Massachusetts Sales Tax “Fairness”

In case you missed it, H.1731 and S.1554 are winding their way through the Massachusetts legislature.  These bills attempt to make large vendors like Amazon subject to state tax, by arguing that MA-based affiliates create an in-state presence.

I’ll concede that the US Constitution has made our in-state/out-of-state sales tax system a bit quirky.   But I object to these bills because they put Massachusetts at a competitive disadvantage in the emerging Internet economy, at a time when more entrepreneurs are eyeing NY and CA for new companies, instead of MA.

It’s also not clear there’s any material revenue benefit:  in other states, Amazon (and other vendors) have responded by canceling their affiliate programs in those states.

These bills are being pushed by Wal-Mart, other multi-national retailers, and the Retailers Association of Massachusetts (RAM), who argues:

Our local small businesses operate at a significant 6.25% price disadvantage to out-of-state, online businesses, leading to fewer sales at brick-and-mortar establishments who contribute so much to our community.

This highlights my real objection:  these bills are about protecting the status quo, without taking a rational and realistic view of the future.  Any MA-based retailer facing out-of-state mail-order competition should be considering the future of commerce.   There are 49 other states where that retailer can sell tax free!  That’s hardly a “disadvantage”.

Like many issues, it’s always helpful to understand the deeper issue.  This is really about Wal-Mart pushing around Amazon.  I can only hope that the MA legislature doesn’t rise to the bait.

3 thoughts on “Massachusetts Sales Tax “Fairness”

  1. The slippery slope of regulating a “free” market. One rule creates two path around it to either side, so you need two additional rules, which creates four paths. Before you know it, you have a free market with regulations akin to our tax code.

  2. there will be zero disadvantage to such bills/taxes if they pass. that is just fog put out by amazon. if amazon kills the local affiliate program, what of it? the dollars generated by amazon affiliate program are tiny in the aggregate, and miniscule in individual cases. so no one will get hurt

    it actually is much more harmful to leave the status quo — why should a retailer who contributes no dollars to the local economies be given such a HUGE advantage over local retailers who do pay all sorts of dollars into the local economies (by, amongst other things, employing people!)

    the “no sales tax on the internet” thing was a clinton era gesture to try to not kill e-commerce in the cradle. well, those days are over. e-commerce is here to stay. and either we believe in sales taxes and consumption taxes or we do not.

    i do.

    and all retailers should collect and pay.

    • “…so no one will get hurt…”  Not true,  I was on my way to making $10,000 for the first time this yeaar until the CT “Amazon tax” law shut me down.  I’m out that income now, and CT is out of the tax they received on that income.  Products I deal with are very nich e and not available in CT anyway.

Leave a Reply

Your email address will not be published. Required fields are marked *