Christenson and Other Mayors Urge Patrick to Tax Amazon
Mayors who are part of a state coalition argue giant online retailers are being allowed to avoid collecting millions in state sales tax, and that's unfair to local businesses that do collect, especially as the holiday shopping season approaches.
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It's only fair -- that's the argument from advocates behind an effort to get giant online retailers, such as Amazon.com or Overstock.com, to collect the 6.25 percent state sales tax on purchases by Massachusetts customers.
The Massachusetts Main Street Fairness Coalition (MMSFC), an organization made up of retailers, local elected officials, labor unions, trade and business associations and individuals, says these online retailers are exploiting a legal loophole that allows them to not charge sales taxes unless they have a physical presence in that particular state.
It's a "huge advantage" local brick-and-mortar businesses -- the "lifeblood" of cities and towns -- can't compete with, the coalition argues.
“Let’s level the playing field for our small businesses which are the lifeblood of our local communities who are struggling in this tough economy yet still pay the state sales tax," Malden Mayor Gary Christenson said. "The Coalition estimates that the state is losing between $25,000,000 and $45,000,000 in tax revenue due to this loophole.”
The coalition is led by Salem Mayor Kim Driscoll as co-chairperson and counts among its supporters retail giants such as Best Buy and Walmart, along with numerous individual small businesses.
Driscoll pledged her support to the effort this spring, saying it will help local businesses stay competitive and therefore benefit cities and towns across the state. Not long after, Peabody Mayor Ted Bettencourt joined the effort as well.
“We have to level the playing field for local businesses,” said Bettencourt at the time. “Closing this loophole will help smaller retailers be more competitive, which will spur economic development in downtown Peabody and in cities and towns across Massachusetts.”
Now, Driscoll, Bettencourt and six other mayors are asking Gov. Deval Patrick to take "aggressive" action with Amazon.com in particular -- it recently established a physical presence in Massachusetts -- and try to force the company into compliance with state sales tax laws before the holiday shopping season arrives.
According to the coalition's estimates, Massachusetts could net an additional $25 million to $45 million from Amazon alone if the company starts collecting sales tax.
“We have read the news reports that you are in contact with Amazon and have plans to discuss this matter with them. We applaud you for your leadership and urge you to move aggressively this fall so that Amazon is in full compliance with Massachusetts tax laws by the time the all important Christmas shopping season begins,” reads a letter to Patrick signed by eight mayors last week.
In addition to Christenson, Driscoll and Bettencourt, mayors Tom Menino (Boston), Joseph Sullivan (Braintree), Michael Tautznik (Easthampton), Stephen Zanni (Methuen) and Daniel Rizzo (Revere) all signed the letter.
MMSFC notes that earlier this year, Amazon purchased a robotics company in North Reading and opened a research office in Cambridge, which therefore establishes a physical presence in-state for Amazon and requires the company to comply with sales tax laws.
Nevada and New Jersey recently announced that Amazon will begin collecting state sales taxes after locating operations in those states and being pressed by governors and other state leaders, says the MMSFC. The company began doing the same in Texas in July and in California and Pennsylvania earlier this month. More than a dozen states in total have reached agreements with Amazon.
The MMSFC notes that many "brick-and-mortar" businesses in Massachusetts do a large amount of sales online as well, yet they don't avoid collecting sales taxes from those customers and neither should online-only retailers.
The MMSFC says that a previous letter on this issue dated May 31 to state Department of Revenue Commissioner Amy Pitter has so far gone unanswered.
The State House News Service reports that Patrick spoke positively about tax agreements with Amazon back in June, saying his administration would begin those talks, but as of last week, it appeared only minimal progress had been made.
Patrick said only his staff has spoken with Amazon officials to date and otherwise offered scant details on the negotiations.
Back to the loophole
The MMFSC says large e-commerce companies hide behind a 1992 U.S. Supreme Court ruling, Quill v. North Dakota, which prohibits states from requiring retailers without a physical presence in the state to collect sales tax on their behalf.
"At the time of that decision, the Internet was in its infancy, and companies such as Amazon did not exist," argues the coalition. "Clearly, times have changed, and our antiquated system is in need of a modern-day overhaul."
