Slashdot Mirror
California's Internet Tax Bill Slithers Forward
jjr writes: "An article over at Cnet talks about how bill on internet tax is going to the Governor's desk next week for signing. This bill will affect alot of companies since California is a hub for a lot of Internet companies. We will see how this one plays out." Note that California (not that it's the only state with such ambitions) seems eager to snare wads of interstate money by snagging it even when people buy goods or services online which the brick-and-mortar versions of the same merchants don't carry.
* The article suggests that it's a clarification.
Hrm. CA law isn't clear that in-state purchases should get sales tax? I'm pretty sure that here in PA, purchases in PA from PA pay tax regardless of the method used (online or no) -- and I've had onliners charge me sales tax when they have a presence in this state.
* As for companies moving out of state...
Do they have a Use Tax? IIRC, some states require a Use Tax for many out-of-state purchases... it may be poorly enforced, but it's on the books already.
Only the dead have seen the end of war.
This is a vain attempt by California to get some extra cash to fill their sparse coffers. I am going to guess that they are hoping they can sneak this one through and have it be active at least for a little while and make some cash before the Federal government shuts them down.
And the Federal Government will shut them down because they are attempting to gain sales tax across state line. This is expressly forbidden by more laws than I can count as well as having a little bit about interstate commerce mentioned in the Constitution which forbids this practice.
I have mentioned on this forum before how much internet commerce is like mail-order commerce and thereby should be governed by the same laws. Those laws state that the consumer must pay the sales tax of his own state and NOT the state the company is in. So the moment that this gets challenged by another state crying foul because California is taking away their tax dollars this law will be striken... or limited to only effect Califonia residents.
Here is hoping that it gets striken down by the courts.
I'll add more questions. If you are a US resident, travel to Europe, and buy stuff, which has a value added tax (VAT) already factored into the price, you can at the time of purchase fill out the paperwork to get the VAT refunded to you (later).
So, I'm wondering, for you residents of Europe who visit the US, do you get a refund for US state taxes? Do you have to pay the equivalent VAT (I think yes)? Thx!
To-do List: Receive telemarketing call during a tornado warning. Check.
Big companies like B&N and Borders are using their major websites to undercut the competition of smaller bookstores, who cannot afford large e-commerce websites and must sell their books primarily through B&M stores, therefore charging tax and not able to offer competetive prices to consumers. One of the sponsors of the bill is the Northern California Bookseller's Assocation.
Slashdot's typically pre-opinionated article posting might indicate that, well there shouldnt be any sales tax period! thats the real solution. But the problem is that the sales tax concept is not going anywhere soon (most likely), and charging it in an unequitable manner is harmful to various portions of a particular industry.
Yep. But I don't really want to see uniform taxation either. I think it's only because states are forced to "compete" against one another that these taxes haven't gotten totally out of control.
The more taxes they collect... the more money they waste. They'd have you think they spend all the money on textbooks for schoolchildren, when in fact they piss it away from the general fund, like all the rest of the money they pick from our pockets.
Let California have their tax. There's no reason all those Internet companies have to be in California. This may help spur new "Silicon Valleys" in other states.
One more shining example of the tyranny of /. group-thought rearing its ugly head - if you disagree with it, fine, but to denigrate as "flamebait" simply illustrates how collective retardation that has become /.
The Supreme Court has ruled that a state can only require the retailer to collect sales taxes if both the retailer and the seller are physically located in the same state.
To get around this, many brick-and-mortar stores started up online subsidiaries with their sole offices in one state. They then claimed this subsidiary, since it didn't have locations in (say) California, could not be required to collect sales tax from California residents.
The proposed California legislation would say that this isn't a legal way to get around the requirement.
IANAL, but based on my understanding of the case, the online retailers still could make an argument that the California attempt is unconstitutional, while the state would argue that mere hoop-jumping doesn't make the retailers immune.
I'll bet the result will be that the subsidiaries will simply be transformed into not-quite-wholly-owned organizations, on the premise that the subsidiares will then have a substantive separation from the parent corp, and thus regain tax collection immunity.
Steven E. Ehrbar
The shipping costs are far greater than sales tax, so no, this is not true.
This gives online stores a disadvantage in pricing--they're forced to have HIGHER prices than brick-and-mortar stores, because they have to pay both taxes and shipping expenses.
Shipping is a real cost. Taxes are artificial. This is a very important point that not a lot of people seem to take into account. The cost of a good should be based upon supply in demand. Supply is in turn determined by how much effort and how many materials go into the product (among other things). It costs money to ship you a product, so that product should cost more. Indeed, you pay for the cost of shipping the product to the individual stores (from the distributors) when you buy from a brick and mortar store.
Think of it the other way around. Assume there are no taxes on anything. Would it be fair to the independent bookstores for the government to start charging just them and leave the internet stores alone? Would you say "Internet businesses have to pay shipping; we should charge local businesses so it will all be fair."?
1. Time savings. To most of us, our time is worth more than the $5 shipping charge.
2. Selection. There isn't any single physical store that can match Aamzon's selection. If you want an exhaustive selection, online is the only way to go.
3. Intelligence. No physical store can offer you smart recommendations, reviews, ratings, etc. Once again, I point to Amazon - as a longtime user of their site, I am amazed at how useful their recommendations are. I have purchased at least ten books just on the basis of their recommendations. Can the high school student down at Jimmy's books be this smart about my personal shopping habits? 4. Bulk shopping. As anyone who shops online a lot will tell you, the only way to avoid getting killed on shipping is to aggregate orders. Order ten books at once instead of ten orders of one book.
