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US States Vote 26-0 To Move Towards Taxing Non-State Sales
buss_error wrote to us with a breaking news story from ZDNN. 26 states, with three not attending/voting have decided to move towards simpliying their tax codes. Why? So that they can begin to try and tax catalog and Internet sales with their applicable state sales tax. I think it was back in 1967, the Supreme Court ruled that you had to have a "nexus" within the state for the state to charge sales tax because of the patchwork of different sales tax laws. Catalog sales are much higher than Internet sales currently, but the states can see the phenomenal growth of Internet sales and want to reclaim some of the sales tax they are losing. The vote here doesn't mean as much as the actual decision they will make - lots of negotiation still to come, I'm willing to bet. CNNfn has a more detailed report.
(To give you an idea how close to the state line it is I think part of the parking lot is in Mass)
The cure of the ills of Democracy is more Democracy.
Erlang Developer and podcaster
none of the three states i traded cars in required registration until you started driving it around. At least, not that anybody ever told me, I just circulated junkers.
The people involved don't know to collect it or where to send it how to report it etc, the people charged with making sure the sales taxes are collected have better places to spend their enforcement efforts.
Bring a car title to the wrong secretary of state's office and they might demand to see every bill of sale since the last time it was registered and tell you you're liable for sales tax on every one of those transactions. As a result of having that happen to myself, I haven't sold a car for more than $2 in years.
Reminds me of England and the soon-to-be U.S. a few hundred years ago...
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First, I reject the assertion that costs are even on the aggregate. The fact is that internet sales are growing rapidly. Beyond the obvious implication that local stores are losing sales, this strongly implies that the internet is offering more favorable terms to the consumer. What's more, when I look around I see many instances where local retailers simply don't have a chance to compete. For instance, there are no local stores near me (nor any of the places that i've lived and been) that can compete against the likes of online computer retailers (i.e., Dell).
Secondly, your definition of "fair" is not fair at all. I equate "fair" with equal OPPORTUNITY, not equal RESULTS. What you are saying is that the results are equal, because the government is effectively "evening" things out by taxing. That's simply wrong. Businesses should compete based on what THEY can bring to the table, not on what the government decides to dole out to them. If you decide to locate your business in India, then your business model should allow for the shipping costs that you incur. Similarly, if the retail store decides to locate their business on prime real estate in Manhattan, the government should not subsidize them because of their increased overhead. It is not "fair", it is not practical, and it is certainly not economically desirable.
Businesses bring a lot of different things to the table. Some have better service, some have faster delivery, some have higher quality products, some have superior warranties, some have more selection, some have lower prices, some are better situated, etc etc etc. The point is that it is virtually impossible for the government to even decide what is "better". The government should not even enter into this kind of role. This is what capitalism is for. Let it be.
Second-rate cases based on flawed legal theory, but impressive nonetheless
Puhleeze, that's about a thousand federal circuit and appeals court cases, not some rogue hillbilly judge who doesn't know the law. It may well be that they are ALL coincidentally based on "flawed legal theory", but until you find a higher-ranking judge on appeal with a theory more to your liking that IS THE LAW.
As far as I know the US Supreme Court has not seen fit to examine such fine legal arguments as "well, the flag has fringe on it, therefore this is a court of admiralty!" (duh, does that mean if I wear a Harvard sweatshirt that i can't possibly have gone to Yale?)
That's what happens to sovereign Citizens in court who haven't done their homework
What homework would that be? I'd love to hear about a single so-called "soveriegn citizen" who has ever been legally challenged and found by a court to NOT be under the jurisdiction of the US court system despite living within the geographic boundaries of the US (because of course you don't have to be a citizen of a country to be bound by their laws).
It takes longer to learn and research, and one is likely to find oneself challenged on various obscure fine points
Would that be "obscure fine points" such as the crystal clear regulations of what constitutes an US citizen, and who laws apply to? (hint: laws apply to EVERYONE, citizen or not -- whether you volunteer to recognize them or not!)
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Recursive: Adj. See Recursive.
Ok, what's wrong with making mail-order and internet shopping less attractive? You have to pay shipping on the book from fatbrain, becuase they actually have to ship it to you. Taxes, as much as everyone hates them, are artificial but necessary and should not be applied with bias. What if there were no sales taxes at all and fatbrain et al didn't have that unnatural advantage over local stores. Would you suggest taxing local stores so that the places that had to ship things could compete?
The government already made $1000 dollars, and hasn't provided me a service for it
So who then pays for and maintains the roads you drive on? Corporations? Funny, I have not seen Microsoft Highway or Red Hat Lane recently. Little green men? No! The governement that taxed you that thousand dollars gives you many servies. They maintain the roads, put up streetlights, pay for the police and fire departments, and many other thngs. Lets not bitch about taxes so much, because taxes are what keeps the country running. If you have to bitch, at least bitch about the government when it wastes your tax dollars.
Isn't that supposed to read "simply lying"?
