Massachusetts Governor Eyes an Internet Sales Tax That Could Have Federal Implications
A funny thing happened on the way to Massachusetts Governor Deval Patrick’s campaign promise of lowering the state property tax — nothing. Not only did he break his promise early on in his governorship but he has looked for all sorts of different mechanisms for raising taxes on top of the property taxes.
Last November the voters of Massachusetts voted against repealing the state income tax. This left the leadership in Massachusetts with an opening to raise taxes. By voting against the repeal the voters look willing to accept taxes, after all if they didn’t like taxes they would have repealed the income tax right? Especially in the state that began the American Revolution based mostly on taxes imposed by the Britons. So if one tax is acceptable why not try another?
Governor Patrick’s latest scheme is to implement a sales tax on items that Massachusetts residents purchase over the internet. This measure seems to have wide approval in the Massachusetts legislature, no surprise there.
In Massachusetts, the tax proposal appears to enjoy broad support in the Legislature,
But his plan is far more devious than just implementing an internet sales tax on Massachusetts residents. There is already a voluntary multi-state pact called the streamlined sales tax initiative, this is the plan that Deval Patrick would be entering. Under this pact there are certain retailers who have agreed to charge a sales tax on residents of states who have agreed to join the pact. Massachusetts is about to join the pact. According to the article that I linked to above, because this is a voluntary program Massachusetts would only receive about $15 million in revenue.
This is where my claim that there is something more devious at play here by the governor. Because $15 million is nothing compared to the Massachusetts government’s deficit there is a plan in the works that could raise the state $545 million. And it involves the federal government.
state officials said passage of the law would help spur Congress to approve a broader version of an Internet sales tax that could produce hundreds of millions of dollars in additional revenue.
What is this quote talking about?
Legislation by Congress would require all 45 states that have sales taxes to collect on those transactions. Because it would be a federal mandate, the law would dramatically increase the number of retailers required to participate, generating as much as $545 million for Massachusetts alone, according to an analysis by the University of Tennessee.
And guess in which state the sponsor of this bill is from:
The US House version of the bill is sponsored by Representative William Delahunt, Democrat from Quincy
So 45 out of the 50 states would be required to pay an internet sales tax if this federal bill passes and this is born out of Governor Deval Patrick’s lust for raising revenue instead of cutting spending.
Thank God I am in one of the 5 states that does not have a sales tax. At least for now. When Governor John Lynch sees the money that Deval Patrick may be swimming in all bets are off.
Of course there is no way that in the final version of this bill the 5 states which don’t have a sales tax will be exempt from paying an internet sales tax. That is just a pipe dream on my part.
America's Watchtower 
I don’t think that is something limited to just Massachusetts. All of the states that have sales tax have been drooling over trying to get a piece of the action ever since people start selling stuff over the Internet.
LikeLike
Worst yet, have you seen the proposed taxes by the reprobates that run our NH legislature?
Here is one beaut:
2009-H-0486-R – establishing tangible personal property inventory and use taxes. Sponsors: (Prime) Dennis P Vachon
What the hell could THAT mean?
Read the list here:
http://www.gencourt.state.nh.us/ie/lsrsearch/lsrresults.asp
RTK is under attack as is private vote at town meetings.
(HB0053 and HB0072)
LikeLike
Thanks for the list, I will look at it tonight when I have a chance. I am sure there will be a post coming after I do.
LikeLike
Terrant, you are right. But what I found the most appalling in the article that I linked to is that Deval Patrick is using his state proposal to push a federal version of the bill so that he can reap huge tax benefits from the sales tax because his state version won’t provide enough revenue. I am sure that the other states won’t mind because as you said, they have been drooling over the prospect.
LikeLike
Can you see me jumping up and down and throwing a fit! Ughhh! I am so sick and tired of these ridiculous shenanigans!
I swear our elected officials have lost all capacity to reason! All they appear to be able to do is solve the problems THEY create with more taxes!
And then don’t forget, Congress having the AUDACITY to vote themselves a $4,700 pay raise!
Grrrr!
BTW – I wrote an article about Congress’ pay raise.