Not only are Net Citizens avoiding California, Californians are leaving
the state in droves and moving here to the midwest, where the "Good
Live" can still be found.
Here's why: remember Berkely?
The schools were magnate schools, the community services were above
average, and all races lived side-by-side in upper middle class homes
and worked in high paying, skilled factory jobs or at the university.
Then the Left started agitating and eventually gained control of the town
council.
They first tried to immitate a "Nation-State" by making Berkley a no nukes
zone. Then they tried to tax both ends of a business transaction, even if a
company wasn't in state. They also made the book keeping so onerous as
be impossible, but since they are anti-capitalist that was ok with them. It
came as a suprize that business left, tax revenues declined, city services
could no longer be supported, and Berkely became, instead of a 'Nation-
State", effectively a third world county.
These same wackos are now trying to drive business out of the state. They
will probably succeed, but we are getting a lot of transplanted Californians
here in the midwest who have a newfound respect for the meaning of free
enterprise, taxation without representation, and the 1st and 2nd amendments..
Running with Linux for over 20 years!
California has the highest state taxes in the country, for a long time. It also has the most prosperous enconomy in the world.
If companies have bothered to move after being taxed at the highest state rates in the nation, they won't move for this.
...and they even charged the tax on shipping cost too! Those jerks, that's not even legally collectable...
If they operate their shipping department as a profit and loss center then they do need to charge taxes for that as well. There's a number of pros and cons involved with deciding how best to handle the accounting aspects of a shipping department, and you obviously ran into one of the cons. I'm no accountant, but I've seen enough tax rules to make my head spin around a few times. It really is nuts.
The line must be drawn here. This far. No further.
Or a stupid Democrat who can't spell. Ha!
No, it's a tax on the brick'n'mortar stores. Remove the tax, and everything will be fair. :-)
---
As copyright owner of this comment, I authorize everyone to defeat any technological measure which limits access to it.
Dunno about California, but in Australia petrol taxes are supposed to pay for maintenence of roads.
So is the state of California going to provide internet connections for the people it taxes, or is this just an extortion racket?
Optus@home just dropped alt.binaries.pictures.erotica.* from their news servers. Three cheers for government meddling in the net.
Software patents delenda est.
California, like all governmental entities, thinks it can't do with one dime less money that it presently gets, even though it's running a multibillion dollar budget surplus. In fact, if you've been paying attention, you've heard them whining that they don't get enough money as-is. They wail that [police|fire|education|health care] will all be jeopardized unless they extract at least 10% more revenue than they presently do. If you don't think politics matters, take a look at how much you're paying in taxation at all levels. A typical family of 4 pays over 50%. That's over half of the money you've busted your butt for. Then if you still manage to accumulate a large enough nest egg, they want over half of that as well. That's money you've already been taxed on. (By the way, for purposes of whether your estate gets taxed at 55%, it's not your home equity, it's your home value at time of death. I.e. it doesn't matter if you have a huge mortgage - it's the raw value of the house that counts. Neat, huh?) If you don't want to continue getting shorn like a sheep, start paying attention, write letters to your representatives (they pay attention, believe me) and vote accordingly. And don't fall for that "we'll have to cut our police and fire if we don't get this money". That's the old Washington Monument ploy (the Park Service always used to threaten to close the popular Washington Monument if its budget got cut.) They always trot out the stuff the public wants, conveniently ignoring the crap that no voter would give a damn about. Start writing.
I suspect the flamebait part was saying that Republicans differed from everyone else in thinking that the rich *should* be given tax breaks unavailable to others just because they're rich.
I see even classic Slashdot is now pretty much unusable on dial up anymore.
The Constitution SPECIFICALLY FORBIDS INTERSTATE SALES TAX LOOK IT UP: What the US Constitution CLEARLY states on this issue: Article 1, Section 9, Clause 5: NO TAX or DUTY shall be laid on Articles exported from ANY STATE. Look I know the Constitution is PASSE these days, despite it supposedly being the bedrock upon which all law rests: http://TeamInfinity.com/~ralph/salestax.html
In the UK it is already required for any sales within the UK online have to charge with VAT, the UK eqvilent (sp? - sorry it is Sunday and I can't be bother checkig my spelling) of Sales Tax
Unfortunately, I doubt that California will ever learn. They once tried to create an income tax for ex-citizens of California (a 'fee for people who had the priviledge of once having lived here). Enough is enough-- you ought to start thinking about moving your companies to somewhere better. And might I suggest Atlanta, Georgia?
Well, that's it: five good reasons to move to Atlanta. To be honest, this description fits many other places as well, like Austin, Pittsburgh, etc. The point is this: don't try to change CA, because they will never learn. They are a gold rush economy: if it isn't gold, or booze, or software, it'll be something else. If you are worried that some lean company outside the valley is able to make their VC last longer, and pay their people less to live better lives, and is getting first dibs on the best people, then just do what they're doing: head for the Peach State.
This law would just put the internet in line with all other mail order, in fact the law is superfluous, as internet sales already fall under the same rules as mail order.
Bring it on. Tax the internet, then tax everything else. Maybe we can go to a per-minute fee for all internet access, regardless of ISP. Then we can all wear brown uniforms, with red armbands, and walk in unison. And then, we can all let Big Brother decide what is best for each and every one of us.
Sorry. Slippery slope idea just took right the hell off there didn't it?
-------------------------------------------------
The poor should bear the greatest proportion of the country's tax burden - it is they who benefit the most from government services, ergo they should pay the most. It is not fair for the rich to be taxed more heavily just because they can pay. Sorry, but that's capitalism for you.
