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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.
(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!"