $4140 is $14,500. Yes, I realize just how small a number that is compared to the ~$50k I earn now. But look at just how much I loose as it is (granted, the regessive taxes like sales and utility franchise taxes wouldn't change, but still...).

Face it, there's too much damned pork in our government as it is. Enough already.

(Back on topic. If they really wanted to easily tax mail/internet orders, they should levy a special tax on whoever does the shipping (UPS, fed-ex, US Postal). That way, you unload the burden of the tracking to a select few centralized companies, rather than each and every single vendor out there. The cost would get passed on to the buyers anyway, but without the buyers or sellers having to track it. Easy, eh?)

Re:Food for thought -- taxes suck ass.

[Anonymous Coward]

Whine Whine Whine.

Maybe you'd rather live in the EU (or Japan), where taxes are WAY higher than most Americans would imagine?

Or would you rather live in the 3rd world, where taxes are low, and you get what you pay for?

Or how about Russia, where your ASS sucks the taxes? Something like that. Nevertheless I doubt that's what you want.

US taxes may be annoying, complicated, and wrongly placed, but they are not at all excessive.

Re:New Engliand and the rest of the world

[MacAndrew]

Notice that I wrote "I'm pretty sure MA had the highest cumulative taxes of anywhere I've lived."

I was particularly impressed when I stopped working and went to upstate NY for school. Because of a peculiarity in NY law, I learned that they expected to tax my MA income before I even moved to NY. After paying NY tax plus penalties and refiling in MA, I came out ahead several hundred dollars!

MA pulls all kinds of stuff to slip taxes in discreetly. When I was there they faced a budget shortfall and so raised fees. To get a reciprocal driver's license from out-of-state, the fee was suddenly over $75. I think IL charged $15. I don't know which fee better represents actual costs, but one was or the other the taxpayer pays for it.

It's not important who is #1, unless it's a competition; it is important who is high tax. MA is absolutely high-tax, the 5.5% base rate + 5% sales tax + the astonishing 12% tax on "unearned income." (I don't know why they don't just go to a progressive tax structure that would give low income earners a break while taxing more those who can afford it -- the 12% just encourages restructuring finances, such as investing in state-tax-free federal obligations like T-bills that would otherwise be unattractive.) It's not like property taxes are low, either. If they now crack down on use tax in a way other states have not, it will be just another example of the state's tax focus.

Don't get me wrong, I think MA is a great state and would like to live there again, but its inefficient gov't coupled with a poor economy makes it an uninviting place for individuals and businesses. The services (I couldn't believe the ease of the Virginia DMV) do not reflect the high taxes. This is not to the state's benefit.

Re:government tax rate is 100% ~ a small rant

[zogger]

--your observation would be more true if the "money" supply was tied directly to produced wealth, but it's NOT. There are more phony pieces of money put out in paper or digitized form then what is "saved". If you were correct, japan wouldn't be having economic problems, but they are, aren't they? They are a nation of savers, unfortunately they saved phony money, although that is changing now with the housewives hitting the gold markets. It's hosed their economy and they are coasting on inertia now.

Fiat currencies (and their total supply) following the rip off central bank models are created poof out of thin air and usually inflated into the system well beyond any reasonableness, similar to how dotbomb stocks got inflated in "value", and why you see the friday afternoon sucker rallies with those gents using the PPT to keep their fatcat buddies afloat and to perpetuate the con. And they do it with poof created "money.

Keynesian economies are doomed to long term failure, they are unsustainable and only go to create hugely rich small numbers of people, and fractional reserve banking is heinous usury, and I don't believe in it.

I believe in the biblical laws of "just weights and measures",because the concept of "just" WORKS and is the right thing to do, and our monetary system as it is now violates those laws, and you can see the results. Temporary boom and bust cycles with huge amounts of scandals and massive wealth transference due to con jobs.

Also, I am well beyond the elementary economic concepts of treating "credit" as tangible stored wealth, so we can skip going there if you insist credit is money. And storing intangibles like fiat currencies doesn't matter a whole lot, they are subject to overnight changes to..nothing. Happens all the time, basic history will show you that. Just because it "sort of" is still working doesn't mean it will continue to do so. Any wildcard variable can set up a chain of events that willcause a collapse, and usually with collapses or near collapses we get major wars. With the military technology available to those bozos, I really am not looking forward to major wars, thankew very much.