That was a FEDERAL moratorium. But the states don't have to follow suit with the federal government.
The only thing the Federal Government can do is coerce the states to do what it wants (like the 21 year old drinking age being attached to federal highway money).
Instead, the East Coast will fall first. Then the Midwest, then everything but California. See also: the video for "Californication" by rhcp://Red Hot Chili Peppers.
<O
( \
XGNOME vs. KDE: the game!
Will I retire or break 10K?
How will they enforce this? Will everyone have to get some sort of license. It is easy to enforce if you have a brick and morter presence in the state. What if you are a dot.com out of state who sells to someone in state? What if you are a dot.com in an off shore colo facility? This will cost more in logistics and enforcement than it would bring in revenue. Peace
Cleara
Umm, don't they already do that? When I'm ordering something online and I find two (or more) similar prices, I'll always go with the one that's out of state to avoid paying sales tax.
Say hello to zMac.
If the 'gubment wants to take money from these companies in the form of a tax, what will they do with that money to help the networking comunity? Pull fibre to every home? Help internetworking companies with international peering arangements? Help with computer science and internetworking education in the comunity? Fund Information Technologie Tech schools?
All you hear from 'gubment is "We're taxing you because we can, and you'll shut up and like it."
This is a sure way to scare business from the comunity and insure that your area doesn't atract good paying internet jobs.
This assumes:
a) the monarch can be bought;
b) the monarch will stay bought;
c) the monarch will stay in power;
d) the monarch will not decide to nationalize the company.
This seems like an awful lot of assumptions to rest the future on. Paying taxes is far less worrisome.
This post makes a valid point. come on moderators, use your heads.
Intercarve Networks, LLC
As I recall from an article I read a long while ago, B&N spun off their web site as a seperate business operating from a single warehouse. They had wanted to set up a system where they could ship directly from their stores, but this would have kicked in the very kinds of taxes that are being proposed now. Since they are in a very tight price competition with other book sellers, most notably Amazon, they opted for the more difficult method of the spin off approach.
What I don't get is if B&N's web site is truly a seperate company operating outside of CA, just where in the hell do they get the right to tax that? Let's not forget what the state sales tax is actually for. It's to have businesses pay back to the state for the infrastructure (roads, police, etc) they benefit from. B&N's web site does not benefit from CA services in any way, thus should not be obligated to taxation. The brick and mortar stores do benefit from local infrastructure, so they do pay.
When it comes right down to it, B&N was playing by the rules all along. It's the state of CA that's looking to inject a loop hole into the mix so they can tax an operation outside the state boundaries. This is like Texas trying to collect taxes from a McDonalds in Oklahoma because McD has a presence in Texas.
When Gray "Never saw a tax I didn't like" Davis signs this garbage into law, you can bet there's going to be a load of cash paid out to trial lawyers that will eventually over turn an obvious constitutional infringement.
The line must be drawn here. This far. No further.
(Note that none of this applies here, since California is only trying to tax online sales made within that state.)
Once upon a time, it was unconstitutional for any state to tax goods imported from other states. The landmark decision Brown v. Maryland (1827) declared that as long as they remained in their original packages, imported goods could not be taxed; only when they became mixed with the general property of the state could the state tax them like domestic goods. To do otherwise was contrary to Article I, section 9 of the constitution ("No Tax or Duty shall be laid on Articles exported from any State").
This state of affairs changed, however, when the supreme court handed down Woodruff v. Parham (1869, which held that only discriminatory taxes violated that clause. If the state uniformly taxes all sales in the same manner without regard to whether they're interstate sales or domestic ones, everything's kosher. It would seem to violate the words of that article, but it would also seem to be better in the spirit of Federalism that as long as states aren't discriminating against each other, ther's no controversy.
I used to work for a mail-order store in Pennsylvania. We charged the PA 6% tax for Pennsylvania residents, and for anyone who picked up the products at our warehouse. Everyone else got off tax free. If you are having an internet tax, I don't see how it could be any other way than this.
How come, when it's time to be 'fair', we never seem to hear the argument that we ought to cut taxes so those who pay 'unfairly', reduce their taxes to the level of those who are paying less than 'their fair share'? Why are tax adjustments only one-way?
Naturally, this is a rhetorical question. Just like when people talk about 'equal pay for equal work' it's never to lower the wages of the higher-paying job to that of the lower. Anyone living in the Tax Hell of California as I do knows just what a crock this whole argument is. Our income tax rate is 9% on the last dollar. Our sales tax gets as high as 8%,depending on the county. We pay property tax, plus the state has enacted fines as great as $271 for traffic violations. Not to mention that CA has attempted in the past to tax even out-of-state residents on portions of their pension income if any of the vesting happened while the person was a CA resident. If a football player plays two games out of 12 in the state, CA wants income tax on 2/12 of their income for that year. This state is so money-hungry it will stop at literally nothing to upend people and shake the last cent out of their pockets. This while running a multibillion dollar budget surplus that it just can't wait to spend. The state budget just passed is up 38%(1) over last year's. Every time some CA politician bitches about how they need more tax revenue I just want to puke.
"If I have seen further than other men, it is by stepping on their glasses." - Michael Swaine
Is it just for goods, or also for services (i.e. ISPs)?
I'm a CA resident and when the time comes to sell my rather substantial portfolio, I'll be doing it as a Nevada resident. Nothing like not having to pay 9% to the lefties who run the show in Sacramento to make living in the desert palatable. That plus the 'must-issue' concealed-carry gun law there.
