Sunday, August 16, 2009

Get your stinkin' hands off our economy

Not content with the stick they put in our business community's collective eye with the 25% sales tax increase that went into effect this month; or the salt they rubbed in that festering wound with their preemptive announcement that there will be no sales tax holiday this year (breaking a tradition that has pumped energy into retail sales every year since 2003); now the meddling bureaucrats who run the Massachusetts State Legislature are telling the Commonwealth's business that it is illegal for them to offer sale prices to offset the sales tax hike.

This article in today's Globe is so profoundly offensive. Read the whole thing, but here is the gist of it:

Many retailers, who have traditionally drawn big crowds for the yearly mid-August event, took matters into their own hands this year and began advertising that they would pay customers’ sales tax, which rose from 5 to 6.25 percent on Aug. 1.

But startled store owners have been scrambling to change their plans after learning that state law makes their gesture illegal.

“We will not be conducting mall-to-mall searches, but if we see people advertising, we will talk to them,’’ said Department of Revenue spokesman Bob Bliss.

State tax law reads, in part, that “it is unlawful for any vendor to advertise or hold out or state to the public or any customer, directly or indirectly, that the tax or any part therefore will be assumed or absorbed by the vendor.’’

Let's be clear here: a retailer offering to cover the sales tax increase is not depriving the Commonwealth's greedy money-grubbers of a single penny. The sales tax is paid - by the retailer. This is simply a way for businesses to try and counter the economically depressing effects of the tax hike - to say to potential customers: "We know those knuckleheads on Beacon Hill have you concerned about higher prices; but don't sweat it - we have you covered this weekend."

It is interesting to note that the retailers - those with the most to win or lose here - are apparently convinced that by taking the sales tax hit themselves, they will generate enough additional sales to cover their loss and, one assumes, make additional profit. Oh, but we'd best not look to hard at the meaning of that, lest we trip over the obvious implications for the impact the sales tax hike is actually going to have on state revenues...

You might wonder, since these sales tax sales will not have any effect whatsoever on state revenues, why the Legislature feels they ought to have a say here. Let Kay Kaufman, chair of the Joint Committee on Revenue, explain. He has put the kibosh on a bill that would have reversed this bone-headed policy in time for this weekend (from the Globe again):
In an e-mailed statement, Kaufman said the bill, “while laudable in its attempt to stimulate retail sales, concerns me because it could disproportionately favor big business retailers over small business ‘Mom & Pop’ stores. These big-box retailers have the balance sheets to absorb the tax, which small business retailers do not. In this economy, this is hardly the time to put small businesses at such a distinct disadvantage.’’
This kind of anti-market, anti-competitive baloney should hardly be surprising, when one of the most liberal members of the Massachusetts Legislature (which is a bit like saying one of the tallest trees in Sequoia National Forest) is put in charge of tax policy. Still, the vacuity of Kaufman's thinking here is staggering.

First and most obviously, by seeking to dictate to businesses how they can and cannot characterize a sale, our Legislature is not only managing to simultaneously screw the businesses and their customers, but it is also treading uncomfortably close to violating their Constitutional right to free speech. After all, the issue here is not the sale, per se - it is how the sale is characterized. There is no question that these businesses can run a '6.25% off' sale - they just cannot say it is to cover the state sales tax.

Second, the notion that a business running a sale - a comparatively minor one at that - is "unfair" to competitors is (hyperbole alert) just gosh-darned unAmerican. Businesses of all sizes run sales every day. 10 percent off, 30 percent off, 50 percent off and more. That is not "unfair" to competitors - it is exactly what makes the competitive marketplace work.

Maybe the Democrats who run our legislature are looking to Washington and feeling a little envy as they see the Obama Administration wrapping its tentacles around the auto, financial services, and health insurance industries. Maybe they are saying, hey, if we're about killing competition nationally, why not do some market-squashing right here in Massachusetts?

But they have already done plenty this year to depress economic activity in the Commonwealth. It is time for Jay Kaufman and the rest of the gang on Beacon Hill to get their hands off our stinkin' economy and let the market get to work pulling us out of this downturn.

1 comment:

  1. I'm not a political neophyte and I have been a Massachusetts citizen for 50 years. I've never heard of such a law. This is just the kind of circular argument (Disadvantage to small buisiness)that these no-nothings have been making for years. They don't even know why they want the law...they just know they want it! My suspicion is that they simply choose not to be reminded of their stupidity from store windows!

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