Get a Receipt with that Doughnut!

The late comedian, Mitch Hedberg had a skit about getting a receipt for a doughnut. He would ask why he received a receipt for a doughnut and insisted that paper and ink should not come into this transaction. He said, “Why would you ever need the receipt as proof of purchase?” He would end by saying, “I have proof, no wait, its home in the file, under “D” for delicious.” We now know why he would need a receipt. He would need it if he lived in Massachusetts, where Governor Patrick has filed a “sugar” tax and where DOR is going after every penny in our couch cushions.

Governor Patrick has filed a “sin tax” to charge people sales tax on candy bars, soda, and other forms of sugar foods. So you may need a receipt if you are eating a candy bar walking down the street and an agent of the Department of Revenue (DOR) approaches demanding proof that you have, indeed, paid your tax.

Outrageous? Yes. However, in a recent conversation with a constituent who owns a business in my district, I was told a story that makes this seem not so farfetched. This struggling business man told me he had just gone through a DOR audit at his hotel. I have known this individual for 30 years and know him to be meticulous in his book keeping. I told him so and opined that he couldn’t have had any problems. He pointed to his fireplace and said he was hit on the fireplace and had to pay for that. Let me explain that his fireplace is in his outer dining room just off of the bar and is lit in the winter time for a little warmth, but more for ambiance than heat. The auditor told him that fireplaces are utilities just like gas and electricity and he needed to pay a sales tax on his cord wood! If we are hitting businesses up for their fireplace wood, we should just stop people and demand their pocket change as they walk down the street.

Is this an isolated incident? Sadly, no. Over the past few years, I have been called by store owners who sell herbs in their supermarket and the DOR is now differentiating as to how they are sold. As food, it is tax exempt, but if they believe they are being sold as vitamins, they reach back to tax the store owner. Got a coffee bar as well as sell food for take -out? Count your cookies! Cookies are tax exempt if taken out as food, but taxable on premises as a meal. Somehow DOR determines what you are selling and how.

And it is not just small business owners. The Department has determined that they are going to restructure the taxation of telecommunication services reaching into other states to look for taxes. While this may or may not be good policy, it doesn’t matter. The Department is supposed to enforce the law, not create it.

Large companies aside, we have to examine who we are taxing and why. In the Governor’s supplemental budget filing, he counts on over $100 million in tax case settlements with big companies and tax disputes. So let’s settle with the big guys, but we’d better count the candy in the little guy’s pockets.

The latest proposals for taxation hit the poorest taxpayers. Proposals to tax candy or sugar, gas, alcohol, telecommunications (phones and cable TV), as well as the recent increase in tobacco all fall disproportionately on the low income tax payers. How much can they afford to pay considering that 653,000 Americans filed for unemployment payments for the first time last week? 12 million Americans are unemployed and here in Massachusetts our unemployment rate is at 8.4% and rising.

Can we afford this? Ah what the heck, it only comes out to a large vat of coffee a week! So, be prepared to pay more for the simple things in life, and don’t forget, keep your doughnut receipt handy.