"If I have seen further than other men, it is by stepping on their glasses." - Michael Swaine
But you said you had no presence in 20% of the states, so where does the money collected from those residents go? Their state governments aren't accepting it. It may make things simpler from an accounting perspective, but it is definitely not legal to tax residents of another state in such a matter. It's not up to a company to decide whether taxes should apply to everyone; in the U.S. that decision is left up to government.
The reason why is because there is no law (fortunately, IMHO) taxing out-of-state internet purchases (except for states which have "use taxes"). Whether it is a subsidy is beside the point - taxes are up to the government (and thus ultimately the citizenry) to decide, not some random corporation. If they don't go under for business reasons (I wouldn't buy something from such a site), I sure hope the FTC goes after them.
Your right to not believe: Americans United for Separation of Church and
Most states have a "use" tax if you buy something from anohter state. Missouri has a box on its state income tax form asking you to put down the value of all out of state purchases that were tax free and then you get taxed on that.
The solution is for a bunch of states to get to gether and build an online system to track these sorts of things. Then when you order somethign out of state, the details go to the database and that gets reported to your state just like income so it can't be hidden.
The side effect of this is the goverments can sell the marketing data for even more profit.
Huh? Where did you get that from? It's not like the government is a single omniscient entity. The state's department of revenue may not necessarily know if they have a presence or not. Even if they did not think his company had a presence, they'd hardly be inclined to send the money back.
Uh, no. It is largely left up to the individual companies. Only when whatever government decides that the company has erred, does the government start telling them what to do.
It's not nearly so simple.
No, you're missing my first point. There are a set of laws out there, not all of them clearly have the companies name written all over them. It is a function of the accountants and lawyers to decide which.
My second point is that this is not some moral injustice; I believe that paying the tax is more equitable than not paying it. As to whether the company should be compelled to pay that tax for moral reasons is entirely academic. However, the consumer can still decide to shop elsewhere if he chooses; companies are entitled to charge whatever they damn well please. No harm done if the consumer doesn't agree to it.
Brick-and-mortar stores are shipping large quantities all to the same site, so the per-unit shipping is a tiny fraction of what it is with an online store, and in many cases, the shipping is done through a government-owned agency, so part of the shipping charge IS artificial and going to the same destination as the brick-and-mortar stores' sales taxes. While this is obviously not the case with other shipping methods, it's still significant.
---------------------
But you said you had no presence in 20% of the states, so where does the money collected from those residents go? Their state governments aren't accepting it.
I don't know about other states, but the law in Florida is, any Florida resident must pay sales tax on anything he buys which would be taxable if he bought it in a store in Florida. Florida law levies the sales tax against the buyer, not the seller. If you buy something in a bricks-n-mortar store here, of course the store collects the sales tax and forwards it to the state Dept. of Revenue. If you buy something via the mail, telephone or the internet from a company which has a physical presence in Florida, and that can be as little as one tech support guy in state, then the seller is required to collect the sales tax just as though it were selling its products over the counter here.
But suppose I buy something from a company in California, with no offices or employees here in Florida? The state of Florida has no hook by which it can force the vendor to collect the sales tax I owe them. But that doesn't mean that that purchase is non-taxable. No, in that case it is my obligation as a Florida resident to keep a record of my untaxed out-of-state purchases and send that record along with a check for the appropriate sales tax to the state Dept. of Revenue. If I fail to do that then I am in violation of state law.
Needless to say, not only do ninety-nine-plus percent of private Florida residents neglect to follow through on this, but also probably ninety-nine percent of Floridians aren't even aware that such a law exists. But the accounting departments of businesses are generally aware of this law, they often get audited, and so they make it a point to pay the sales tax and stay out of trouble. This has the advantage, for Floridian businesses, that they do not suffer a disadvantage when competing with out-of-state firms to sell to customers in-state, where the cost of the sales tax might well be more than the cost of interstate shipping.
So where you say that states "aren't accepting" sales tax from out-of-state firms, I suspect you are probably wrong in Florida. Our Dept. of Revenue is eager to collect all the sales tax it can get, surprise, surprise!
Yours WDK - WKiernan@concentric.net
Okay, there is the physical location aspect to overcome. But don't stores already pay property tax on their physical locations? What about the payroll taxes from the employees of these companies? How much tax from the consumer do these god damned governments need?
This is not the way to build a lasting empire.
The constitution plainly states that the Federal gov't and only the Federal gov't may regulate interstate commerce.
Conformity is the jailer of freedom and enemy of growth. -JFK
The state of California isn't making any money offa the internet Waaaah.
These online retailers are going to bankrupt our state government. Waaaah.
Have i heard this somewhere before?
"Tension is the great integrity" -- R. Buckminster Fuller
I dont see where the problem is with Internet taxation. Not taxing purchases made over the Internet is actually a subsidy to the online stores. And the online stores are used by the wealthiest part of the population. There is no reason to give a tax break to the wealthy, unless your a republican.
There's been a lot of discussion on DVD forums lately about how, with a lot of the crazy bargains disappearing online, there's no compelling reason to shop on the net. If you tack on sales tax to the shipping costs, the price point advantage disappears completely and it becomes an even harder sale.
Will internet commerce disappear? Hardly, but I think measures like this certainly will slow it down.