In this debate, it's important to note that even i f you don't pay tax on a out-of-state purchase, AFAIK every state with a sales tax still says that you are supposed to pay them something called a use tax; they just can't force the company to collect.
For example in this Texas government FAQ, you find the quoteA white paper at CommerceNet gives extensive information on the California law, and mentions that this is pretty common. For the curious, here is a table of State Sales Tax Rates, which mentions that Alaska, Deleware, Montana, New Hampshire, and Orgeon have no state sales tax.
<opinion>
Personally, I favor raising the sales tax and dropping the income tax. As a general rule of thumb, taxing something tends to discourage it (e.g., cigarette tax), so it seems silly to tax something like income. I'd much rather tax consumption, and I'm even more interested in taxing things that are environmentally bad. If society is going to allow pollution, we might as well get paid for it.
</opinion>
If it weren't baloney, you'd see a lot more constitutional powergrabs by the states with that as the excuse.
Instead, you don't hear about it at all--because it's baloney.
I don't need large brains to have a good time.
I think it's unfair for places to have to compete with out-of-state sales simply because they get around a tax loophole.
It's not a loophole, it's a clause in the Constitution. States are not technically allowed to tax residents of another state. (Wish I had a link... I'll try to track one down.) IIRC, this was one of the things that The South(tm) wanted to change in the Civil War.
Even if it were not stated expressly in the Constitution, sales tax on mail order and internet purchases is completely unjustified. Sales tax exists to generate revenue for things like roads, schools, and other public facilities. If I live in Michigan and I'm buying from an online store in Washington, your state has no justification to tax me because I do not use any of your facilities.
While you don't specifically mention it, your argument reminds me slightly of the people who maintain that internet sales ought to be taxed merely on the assumption that "ma and pa, brick and mortar" stores are losing out on sales to the internet. And believe it or not, it IS one of the major arguments that proponents of internet sales tax use.
Sounds a bit like the RIAA & MPAA debates, doesn't it? I'm sure most everyone on slashdot knows where they stand on those issues.
Heh, no it's not illegal.
Nowadays, most stores just choose to eat the 3% in the interest of keeping the customer happy.
Heh, well I guess that could be true also.
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Some people have a way with words, and some people, um, thingy.
Hemos writes:
Did the other 21 states go home for holidays? Or were they voted out of the Union recently?
I guess it should be noted that these twenty-nine states belong to a coalition known as the Streamlined Sales Tax Project.
My beloved North Dakota seems to be a participating member. Guess it hasn't become a wildlife reserve just yet.
Happy holidays, and remember: there are fifty states in the Union. Should any fewer involve themselves collaboratively, you [the editors of Slashdot] may want to mention in passing the reason why. :)
The basic idea is that sellers who sell interstate will be required to use a commercial "tax service provider" who takes in the shipping address, computes the tax rate to be applied, collects payments from the seller, and sends appropriate amounts out to the appropriate state and local taxing authorities. This makes interstate sales taxes for online sales practical.
No sign yet of a protocol spec for transactions with the tax service provider.
Anyhoo, there is a jurisdicitional issue here. Where am I located? At my ISP, at my house, where? I have and will pay local sales taxes to my local state of residence on sales I make of taxable items to within my state, but gang, this is an open invatation to a massive non-compliance by many, many of the smaller dealers...
(1) Somes stores add a surcharge for paying with credit cards.
/dev/random > /dev/hda3
I keep thinking for some reason that this is illegal. Can anybody confirm or deny this?
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cat
I pledge allegiance to the flag...
of the Corporate States of America...
Cutting through a lot of the hogwash that's thrown about on this issue.... there's one very simple reason that states can't charge tax on out-of-state sales. They don't have the jurisdiction to enforce it! If a state passed a law saying that out-of-state companies had to collect sales tax, and some company violated it, how could the state enforce that law, unless the company had an office or something in the state?
And that's the crux of the matter, and between that issue and the Constitutional restrictions against interstate trade barriers, proposals like this don't stand a chance. And they shouldn't.
And I'm tired of hearing how states "lose" revenue just because the don't have the power to tax everything they want to tax. They don't lose any money, no money leaves the state coffers. Yes, they take less from the consumer when it's an out-of-state sale, but that's quite different from "losing" money. This speaks to the issue that money doesn't belong to the state, it belongs to the people. New Hampshire doesn't have any sales tax. Do they lose anything when a NH resident buys out of state? Of course not. Nor does California or Massachusetts or any of the other greedy legislatures who think they have some entitlement to a portion of everything we spend.
While I agree with you, I hope that it is based on the buyer's home state (I live in Oregon and we don't have a sales tax)
Personally, I would prefer that it were based on the seller's home state, and not just because my home state (Utah) has sales tax. Business operations are fairly easy to move if there's an incentive to do so, and basing the tax on on-line sales on the seller's state would incent them to move to states that have no tax, which would, in turn, incent states to eliminate or reduce sales taxes wherever possible. I like the notion of state governments having to compete with one another for residents and businesses.
