When I first heard about the protesters on Wall Street a few weeks ago, I didn't have much optimism for their success. Based on the YouTube videos that were circulating, I saw a crowd of mostly twenty-somethings protesting corporate greed with some recording every minor police altercation in an attempt to claim police brutality. I agreed with their general ideas--there are few in this country who aren't angry about corporate greed--but I didn't believe they could accomplish anything (and I didn't see any real police brutality in those early videos, either). I wasn't sure what they were trying to accomplish. I wasn't sure they knew what they were trying to accomplish. My husband believed (and I agreed) that nothing would change because too many people are too comfortable with the status quo. In order for revolution to happen, there needs to be a critical mass of people who are willing to pledge their lives, their fortunes, and their sacred honor to the change they wish to see. Most 'revolutionaries' today seem to be willing to 'like' a Facebook page dedicated to their cause, and maybe copy and paste a status update that they agree with, and that's it.
But now I'm not so sure. The protests are growing, spreading, and appear to have broken the media blackout. (I regularly read the Wall Street Journal Online, plus use the news and weather app on my phone which draws from a variety of outlets, and I didn't know anything about the protests until another blog I follow posted one of those YouTube videos three or four days after the protests began. Now the WSJ Online is providing regular updates on its homepage.) Additionally, the protesters have begun to focus their message. The First Official Release From Occupy Wall Street articulates some of their specific grievances, and they are working on a List of Demands.
Now they're getting more organized, focused, and specific. Their grievances basically amount to calling out the government for allowing large corporations to dictate US economic policy in such a way that it benefits 1% of the population at the expense of the other 99% (this is my interpretation and summary, not a statement from their document; I encourage you to follow the links above and read their statements for yourself). And it's not just that the rich are getting richer and the poor are getting poorer; it's that the poor are getting poorer because the rich are usurping power from our supposedly democratic government, drowning out the voices of the majority of the population with the money our elected representatives need for reelection, and changing the rules to benefit themselves while causing harm and injustice to everyone else. I don't necessarily agree with all their grievances, but there is definitely enough common ground there for me to hope for their success.
But what about the concern that too many people are too comfortable with the status quo to risk their lives, their fortunes, and their sacred honor? I'm beginning to realize that people are more uncomfortable than I'd realized. I knew things were rough; my own family is struggling to make ends meet after a prolonged period of unemployment and underemployment, and I have no idea how we're going to pay down the debt we accumulated during that time. But I hadn't realized just how many people have already lost not only their fortunes, but their hope of ever rebuilding them. Honor isn't what it once was, however there is enough anger against large corporations and the super-wealthy that aiding in the effort to stop filling their coffers with the hard work and sacrifices borne by the rest of us will gain honor, not lose it. And if you've already lost everything and have no hope of ever getting it back under the current system, why not pledge your life to trying to make things better? If the current system doesn't care about your life or well being (and it doesn't), what have you really got to lose?
Americans are sold a bill of goods. We're taught that if you study hard, work hard, maybe even serve your country in the military, you can make something of yourself. You can live the American Dream. Instead we're seeing college graduates who did what they were supposed to do saddled with impossible debt loads and unable to find the jobs that were supposed to be worth that investment. We're seeing people who have worked hard at their jobs all their lives taking pay cut after pay cut, until finally ending up unemployed and unemployable because their entire industry is virtually gone, losing their houses, their health insurance, and, eventually, their health. We're seeing veterans ignored and forgotten once they take off their uniform (and sometimes before they've taken it off). There are a lot of people represented in that 99% who are being screwed over by the 1%. Rather than try to tell you their stories, I'm going to let some of them speak for themselves.
The following is only a small sampling from 'We Are the 99 Percent.' Please go to that website and see why people are protesting on Wall Street (and elsewhere in the US), especially if you tend to believe that things aren't all that bad, and people who are complaining should just suck it up, stop slacking off, and work harder.
* I’d never been unemployed, until the company I worked for tanked a month ago. Up until then, I was living paycheck to paycheck, sharing a small apartment with my elderly, unemployed mother, making just enough to pay rent, grocery bills and medical insurance. Now we have no jobs, no savings, no health care and no furniture in our apartment; we sold almost everything we had to pay for food and rent. We both have extensive medical problems and are wondering how we’re going to pay for the medications we need to keep functioning. I don’t want sympathy, or handouts. I want a job, affordable rent and the restoration of the “American Dream.” I AM THE 99%!!!