According to the Alliance for Main Street Fairness, the Bay State has lost out on $600 million in sales tax revenue from e-commerce since 2007.
"We understand that the ultimate solution to this problem rests with the federal government and we hope, in time, it acts appropriately to correct this imbalance. But Congress is not going to act unless pushed, and Massachusetts -- like we have on healthcare reform and many other issues in the past – can once again demonstrate national leadership on this vital issue," the mayors wrote to Patrick.
They say individual states can try and simplify state tax codes, facilitate collecting sales taxes and eliminate any loopholes they can that are being exploited by remote e-commerce companies. In Massachusetts, for example, the legislature is looking at the Streamlined Sales Tax project.
For more information from MMSFC, visit www.massmainstreet.com.
David Marsters
6:43 am on Monday, September 24, 2012
I have an easier solution. Eliminate the Sales Tax all together!!!!!!!!!!!
ANDREA
9:30 pm on Monday, September 24, 2012
tax, tax, tax is that all they can think of!!! with half the country or more OUT OF WORK...should be working to LOWER PRICES for the poor people...TAX THE MOVIE STARS, THEY HAVE IT.
Raj
8:25 am on Monday, September 24, 2012
Way to stimulate the economy, tax us more...that seems to be the only solution Democrats can find... I hope there is a viable candidate in opposition to this disappointing Mayor in the next election. I am really disappointed in his decisions (or lack of decisiveness---what happened to trash plan announcement around Labor Day?) as time goes on. Any break the consumer can get for a discount they want to tax. I have news for you Mr. Mayor, the Dollar Store enterprise of businesses that you have created in Malden do not carry the same quality of goods as Amazon. Bring in some top rate businesses other than more restaurants, food trucks and dollar stores and then maybe your argument will have a little bit of credibility to it!
Tony H.
9:28 am on Monday, September 24, 2012
Online competition has an unfair advantage at this point. What motivation does a local retailer have of opening a store if online rivals 1) do not have to pay the same sales taxes (and are thus cheaper to customers) and 2) do not have to maintain expensive storefront space. Level the playing field for businesses of all types and you'll see more retail survive and maybe even some open. This isn't about taxing consumers more -- it's about stopping the online store tax gap, where the government essentially forgoes tax revenues from online space and then has to pull taxes higher and harder from your good old brick and mortar stores.
youarerightandiamwrong
9:08 am on Monday, September 24, 2012
Raj, You are 100% accurate! Malden and its surrounding neighbors have made it easier for the 47% to get housing and ebt by continuing to drive down home prices by putting these dollar stores and other garbage outlets everywhere. I can get my electronics online, cheaper than the boxstores on route 1, pay no sales tax, and sometimes free shipping. Why should I lose that?? Because of the halfway houses, meth clinics, transients, and foreigners who get off the train and go right to the 4th floor in city hall to get their ebt cards and section 8 housing. Sure lets tax Amazon. Democrats or should I say Socialists answers for everything are tax the hardworking citizens so we can pay for the family of 8 who just got here from overseas, the couple who are addicted to pain killers, and the mom who has 5 kids from 5 different men. This is the truth, plain and simple. RAJ FOR MAYOR
fred
10:10 am on Monday, September 24, 2012
Dad, be careful. You could get labeled as a racist on here. You and Raj get it. The high tax and rediculous regs are forcing the large companies to fold or look for relief over seas. The socialist running the show now think they have all the answers.
Diana
5:28 pm on Monday, September 24, 2012
Wow, so many words for a post that can be summed up as "WAAAAAAAAAAAAAAHHHHHHHHHHHHH!!!!!!!!!!!!!!!!!!!!!!"
whatsup
9:29 am on Monday, September 24, 2012
Thank you Mayor for supporting the coalition.
Thank you for standing up against the policies of republican bigots who cater to the big corporation giving them unfair advantage ( no sales tax ..really??) where every mom and pop business and small business owners have to pay the tax, is beyond belief.
The only solution Republicans have is tax cut for the millionaires, I mean the 'job creators', makes me me throw up in my mouth every time I hear the word.