Do you really think that any governmental body is going to reject a business that's giving them the sales taxes that they've collected? Hell no! You are correct that it's up to the government and its citizens to decide taxes. So what's wrong with collecting the taxes at the rate that the governments have decreed and giving it to them? They are probably accustomed to companies try to not charge the appropriate sales tax and skirting around the law. It also takes away one complaint that local merchants usually have with internet based businesses. It's also good PR for the govt bodies in the states they're not in for the future when they do get a physical presence. The only reason the FTC or anyone else would go after them is if they were collecting taxes and not paying them.
IMHO, I think you are just offended by the chance of having to pay sales tax on something bought via the internet.
the good ground has been paved over by suicidal maniacs
Well I guess there are going to be alot of companies moving out of California. If I were Barnes & Noble, Borders or Sam Good I would just reincorporate my non-internet divisions in Nevada.
This'll bring even MORE californians north of the border :-)
* And remember, it's spelled N-e-t-s-c-a-p-e, but it's pronounced "Mozilla."
Huh? Is that even legal? Why is your company charging sales tax to people in the 20% of states where you don't have brick and mortar operations? Simplifying your accounting can't be the justification...
Probably because they are in the process of moving into the other 20% at some point in the future anyway. And whether anyone likes it or not, I'm sure that laws similar to the one passed in CA are going to be more common. Local & state govts are going to realize how much revenue they are not getting, coupled with local merchants complaining how unfair it is that they have to charge taxes, but the e-businesses don't have to. I'm sure any state welcomes sales tax revenue, whether it's from a real or virutal store. It's not like they are charging everyone the same rate. Besides, with the scheme presented above, if a state really protested in receiving the collected taxes, they could just set the tax rates for those zip codes to zero. I don't see why it wouldn't be legal as long as the prescribed methods are followed when collecting and submitting the taxes. Again, I don't know why, just that's what it appears to be doing. Who knows maybe the other states actually do have 'use tax' laws like UT or MO and it's legally required.
the good ground has been paved over by suicidal maniacs
"The constitution plainly states that the Federal gov't and only the Federal gov't may regulate interstate commerce."
They are not talking about interstate commerce there but rather internet companies in California who don't charge sales taxes for residents in California. In particular, they were talking about companies like Barnes and Noble.
Personally, while I live in California, I think that the taxation should be fair. If the brick and moaters need to collect sales tax then the click and moaters should also. People say that the internet commerce is just in its infancy but it has been around for 5-10 years and in internet time, that is 20-40 years!
Well, if this legislation is going to tax online businesses that also have "brick and mortar" stores in California, then won't most of the superstores still be exempt? I mean, there's neither brick nor mortar in the ugly big-box sub-urban stores from which they do their retailing.
*** Work like a king, command like a slave, create like a dog.
The situation which we are discussing concerns a company charging customers sales tax for purchases even when there is no law authorizing them to collect such a tax. If no applicable government has enacted such a tax, then the company is collecting money under false auspices, and it might as well be going into a black hole as going back to whichever state they say they send it to. Since that state doesn't have such a tax, they aren't going to audit such a company to make sure that they don't tax too much or too little. As a result, the consumer can easily be screwed.
If those local merchants want more taxes, they should get them passed by the duly-elected legislature, not added by other businesses.
A bribe, in other words.
I'm offended by (in no particular order):
Your right to not believe: Americans United for Separation of Church and
It looks to me like they're planning to tax online sales ordered by California residents, where the orders are filled by companies operating in California. So it's not interstate commerce that they're trying to tax.
Lets say "Big Johns amazing leather and bondage" sells stuff to people that walk in the door and the business pays taxes on that. Setup a computer near the checkout and let people buy the same products over the internet and the business dosn't have to pay taxes? hmm what's wrong with this picture. It's in state comerce and should be taxable regardless of the tools used to foster that transaction.
This law makes sence, but all it does is give companies an insentive to move one or both of their business outlets (B&M or Inet) out of state to avoid the tax. Like a game of Whacka mole. . as soon as the 'gubment tries to whack a business down, it popes up somewhere else.
If Gov Davis knows what's good for him in an election year, he'll veto this little jem.
In Oregon a sales tax has been voted down again and again, and I am surprised that there are only a couple of other states that don't have one. If I go to California, all I have to do is to prove my Oregon residency to avoid sales tax (actually its pretty hard since most merchants don't want to screw with the paperwork). Does anyone know if this provision is being made? Hell, even if I order from a catalogue, I don't have to pay sales tax, so why should internet be any different?
These are breasts; this is source code.
Why do you have a problem with those two things belonging to one person?
I think the only way to achieve fairness would be either to have a nationwide, uniform sales tax that would be collected by the federal government and then apportioned to the states, or to abolish the sales tax altogether. Of course, hell will freeze over before some states would agree to either of those.
With the current non-uniform method, states without a sales tax, as well as mail order stores, are freeloading: both companies and residents end up using resources (roads, airports, etc.) that others pay for. Imagine, for example, how New Hampshire would do if the people in NH couldn't come to work in MA or if MA shoppers couldn't drive up to NH.
As for the "Internet Tax" bill, if it applies uniformly to any kind of mail order, that's fine with me. If it applies only to orders placed through the Internet, that seems stupid.
You have to pay local taxes, if you live in that state, with mail-order and whats "Internet Business" other than a mail order catalog thats updated really really often. Hopefully this loophole will be closed.
The shipping costs are far greater than sales tax, so no, this is not true.
Mail-order catalogs are tax free. Again, the cost of shipping is greater than that of any tax.
This gives online stores a disadvantage in pricing--they're forced to have HIGHER prices than brick-and-mortar stores, because they have to pay both taxes and shipping expenses.