* I have a master’s degree from a top university and $75,000 in student loan debt. I have applied to jobs all over the country but I can’t even get an interview. My mom lost her job in 2010 and hasn’t been able to find anything since. I don’t know what we will do when her unemployment runs out. I’ve given up all hope in having a future. I am the 99%!
* I am educated, hard working and responsible. I am employed full time and have been for all of adult life. And yet I struggle each month to pay my bills, to feed my dog, to keep gas in my car. I dream of grad school, of a job in social services or ministry to make this world better than I found it. And yet, I am trapped. I am chained to my mortgage, to my unsellable home, to my mediocre job, to my city. Sometimes I feel a failure to be part of the first generation that will not exceed the accomplishments of the last and yet everyone I know works so hard. Just to get by. Our priorities have gone so astray in this country. We have lost sight of the importance of community and equality. Of justice and forgiveness. Of generosity and faith. Of democracy and hope. We got lazy and distracted and entitled and we didn’t realize that a few people have been making greedy decisions that would and do negatively affect the lives of the many. It’s time to wake up. To pay attention. To stop worshiping the dollar and start worshiping each other again. All of us. Together, being the change. My name is Emily Wheeland and I am one paycheck away from homelessness. I am the 99 percent.
* Single mother. Living with my parents, who own a small business and are barely scraping by themselves. Neither has health insurance or savings. My grandparents have spent their savings on medications. My daughter’s father joined the military to get a degree in a field he doesn’t want to study in, because it offers job security. He is stationed overseas for 2 years and is missing his daughter growing up…she asks for him almost every day, if she will see him soon. She won’t, not because he can’t get leave from work, but because we can’t afford tickets. We stay married for health insurance and assistance with my college. I have $15k in medical debt (collections) and terrible credit. He owns my car and we live off of his child support while I am in school. My parents provide free childcare so I can go to school. EVERYTHING I have—roof over my head, financial aid for my classes, my car and financial security, are all due to someone else’s generosity. I am grateful and scared. When will I be able to support myself so I can feel safe? Will this degree be worth it? I can’t tell my daughter she can be anything she wants to be. I can’t even guarantee she will have clean air to breathe or a school that isn’t underfunded and understaffed. WE ARE THE 99%!!!
* I’m 50 years old. I am one of the lucky ones! I’ve worked since I was 16, I’m a decorated US Military Vet. I’m well educated and work in the IT field and haven’t had a raise in five years. My wife is a school teacher who has lost $5000.00 of her salary due to budget cuts. Wells Fargo started foreclosure proceedings after we missed a payment, they would not talk to us until they successfully foreclosed on our home, then socked us with legal fees and refinanced making us upside down on our mortgage. To make ends meet, I’ve had to take a better paying job out of state, leaving my wife and child (a foster care adoption) in our home we cannot sell and cannot rent. I’ve been tuned down for insurance even though I’m healthy. I’m looking for a 2nd job so I can move off of my friend’s couch because with my wife and my combined salary I can’t afford a cheap efficiency apartment. WE ARE DOING WELL! WE ARE THE 99%
In a land where everyone is equal, the stories of the people above should not be true. But they are. The needs of the 99% are not equal to the wants of the 1%, and rather than majority rule, the 1% is calling the shots. Why does my husband pay more in personal income taxes than the multinational corporation he works for pays in corporate income tax? Why do banks make risky investments and get bailed out with public money when those investments fail, but individuals with pension funds that believed the banks about the safety of those investments have to accept their losses and start over from scratch? Why was the man in line in front of me at the pharmacy last week told that they couldn't fill his valid prescription from his physician because it wasn't on the 'approved' list from his insurance company, and it would take three days for them to get authorization? When he told the pharmacist that he couldn't wait three days for this medication, he was told to call his doctor and see if he could be prescribed something else.
According to the Supreme Court, corporations are 'persons' just like anyone else. All persons are equal, but apparently some persons are more equal than others.
