Extra Point

April 2006

by Jack Tenney, Publisher

Taxing Situation

Taxation with representation isn’t always that hot, either.

Income, sales, gas, sin, communications, property transfer, rooms and meals, use taxes — all have in common the fact that we pay them.

Well, maybe not the use tax. Who pays a use tax? It’s like a one-stroke penalty for inadvertently moving your golf ball at address: it’s tough for anyone else to impose it so you have to call it on yourself. Most of the time, you don’t even see it.

You know those T-shirts that say “... and all I got was this lousy ...”? Even though you didn’t pay Vermont sales tax on them, you don’t owe a use tax if you bought the shirt in New York, Massachusetts, Hawaii, Florida, California, Europe even, or just about anywhere except New Hampshire. 

What you do owe use tax on is stuff you bought online but didn’t pay sales tax to another state; or maybe catalog stuff from, say L.L. Bean, Neiman Marcus, Golfsmith. That stuff you clearly owe a use tax on. You know that and I know that, but here’s a question:

Say you work in Williston but live in Shelburne and had your monogrammed, French-cuffed, combed-cotton dress shirts (I use them as an example because all I ever get is a lousy T-shirt — and then as a gift, of course) delivered to your office. Do you owe Williston an extra point because they have this local option sales tax?

It’s all so confusing, isn’t it? 

I repeat, who pays a use tax?

As Thomas Aquinas would say, “Ex dubia non obligat” or, “A doubtful law does not oblige.” 

Just kidding.

April fool! Everyone (you, me, everyone) pays use tax (line 27 on last year’s personal state income tax form). That’s how the state clears maybe $22,000 a year from it! That’s almost 4 cents per capita.

Interestingly, this year you can seek a use tax safe haven on line 27 using a chart that calculates use tax as your federal gross income times, by, you guessed it, .0004 percent. That’s like $40 on $100,000. Go figure!