A state tax on internet transactions, such as this one, would be a disaster to implement. If it is based on the location of the seller, all the sellers would leave that state. If it is based on the location of the buyer, it creates the problem of having to deal with different taxes in different states, which is bad for the little guys having to hire extra lawyers to keep track of what the tax laws are. If it is based on both the buyer and seller's location, then it has both problems.
A federal tax would be more reasonable, but it would discourage the online economy and stifle its growth, which is why a moratorium was passed a while ago.
---------------------------
>>I just wish they'd secede from the union before they spread
:-)
Perhaps we could make some arrangement with the San Andreas fault to "help" them
Do not teach Confucius to write Characters
Today's Sesame Street was brought to you by the number e.
Sales taxes are charged when both the buyer and seller are in the same state.
California can't charge sales tax when the buyer is out of state and the seller is in state. They presently have no real method of enforcing sales tax when the seller is out of state and the buyer is in state - they claim that right but presently without search rights they can't prove you owe them a dime. It might turn up in an audit.
Creative Labs is the first purely out of state company to charge my state sales tax on my internet transactions, and they even charged the tax on shipping cost too! Those jerks, that's not even legally collectable, but I can't convince them and it's not worth the 50 cents to argue with them, I'll just buy elsewhere.
It has been done before; you're just looking at the wrong history. The companies that colonized America had just such a setup going. But as those companies found out, governing an entire populace can be a rather risky proposition, and dealing with international affairs is no small matter. It's much easier only to have to worry about producing the goods, and since it's already quite easy to get near-slave wages in countries like Indonesia, there's less incentive than you think. And your "measly 10 or 20 million [dollars]" figure is a far cry from what the average Saddam Hussein makes in a month, so why would he be interested? Countries that are susceptible to this sort of corruption are already dominated by ther own home-brewed 'corporation' (party).
I don't agree with internet taxation and do not understand why the government should try to limit such an amazing technology. The development of the internet will soon be the main source for government profit, overriding exports, even the stock market. The upward trend of new ISP development, hosting companies, operating systems derived from the internet, and much more, is good enough cause that the internet will produce more income than any other median ever.
The government is simply trying to gain more money than neccessary from internet. In my opinion, the internet is a very fragile place.. susceptible to any mode of taxation, but that's still not grounds for the government to attempt to capitalize even further. The Californian state government will see this as one big screw-up if this bill passes. People will slowly drop their ISP's and NetZero will gain even more users. No taxation that causes for even small sums of money will go without spoken word from the population. Look for this one to get out of hand folks... because it probably will.
Free e-mail address at The Mailing Zone. Will add much more to it soon.
Before people get their underwear in a bunch about whether this violates the interstate commerce clause or whether the internet should be taxed, etc., please read the article.
The sales tax would only be charged if a CA resident is buying a product from an internet site of a company that has a physical presence in CA. If the company has no physical presence in California, the residents do not have to pay any sales tax. Residents of other states do not have to pay CA sales tax either. If it was a California mail order firm, they would have to charge you sales tax too. If one looks at the order form for a catalog, there is usually a place near the shipping and handling field where it says something like 'Illinois residents add x% sales tax'. IMHO, shopping via the internet is just like shopping from mail order catalogs. But you can spend your money faster because it's interactive. (Since this was instigated by local bookstores against BN & Borders, there are book price comparison sites that will include sales tax in the final cost if it is required.)
I would not be surprised that more states start beefing up their existing mail order catalog tax laws for the internet. Some states require you to pay sales tax on anything bought via mail order, no matter where it's from and have a section for that on their state income tax forms. As far as they are concerned, the internet isn't any different.
The retail company that I work for recently opened an e-store. Since we have brick-n-mortar operation in about 80% of the states, someone must have saw laws like this coming, because we charge sales tax for everybody. Even residents of states we don't have any presence in at all. While I didn't work on the project, I'm guessing it goes something like this:
- The company keeps a sales tax table for all zip codes in the US. We have to do it for the retail stores, so it's no big deal for the internet store.
- Take the customer's shipping zip code and use that to retrieve their sales tax rate.
- The total merchandise cost is multiplied by this rate to get the total sales tax paid. This is charged to the customer, and is stored in a data warehouse along with any warranty informaiton.
- Periodically, a report is run to show the total amount of merchandise bought and sales tax paid by zip code. This is broken down by state and sent along with any other legal paperwork to each state tax commission with a check (this may be totally electronic or involve real paperwork depending on the state)
There are probably software vendors that sell packages that do this or provide the service of handling the paperwork for each state. If there aren't that do this now, if many states follow CA's lead, I'm sure there will be companies offering such services to smaller internet businesses. It's probably simpler than all what's required by each state & the federal govt for COBRA, employment insurance, and all the other insurance/human resource related crap. Good grief, it seems like just about every town/city/county in PA alone has a different income tax, payroll tax, or some odd requirement that's slightly different from anyone else.the good ground has been paved over by suicidal maniacs
For about a year now, there has been an explosion in south Reno of new building, including some huge warehouses right along the US 395 artery. The airport has been gearing up to handle more freight flights, especially as passenger traffic through Reno/Tahoe Airport is trending downward during the last year of the millenium.
Physical plant isn't the only thing growing. There has been a number of technology committees that have sprung up in Reno and Carson City to address infrastructure issues for business, including attracting more bandwidth into the Reno/Carson City nexus.
Bottom line: new work may be coming here. Good news for me...
You're right about the first part, and that's a reason that brick and mortar stores might be more efficient than internet stores (which have their own advantages). They ship in bulk, from distributor to the store, and the internet stores ship from the distributor (optionally to a warehouse) and then to the consumer.