I remember what my grandmothers and great aunts told me about the great depression, and the lessons sunk in to me. Now my parents generation, who were children during the depression and didn't have an adults recollection or memory or responsibility, is different, they embraced the scams perpetrated later on. It wasn't all their fault, but I will fault them for not getting educated eventually. They got seriously brainwashed into believing everything government said was the truth, primarily from coming of age during ww2. The created bust economy scam of the great depression then the profit war that ww2 was scared them into "believing" government was their savior, along with the economic scams based on ponzi schemes and lies mostly, but it's really another topic for another time.

one reply for AC, thanks for the commentary and you are welcome

thanks for the link

[zogger]

--my observations are both "book" induced and just anecdotal. How many government workers do you have to meet who will tell you off the record of the waste and abuse that goes on before you realise it's endemic? And how whistle blowers get treated? And how many unresolved scandals have to occur? How many more obvious crimes at high levels need to occur? And how many more "laws" do we really need? Isn't buhzillion millions ENOUGH laws? How many exist now, does anyone really know? It's seriously nutso. And electing in the same two for-profit gangs decade after decade just slap ain't working.

I reached my tolerance and "fake out" point a long time ago, the "system" is broken and the only chance of fixing it is to replace the goons in charge and return to the basic concepts of the constitution, or even the earlier articles of confederation actually, if I had my druthers. I just don't believe in their fairy tales any longer, it's the same old lying drivel. Those bought off elected marionettes on TV have no sway over my awareness, I look at results, not rhetoric.

The MAIN reason is still vote is to stay on the potential jury lists, where I guarantee I'll apply common and constitutional law as it's written in english to any case I have to sit on.

Re:thanks for the link

[ronfar]

The best quote in that article is:

"The breed of government employee is different nowadays," says Norma Pratt, owner of Rodgers Travel in Philadelphia, which handles government business. "They don't see any reason why they can't travel first class."

If the quote is accurate (and knowing as much as I do about Lyndon Baines Johnson, I actually think it is far from accurate, there was a man who loved to live well on the public's dime) it just goes to show how much more arrogant people in goevernment are now. Actually, I think the difference is that Johnson liked to pretend that he loved the simple, lower-middle class life while craving luxury and power. Nowadays, the government types don't understand why they have to pretend. To paraphrase the Bard, "What need they fear when none can call their power to account."

well...

[zogger]

..well, what I am complaining about is I don't want the US to keep getting worse until it becomes a second world nation with only two classes of people.

In my opinion, it's headed that way, and I strongly suspect it's being engineered (at extremely high places) to economically and socially "fail" to help bring about a one world fascist government.

*someone* is really trying to implode our economy, similar to what happened to ya'all in argentina. And it can happen FAST.

word to the wise- anyplace in the world- there's "wealth" in the form of tangibles, like decent land with it's own water and garden and woodlot, and precious metals, those are examples of stored wealth that can't be inflated, then there's inflatable poker chip "money" like pieces of paper with numbers on them and "stocks and bonds".

Re:well...

[stm2]

You said:

"anyplace in the world- there's "wealth" in the form of tangibles, like decent land with it's own water and garden and woodlot, and precious metals, those are examples of stored wealth that can't be inflated,"

You are right. but be aware that even with "tangible goods" you can have several economic problems. Take Argentina again, we have plenty of land, we export seeds to a lot of nation but a lot of people are starving. There are even kids dying of starvation, like in Africa!!.

Tax USA v UK

[vaseyandco]

This is one thing I have never understood about the US tax system, why is the responsbility put on the individual to sort taxes? In the UK individuals (consumers) hardly ever come into this line. When they get paid, their income tax, which covers government spending (22%) is deducted by the employer, as is their national insurance (5%) contribitions NIC's (which fund pensions and the National Health Service). If you have a private pension all you have to do is tell your employer, who it is with, and their account number they arrange it all. Which seems very different to the US system with 401k's and the like.

Sales Tax, again is something different in the UK to the USA. 99times of 100, consumers don't bother with VAT, the prices you see is the price you pay. if on the shelf it says £2 then you pay £2. Unlike the US system where it says $2 and you pay $2.14 (7% sales tax) Which is confusing for anyone surely.

From a business point of view VAT is simple in the UK. A business buys a product at £100 plus VAT (17.5%) so the company sends a cheque(check) for £117.5. The company can then sell that to another business for £150 plus VAT = £176.25 so the business has made £50. But the business then needs to the send the (£26.25) VAT to Customs and Excise (the customs official take our tax (wonderful system!!). But we also can claim back the 17.50 we already paid, which means we only send a cheque for £8.75. Simple! You might not think so?? well this is a business, not an individual. All they pay is the £176.25. They dont even know they are paying the VAT, it's just a price to them.

