Massachusetts Eyes Sales Tax Increase – Loss of Private Sector Jobs high versus Saved State Jobs

The State of Massachusetts, in a never ending quest of Deval Patrick’s’ administration and the Democrat Legislature to tax their way out of massive spending, are seeking a 25% increase in the State Sales Tax. The Massachusetts Retailers Association has predicted that should this increase occur, the Commonwealth stands to lose approximately 12,000 private sector jobs, while the Administration will save 6,000 State jobs. The argument used by the administration for the increase is based on a study by the Massachusetts Taxpayers Foundation and Beacon Hill Institute - Massachusetts ranks last in sales tax collected out of 45 states that have a similar tax. That said, this study does not take into consideration that Massachusetts has a variety of taxes and fees in place that are responsible for individuals and businesses leaving for greener pastures, while leaving those remaining to pay for the excess of Beacon Hill.

The Governor has multiple tax proposals before the Legislature in order to shore up the ever increasing budget deficit – State Lawmakers are eyeing the sales tax as a means to lessen the impact of multiple taxes on the Commonwealth, however, logic dictates that a 25% increase in the sales tax will be a boon to surrounding States, rather than Massachusetts.

Retailers in bordering New Hampshire will see an increase in sales, while those in Connecticut, who have previously lost to Massachusetts’s slightly lower sales tax, will find their citizens staying home to shop. Internet retailers outside of the Commonwealth will also benefit.

To answer the question why any increase in sales taxes produce job losses in the private retail sector, one need only to look as far back as the summer of 08, when gas prices surged to unprecedented heights, aided by both Federal and State taxes. Consumers were forced to choose between a commute to work and spending on luxury items as well as necessities, the Stimulus Checks received from the Federal Government went to pay credit card bills, resulting largely from gasoline purchases as well as an overall increase in essentials such as groceries. (A rise in retail, including grocery prices are a direct result of the trucking industry paying higher prices for fuel passed onto the consumer.) The burden placed on retailers by the rise in gasoline prices contributed heavily to the demise of retail giant, Circuit City.

Ultimately it will be up to the Governor and his simpatico Legislature to choose between the welfare of the people of the Commonwealth and the welfare of the State Government, which said outcome, is fairly predictable given the propensity for the State to do avoid reforming bloated programs and corrupt policies over protecting the last available taxpayers. (See current battle over unusual Commonwealth pension practices suddenly a focus of the Patrick Administration.)

Addendum:
Correction: The Retailers Association used Data by the Beacon Hill Institute – to oppose the increase. The Beacon Hill Institute is not in favor of a tax increase in the Massachusetts sales tax.
Excerpts appear below:
From the Springfield Republican article found here
“The Retailers Association of Massachusetts released the study Monday ahead of a possible state Senate vote next week to increase the sales tax. The study, prepared for the association by the Beacon Hill Institute at Suffolk University in Boston and updated from a prior report, focuses on the economic effects of increasing the sales tax from 5 percent to 6.25 percent. The state House of Representatives on April 27 voted 108-51 for the increase.”