Paul Hampton

It’s not that taxing: It’s your money, the government wants it

Goods stand stacked at the fulfillment center in Hemel Hempstead, England.
Goods stand stacked at the fulfillment center in Hemel Hempstead, England. Bloomberg File

Not to say Russ Latino hates taxes but should you run into him, whatever you do, don’t quack.

That old saying, “If it looks like a duck and swims like a duck, then it probably is a duck,” has a lineage back to an 18th-century wiseacre who used it to prove his automaton was indeed a duck. In more recent times, though, it has been applied to the habit of would-be taxing bodies calling a tax anything but a tax.

Only when squeezed do those bodies start to quack like a tax.

Latino, state director of the conservative Americans for Prosperity, has been squeezing members of the Legislature who argue that they wouldn’t be raising taxes if they passed a bill that would result in anywhere from $15 million to $30 million more taxes being collected. They say they’re only changing the method of collection.

At issue is the use tax, which is the tax Mississippians should be paying on stuff they buy from Amazon and other online retailers that don’t have a “physical presence” in the state. It’s the same rate, 7 percent, as the sales tax Mississippians pay at the cash register when they shop in Mississippi.

I said Mississippians should be paying the use tax because by and large they aren’t. Tax pros put the compliance rate at somewhere around 20 percent. The state collected about $244,000 in use taxes via the income tax form when it added a line requiring taxpayers to report out-of-state purchases, a far cry from what it expects to get if it makes out-of-state retailers collect the tax.

Latino thinks collecting more taxes than the year before has the distinctive quack of a tax increase, an unconstitutional one at that.

He cites Quill v North Dakota, the Supreme Court ruling that holds a business must have a physical presence in a state for the state to require it to collect its sales taxes.

Amazon, for example, lacks a physical presence so the state can’t compel it to collect sales tax. HB 480 would change that. Or it would change it until an enterprising Mississippi retailer challenged it in court via the Quill ruling. Or, like Amazon, the retailer agreed to collect it voluntarily.

The bill passed 77-40, with representatives in both parties — 26 Republicans and 14 Democrats — voting against it.

Some folks must have had a sleepless night, though, because the next day a vote to table a motion to reconsider the bill failed. Had that motion been tabled, the bill would have gone on to the Senate. Now the House can have another vote by Feb. 10 or the bill will die. At least it would be as dead as a bill gets in the Legislature — as dead as cat in a Poe story.

But, as they say, you can’t kill an idea, and a tax is almost as durable.

Enter the Department of Revenue, which is giving “guidance” on the use tax per a Jan. 12 filing. By the way, if you’d like to give the DOR guidance on its guidance, the time to do so would be at 3:30 p.m. Feb. 15 at the DOR office, 500 Clinton Center Drive, Clinton.

Apparently, in the DOR’s eyes, a “substantial economic presence” is just as good as a “physical presence.” In other words, if your out-of-state business sold more than $250,000 worth of stuff one year, it could compel you to collect use tax the next year.

Is this not twisted enough? Consider this. According to the filing, the rule has a proposed effective date of 30 days after filing. Thirty days after Jan. 12 would be Feb. 11, a few days before the “oral proceeding” at the DOR office but too late to get lawmakers off the hook on that second vote.

Makes me long for the days of revenue enhancements.

Paul Hampton: 228-896-2330, @JPaulHampton

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