So can someone explian the 401k's and why it seems so complex?

Re:Tax USA v UK

[Anonymous Coward]

Yeah we have this stupid system in Sweden too. 31-57% income tax stolen from the employee's salary, but on top of that they - what you call convenient - charge the company another 35%. Add to that a 6% fee for "retirement funds" (ponzi scheme) and finally we have the sales tax at 25%

So a worker earning less than ~USD2800 (all the way down to ~USD100 per month) pays around 60% in taxes. And because all they see is that 31% tax most people don't understand why some others are complaining at the taxes.

And from a business point-of-view there's not something good about paying 25% extra when purchasing goods from another business. It's extra paperwork and only annoying. If the government want to steal more money they can do that on their own and not force private businesses do it.

Re:Tax USA v UK

[Anonymous Coward]

You wrote:
This is one thing I have never understood about the US tax system, why is the responsbility put on the individual to sort taxes? In the UK individuals (consumers) hardly ever come into this line.

Well.. not unless you earn anything over the threshold for higher rate tax (currently, that kicks in at about £33K). Then, you get the Inland Revenue sending you a tax form, and you have to go through the last years' receipts, bank statements, and payslips in minute detail to do the tax office's work for them. B@stards. It usually takes me about 5 days' solid work to get my tax form done - and do you think I get compensated for that time by the government? Ha. Ha.
[rant]
Basically, it's a tax on success. The message seems to be, "be a good little Peon and earn as little as you can and we'll give you tax credits, benefits and income support, and you must forever be grateful to Big Nanny Socialist State - but if you so MUCH as DARE to work hard and be successful and support yourself we'll clobber you every which way, you Nasty Capitalist Fat-Cat". [/rant]
Sorry, but this kind of thing really infuriates me. And don't forget that here in the UK we've got another 1% hike on our tax rate coming later this Spring - disguised as "National Insurance". Whoopee, how I love Socialist governments.

Actually....

[saturndude]

...I believe the tax has existed since 1933 or 1934, but only appeared on the income tax form since 1999. I thought the state was forbidden to enforce it by an old court ruling. Just a line on the income tax form for honest people to use, since there was probably no other form to report it on. Ohio's budget deficit could reach $4 billion/year this year or next. If inter-state enforcement were viable, "Uncle Bob" Taft and the legislature might pass a bill creating enforcement ability in a "New York minute". After all, US Federal Income Tax was once illegal, until the US Constitution was amended. I don't want to sound pessimistic, but as /. readers know, "Big Brother" is already here.

yes, we agree

[zogger]

--I AGREE with you. the point I was making is that putting all your "trust" into fiat currencies and banks and politics to ensure your basic human needs is very short sighted. I've been following ther argentine situation a lot, because I can see parallels with other nations, especially after the IMF blows the economies out. My recommendations to people who are *smart* and can think outside of the herd-level is to thoroughly understand the profounddifferences between stored theoretical forms of wealth, and true tangible wealth, and to make SURE at a minimum that your first accumulated wealth is in the form of a practical tangible like a paid off piece of ground, with a garden and a well for instance. Even if you don't live there all the time, get a small country place to serve as your backup place during rough times, and pay that thing off first before anything else. Skip the new car, keep the old clunker running, get that property and even if all you can do is put a trailer on it or a small cabin, then at least you have something that's real and "in the bank" so to speak.. You might not be as good off during real bad times like you might be in the good times having a fat bank account and an open supermarket, but when the banks close, and the currency gets inflated, and the shelves are bare at the store, and when your job poofs,(all that stuff you can see happening now in argentina) you still got that garden, and well water, and a modest roof over your head. You can't do it for your entire nation yourself, but anyone can do it for themselves and their immediate family. THAT's the big difference.

I write a lot on survival/preparedness topics, I categorize human being carbon based life form priorities in this fashion...

water-food-shelter-security

And in that eaxct order of importance. These are necessities that if all the wealth you have is represented, that these should be top of the list, and not a thoeretical "I have enough money in the bank to cover that". They should be as independent of outside influence as practical, ie, 'water' isn't magically made in the city dwellers kitchen faucet, "food" doesn't grow on grocery store shelves automagically overnight, and etc. That's dangerous and naieve if not outright arrogant thinking, and way too many people assume that's how it is, and don't care---until one morning they wake up and that stuff is gone, their money worthless to aquire basic human necessities, their retirement 'accounts" and 'portfolios" vaporware. As I'm sure you can see now in your nation where so many peoples life savings buy nothing now, and there's widespread hardship and hunger. And the sheer speed in how it happened. People's realities can be turned upside down, comfortable to desperate in a few steps that you don't have any control over. You can't eliminate bad things happening, but you can plan in advance to have more tangible forms of "insurance" than just a piece of paper in the file cabinet.

