Saturday, March 14, 2009

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.

7 comments:

Steph Bose said...

This is probably the most ridiculous thing I've ever heard.. is this a joke like your Christmas post?

Yet again we're pushing the poor down deeper in the hole... and i don't mean donut hole because i don't want to get taxed.

Way to keep up the Taxachusetts name Deval.

dan bosley said...

No, this isn't a joke, although meant to be satirical. The problem is that we keep going back to the same people, mostly lower income to find ways to pay for things. We need to make a decision as to how much we should tax people based on a reasoned discussion over what people expect for services and are willing to pay for. That should include how much we actually need for things like transportation spending after realizing savings from common sense reforms. Then we can have a rational reasonable discussion over tax levels in a manner that hits all people proportionately. Some people don't realize the symbolism of these little taxes. Things like license renewable forms being discontinued or feeling a pain of lots of little increases resonate with voters. They don't know where they will be hit next and they don't like it. Find a level and tax to that by raising one tax at one time if need be and explain it to people.

Editor said...

Personally, I have no problem with a "sin" tax. I understand that it COULD fall disproportionately on the poor, but since none of these items are necessities, one could choose whether to pay the tax or not.

I'm sure I will get hammered for saying this, but just makes sense.

I agree, that it is not a great way to raise money for the state's tax coffers, but it should be a good way to help people understand where their money could be better spent.

When I watched a customer purchase nearly $100 worth of soda, potato chips and candy last week, I was appalled to see them paid for with food stamps. This simply doesn't make any sense.

I just have a problem with people feeling entitled to things they cannot afford. As I built myself and my business there were many, many things that I wanted but did not buy, regardless of how much I wanted them. I wish people would do the same on their own, but most simply do not.

As an aside: I think it is wonderful that you have this blog and it is refreshing to read. Thanks.

Greg said...

Dan- You hit close to home with this one. The DOR's rule for determining the difference between grocery and "eat-in" food is ridiculous. If you buy 6 cookies, they are not taxable, but if you buy one, it is.

Oy.

However, I have limited support for wholesale level taxes designed to benefit public health on certain junk food ingredients. Just as cigarette taxes have reduced smoking, I tend to think that taxing certain refined sugars (high fructose corn syrup) and manufactured trans fats could have a similar effect on obesity and heart disease.

I would consider such taxes as incentives for food companies to use better ingredients. If Coke contains cane sugar - great. If they use corn syrup, then tax 'em.

I don't want to tax your doughnut unless it is made with unhealthy artificial crap.

But more to your bigger point, I agree that way too much of the state's revenue stream comes from those who can afford it the least. The gas tax is a perfect example. And don't get me started on lottery revenue.... grrrr.

... happy to talk about this someday.

dan bosley said...

Suzy, thanks for the comment on the blog. I agree that some people feel more entitled than they should, but many just need more education on what's good for them rather than tax their continued bad behavior. And I don't believe that this is about behavior, but money.

Greg, I don't know of a doughnut that isn't filled with artificial unhealthy crap! Talk to you soon.

Greg said...

Unhealthy - yes.

Artificial - it doesn't have to be.

It's only the combination that I worry about.

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