Showing posts with label Taxes. Show all posts
Showing posts with label Taxes. Show all posts
Tuesday, October 4, 2011
Tuesday, September 6, 2011
Let's Blame the Immigrants!
The US economy is in the crapper, everyone's feeling the squeeze, so of course it's time for the next round of "Let's Blame Immigrants for All Our Problems!"
The following post has been making the rounds on Facebook (again):
The following post has been making the rounds on Facebook (again):
Tuesday, August 16, 2011
Whose Fault is the Next Recession?
The government is tapped out. The big banks are teetering. Large corporations are watching their stock prices plummet, then skyrocket, then plummet again, with no idea where they'll settle. We are on the brink of recession. And if we go over that edge, it will be the fault of American consumers and small businesses.
At least that's what an article* in the Wall Street Journal suggested last week.
According to an economist interviewed in the article, consumers and businesses who worry about a recession and make spending decisions based on that worry will then, by their cautious actions, trigger that recession. He called it a self-fulfilling prophecy.
His words make sense, but they--and the article--leave out some very important details.
The United States government has been passing a deficit budget nearly every year since around 1970. That means that for about forty years, the government has been borrowing money to meet its expenses. Of course, they eventually had to pay that money back, and they did that by borrowing more money, on top of what they were already borrowing. And then, when those bills came due along with all the others, they paid those off by borrowing yet more. It's like someone paying all their bills with a credit card, and when their credit card bill comes due, they get a new credit card to pay it off, and on and on it goes. The recent fiasco in congress about raising the debt ceiling came about because someone finally questioned whether it was a good idea for the government to continually get a new credit card every time they maxed out the old one.
So now the government is trying to cut spending. And some of the things they are cutting are the safety nets. Now I for one see a distinction between a safety net and an entitlement program, but that's an entirely different rant for an entirely different post. At any rate, I believe that some of those entitlements do indeed need to be trimmed. But the entitlements benefit so many people that they have powerful lobbies, and it's hard to touch them at all. So the small safety nets that are still left and make the difference between life and death for a few people (comparatively speaking) are being cut or eliminated, and the backlash against the entitlements when it comes (and it will come) will cut too deeply, and then they will barely function as safety nets, either. So watch out, citizens! Don't count on Uncle Sam helping you out if you get in trouble; you're on your own.
Big banks were lending large sums of money to people with small incomes. Mortgages were great for the banks. The more money people were able to borrow, the more they were able to spend on a house. As more money was available to spend on housing, the more expensive houses got. So people had to borrow more money for less house, and with the availability of that money, houses got yet more expensive, and people had to borrow more. Anyone not buying a house was cautioned that they'd better do it before they got priced out of the market completely, because home prices were only going to go up. So more people felt pressured to buy, and took on interest-only mortgages with low monthly payments that would balloon later, expecting that by the time their payments went up, their house would be worth so much more than they'd paid for it that they could just tap their equity and make the house pay for itself. Free money, free house. Banks encouraged this by lowering their lending standards to practically nothing.
Then the banks began betting that their borrowers would default with the investment known as Credit Default Swaps (CDS). These little beauties made it so the banks won either way: if the mortgage was paid back along with the interest due, the bank got a payoff from its investment; if the mortgage defaulted and wasn't paid back, the CDS would pay the bank a lump sum, and the bank got a payoff from its investment. The losers were the ones who had to pay out the CDS. And since you don't have to actually be the creditor (i.e. hold the mortgage) to buy a CDS, anyone can get one. So those made their way into pension funds, mutual funds, etc., as safe investments with high payoffs, which was accurate (provided the mortgages never defaulted). Of course, once things reached a breaking point and people couldn't pay their mortgages, there was widespread failure across the system. The banks, who held both mortgages and CDS, found themselves overexposed and ready to fail. Of course if that happened, people and businesses couldn't borrow money, and the entire economy would seize up (because we've already established that no one can pay for anything unless it's with borrowed money). So the government bailed them out and covered their investment losses (but did nothing to help the individuals who suffered losses--except make it easier for them to borrow more money to make ends meet) and took more money out of taxpayers' pockets and gave it to the banks. So watch out, bank customers! Don't count on the banks working with you if you get into trouble; you're on your own.
