Online sales tax a burden for small businesses
They finally got you, New Hampshire.
For years, the “tax ’em high” crowd have been after you, trying to drag you into the big-government mud. Massachusetts liberals hate the fact that every time they raise taxes on us here, they hear gleeful cackling from you as you expand your parking lot and warm up your cash register for the flood of new customers from across the border.
Remember Gov. Deval Patrick trying to force New Hampshire businesses to collect Massachusetts sales taxes from border-crossing Bay Staters?
Well, the Supreme Court just did Patrick’s dirty work for him, I’m afraid. They forced you into the sales tax business over the objections of your own citizens and small businesses.
There’s a telling part of Judge Anthony Kennedy’s ruling where he cites the $33.9 billion in potential internet sales taxes as “uncollected.” Alas, my New Hampshire friends, that’s how America’s political class views the money you work so hard to earn. It’s not yours. It’s theirs — they just haven’t “collected” it yet.
I don’t often agree with Sen. Jeanne Shaheen (DN.H.), but she got this right: “This is a disastrous decision for NH’s economy & does not take into account the day to day challenges of running a small business. NH small businesses do not have the time or resources to become tax collectors for other states,” she tweeted yesterday.
Many people are blaming the court for this mess and, in fact, there is plenty of blame — and pain — to go around. That $34 billion is going to bite shoppers from coast to coast, but it’s really going to hurt small online businesses in New Hampshire and the four other states (Delaware, Montana, Oregon and Alaska) without a state sales tax.
But before you blame five unelected judges for coming up with a lousy solution, remember: We pay 535 men and women — the U.S. Congress — a full-time salary to fix problems like this and they blew it off.
The Supreme Court first ruled on this when George H.W. Bush was in office. We’ve had eight years of Clinton, W. and Obama to find and pass a legislative answer, but Congress didn’t do it. Not under Speaker Pelosi or Paul Ryan.
The Supreme Court didn’t rule that states must shake down online T-shirt sellers or graphic artists, merely that they can. Congress could end it tomorrow. They won’t. And to be honest, I’m not sure they should.
I think brick-and-mortar store owners are right to complain that the guy selling the same stuff on the web down the street is off the sales-tax hook. I just don’t support the idiotic “solution” of making the internet guy collect the taxes due in 10,000-plus different jurisdictions.
The solution is to make internet businesses do what the brick-and-mortars do: Charge every customer ... their local sales tax.
Who cares if the shopper is standing at your counter or sitting in his underwear shopping online? Charge the sales tax based on where the store is, like we do with traditional purchases. When you buy a delicious and reasonably priced soda at Disney World for $13 (assuming you order the small one), they don’t ask where you’re from to calculate the sales tax. You pay based on where the seller is doing business.
Now do that online. If you’re WebStore World and you decide to locate your facility in Massachusetts, everyone who shops pays 6.25 percent. But if you locate in New Hampshire or Oregon, everyone pays ... zero.
“Hey, wait a minute,” Massachusetts liberals respond. “If we did it that way, all the online retailers would set up shop in lowtax states like New Hampshire. We’d lose all that revenue and those jobs!”
Exactly. Not only that, but this policy would pressure high-tax states like New York and Massachusetts to lower their sales tax rates, which in turn would benefit the Mom and Pops, too.
Win-win!
Which is why, of course, it will never happen. Sorry, New Hampshire.