SalemNews.com, Salem, MA

Opinion

May 9, 2013

Anderson: Tra la, it’s May — time to shop before the taxes go up

(Continued)

Meanwhile, on Beacon Hill there are new taxes in a complicated mix of bills: the governor’s $1.9 billion proposal that leans heavily on a major increase in the income tax, so far rejected by the Legislature, which has its own House and Senate versions with gas and tobacco tax hikes. All versions have a new sales tax on computer services. There’s also a transportation bond bill and the House budget, both of which assume passage of the legislative tax package, which is presently in a conference committee to resolve any differences.

Meanwhile, the Senate is working on its own version of the budget, and the governor is still arguing for his higher, broader taxes. I am just trying to understand how this sales tax on computer services would work.

One small-businessman told me: “During the current depression, I’ve already had to discount my normal rates in order to get work. Accordingly, if I invoice my customer for $10,000, I’d have to pay the state $625. In other words, the sales tax will act as a 31.25% income surtax on my $2,000 profit. This would be devastating…

“It is even worse. As I understand the legislation as passed by the House and Senate, if I subcontract a portion of the project to another consultant, I would have to pay a double sales tax on the amount of the subcontract. For example, suppose the consultant invoices me for $5,000. As I read the legislation, I would have to pay the state an additional $313 in sales tax on that $5,000 invoice from the subcontractor, which would bring the effective income surtax on this hypothetical project to almost 47 percent.”

The taxpayer offered his conclusion: “If this legislation becomes law, I will no longer be able to work as a computer consultant in this state.” He said he guessed he could apply for MassHealth, EBT, fuel assistance, housing subsidy, etc.

Text Only | Photo Reprints
Opinion

AP Video
US Mission to Rescue Hostages in Syria Failed Manfred, Torre and MLB Take Ice Bucket Challenge Bank of America Reaches Record $17B Settlement Holder Reassures Ferguson Community With Visit GlobalPost CEO Remembers Foley As a Brave Man Seth Meyers Rolls Out Emmy Red Carpet Obama: World Is Appalled by Murder of Journalist Israel, Militants Trade Fire After Talks Fail Pres. George W. Bush Takes Ice Bucket Challenge Pierce Brosnan's Call to Join the Expendables Changes Coming to No-Fly List Raw: IDF Footage Said to Show Airstrikes Police: Ferguson More Peaceful Raw: Aftermath of Airstrike in Gaza Raw: Thousands March on Pakistani Parliament Raw: World's Oldest Man Lives in Japan Fire Crews Tame Yosemite Fire Raw: Police Weapon Drawn Near Protesters, Media Raw: Explosions in Gaza As Airstrikes Resume Charter Schools Alter Post-Katrina Landscape
Comments Tracker
Roll Call
Helium debate
Helium