Businesses have focused so much on quarterly earnings that they cost-cut their way to short-term profits while sacrificing their long-term strategies and even viability. They lay off employees (i.e. people who are trying to work for a living and take care of themselves) and expect unreasonable levels of productivity from those who are left. They shift more of the costs of health insurance to their employees. They make management decisions that cause the workplace environment to become unpleasant or even unhealthy (I'm aware of one company that has removed every third fluorescent tube from their overhead lighting to save money, making the office just dim enough to cause eyestrain). They use cheaper quality components in their products while charging their customers higher prices on account of the company's 'increased costs.' And finally they take advantage of perfectly legal tax loopholes that allow them to post record profits while keeping their federal income tax liability at zero. So watch out, employees! Don't count on your company to value your job over their shareholders' gains; if they need to lay you off to save a few pennies, that's your problem; you're on your own. And customers, don't count on prices going down, either.
Individuals aren't innocent here, either. No one was forced to take on an oversized mortgage. If you took out anything other than a conventional mortgage with a fixed interest rate, then you contributed to the problem. If you took out a home equity loan for anything other than major home repairs or improvements, you contributed to the problem. If you ever used your credit card and didn't pay off the balance in full at the end of the month, you contributed to the problem. (I'm not talking about the occasional large purchase that took two or three months to pay off; I'm talking about if you can't remember the last time you didn't carry a balance on your credit cards.) Of course, this was also in an environment when costs were going up, salaries were remaining stagnant or going down, and we were being told that it was our patriotic duty to stimulate the economy by spending money.
No one (that I'm aware of) is spouting off that 'patriotic duty' crap this time around, but putting the responsibility of another recession on the backs of consumers amounts to the same thing. (It's also notable that the American public is usually referred to as consumers, and not citizens or people--I guess it's clear what our primary purpose is in this country.) We've learned that prices are going up, jobs can't be counted on to last, banks will gamble with people's money and expect the government to cover their losses, our own individual taxes will have to pay for those bailouts as well as make up for the taxes the large corporations aren't paying, and the government isn't going to help us out if we get in trouble. But if we practice fiscal responsibility by living within our means, saving for a rainy day, and spending cautiously, the next recession is our fault.
Give me a break.
*The article was "Penny-Pinching Puts Recovery on Thin Ice" by Ben Casselman and Conor Dougherty, in the Wall Street Journal's online edition on Wednesday, August 11, 2011. I have provided a link, but I believe the article is locked unless you have a subscription.
At least that's what an article* in the Wall Street Journal suggested last week.
According to an economist interviewed in the article, consumers and businesses who worry about a recession and make spending decisions based on that worry will then, by their cautious actions, trigger that recession. He called it a self-fulfilling prophecy.
His words make sense, but they--and the article--leave out some very important details.
The United States government has been passing a deficit budget nearly every year since around 1970. That means that for about forty years, the government has been borrowing money to meet its expenses. Of course, they eventually had to pay that money back, and they did that by borrowing more money, on top of what they were already borrowing. And then, when those bills came due along with all the others, they paid those off by borrowing yet more. It's like someone paying all their bills with a credit card, and when their credit card bill comes due, they get a new credit card to pay it off, and on and on it goes. The recent fiasco in congress about raising the debt ceiling came about because someone finally questioned whether it was a good idea for the government to continually get a new credit card every time they maxed out the old one.
So now the government is trying to cut spending. And some of the things they are cutting are the safety nets. Now I for one see a distinction between a safety net and an entitlement program, but that's an entirely different rant for an entirely different post. At any rate, I believe that some of those entitlements do indeed need to be trimmed. But the entitlements benefit so many people that they have powerful lobbies, and it's hard to touch them at all. So the small safety nets that are still left and make the difference between life and death for a few people (comparatively speaking) are being cut or eliminated, and the backlash against the entitlements when it comes (and it will come) will cut too deeply, and then they will barely function as safety nets, either. So watch out, citizens! Don't count on Uncle Sam helping you out if you get in trouble; you're on your own.
