Thursday, April 18, 2019

The camel got its nose beneath the tent flap and nobody noticed

Michigan levies a 6% sales tax on items sold in Michigan.

The item I was going to purchase from Amazon cost $66.99

Six percent of $66.99 is $4.02

Amazon charges $5.76 for tax because they roll in the cost of shipping.

Shipping is a service. I, and every other on-line shopper, are now paying sales tax on shipping. We are paying sales tax on services.

You are looking at a precedent that nobody is challenging. Every state in the union is stacking up "precedence" where they are charging sales tax on services.

What next?

Suppose you paid $400 to have your taxes prepared. If you live in a state with 8% sales tax then expect to pay $432 next year. If it is legal (i.e., unchallenged) to force people to pay sales tax on shipping then it is legal to compel them to pay sales tax on every other service.

Mechanics worked on your vehicle and the work came to $500 in parts and $600 in labor? Expect the bill to go up $48 next time because you will be paying sales tax on the labor.

Do you really expect states to NOT exploit this newly created revenue windfall?

6 comments:

  1. Lived with it for years in Kansas. Arizona's tax structure isn't quite as stupid.

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  2. Here in Missouri, if a retailer overcharges for sales tax, they get to keep the overage after they settle up with the state at the end of the year. Every store in a strip mall will have different percentages.

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  3. Grrrr... They will do ANYTHING to get more money... sigh

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  4. So, is it a *service* that the retailer provides to the state to collect the sales tax? Will they add a tax for that *service*?

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  5. They continue to expand the definition of items subject to sales tax, mainly dependent on which group has the best (or worst) lobbyists. In NE, there are a number of sales tax exemptions, but they are slowly removing those. They are also trying to enact taxes on things such as franchise fees charged by out of state franchisors (fast food mainly). Of course, they will do this promising property tax relief but it will never be dollar for dollar. $1 for NE, $.25 for the taxpayer or something like that.

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