By following common sense and differentiating between theoretical forms of money (stocks, paper, digits in a database at a fractional reserve bank, various health "plans", etc, etc) as opposed to in-your-possession true "wealth", at least for the necessities, you can eliminate a lot of potential problems that *might* arise.

During the great depression here in the US, I heard about it a lot when I was younger talking to people who went through it. People who lost their jobs in the city were really hurting, no money, couldn't get food, hunger. People in the country with wells and gardens and chickens still might not have had any "money", but they had food and water and firewood for fuel. This was my direct relatives I'm talking about now, so poor "money wise" eventually duyring those lean years they didn't have two dollars, but they still had food and water and shelter and heat in the winter. We tend to lose track of that in high tech society, but those necessities remain the same for everyone, no matter their station in life.

There true tangible wealth wasn't inflated away like some theoretical digitially stored nonsense in a "bank". They owned "real wealth" as opposed to all that perceived theoretical wealth such as the "stocks" in the portfolios at that time. No soup kitchen lines, no scrambling for scraps at the dump-which I know is going on in argentina now. Maybe they didn't live real "urban" fancy, but what they had, and were able to hang on to, was certainly better than nothing!

And good luck to you folks and to brazil, you have the potential to learn from your mistakes in the past and get more independent and more wealthy, especially as soon as you tell the IMF and the world bank con-men thieves to take a hike.

At least in Illinois...

[scaryjohn]

...you only have to pay the difference in sales tax to the state revenue board. State tax rate is 7%. If I buy something with 6.5% tax, say in Arkansas, and use it in Illinois I only have to pay Springfield for 0.5% tax. This is cool under the spirit of the "Internet tax moratorium". Now, if you had to pay full Massachusetts tax on top of sales tax wherever, that is not cool. (And according to the article, this is not the case.) This is the first year it's included with the IL-1040, as well.

Two more things:

1. If a company has "physical presence" (buildings, incorporation or licenses, contracts with municipalities) in the state, they generally have to collect appropriate sales tax from you already.
2. Almost all mail-order (and phone-order) sales are part of a national clearing-house to appropriately re-distribute sales tax under use tax rules whether there's physical presence in the state or not.

Sign at JFK airport

[ephraim]

(OK, so I'm a little late getting into this discussion :-) )

If you fly into New York's JFK airport, there's a nice large sign at customs announcing that all New York State residents arriving from abroad are obligated to pay sales tax on any items purchased while out of the country.

I've always wondered how many non-business types actually go up to the desk and announce "Hi, my family is returning from Paris and wants to pay NY's 8.25% tax on the $200 souvenir we bought there!" /EJS

Re:Sign at JFK airport

[Anonymous Coward]

Sounds a lot like an import duty. Last time I checked, the states were forbidden by the Constitution to levy import duties with that power resting with the federal government.

Taxachusetts is long gone

[paiute]

Gee, I hate to interrupt this anecdotal exchange with some facts, but the state and local tax burden per capita in MA was 39th out of the 50 states in 2002.

http://www.taxfoundation.org/statelocal02.html

Estimate?

[itsyourunclebill]

Well, I have never bought anything online, don't know what the internet is, and don't own a computer. The state didn't provide anything that contributed to the non-sale.

and YOUR quote...

[zogger]

..and your quote from shakespeare is apropos to today's political reality. There's about zero accountability within the US government, it's grown so entrenched with career bureaucracy, cronyism, neoptism, bribes, corruption and scandal that I see no easy way to "fix" any of it. I forget right now which one of the new "patriot" laws it is, but one of them effectively guts "whistle blowing" for government employees who are at least honest and just want to do a righteous job and uncover malfeasance. And "Voting" has been reduced (more or less) to voting in criminal gang A or B and back and forth. I can't remember the last time anyone I voted for actually got in office, the herd mentality rules (and still drools). On some local levels, yes, constructive change and honesty can be achieved, but above small local levels, well, to say I am pessimistic is an understatement, I think it's close to impossible the way things are now. Thanks for your reply.