Big banks were lending large sums of money to people with small incomes. Mortgages were great for the banks. The more money people were able to borrow, the more they were able to spend on a house. As more money was available to spend on housing, the more expensive houses got. So people had to borrow more money for less house, and with the availability of that money, houses got yet more expensive, and people had to borrow more. Anyone not buying a house was cautioned that they'd better do it before they got priced out of the market completely, because home prices were only going to go up. So more people felt pressured to buy, and took on interest-only mortgages with low monthly payments that would balloon later, expecting that by the time their payments went up, their house would be worth so much more than they'd paid for it that they could just tap their equity and make the house pay for itself. Free money, free house. Banks encouraged this by lowering their lending standards to practically nothing.
Then the banks began betting that their borrowers would default with the investment known as Credit Default Swaps (CDS). These little beauties made it so the banks won either way: if the mortgage was paid back along with the interest due, the bank got a payoff from its investment; if the mortgage defaulted and wasn't paid back, the CDS would pay the bank a lump sum, and the bank got a payoff from its investment. The losers were the ones who had to pay out the CDS. And since you don't have to actually be the creditor (i.e. hold the mortgage) to buy a CDS, anyone can get one. So those made their way into pension funds, mutual funds, etc., as safe investments with high payoffs, which was accurate (provided the mortgages never defaulted). Of course, once things reached a breaking point and people couldn't pay their mortgages, there was widespread failure across the system. The banks, who held both mortgages and CDS, found themselves overexposed and ready to fail. Of course if that happened, people and businesses couldn't borrow money, and the entire economy would seize up (because we've already established that no one can pay for anything unless it's with borrowed money). So the government bailed them out and covered their investment losses (but did nothing to help the individuals who suffered losses--except make it easier for them to borrow more money to make ends meet) and took more money out of taxpayers' pockets and gave it to the banks. So watch out, bank customers! Don't count on the banks working with you if you get into trouble; you're on your own.
Businesses have focused so much on quarterly earnings that they cost-cut their way to short-term profits while sacrificing their long-term strategies and even viability. They lay off employees (i.e. people who are trying to work for a living and take care of themselves) and expect unreasonable levels of productivity from those who are left. They shift more of the costs of health insurance to their employees. They make management decisions that cause the workplace environment to become unpleasant or even unhealthy (I'm aware of one company that has removed every third fluorescent tube from their overhead lighting to save money, making the office just dim enough to cause eyestrain). They use cheaper quality components in their products while charging their customers higher prices on account of the company's 'increased costs.' And finally they take advantage of perfectly legal tax loopholes that allow them to post record profits while keeping their federal income tax liability at zero. So watch out, employees! Don't count on your company to value your job over their shareholders' gains; if they need to lay you off to save a few pennies, that's your problem; you're on your own. And customers, don't count on prices going down, either.
Individuals aren't innocent here, either. No one was forced to take on an oversized mortgage. If you took out anything other than a conventional mortgage with a fixed interest rate, then you contributed to the problem. If you took out a home equity loan for anything other than major home repairs or improvements, you contributed to the problem. If you ever used your credit card and didn't pay off the balance in full at the end of the month, you contributed to the problem. (I'm not talking about the occasional large purchase that took two or three months to pay off; I'm talking about if you can't remember the last time you didn't carry a balance on your credit cards.) Of course, this was also in an environment when costs were going up, salaries were remaining stagnant or going down, and we were being told that it was our patriotic duty to stimulate the economy by spending money.
No one (that I'm aware of) is spouting off that 'patriotic duty' crap this time around, but putting the responsibility of another recession on the backs of consumers amounts to the same thing. (It's also notable that the American public is usually referred to as consumers, and not citizens or people--I guess it's clear what our primary purpose is in this country.) We've learned that prices are going up, jobs can't be counted on to last, banks will gamble with people's money and expect the government to cover their losses, our own individual taxes will have to pay for those bailouts as well as make up for the taxes the large corporations aren't paying, and the government isn't going to help us out if we get in trouble. But if we practice fiscal responsibility by living within our means, saving for a rainy day, and spending cautiously, the next recession is our fault.
Give me a break.
*The article was "Penny-Pinching Puts Recovery on Thin Ice" by Ben Casselman and Conor Dougherty, in the Wall Street Journal's online edition on Wednesday, August 11, 2011. I have provided a link, but I believe the article is locked unless you have a subscription.
Tuesday, June 14, 2011
Welcome Back, Now Bend Over!