Thank you for understanding that the fat cats of the big corporation doesn't need the tax break that creates an uneven playing field for the hard working middle class small business owner.
Mary A
10:00 am on Monday, September 24, 2012
Any tax imposed on a non-resident business will ultimately be passed on to the consumer anyway and with this economy, unemployment, lack of salary increases for the working coupled with increased living expenses, I won't be shopping as much. I need to watch every penny spent. If I'm taxed on Amazon for a comparable live purchase, I'll return to shopping in New Hampshire as long as the purchase plus commute beats a local purchase with tax. It certainly will not encourage me to shop locally. Sorry small business owners but I need to survive too, lowest cost for quality items wins the sale.
Joe Gray
10:12 am on Monday, September 24, 2012
Amazon is evolving beyond the tax issue. Example: California small businesses pushed for the tax on Amazon, to level the playing field. It backfired. Amazon simply opened giant local distribution outlets to stage merchandise in multimillion square foot warehouses. The local businesses got the tax imposed and are still getting beaten by Amazon. Many loopholes in the tax laws.
http://news.cnet.com/8301-13578_3-57510713-38/amazon-shoppers-will-squeeze-through-calif-tax-loophole/
http://www.nytimes.com/2012/09/12/technology/amazon-forced-to-collect-sales-tax-aims-to-keep-its-competitive-edge.html?_r=0
Andejo
10:31 am on Monday, September 24, 2012
In 2009, the state of Massachusetts increased the sales tax by 25%, yet offered no new or improved benefits to the taxpayer. If I did that with my customers, I'd be out of business in no time!
If this coalition of mayors really wants to help local businesses, they should concentrate on at least reducing the sales tax back to 5%, or better yet, work on eliminating it altogether.
After the 2009 tax increase, I made myself a personal promise: All non-emergency purchases over $100 will be made in New Hampshire or online. Until the sales tax in this state is set at a more reasonable level, Massachusetts stores will continue to lose my business.
steve
11:34 am on Monday, September 24, 2012
Remember - the $25 - $45 million the state is looking for is coming from US, not from Amazon...
paul surette
7:49 pm on Monday, September 24, 2012
That's correct Steve, but the one poster who said "the Republican bigot' isn't smart enough to see that if Amazon WAS collecting that sales tax from every sale, it is STILL us that is paying it. To 'whatsup', you don't have to worry about anyone calling you Captain Obvious, because 'obviously' you can't see what's in front of you!
david mokal
3:02 pm on Monday, September 24, 2012
I think it's just awesome.That way Ill be able to get more free stuff. Thank You everyone Oh keep working Extra Hours Got to make sure my Social Security keeps coming in! :>)
paul surette
7:45 pm on Monday, September 24, 2012
Mary A. explained it correctly, that the consumer (us) will be paying anyway for any tax 'shortfall' the state encounters. What I find truly laughable, is another example of Gary Christenson's shameful pandering to Deval Patrick and friends. It was painful enough watching Mr. Christenson on local t.v. trying to turn Elizabeth Warren's book right-side-up for the camera. Now this. Congrats, Mr. Christenson to you for finding another creative way of sucking up for future advancement in Massachusetts politics. And I dare someone to tell me that Mr. Christenson, and his mayoral cohorts don't have Ebay or Amazon accounts themselves. Please! Like EVERYONE else, don't tell me he wants to stand in line and pay full price PLUS that ridiculous sales tax. It all just wreaks of hypocrisy.
robert wilson
8:58 pm on Monday, September 24, 2012
Yeah sure, we can always use another tax, it's not like we don't have enough already.
broadway Jay
10:38 pm on Monday, September 24, 2012
Is there any doubt that Christenson has his political ambition set on Ed Markey's congressional seat ? The writings on the wall.
