Crutchfield sues Mass over online taxes, unions protest Siemens

Online retailer tries to duck sales taxes

For a long time, the internet was like the Wild West for online sales. Companies sold products to consumers all over the US, and the feds and many states were slow to tax those transactions. You know, because “innovation goooood” and all that. On Oct 1, Massachusetts finally started collecting its standard 6.25 percent sales tax on internet sales from out-of-state companies with 100 or more online transactions last year. And last week, according to the Salem News, “online car stereo and electronics retailer, Crutchfield Corp., says Massachusetts’ policy violates interstate commerce laws and is therefore unenforceable.”

Why? In its legal challenge the company is basically saying: You collect taxes on us, but not on other companies who might do the same business by other means. Virginia-based Crutchfield also says it’s covered by a Virginia law designed to protect businesses in that state from having to pay taxes in other states where the business has no brick-and-mortar presence. Yet the Commonwealth has already argued that under a 1992 Supreme Court decision, having “cookies” stored on consumer’s computers from companies like Crutchfield counts as a physical presence in the Bay State. The Salem News also notes that NetChoice—a group representing online retailers like eBay and PayPal—is arguing “that the Baker administration doesn’t have the authority to tax businesses with no actual presence in Massachusetts.”

What’s most fascinating about these developments is the lengths big online retailers will go to avoid paying very standard state taxes (and, of course, federal taxes) in places where they do a significant amount of business. Any corporate victory on this front translates to millions of dollars being effectively stolen from the public that could be used to pay for social goods like education, housing, environmental, and welfare programs. Just what we don’t need.

German multinational faces protests over job promises, tax breaks

Walpole is a town with a population of 24,000 at the 2010 Census, but it’s punching above its weight in lavishing tax breaks on the huge German conglomerate Siemens. And area labor unions—led by the Building and Construction Trades Council of the Metropolitan District (Metro BTC)—are not happy. According to Wicked Local Walpole, hundreds of residents and area union members turned out for an Oct 19 protest on Walpole Common to demand that Siemens Healthineers, the goofily renamed healthcare division of the company (formerly Siemens Healthcare Diagnostics Inc.), follow through on its 2016 promises to the community.

In March of that year, the Walpole town meeting representatives voted 76-51 in favor of giving tax breaks worth millions between 2018 and 2037 to Siemens—an average savings of 75 percent on its property tax for the 20 years, according to the Brockton Enterprise—in support of the $300 million expansion of its existing plant there. The company said it would add 400-700 “permanent jobs” to its existing workforce of about 700 by 2026.

But at the recent rally, Walpole Selectman David Salvatore told the crowd that Siemens has “only hired 32 Walpole residents” to date out of the 170 jobs the company says it has created since the deal was cut. In an earlier Boston Globe article—released just after the town meeting vote on the agreement—he had provided more background: “The benefits of this project are regional, and the burden is local. Of the 620 current employees at the Siemens plant, a mere 33 are Walpole residents; most are not even from Norfolk County, and 83 are from Rhode Island.” So, Walpole is putting a bunch of money on the table for a big company that has thus far only created about 60 jobs for town residents.

Union leaders, according to an Oct 16 press release, are angry that Siemens has not committed to using union labor to build the 300,000-square-foot expansion of the factory or to hiring more local workers—especially since it’s getting such a large tax break. Their pressure campaign is calling for “slowing down the slated expansion for further community input and review.” One would think that a company with a market capitalization of $109.8 billion in May, according to Forbes, can afford to work things out with its critics. But it will be interesting to see how the situation plays out, regardless.

Townie (a worm’s eye view of the Mass power structure) is syndicated by the Boston Institute for Nonprofit Journalism. Jason Pramas is BINJ’s network director, and executive editor and associate publisher of DigBoston. Copyright 2017 Jason Pramas. Licensed for use by the Boston Institute for Nonprofit Journalism and media outlets in its network.