For all the years I spent trying to get out of Massachusetts, I was actually very happy to be returning. I like the culture, I like the diversity, I even like the climate (yes, really!). My new neighbors have been very nice, with several stopping by the house to introduce themselves, sometimes bringing bagels or brownies. Old friends have contacted me to reconnect, and all in all we've felt very welcomed.
Until my husband went to register the cars at the RMV (Registry of Motor Vehicles, for any non-Massholes reading this).
We expected that there were going to be hefty registration fees, and while we certainly didn't like it, we were OK with it. What we didn't expect, however, was the sales tax scam being run by the state with the full cooperation of licensed auto dealerships.
Let me back up. In July of 2007, when Tom and I were legal residents of New Hampshire, we bought a car at a licensed dealership in Acton, MA. Why did we go to Massachusetts to buy a car? Because we were looking for a very specific type of car (Volvo station wagon of a certain vintage with a manual transmission), and we would go any reasonable distance to get it. A dealership in Acton had it, so we bought it.
Now, usually you pay sales tax on a purchase at the point of sale. Massachusetts changed the rules for vehicles, most likely because of all the Massholes who were going up to sales tax-free New Hampshire and buying their cars there. So in Massachusetts, you pay sales tax for your car when you go to the RMV to register it. Well, we lived in New Hampshire, so we registered it there, where we paid all applicable taxes and fees. No, we didn't pay a sales tax, but we did pay a vehicle license tax which is based on the car's purchase price when it was new (even if you bought it used, which we did). Not an insignificant amount of money.
Fast forward four years. Since purchasing the car, we've moved to Iowa, New York, and now Massachusetts. Each time we properly registered all of our cars, and we properly retitled them in each state. My husband went to the RMV to do the whole song and dance again in Massachusetts (by now an old hand at it), and was told that he can't register the cars without a bill of sale for each vehicle. Massachusetts didn't dispute that we legally own the cars (our valid New York titles are sufficient proof of that); they just wanted to ensure that we acquired them legally and paid all applicable taxes. How conscientious of them. So after much digging, we found the bills of sale from my car (bought four years ago) and one of Tom's cars (bought seven years ago), both obtained from licensed Massachusetts dealers and legally registered in New Hampshire at the time of purchase. Our 'spare' car was purchased from a private party in New Jersey six years ago, and Tom had to provide that person's name and address.
Having to find that paperwork was bad enough, but here's where it got ugly.
The Mass RMV accepted the car purchased from a private party in New Jersey six years ago as being on the up and up, and just collected the regular registration fees that we were expecting to pay. But the cars purchased in Massachusetts were another matter. Buried deep in Massachusetts law is the following: "If a nonresident of Massachusetts purchases a motor vehicle in Massachusetts and takes title to and/or possession of the vehicle in Massachusetts, the sale is subject to the Massachusetts sales/use tax irrespective of whether the nonresident intends to use the motor vehicle within or outside Massachusetts." (Chapter 64H) How is this to be done if the purchaser is not registering the vehicle in Massachusetts? Letter Ruling 77-13 states: "No dealer can make delivery of a motor vehicle to an out-of-state purchaser who takes delivery of the vehicle in Massachusetts without first receiving evidence that the required sales tax has been paid. This payment is made on Form ST-7R at either the registry or any state tax office and the dealer must retain evidence of payment in case of an audit." In other words, the dealerships were legally required to fill out this form and inform us of our tax liability, and then NOT release the titles to us until we could prove that we'd paid the required tax. Neither of them did that. They just took our cash and gave us the titles, with no hint that there was anything more we needed to do.
So when Tom went to register the cars and produced bills of sale from Massachusetts dealers, he was informed of his tax liability, along with the nice detail that we were now also on the hook for penalties and interest, plus we would be assessed at the current 6.25% rate, not the 5% sales tax rate that was in effect at the time of purchase. The penalties and interest more than doubled what we owed for my station wagon. Did the RMV care that the dealerships were negligent in their legal responsibilities? Not their problem, mon. Furthermore, the woman Tom dealt with at the RMV went on a bit of a rant about how this happens all the time, and how few if any dealerships comply with this requirement, leaving people like us screwed for hundreds or even thousands of dollars more than they should have paid. (You know it's bad when an RMV employee is doing your complaining for you!) The biggest victims, according to the woman at the RMV, are retirees who split their time between Massachusetts and Florida.