LikeLike
Are you getting any snow where you are, Mr. Pink Eyes?
LikeLike
Good point, while Americans are struggling these people have to audacity to give themselves a raise. It is so frustrating.
We got a few inches of snow today before it turned to rain. Here is hoping that it doesn’t freeze like the last time. I don’t know if I can handle another nine days without electricity.
LikeLike
I certainly hope that Massachusetts doesn’t adopt the “internet” sales tax because every other state that has adopted similar laws has pushed big retailers like Amazon to shut down affiliate programs, therefor causing a major loss of income for many small business sites.
Honestly if it happens I will move from my state, therefor will they will lose all of my business taxes – and how does that help them?
LikeLike
Governor Patrick hasn’t seen a tax increase that he doesn’t like.
LikeLike
I would like to direct your readers to understand that even if an Internet merchant doesn’t charge you sales tax, you still likely owe the equivalent use tax in your state (unless of course you are in a state which doesn’t collect sales tax) – which you are supposed to report to your state on your annual tax returns (and remit payment – although most people regularly do neither).
We also like to remind people that local sales tax are not new taxes dreamt up by some Washington DC tax legislator. Local sales taxes are decided upon directly (or indirectly) by you, in the voting booth at every election. When you vote for local services (police, schools, hospitals, etc) or projects (parks, transportation, sports facilities), these voter mandates are funded almost entirely by local sales tax revenues. When you avoid paying these local sales taxes (intentionally or not), only your local community suffers.
The only reason Internet merchants don’t do this for you (like your local stores do) is that in 1967 & 1992 the issue of “Remote Sellers” came before the US Supreme Court (then in the context of mail order catalog merchants). In both opinions, the court agreed that remote sellers should collect and remit local sales taxes, but they also conceded that requiring remote sellers to keep track of 4,000+ local tax jurisdictions would be too difficult, and that only an act of Congress could empower the States to require remote sellers to collect and remit sales taxes just as local businesses do.
With contemporary companies like Amazon.com and services like iTunes, no one can legitimately question their technical ability to keep track of many millions of transactions per quarter. Further, with the successes of the Internet over the last 25 years, it is time to revisit how difficult it is for remote sellers to manage a mere 10,000+ local jurisdictions.
Hopefully the revised Main Street Fairness Act will be soon introduced before congress to address this very issue.
The Main Street Fairness Act will finally mature efforts which has been underway for the last ten years called the Streamlined Sales and Use Tax Agreement (or SSUTA) – this is the organization you declare to be “devious” in your article! SSUTA is not a devious scheme.
SSUTA has been developed collectively by 44 states, along with industry groups and retailers, in an effort to simplify and modernize state-by-state sales tax codes to eliminate the overly burdensome “entanglements” cited by the US Supreme Court opinions from 1967 (Bellas Hess) and again in 1992 (Quill). Complete details about SSUTA are available at their website, http://www.streamlinedsalestax.org.
We maintain that with basic application of modern technology with SSUTA simplified rules and procedures, systems within e-commerce websites could easily calculate (and collect, and remit) accurate local destination-based sales tax, using techniques akin to real-time shipping calculation – a feature frequently a part of most modern web purchasing experiences today.
Our TaxCloud sales tax-as-a-service, which will be available later this year, will be offered at no charge to merchants, to facilitate collection and compliance. You can see a preliminary demonstration of TaxCloud calculating tax rates for thousands of state and local tax jurisdictions at http://myrate.taxcloud.net. As states, counties or sewer districts update their rates, TaxCloud and all TaxCloud merchants get the change automatically, and maintain compliance with all local sales tax laws.
It is time to tell Internet merchants to start collecting and remitting local sales tax, just like the corner store has to. Stop pretending that the transaction is “tax-free” because Use tax is still due.
Your local sales tax should be collected & remitted for you by all merchants, so businesses and individuals don’t have to meticulously keep track of all out-of-state transactions.
We believe it should be easy for everyone- consumers, merchants, and government, to comply with existing tax law and do the right thing for our communities.
R. David L. Campbell
Chief Executive
The Federal Tax Authority (Fed-Tax.net)
LikeLike