But the USPS is only sort of a government agency; it is not subsidized, except perhaps in the real estate it owns (this is a really, really small part of its operating expenses). So the second part of your argument doesn't really make sense. Using the USPS is nothing at all like paying taxes.
Mail-order catalogs are tax free. Again, the cost of shipping is greater than that of any tax.
No they're not. Look at the order form. There is a field for entering the sales tax if you are a resident of a particular state. Other states require you to pay local sales tax on mail order items no matter where the company is from (WA, UT, MO, amoung others).
the good ground has been paved over by suicidal maniacs
It's corporations who have an actual physical presence in CA. "pure" internet companies, such as amazon, are unaffected. I've heard this story before, and the gist of the defense, in Barnes and Nobles case, was that the web site was entirely separate from the store operations, despite having the same name and the cash going to the same place. It's bullshit. Ironically, this is both fair and required taxation, and it's primary intent is to stop rogue entities from making bogus internet tax exemption claims.
California will require online retailers with a phyiscal presence in California to charge state sales tax. This is the same treatment mail-order stores get - this really isn't a big deal.
makes you wonder about the accountants. :) they must be CRAZY! :) (da boyz in accountz receevablez starts coming to mind... hehe.)
eudas
Blessed is he who expects the worst, for he shall not be disappointed.
Hal Duston
hald@sound.net
If Al Gore invented the internet, why is it named after George W. Bush?
"IMHO, boycott them all (with the exeption of the cool ones like ThinkGeek) and watch them go bankrupt."
I think you will find that many of these e-tailers are pretty good at bankrupting themselves without our help ;-)
Doesn't it stand to reason that the more taxes you pay the bigger your tax break would be? The millionaire gets a bigger tax break because he pays more to begin with.
Only the State obtains its revenue by coercion. - Murray Rothbard
The EDGE (in the oregonian) ran a contest in that spirit a year or so ago soliciting ideas for another sign. The winning entry was "OREGON: If you didn't live here, I'd be home by now."
* And remember, it's spelled N-e-t-s-c-a-p-e, but it's pronounced "Mozilla."
Hal Duston
hald@sound.net
If Al Gore invented the internet, why is it named after George W. Bush?
Moderators, feel free to moderate me down into oblivion... and if you want to really have fun, moderate as many of my previous posts as you can too. ;-)
Say hello to zMac.
Actually, for the US, over 99% of the income taxes and such are collected from the middle class. Yes, the rich are soaked more, at an even higher percentage than the rest of us, but the US has such a strong middle class that's where the real money comes from. The US Government can't operate for a day even if it taxed all the millionares at 100% rate.
A court system which enforces the corporations intellectual property claims.
An investigative and police force to aprehend and prosecute the thieves which will inevitably show up.
Negotiating treaties with foreign govenments to make sure all transactions are honored and enforced by local police forces.
Providing a legal framework to make sure all states agree to the same level of service.
I honestly don't think that corporations want to do this stuff themselves. I don't think MS wants to hire it's own international police force to aprehend, jail or otherwise coerce you to pay for your copy of windows.
A Dick and a Bush .. You know somebody's gonna get screwed.
War is necrophilia.
No tax or duty shall be laid on articles exported from any state.
atto
I didn't use the preview button, so get over it!!!!
Mike
They(Kalifonia)will be shooting themselves in the foot if this bill pases. If the enviroment gets to hostile for the affected companies they'll just take thier business elsewhere along with any taxes they do generate. Apearently the liberal democrats are just too fucking stuuupid to realize this simple fact of life and will never "get it".
Here in St. Louis where I live most businesses are in St. Louis county or Franklin County. Only a few remain inside the city boundaries. But a lot of these businesses use "St louis" in thier address to identify themselves as bieng from this geographical area. The reasons these businesses have left the city are legion, but most come from city hall. one of the main reasons is the "head tax" what his means is that for each employee a buisiness has it must pay a certain percenage(of gross revenue i think)and each person who works in the city has to pay a city income tax whether they live in the city or not!
Recently a "Living wage" proposition was passed by the voters to raise the minimum wage a person can work for to around $9.00hr(note that this is local, not state or federal). Imagine what will happen in the city in two years! The law goes into effect in january and I imagine that the businesses that are left will try to deal with it for about a year, and then make plans to move after that if they are not doing so already.
The same goes for E-commerce. They want to be online? Fine. Certain goods and services are better bought online. But they're going to pay it in shipping. Intentionally giving anyone an artificial advantage is just plain bad economics. You would effectively incentivize inefficiency, and it would only get worse. What's more, where shipping costs are higher, there is almost always an increased ENVIROMENTAL impact (nearly 1 to 1). E-commerce pays more in shipping because it is less efficient to deliver goods to individuals than massive loads to a central place.
Though this is the only remotely viable argument (i.e., the act of taxing online creates excessive costs), it really holds no water. There are many mail-order businesses that have to pay taxes, believe it or not. These busineses, like those in this law, have a presense in the state(s) in question, albeit nominal (i.e., sales people in that region). They do fine, I happen to work for such a company. The costs associated with taxing are negligible. If an E-commerce firm can ship, they can certainly afford the penny it costs these mail-orders. These busineses pay not just state taxes, they pay county and city taxes many times too. I know systems can be put in place at these dot-coms to handle it for even less.
FYI, It is not as if these companies run around the country finding out the latest tax rates. There are services and products (i.e., cd-roms) that you can buy complete with the latest tax codes and the like. If a company makes a reasonable effort to keep up to date, it is not an issue.
