Archives For sales tax

While tax breaks on various school supplies may be saving the consumer in the short term, skepticism still surrounds the large-scale economic implications of renewing these policies year after year.

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While some taxes get more attention than they deserve, others fly totally under the radar.

The wireless tax is one of them and the mobile industry isn’t happy about it. As seen in a previous infographic which we posted, I bet you didn’t know wireless taxes grew 4X faster than general sales tax has in the last decade. Continue Reading…

If you’re headed back to school this fall, check to see if your state is highlighted in blue on the infographic below. If it is, you’re in luck! 17 states are participating in a state-wide sales tax holiday for certain back-to-school supplies (listed below) such as computers, textbooks and clothing.

Of course, if you live in Delaware, New Hampshire, Montana, Oregon or Alaska then you don’t pay sales tax anyways. Enjoy!

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Baseball fan? Or a hot dog aficionado like President Obama? As designated by the National Hot Dog and Sausage Council, Happy National Hot Dog Day! More importantly, did you know that a lot of states have a ‘hot dog tax’?

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“This is an invisible tax that consumers don’t know they’re paying,” Beer Institute President Joe McClain said in a March 2013 audio interview posted on the group’s website. “The people who enjoy beer the most, those middle-class Americans, are feeling the bite of that tax more.” Continue Reading…

The non-partisan United States Conference of Mayors reported on Friday that cities and counties across the country would be losing out on $1.7 billion in new revenue this year because Congress has yet to pass the bill that allows states to tax Internet sales.

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New Hampshire: “Live free or die.”

As the only state without a sales or income tax, New Hampshire appears to live up to its motto.  But the state still has a functioning government and department of revenue, so the question bodes: Is New Hampshire a model for a tax-free society or is it just disguised as one?

First, let’s see how New Hampshire stacks up to other states, 1st being the best, 50th being the worst.

In a CNBC measure of competitiveness, developed with input from business groups including the National Association of Manufacturers and the Council on Competitiveness, states received scores based on 10 broad categories relevant to living and doing business there.  Here’s How New Hampshire ranked:

Overall Cost of Business Workforce Quality of Life Economy Infra & Transp. Tech. & Innovation Education Business Friendliness Access to Capital Cost of Living
19 35 44 1 34 46 26 8 2 19 40

Overall, New Hampshire ranked slightly above average.  On the good side, they scored first for quality of life and second for business friendliness.  On the other hand, they are in the bottom 10 for cost of living and near last in infrastructure/transportation – both of which could be the result of a crippled revenue stream.

Now, about all of this no tax stuff.  If you thought New Hampshire had no taxes period, you’re mistaken.  In fact, other states actually have smaller tax burdens when considering income, property, sales and auto taxes together.  In a report on major tax burdens for the largest city in each state, Manchester, New Hampshire ranked 31st for a hypothetical family of three earning $50,000/year.  The cumulative tax rate for this family was estimated to be 8.8%, just a few ticks lower than the national median of 9.4%.

Below is a list of all New Hampshire taxes:

So it’s not that New Hampshire doesn’t have taxes, they’re just better at hiding it.  Their property tax, for example, is the third-highest in the country.

Here’s another piece to the puzzle:  One reason New Hampshire can afford it’s modestly low tax rates to begin with is because their citizens are some of the wealthiest in the country.  According to data from the US Census Bureau, the 2008-09 average median income in New Hampshire was the highest in the country at $68,187.  In 2010-11, that figure dropped to $67,308, but was just a couple hundred dollars behind Maryland’s top national average of $67,551.

With higher incomes, overall tax rates can be lower; however, note that the state’s revenue per capita is still modest, according to the National Tax Foundation.  In 2011, New Hampshire’s revenue per capita was $4,746 – the 40th lowest and below the national average of $5,323.

In sum, New Hampshire’s overall tax burden is relatively low, but because their population has above average income and auto and property taxes are high, taxes paid per capita are normal, allowing the government to function without collecting sales or income tax.

200px-Free_State_Project_Logo.svgOne more thing: New Hampshire relies heavily on tourism as a source of revenue.  While there is no uniform sales tax, the state does collect tax on certain items including restaurant food, gasoline and hotel rooms – all things that tourists spend a lot of money on.

