Down with Mass. sales tax

It’s a common practice in politics to tax things that you want there to be less of. That is why ‘sin taxes’ were created, as a means to make things that politicians say are bad for you ‘- such as alcohol and tobacco ‘- less appealing to buy.

These are classic cases of government affecting regular supply and demand. When things have a higher price attached to them, there is less of a demand for them. And taking it oppositely, if similar goods somewhere nearby have a lower price, people are more willing to go out of their way to buy them.

People want as much as they can get of everything they desire ‘- whether it is alcohol, tobacco or whatever makes them happy.

Free markets and cheap goods make many people happy, so people are willing to go out of their way to buy things that are over the border in sales tax-free New Hampshire if it means they will save some money.

That’s why liquor and firework stores are so conveniently located right across the border and on the highway: People don’t mind going out of their way to get a good deal.

States like New Hampshire leave Massachusetts politicians two options if they want to spur growth and retain jobs in their economies: lower or get rid of the taxes that are making people go to other states to buy ‘- or attempt to further punish people who try to get the good deals.

The latter is the issue in the current Massachusetts Supreme Court case between Massachusetts Department of Revenue and Town Fair Tires. People go over the border to buy tires because they can save on the sales tax., or wait until one of the tax-free holidays.

The thing about tax-free holidays is that they can’t be regular or people would simply refrain from buying products until a specific time of the year. Thus, they haven’t been on a set date when we’ve had them, but only on special occasions.

Currently, businesses that have shops in both New Hampshire and Massachusetts have to charge sales taxes on Massachusetts residents who buy over the Internet and from mail catalogs. Goods that are ordered from Massachusetts but are picked up in New Hampshire also have to collect taxes.

Purchases that have been made entirely in New Hampshire have never been taxed like this before though, and the ways in which this case could be extended to any goods or services that Massachusetts citizens want to buy is alarming ‘- to say the least.

This principle was applied in 1930 during the Great Depression. The Hawley-Smoot Tariff Act restricted trade to American goods so we would only buy goods from others in the country.

Over 1,000 economists wrote a letter to the president before he signed the bill into law, saying that ‘The proponents of higher tariffs claim that the increase in rates will give work to the idle. This is not true. We cannot increase employment by restricting trade.’

This act caused other governments to put tariffs onto the US, and unemployment rose as a result from 9 percent in 1930 to 25 percent two years later, further spurning on the Great Depression. Economists warned that restricting trade would have more bad consequences than good ‘- coming indirectly from what the bill had been meant to do.

Barack Obama’s stimulus bill even gained scorn and threats of foreign embargos on the U.S. with its ‘Buy American’ clause, which would restrict infrastructure projects to buying U.S. made steel, iron and other products.

EU Ambassador John Bruton went so far as to say ‘We regard this legislation as setting a very dangerous precedent at a time when the world is facing a global economic crisis.’

And today, while Massachusetts residents may not have to think about the EU cutting off trade with them personally, they do think about why they aren’t simply moving somewhere that has less tax.

Massachusetts is 46th of the 50 states in terms of fertility because tens of thousands of people leave each year, due in no small part to these restrictions to trade. Only 64 percent of the people who were born in Massachusetts who are alive are now still living in the state according to a Northeastern University study done in 2008 and we rank as 48th overall in terms of losing residents to other states.

People don’t want to live in Massachusetts as much as they want to leave it.

Winston Churchhill said that ‘The inherent vice of capitalism is the unequal sharing of blessings; the inherent virtue of socialism is the equal sharing of misery,’ and our state’s philosophy of keeping everyone’s taxes at equally high levels is only making other states seem more appealing.

Everybody wants their children to have the best education possible, to have the best home and the best quality of life possible and these are simply easier to find in other places. So when I hear of my state keeping me from buying in better places because of their failed philosophies, I can only think that they have been taxing my patience for far too long.

Jon Petersen is a Collegian columnist. He can be reached at [email protected].

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Pull quote: States like New Hampshire leave Massachusetts politicians two options if they want to spur growth and retain jobs in their economies: lower or get rid of the taxes that are making people go to other states to buy ‘- or attempt to further punish people who try to get the good deals.