If an equally plied tax hurts E-commerce, it just means they can't provide a good alternative for the customer without artificial distinction. I say, make taxes as equal as possible, and let the cards fall where they may.
As for why Congress passed a moratorium....can you say Moooo? Like everyone for the past few years, they're afraid to speak their minds about the sacred cow that is the internet. These days, you're no more likely to find a politician "against" the internet than you are to find one "against" children.
Oh yeah, and in case you didn't know it, sales taxes comprise roughly 30% of most states revenue. If the internet is nearly as big as you think it's going to be, something has to be cut...The axe will eventually have to fall on E-commerce, and then they'll be in real trouble...as if they aren't already.... hehehe
This is just stupid. Politicians have no sense pf economics.
I think that CA has both an income tax and a retirement tax. They get a chunk of every paycheck cut for a worker living in CA for the life of the worker.
Now they want to drive all of the employers of those taxable paychecks away to Reston/Herndon VA. UGH! more screwballs that ask "what kind of mixed drinks do you have" at Paolo's in the Towne Center, oh joy.
Anyway, CA makes a fortune off of the backs of it's workers, even after the worker has moved and retired. Piling this on top is just beurocratic greed.
If the businesses affected had a financial brain (and they do) they will just pull up stakes and move to SeaLand.
Visit DC2600
Eve Fairbanks says I drive a hybrid!LOL
As California drives people out, other states (Oregon) and nations (Texas) will say, "Hey, look at all these new businesses to tax!" You can't afford to relocate too many times...
<<< CmdrTHAC0 >>>
__CmdrTHAC0__
In Soviet Russia, Spanish Inquisition doesn't expect YOU!!
There used to be a sign as you exit California to the north...
Welcome to Oregon but Please Don't Stay
I'm surprised that there aren't MORE e-biz sites based in sales-tax-free states such as OR or MT. But then maybe the other taxes scare them away.
Give me my freedom, and I'll take care of my own security, thank you.
We all know California is going to break off and sink into the ocean soon anyway.
On the other hand, it's complete BS. As I believe another poster already mentioned, interstate commerce can only be regulated by the Federal government, not by the states. Now I'm not exactly sure where in the scheme of "regulation" taxation falls, but I'm betting it's not the most clear cut issue in the world.
Likewise, the actual implementation of Internet taxation seems prone to overcomplication and beaurocratic bloat. When interstate commerce occours which state's taxes are applied? The state where the merchant is located? Or the state where the purchaser is located? Perhaps both (because it starts out one way and then the other state feels screwed over... I mean, if a large percentage of online stores are in, say, Texas, they would love to get their hands on all that tax money, at their local sales tax rate. But if most of those purchases are happening in California then I'm sure that California will want to get in on the action.
Perhaps someone more conversant in interstate commerce than I can enlighten us as to how this works with mailorder catalogs right now? That would seem to be the closest guidline that I can think of.
As for taxation on the internet, my bet for a final tax scheme is this: some sort of federal tax, with the same rate everywhere, on all purchases made from domestic merchants. Maybe, if they are lucky, the states will get cuts of this, but I doubt it.
But that's just my guess...
--
Behold the Power of Cheese!
Yeah, that's very true. ;-) It just pisses me off that now all the state governments have to get their cut too.
Ever visit one of those e-flowers sites? I saw one the other day that wanted $50 for a box of cookies. $50 Most of their flowers were the same price, with the exeption of one that is. That one was $99.
I hope they all go down . . . soon. It'll give us all back a hell of a lot of bandwidth.
Whatever happened to that little internet tax moratorium thing? I thought they wern't going to try to tax the net for 5 years or something.
-- iCEBaLM
Myself, sales tax avoidance is not the reason I buy stuff online. The internet affords the opportunity for more product detail than in print catalogs, and I don't have to wait for a paper catalog to arrive before ordering. And there's none of this "please call for price" garbage that you see in computer and electronics catalogs. I can place an order at 3am if I want to, and don't have to wait on hold or talk to a sales associate. It's much more efficient to read e.g. shipping options or available seats on a flight than to listen to a salesperson read them off. I get an e-mail record of my purchase instantly, which often has a direct link to the status of my order. I can store this in a "commerce" folder on my email client, instead of writing everything down on some scrap of paper. Lower price or no, I think the Internet is just a better way of doing a lot of purchasing.
*** Work like a king, command like a slave, create like a dog.
A transaction tax would essentially be a government providing a guarantee (by providing a stable economy, police, legal and military protection) that your money will safely move from A to B. In return for this service (yes, a protection racket, more or less) the government takes a small slice of the transaction.. some micropayment type percentage.
Each small chunk would be trivial compared to the size of standard transactions, but the total amount of money being moved around would add up to a lot.. which could be arranged to easily cover what is raised currently through more traditional methods.
It would be fair, because those who have less money (and hence move it around less) will pay less in tax, just the same percentage. If you have a lot of money or move a lot around, then you will get taxed more.. but again, the same percentage per transaction.
This could easily be extended internationally, since you will be transferring money from your account in one country to an account somewhere else. Each country takes a small slice. If you insist on moving money through 15 different countries/banks/money laundering operations/whatever then you will pay for the priviledge of ensuring that whatever money is left arrives safely at the destination.
There are probably numerous issues with this concept which require clarification, but it would certainly make tax evasion more difficult (which only the mega rich can currently afford to do properly) and get the money grubbing governments off everyone's backs. Simple tax laws means they can't cheat you out of your hard earned dollars either.
Just because you're paranoid doesn't mean they're NOT after you.