However, I don't think there's any question about the fact that the buyer's tax would apply. The issue at hand is how to arrange things legally and logistically so that it's feasible for sellers to collect the taxes and disburse them back to the appropriate states.
Note to ACs: I usually delete AC replies without reading them. If you want to talk to me, log in.
One of the big benefits of no tax on mailorder
sales is that you have a built-in discount that
is usually negated by the "shipping" and "handling" charges. With sales tax added, mail
order will cost more than local retail stores,
and local stores will be able to provide instant
gratification. If I had to pay sales tax on the
boox I order from fatbrain, I'd start buying them
at a local bookstore instead, since the tax represents the discount.
-fb Everything not expressly forbidden is now mandatory.
US Constitution, Article I, Section 10:
No state shall, without the consent of Congress, lay any duty of tonnage, keep troops, or ships of war in time of peace, enter into any agreement or compact with another state, or with a foreign power, or engage in war, unless actually invaded, or in such imminent danger as will not admit of delay.
Looks like you're right.
Did you quote his post and not read on? The original poster shows where government gets money for things like streets, municipal services, etc. He referenced the gas tax, property tax, and could have included tolls.
Also, things like "Microsoft Highway" do exist. They are called "Adopt a Highway" programs; corporations and organizations can fund highway cleanup, repairs, or whatnot and get a little sign on the side of the road saying how nice they are. Many states run this program.
Many municipalities -- especially in suburbia -- allow private citizens to buy the roads on which they live. This basically allows for gated communities, but it also means the town doesn't pay for repairs or snow removal.
"What? You didn't buy anything out of state? Well then you can explicitly claim 0 but we're gonna look at those closely"
"Oh, you paid 3% sales tax to another state for the purchase? Well hmmm... we charge 5% for our sales tax so how about you pay us 2% use tax and we'll call it good."
Sounds like sales tax to me. Sounds unconstitutional to me, anyone have deep enough pockets to fight it?
Welcome to Maine. I understand a number of states use this same scam.
Last time I bought a PC from Micron they charged me sales tax. They have _no_ nexus here in Maine. But they decided it was easier to cooperate with the state for some bizarre reason.
This is all a big joke. Can't tax interstate trade? Well call it something different yet base it on the same thing. Something seriously needs to be done about this.
Perhaps its a good thing that the internet sales are gaining a lot of attention. Perhaps its time to stop the states from collecting any kind of tax based on sales (whether you explicitly call it sales tax or not) and let the feds collec it. Then dole it out back to the states based on some formula that takes into account revenue generated and population and keep a percentage for the US Treasurey and reduce or eliminate the income tax.
There is no easy answer to this question. As the buyer, it would be my preference for the tax money to go to Colorado. That it would benefit the infrastructure of my state and not Texas. But I'm sure Dell and the state of Texas could make the same arguemnt.
Then there is also the question of verifying the location of the purchaser. How are they going to do that on the internet. Shipping address would work, unless you have the item sent to a friend who lives in a state with no sales tax.
But that is my biggest question, who gets the revenue?
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I like not paying taxes as much as anyone, but I have to admit it's not fair that a local retailer gets taxes, but if I order from an Internet site, it's not taxes.
Personally, I've always liked the idea of moving toward a national sales tax as a replacement for the income tax. It would do wonders for saving and privacy (since you would no longer be required to report income). Of course, the problem is that recent administrations (read: Democrats) wanted to add the national sales tax, which would totally suck.
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Sometimes it's best to just let stupid people be stupid.
I know this flies in the face of the general anti-tax sentiment, but there are a handful of places I do mail-order that actually have a nexus within my state (Washington). I think it's unfair for places to have to compete with out-of-state sales simply because they get around a tax loophole. By the way, I believe Washington requires state sales tax to be paid no matter where the purchase is to be made, so technically they're making it EASIER for us since the consumer burden is back on the storefront.
If a state is losing major revenue from online sales, it'll just try to make up the difference with higher local taxes. That disproportionately hurts poor people who don't have the access to eshopping.
If states would look at this Internet taxation as being a way to even out their tax structures (as opposed to being a big windfall), I'd have no problem with it.
Why are you letting these clowns ruin our country?
Why is states all colluding together to fix sales taxes any different?
The consumer is the one responsible for paying sales tax. Retailers, etc have been providing the service of collecting and remitting the sales tax on behalf of the consumers. They get a discount from the states for doing so.
On all sales on the internet, and from catalog, the consumer is still responsible for paying the sales tax. It has just become common place for retailers to not collect it because it is an enormous pain in the ass for them to keep track of all of the local taxes (there are services like Vertex that will provide this data for a fee). In these Internet sales situations, the consumer is obligated to calculate and remit the tax to their local taxing authority. This just never gets enforced.
So, they aren't going to create any 'new' taxes, they are just going to force retailers to collect the taxes that have always applied. This will be more difficult in some industries than others. For example, with dental products (those sold to dentists, not consumers), the tax classification for each product varies from state to state.