This isn't a new requirement. That letter ruling I referenced dates back to 1977, and it hasn't been superseded. The Commonwealth of Massachusetts doesn't bother enforcing this law because it's a cash cow for them. Enforcement would cut their revenue drastically. So instead they stick it to people who would be happy to comply with the laws if the people responsible for informing us of them actually did what they were supposed to do. After all, if ignorance of the law is no defense, and violation of the law results in higher revenues, of course they want to keep people as ignorant as possible!
Massachusetts does have a reciprocal relationship with most states. If this whole thing had happened this way except we'd lived in New York (which also collects sales tax at the time of registration) instead of New Hampshire, then Massachusetts would have credited us with the amount of tax we'd paid in New York and only charged us the difference (plus penalties and interest on that difference), if any. But they don't recognize the vehicle license tax we paid in New Hampshire, because technically it's not a sales tax, so we're considered delinquent on the whole amount.
If we had known about this at the time we purchased my station wagon, we would have paid the $50 or $100 to have the dealership deliver the car to us in New Hampshire, which, according to Massachusetts General Laws, would have exempted us from the tax liability entirely. But we weren't informed, and the dealership illegally released the title to us when we picked up the car in Acton, so now the state gets hundreds of extra dollars.
The obvious thing would be for us to go after the dealerships themselves, if the state won't. Unfortunately, both dealerships have since closed, even though at least one of them is currently operating in a new location under a new name (same owner). But it's legally a different entity, and therefore not responsible for the actions of its former existence. How convenient.
Yes, this has turned into more of a rant than I'd intended, but it's really frustrating to get hit with a four-figure registration fee that should have been half of that when you've tried to do everything right. It's not like the state caught up with us after we spent years flouting the law; the law was concealed from us by the dealerships' illegal actions, and by the failure of the Commonwealth of Massachusetts to enforce their own 30+ year old law.
Massachusetts, I realize you're having trouble balancing your books, along with virtually every other state in the union (except North Dakota, I think). But please don't attempt to solve your fiscal woes by screwing over your citizens. Taxes are bad enough; partnering with auto dealerships to stick consumers with exorbitant penalties is just obscene.
Until my husband went to register the cars at the RMV (Registry of Motor Vehicles, for any non-Massholes reading this).
We expected that there were going to be hefty registration fees, and while we certainly didn't like it, we were OK with it. What we didn't expect, however, was the sales tax scam being run by the state with the full cooperation of licensed auto dealerships.
Let me back up. In July of 2007, when Tom and I were legal residents of New Hampshire, we bought a car at a licensed dealership in Acton, MA. Why did we go to Massachusetts to buy a car? Because we were looking for a very specific type of car (Volvo station wagon of a certain vintage with a manual transmission), and we would go any reasonable distance to get it. A dealership in Acton had it, so we bought it.
Now, usually you pay sales tax on a purchase at the point of sale. Massachusetts changed the rules for vehicles, most likely because of all the Massholes who were going up to sales tax-free New Hampshire and buying their cars there. So in Massachusetts, you pay sales tax for your car when you go to the RMV to register it. Well, we lived in New Hampshire, so we registered it there, where we paid all applicable taxes and fees. No, we didn't pay a sales tax, but we did pay a vehicle license tax which is based on the car's purchase price when it was new (even if you bought it used, which we did). Not an insignificant amount of money.
Fast forward four years. Since purchasing the car, we've moved to Iowa, New York, and now Massachusetts. Each time we properly registered all of our cars, and we properly retitled them in each state. My husband went to the RMV to do the whole song and dance again in Massachusetts (by now an old hand at it), and was told that he can't register the cars without a bill of sale for each vehicle. Massachusetts didn't dispute that we legally own the cars (our valid New York titles are sufficient proof of that); they just wanted to ensure that we acquired them legally and paid all applicable taxes. How conscientious of them. So after much digging, we found the bills of sale from my car (bought four years ago) and one of Tom's cars (bought seven years ago), both obtained from licensed Massachusetts dealers and legally registered in New Hampshire at the time of purchase. Our 'spare' car was purchased from a private party in New Jersey six years ago, and Tom had to provide that person's name and address.
