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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.'"
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.
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.
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?)
(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!"