Massachusetts is among the states hungrily eyeing the potential tax windfall it would get if big Internet retailers like Amazon were forced to apply state sales taxes to its merchandise.
We agree with our state’s Democratic leaders’ contention that it’s a matter of “Main Street fairness.” But we also think they are trying to talk out of both sides of their mouths on this issue — they are avoiding an opportunity to do a major service to the “Main Street” retailers whom they supposedly embrace.
Right now, the Internet is largely a tax-free zone. Big companies such as Amazon are able to operate enormous warehouses in out-of-state locations, and can ship their items wherever they want without having to charge a sales tax.
It places traditional brick-and-mortar businesses at a big disadvantage. Here in Massachusetts, those businesses are forced to tack on an additional 6.25 percent to pay the state’s sales tax. It’s particularly hurtful in the border towns, where customers are drawn to New Hampshire and its “tax-free” shopping. Many local retailers have joined an effort called the “Main Street Fairness Coalition” in an attempt to pressure state leaders to get Amazon to start paying taxes.
State leaders such as Gov. Deval Patrick like the idea, but here’s the rub.
Top policymakers like state Treasurer Steve Grossman would love to take that estimated $339 million in new money and use it for new spending on transportation and various “capital needs.”
We think it would be far wiser to take that new revenue and use it to drop the sales tax rate. After all, aren’t we talking about saving “Main Street?”
Massachusetts residents may recall it was just a few years ago that state lawmakers jacked up the sales tax rate from 5 percent to 6.25 percent, in response to a “fiscal crisis.” The crisis is long gone, but the state is hanging onto that 6.25 percent rate. It’s like prying honey from a bear.
Crisis or not, the state just won’t let it go. What’s going to happen when the next “fiscal crisis” arrives?
This is the same old “tax and spendagogery” that has earned Massachusetts the reputation of Taxachusetts. We want to see traditional downtowns like Gloucester, Rockport, Essex Manchester and others throughout the region thrive. It’s clear that the micro economy that local retail creates — in the form of jobs, commerce, and local tax revenues — is vitally important to our local communities. The local banker gets his hair cut at the local barber, who uses that money at the local lumberyard, which uses it to pay an employee, who spends it at a local restaurant, and so on. Besides the powerfully important role of creating jobs and a circulation of locally-spent money, a thriving local retail economy helps to lift some of the tax burden off residents and boosts property values. So yes, state government leaders, go ahead and tax Amazon. But take that money and use it to give Main Street a double boost — use it to lower the state’s artificially high sales tax rate. Give the people who have the courage to invest in our downtowns a better chance at success.