A bit of an uproar in Massachusetts, where the local papers have discovered that Senator Kerry bought a yacht, but has parked it in nearby Rhode Island to get out of paying the local sales tax.

The good news is that, now that he has been caught and shamed, he will pay the half million dollar sales tax.

The dirty little secret is that there are lots of places where people buy “big ticket” items across the state line to save a couple of bucks. This is illegal, but rarely prosecuted for small ticket items.

And then there are internet sales. I used to buy books from Amazon, since the nearest book store was 50 miles away. Because I worked in isolated rural areas, before the internet, I used to order books and clothing via the old fashioned “landline” telephone.

Of course, all this bothers those who like to tax anything that moves.The total amount of out of state sale not allowing taxes was high, but the overhead/administrative cost for a retailer to estimate and pay all the taxes on small items would have been huge too, probably putting some of the smaller firms out of business. Yet when money is involved, that doesn’t bother Congress, who only see another way to get money:

The bill’s sponsor, Rep. Bill Delahunt (D, MA), says it’s intended to help states recover an estimated $18.6 billion in sales tax revenue from online purchases that will go uncollected this year, a figure that he says will reach at least $23 billion in 2012.

The bill is written self righteously implying that if sales taxes were collected, more folks would buy locally. Is this true? Probably not. I bought my dresses from mail order or internet firms because I could not buy good quality clothing locally in my size. As for books, the retail book stores at the mall rarely had what I bought (and the nearest “independent” book store which had them was 100 miles away). Yet even if I lived in the city, the convenience of ordering on line or via catalogue outweighed the time and energy spent driving, parking, and towing kids around while I tried on clothes, tried to find the wished for books, or looked for hard to find items.

Yet most of my purchases were under $100 (usually under $20). A good compromise would be to only collect taxes if the order was over a certain amount.

Yet when I bought a Dell computer a couple years back, I was advised that I was supposed to pay state taxes on it. They even gave me the number for me to report the buy, so the local state bureaucrat could estimate how much I owed.

So presumably Senator Kerry was aware of all of this, but like a lot of rich Massachusetts yacht owners, got around the law by berthing his yacht in nearby Rhode Island.

He saved a bundle, until the local papers found out. Yes, Senator, when we have to pay sales tax on our laptop that we buy out of state, why should you get away with this scam?

Actually, although it made folks mad, what Senator Kerry did was perfectly legal.

The way the law works is that if the item is used outside of the state, you don’t have to pay taxes.

And yes, I found this out when I called the state bureaucrats about my computer. When they checked my address, I was living on an Indian reservation that historically had local sovereignty (we even had our own license plates for our cars, making it easier for state cops to pull us over for “driving while Indian…but that’s another story).

So I didn’t have to pay taxes to the state, only to the tribe.

So thanks to this loophole, I saved about $100.

Nothing near Kerry’s half million bucks, but that’s his fault. He’s the one who writes tax law, at least at the Federal level.

Maybe if he had to pay his fair share, he might be sympathetic to the little guy who gets stopped and fined for not paying sales-tax on a refrigerator bought at the outlet stores in the next state (something that happened to a friend of mine).


Nancy Reyes is a retired physician living in the rural Philippines. She blogs at Finest Kind Clinic and Fishmarket.

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