Having to find that paperwork was bad enough, but here's where it got ugly.
The Mass RMV accepted the car purchased from a private party in New Jersey six years ago as being on the up and up, and just collected the regular registration fees that we were expecting to pay. But the cars purchased in Massachusetts were another matter. Buried deep in Massachusetts law is the following: "If a nonresident of Massachusetts purchases a motor vehicle in Massachusetts and takes title to and/or possession of the vehicle in Massachusetts, the sale is subject to the Massachusetts sales/use tax irrespective of whether the nonresident intends to use the motor vehicle within or outside Massachusetts." (Chapter 64H) How is this to be done if the purchaser is not registering the vehicle in Massachusetts? Letter Ruling 77-13 states: "No dealer can make delivery of a motor vehicle to an out-of-state purchaser who takes delivery of the vehicle in Massachusetts without first receiving evidence that the required sales tax has been paid. This payment is made on Form ST-7R at either the registry or any state tax office and the dealer must retain evidence of payment in case of an audit." In other words, the dealerships were legally required to fill out this form and inform us of our tax liability, and then NOT release the titles to us until we could prove that we'd paid the required tax. Neither of them did that. They just took our cash and gave us the titles, with no hint that there was anything more we needed to do.
So when Tom went to register the cars and produced bills of sale from Massachusetts dealers, he was informed of his tax liability, along with the nice detail that we were now also on the hook for penalties and interest, plus we would be assessed at the current 6.25% rate, not the 5% sales tax rate that was in effect at the time of purchase. The penalties and interest more than doubled what we owed for my station wagon. Did the RMV care that the dealerships were negligent in their legal responsibilities? Not their problem, mon. Furthermore, the woman Tom dealt with at the RMV went on a bit of a rant about how this happens all the time, and how few if any dealerships comply with this requirement, leaving people like us screwed for hundreds or even thousands of dollars more than they should have paid. (You know it's bad when an RMV employee is doing your complaining for you!) The biggest victims, according to the woman at the RMV, are retirees who split their time between Massachusetts and Florida.
This isn't a new requirement. That letter ruling I referenced dates back to 1977, and it hasn't been superseded. The Commonwealth of Massachusetts doesn't bother enforcing this law because it's a cash cow for them. Enforcement would cut their revenue drastically. So instead they stick it to people who would be happy to comply with the laws if the people responsible for informing us of them actually did what they were supposed to do. After all, if ignorance of the law is no defense, and violation of the law results in higher revenues, of course they want to keep people as ignorant as possible!
Massachusetts does have a reciprocal relationship with most states. If this whole thing had happened this way except we'd lived in New York (which also collects sales tax at the time of registration) instead of New Hampshire, then Massachusetts would have credited us with the amount of tax we'd paid in New York and only charged us the difference (plus penalties and interest on that difference), if any. But they don't recognize the vehicle license tax we paid in New Hampshire, because technically it's not a sales tax, so we're considered delinquent on the whole amount.
If we had known about this at the time we purchased my station wagon, we would have paid the $50 or $100 to have the dealership deliver the car to us in New Hampshire, which, according to Massachusetts General Laws, would have exempted us from the tax liability entirely. But we weren't informed, and the dealership illegally released the title to us when we picked up the car in Acton, so now the state gets hundreds of extra dollars.
The obvious thing would be for us to go after the dealerships themselves, if the state won't. Unfortunately, both dealerships have since closed, even though at least one of them is currently operating in a new location under a new name (same owner). But it's legally a different entity, and therefore not responsible for the actions of its former existence. How convenient.
Yes, this has turned into more of a rant than I'd intended, but it's really frustrating to get hit with a four-figure registration fee that should have been half of that when you've tried to do everything right. It's not like the state caught up with us after we spent years flouting the law; the law was concealed from us by the dealerships' illegal actions, and by the failure of the Commonwealth of Massachusetts to enforce their own 30+ year old law.
Massachusetts, I realize you're having trouble balancing your books, along with virtually every other state in the union (except North Dakota, I think). But please don't attempt to solve your fiscal woes by screwing over your citizens. Taxes are bad enough; partnering with auto dealerships to stick consumers with exorbitant penalties is just obscene.
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