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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.
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
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.
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.
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.
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
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.
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).
what if youre poor but you pay your own way? then it becomes, people get taxed at the end of the year based on how much utilization of government services. the government then becomes a business and since its customers are poor, it goes out of business. youll have to pay to have your local streets paved next year and everytime you call 911.
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.
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.
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
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
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.
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.
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
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
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.
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.
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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
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
I prefer sales or VAT taxes to income taxes any day. I don't have to keep any documents or fill out any forms at the end of the year or have some bureaucrat snooping through my finances. People who aren't residents also pay and so do those who work on a cash-only basis. When I was in Europe, I also liked it that it was automatically included in the price of the item being bought. I know people who structure their entire life around trying to get a tax deduction for any little thing they do. And in doing that, they end up paying a CPA $200+ so they can get maybe $400 more back than they would otherwise get. IMHO, it's not work the hassle.
the good ground has been paved over by suicidal maniacs
I you want to go through all the hassles and the govt wants to let you write it off, then that's fine with me. I for one, do not like to put up with the additional paperwork and contort my life in order to get a tax break (which is why I'm in favor of a flat income tax and a national sales tax). Now of course, if there it's for something that I would normally do (ie. paying for college expenses) then I'll take it. A friend of mine tries to get any little tax break or deduction that he can, often doing things that totally illogical just for a tax break. For example, my family and I met him at a science museum one year. He bought a membership because he would get a tax break. It didn't matter that he wouldn't ever go there again for at least another year, it's normally free except for special exhibits and parking (which we split). IMHO, he could probably save more money by not trying to get some of these deductible expenses than he does in the amount of tax reduction that he receives. That doesn't include all the time he spends keeping records and tracking down other things that are tax deductible. Everyone should have a hobby, I guess his is tax avoidance.
the good ground has been paved over by suicidal maniacs
In fact since most of these large companies make ungodly amounts of money why don't they just buy a country and locate there. I am sure that if BN and ebay got together they could easaly buy a small country in africa or asia. I don't mean buy it literally I mean buy it by bribing the king just like they do here. In a monarchy you only have to bribe one guy and maybe a couple of underlings not hundreds of politicians. As a bonus they may be able get a whole slew of employees at slave wages or even as literal slaves. As an alternative they could throw enough money at a future Pol Pot or Idi Amin and just literally enslave a country with their puppet as a king. Voila for a measly 10 or 20 million you have a country of slaves working to make cheaper sneakers and returning maximum value to shareholders.
I am sure this will happen one day I am just surprised it hasn't happened yet.
A Dick and a Bush .. You know somebody's gonna get screwed.
War is necrophilia.
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
That won't be sufficient. For a company like Barnes & Noble to claim exception from this tax (which appears to be a clarification of the existing law, rather than a brand spanking new tax), they would have to relocate or close all B&N storefronts as well. That is, they would have to close all their retail outlets that are within the state as well as relocate their offices.
Hrm. CA law isn't clear that in-state purchases should get sales tax?
I believe that the situation is this: when a business has a presence in the state of California, and an order is made with that business, the business must collect sales tax even if fufillment of that product comes from out of state. That is, if I go to my local B&N bookstore and order a book to be shipped to my home, they collect sales tax even if the book was shipped from a warehouse in Nevada.
The law is not quite so clear when dealing with a subsidiary who does not have a presence in California, but who is owned by a company with a presence in California. In particular, B&N the web site is a subsidiary of B&N the bookstore chain, and so it is not as clear if the subsidiary should be required to collect California sales tax.
Some web presences of brick and mortar operations have been collecting sales tax, even though the wholely owned subsidiary providing that web presence is located out of the state of California. Some have not. The law clarifies this.
Of course this is AFAIK, IANAL, YMMV, etc.
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
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!
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
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.