On August 29 and 30, Massachusetts will celebrate its annual “sales tax holiday.” For one weekend a year the Bay State generously allows their citizens to buy products without giving the state government more of their money.
This event traditionally creates a Christmas-like run on retail locations. It also creates confusion among Granite Staters from the Massachusetts advertisements touting the sales tax reprieve.
New Hampshire still enjoys the New Hampshire Advantage of having no general sales or income tax, making a “sales tax holiday” seem like quite the unnecessary event. Of course, Massachusetts residents have been taking advantage of this for years by doing much of their shopping across the northern border.
The 100,000 or so Granite Staters working south of the border have been experiencing the “Massachusetts Disadvantage,” paying a hefty income tax on Massachusetts wages while also spending much of their lives in lengthy commutes.
Under what had been the tax rules, these residents were able to claw back a bit of their home state advantage if they worked out of Massachusetts for any period of time. The astute folks in Massachusetts must have noticed the lack of traffic coming in from the north during the COVID-19 pandemic and realized the missing cars meant missing workers, which would lead to missing tax dollars. Thus an emergency rule change was passed to make those former Massachusetts wages, now earned while working at home in New Hampshire during the pandemic, subject to Massachusetts income tax.
We understand the fear of missing revenue; it is something being dealt with across many industries and governments around the country. It is heartening to hear that the New Hampshire Department of Justice has started a review of this Massachusetts change and we hope they can help keep the long arm of the Massachusetts tax collector out of New Hampshire pockets.
Estimates are that the 2018 sales tax holiday cost the Bay State $38 million. It would seem that those panicked about Massachusetts tax revenues would issue an emergency suspension of a sales tax holiday that, at best, has dubious benefits for that state. Of course, canceling the holiday would risk angering Massachusetts voters. Robbing New Hampshire commuters just results in taxation without representation. One would think Massachusetts memories of that practice would not be so short-lived.