Unheralded

JIM FUGLIE: View From The Prairie — Republicans Raising Taxes In North Dakota? Yep, They Did That

Wait a minute.

Wait A Minute!

WAIT A MINUTE!

What the heck is going on here?

The North Dakota Legislature raised your taxes, and everybody’s cheering!

The cheerleaders?

Republicans: Gov. Doug Burgum, Attorney General Wayne Stenehjem, Tax Commissioner Ryan Rauschenberger.

Democrats: Sen.. Heidi Heitkamp, Tax Commissioner candidate Kylie Overson.

The chant: “A victory for North Dakota’s retailers!”

Screw that.

OK, I’m going off on a rant here.

I’m talking about last week’s U.S. Supreme Court ruling that states (including North Dakota) can collect sales taxes from Internet retailers. So now, states that have a law in place can immediately begin collecting sales tax on the books we purchase from used booksellers, or shoes we buy from Zappo’s, or a CD from Amazon, or printer ink cartridges we buy from Canon, or refrigerator filters we buy from Sears.

North Dakota has such a law. It’s a pretty new one, thanks to the passage of Senate Bill 2298 in the 2017 Legislature, which said that if the Supreme Court should ever rule in favor of allowing states to collect sales taxes on Internet purchases, North Dakota will do it.

In the North Dakota Senate, all 47 senators — 38 Republicans and nine Democrats — voted for it. In the House, 56 Republicans and 12 Democrats voted for it, while 22 Republicans and one Democrat voted against it. Republican Gov. Doug Burgum signed it into law. That’s the law that just raised your taxes.

A major tax increase passed with not so much as a whimper. Of course, the tax increase had a “trigger” (sound familiar?): it only took effect if the Supreme Court justices said it could. They did. Last week.

The decision was hailed nationally as a “victory for brick-and-mortar businesses that have been complaining for years that they are at a disadvantage by having to charge sales taxes while their online competitors don’t.”

And the states complained they were missing out on billions of dollars in revenue. One of the newspaper stories I read about this past week quoted a fellow from something called the Institute on Taxation and Economic Policy as saying, “State and local governments have really been dealing with a nightmare scenario for several years now.”

Oh cry me a river. No one is going to change their shopping habits because they have to pay sales tax — an extra 5 percent or so.

People shop online because they can get exactly what they want, which is not always the case locally, usually at a substantially lower price than if they bought it locally, and have it delivered to their door, in a matter of days.

Paying an extra 5 percent sales tax, when they’re saving 20 to 30 percent — or more — is not going to deter them.

What all these politicians who are raving about this as being a huge boon to their state’s treasuries fail to mention is that it is not big online retailers who pay these taxes.

IT’S US!

We pay them.

“This is a long overdue victory for our local retailers,” says Gov. Burgum.

“I’m absolutely thrilled,” says Heidi Heitkamp, a former North Dakota tax commissioner and attorney general.

“I’m glad the Supreme Court was able to recognize the unfair advantage online retailers have,” said Rauschenberger.

Well, I call bullshit!

This is nothing more than an increase in the most unfair tax we pay, and it hits lower and middle-income families the hardest. Low-income families spend most of their paychecks, and yes, if they can buy products cheaper online than in local stores they do that. (Note: A lot of us old folks who don’t like driving in traffic or parking at the mall do it, too.)

But they’re not doing it because they don’t get charged taxes. You bought ink for your home printer lately? Eighty dollars at Staples or Best Buy. Twenty dollars online. That’s why people shop online. They’re not disloyal to their hometown merchants. They’re simply trying to make ends meet.

On top of all that, the North Dakota Legislature has been cutting taxes on big corporations and has slashed billions in revenue from oil companies in the past four years. That new sales tax law passed in 2017 means that a family scraping by on $40,000 a year — and there are lots of them in North Dakota — gets a tax increase. Meanwhile, that same North Dakota Legislature gave Harold Hamm’s oil company a multimillion dollar tax cut.

I’ve been arguing for years with my Democratic-NPL friends in the Legislature, to no avail, that with all the oil tax revenue we could collect, they should be introducing bills to CUT sales taxes.

“We need the revenue for schools and Medicaid,” they counter. Well, yeah, but how about getting it from big corporations and oil companies and not from poor families in the checkout line?

C’mon, Democrats. Introduce a bill to cut sales taxes. There are only 22 of you in the whole damn Legislature — and 119 Republicans. Make them vote against cutting taxes. Maybe, just maybe, they’ll be too embarrassed — or even principled — to do that.

We’ve got $7 billion or $8 billion in the bank. We’re not poor. Use oil taxes to pay for schools instead of raising taxes on moms and dads working two jobs to just put shoes on their kids’ feet.

I talked to one of the legislators who voted against SB 2298. He agreed that the sales tax hits the working class families the hardest. And he also pointed out that we have a lot of our own online retailers right here in North Dakota, and this could be a nightmare for them.

Our law says they have to collect sales taxes if they conduct more than 200 transactions a year, or have sales of more than $100,000. Well, that puts our online retailers between a rock and a hard place. First, they’re going to have to spend some money ramping up to collect the taxes and send them to the state. Then, let’s say they figure there’s no way they’re going to exceed $100,000 in sales, so they don’t charge the tax, and then right at the end of the year, they have a Christmas rush in sales and end up with 210 customers, or someone comes along and makes a big purchase, pushing them over $100,000. Now what?

Or let’s say they expect to have a pretty good year, so they charge the tax, and then end up not reaching 200 sales, or $100,000. Now what?

This whole deal just sucks. The Supreme Court decision doesn’t mandate states collect the tax. It just allows them to collect the tax. I think North Dakota shouldn’t do it. We’re already one of the richest states in the country. If we need more money, the only tax we should be raising is the tax on oil. Not a consumer tax.

Rauschenberger says he’ll collect up to $30 million a year under the new law. But not from online companies — from us. We’ll be paying it. Although those retailers are going to have to do a lot more technology and paperwork, which might mean they have to raise the prices on stuff we buy. A double whammy on consumers.

By the way, that $30 million would be 5 percent of online sales. That means North Dakotans must be spending $600 million a year online. I’m having a hard time wrapping my head around that. I’m wondering if the tax commissioner didn’t just make something up, pull a number out of his ass. There’s been a lot of that going around lately.

Anyway, if my choice is to pay $20 for ink for my printer online, or $80 here in town, that 5 percent tax doesn’t make a bit of difference to me. I’ll still order it online. So tell me how this ruling helps local retailers. Does that make any sense to anyone?

Well, anyone except greedy government officials, who just can’t see a downside to this?

I read somewhere that the cuts the Republicans made to the oil tax in 2015 are costing the state something like $15 million a month. So we cut taxes for those who can most afford them and increase taxes on those who can least afford them.

A victory for North Dakota retailers? Bullshit. It’s a $30 million loss for North Dakota consumers. And it really pisses me off.




2 thoughts on “JIM FUGLIE: View From The Prairie — Republicans Raising Taxes In North Dakota? Yep, They Did That”

  • Therese June 26, 2018 at 8:11 pm

    Good reporting Jim.

    Reply
  • Diana Esta Green June 27, 2018 at 4:16 am

    Yup, it really pisses me off too Jim. I live in CT and work with ETSY and have to charge sales tax now too. EVERYTHING HAS STOPPED COLD. .
    Wild Hawk.

    Reply

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