The tax portrait of New Hampshire isn’t as libertarian as its made out to be, but that doesn’t stop its attraction to some of the most die-hard anti-tax people in the country.  As the Free State Project, an “enthusiastic legion of libertarian activists,”  says, “choose New Hampshire, where freedom happens first.”

If you want to learn more about New Hampshire’s libertarian culture and vision of a no-tax society, consider attending the annual Porcupine Fest this summer.   Continue Reading…

senatevote

MFA Votes

The U.S. Senate voted overwhelmingly on Monday to approve a measure allowing states to collect sales tax from online purchases.  In a vote that split party lines, the Marketplace Fairness Act (MFA) passed by a margin of 69-27 (See vote breakdown on right).

Despite its ease of passage through the Senate, the bill faces an uphill battle in the Republican-controlled House.

“We place a 30 percent probability that the bill is signed into law by the end of the year” primarily due to opposition in the House, said Guggenheim Securities analyst Chris Krueger, “Our odds will increase following passage of this bill in the Senate provided it receives a big vote of support,” he said (Reuters).

The bill received support from prominent Republicans such as U.S. Senators John McCain (Ariz.), Lindsay Graham (N.C.) and Saxby Chambliss (Ga.), but may be less favorable with House Republicans who have been reluctant to attach their names to anything that hints of a tax increase.

“Call me a conservative, but I believe the right approach to tax fairness is to reduce rates – not force higher rates onto others,” said Tom Graves, a House Republican from Georgia (Reuters).

Anti-tax activist Grover Norquist tweeted that the MFA represents a “struggle against new and higher taxes.”  His sentiment is shared by lawmakers from states with no sales tax (Alaska, Delaware  Montana, New Hampshire, Oregon), and online merchants such as eBay Inc, and Overstock.com Inc.

The bill’s co-sponsors are Illinois Sen. Dick Durbin (D), Wyoming Sen. Mike Enzi (R) and Tennessee Sen. Lamar Alexander (R).  Corporate backers include Best Buy Co Inc, Wal-Mart and Amazon.com Inc.  The bi-partisan National Governors Association  also strongly supports the MFA:

“Marketplace fairness is about collecting taxes that are already owed on retail sales—it is not a new tax nor a tax on the Internet. Annually, states fail to collect more than $23 billion from taxable transactions conducted over the Internet or through catalogues. This legislation levels the playing field between Main Street and e-street. It means fair competition for consumers, helps states collect what is owed and does not cost the federal government a dime” (National Governors Association statement released 02/14/2013)

One of the biggest hurdles to passing the MFA is its perception as hurting small businesses.  EBay Inc Chief Executive John Donahoe said the legislation unfairly burdens small online merchants; in an unprecedented lobbying effort, he sent an e-mail to over 40 million eBay sellers urging them to oppose the MFA.

Most eBay sellers won’t be effected by the legislation though, since the MFA exempts businesses with annual out-of-state sales of $1 million or less. Rex Solomon, owner of a Houston jewelry store that uses eBay, told cpapracticeadviser.com that “eBay is working to preserve special treatment for a handful of multi-million dollar sellers that puts my business at risk.”

Donahoe, for his part, is pushing to raise the ceiling to $10 million.

The MFA will be reviewed by the House Judiciary Committee, where it will undergo hearings. “Judiciary Committee Chairman Robert Goodlatte, a Republican, has reservations about the legislation, including its complexity and potential impact on small businesses, a spokeswoman said,”(Reuters).

Interestingly, the MFA mandates something that both parties support – tax simplification.  If implemented, states could only begin collecting sales tax from online merchants only if they simplify their tax code.  As instructed in the MFA, the tax simplicity requirement can be met either by adopting the Streamlined Sales and Use Tax Agreement, or by meeting a list 5 simplification measures described in the bill.

24 states have already simplified their sales tax laws to make it easier for multistate retailers, according to Tax Cloud, a sales tax service for online retailers.

The MFA is independent from Congress’ effort for broader tax overhaul.    Continue Reading…

Taxes are a fact of life. As Benjamin Franklin famously put it, “the only things certain in life are death and taxes.” But while some taxes get more attention than they deserve, other fly totally under the radar.

The wireless tax is one of them. And the mobile industry isn’t happy about it.

For example, I bet you didn’t know wireless taxes grew 4X faster than general sales tax has in the last decade. The following infographic from Mobile Future, a coalition of technology and communications companies, takes a hard line on the wireless tax:

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