AnnieOMalden
1:56 pm on Tuesday, September 25, 2012
Does the wall tell you Kinnon will jump into the Mayor's seat? LOL
Michael Victor
2:32 pm on Tuesday, September 25, 2012
Only problem with Congress is that Ed Markey will live to 90, is unbeatable and has no reason to give it up. Hometown Malden boy does good. The seat has been a Malden seat forever and is unlikely to be as our star has faded unfortunately.
david mokal
2:39 pm on Tuesday, September 25, 2012
Wait till all the 1000 + convicts get out because of the Tainted Chem Lab findings. Its going to be a Lawyers Paradise when everyone starts litigation.Who will foot the
bill? You guessed it.
Gene Pinkham
5:02 pm on Tuesday, September 25, 2012
Got a mirror?
Bill M
6:17 pm on Tuesday, September 25, 2012
Does Amazon sell Malden's blue trash bags?
Rick O'Shea
6:55 pm on Tuesday, September 25, 2012
This article reads like a press release for standwithmainstreet.com. A.K.A. the "local" businesses Sears, Wal-Mart, Target, Best Buy, etc..
Tony H.
8:21 pm on Tuesday, September 25, 2012
I wouldn't say that forcing online retailers to pay traditional "sales taxes" on consumer sales is a new tax. Online businesses have been exploiting a nexus loophole for their own benefit all these years and we consumers have been paying the taxes in other areas. In the end, online businesses should be subject to the same tax rules as local businesses.
THE ABOVE SAID, the state should be reducing overall sales tax rates once online businesses are taxed. It would be absolutely shameful and abhorrent to impose an online tax while not offsetting tax expense for consumers in other areas. Consumers should NOT have to pay more overall tax -- we pay enough as it is. Any proposal I see from the state house should say something to the effect "online tax passing subject to overall rate reduction to make MA more competitive in the national economy".
paul surette
6:28 am on Wednesday, September 26, 2012
To Tony Holley....I'm sorry...I almost spit my coffee all over my laptop when you wrote "the state should be reducing overall sales tax rates once online businesses are taxed"...Do you seriously think the state would ever do that? Were you in Massachusetts back when Tom Finneran and friends threw out the popular vote to roll back the state income tax rate back to 5%? With the present mindset running the show on Beacon Hill, NO TAX will ever be rolled back. Every year, the Beacon Hill Brotherhood continuously spends more than they take in in revenue. Then they borrow more, don't make the timely payments on the interest, and then we were turned into junk-bond status. How about that fairly new 'hotel tax' we are all enjoying? You get to pay that awesome sales tax, then the awesome hotel tax. Two taxes on the same transaction? Only in Massachusetts. So I'm sorry Tony, but I doubt anyone shares your ideology on this, because we are realistic. I had to laugh when I learned that Mayor Menino (Mumbles) endorsed this newest 'venture'. This from a guy who openly admitted that the City of Boston DEPENDS on parking tickets as revenue. Imagine telling people they can't park 'there', and then depend on them to violate the parking restrictions for revenue. Is it just me, or does anyone else find this in the realm of absurdity?
Tony H.
9:20 am on Wednesday, September 26, 2012
To clarify, I didn't say that I thought an overall tax reduction would happen -- I said that it should happen. I'm experienced enough to know the low probability in Taxachusetts.
paul surette
6:43 am on Wednesday, September 26, 2012
And a couple of more things regarding Governer Deval Patrick....remember four years back when he was lobbying the State House to vote on his casino bill? He lobbied from the first month in office. Yet...YET when the day came for the House to vote on it, that other crook, Sal DiMaisi, killed the measure before the vote. Guess why? Mr. Deval Patrick was in New York City, negotiating with Random House on his autobiography. Guess we all know where Mr. Patrick's priorities were, not to mention the money that wasted by his 'researchers' on the feasibility of his proposed bill. And I think I know why he hasn't approached Amazon.com yet on this 'sales tax' issue....he hasn't done his Christmas shopping yet. By the way, Tony Holley. I'm curious as to why you seem to be 'passionate' about this subject. Are you a state worker? Are you a legislator? Hmmmm....and please don't tell me for a second that you don't have an Ebay and Amazon account :)
Tony H.
9:22 am on Wednesday, September 26, 2012
Oh no, I'm just an accountant that works insane hours and buys most things on Amazon. Don't worry, I'll be one of the most impacted by an online tax.