Slashdot Mirror
Congress Reconsiders Internet Sales Tax
FatHogByTheAss writes "The ability of local governments to collect sales and use taxes from Internet transactions was argued strenuously during a lengthy Senate hearing Wednesday, as time runs out on the existing federal moratorium on Internet taxation."
I'm not a constitutional lawer or anything, but I think that means that Missouri can't say we shall tax everything from New York x% because we don't like them. And that the federal government can't impose a fee for transporting items between state lines. But any state still has the rights to tax purchaces, property, or use within it's bounds
As x approaches total apathy I couldn't care less.
Yeah. Minnesota is the same way. By law you are required at tax time to pay sales tax on all items you have purchased through out the year over the internet and through the mail.
I have yet to see how they expect to enforce this tax law. I have seen some internet companies charge sales tax though. Some "well behaved" companies may already be keeping track of tax laws in states and sending in the state sales tax on your behalf (example: Loki Games, Va Linux Systems).
The one thing that irritates me about the above article is these legislators don't seem to understand what taxes are for. Taxes are to raise revenue for a government entity. To say that you want to create a new tax to be fair is an abuse of the very purpose of taxes. If you don't need the money, what's the point of even talking about new taxes.
It's like your neighbor complaining to the government you have a cow and he doesn't so they come in and shoot your cow rather than give your neighbor one as well.
Just fed up with legistors.
http://www.argusleader.com/editorial/Wednesdayfeat ure.shtml
.coms, check it out, and while your at it, use the link "send a letter to the editor." Maybe some informed opinion, versus the "OhMyGod those .coms are killing Ma and Pa in de store dere."
That paper there, the Argus Leader, is the largest paper in South Dakota, and among the largest in the upper great plains. They've been gung ho about an internet sales tax for quite sometime, and it appears to be havin an effect.
For a dose of how middle america sees these
Here's the argument:
"Those lost revenues put added burden on bricks-and-mortar businesses when catalog and cyber-retailers aren't paying a fair share. And with that 5 percent or more discount, some price-conscious buyers are abandoning local businesses."
By the way, nobody mentioned catalog retailers....just e-commerce.
No sig is worth reading.
So, unless the internet tax is going to be a federal tax, the states cannot collect money from stuff imported from other states without amending the constitution. At least, that's how it appears to me.
Ita erat quando hic adveni.
I would beg to differ with you on on-line vs traditional retail. There are many expenses for traditional retail that just don't apply to online sales. For example, a traditional store must maintain a showroom and have inventory in the showroom. An Internet Retailer (IR) does not need this and can thus reduce the real-estate, utilities, and manpower required for this.
Also, a brick-and-mortar store needs to hire cashiers to be able to handle peak demand. An IR can get by with fewer cashiers since most of the work is automated and the transactions don't necessarily need to be processed in real-time.
A traditional store needs to hire employees to maintain the showroom and to keep track of inventory, check for shoplifting, install survalence cameras, etc. A IR doesn't need to worry about shoplifting, and the displays don't need to be maintained (take a photograph and you're done).
Now, there's some additional cost for on-line, such as hiring a web designer and for web hosting (which is cheap these days), but compared to the traditional store the cost is far less.
If you're counting catalog companies as traditional, they have the expense of publishing their catalogs, printing them, and mailing them. A IR doesn't have this expense, only the publishing expense.
This post is encrypted twice with ROT-13. Documenting or attempting to crack this encryption is illegal.
This won't happen. It is unconstitutional. Only the selling location can have sales tax applied. This issue has already been dealt with once with ordering things over the phone. It is illegal for states to apply taxes to items brought in from other states, because that's a tarrif, and the Constitution forbids inter-state tarrifs.
Don't label something "offtopic" unless you know the topic well enough to tell what's on topic.
I believe it is going to be calculated based upon the customer's location.
That's fine with me, I live in New Hampshire, where we _currently_ don't have a sales tax.
This brings up several other questions, though. What if the customer's billing and shipping locations are different? Would the shipping address or billing address be the taxable location?
I was about to say that the obvious choice is the billing, but it isn't. In fact, the shipping very easily could be.
A couple of years ago, a friend of mine who lived in Andover, MA needed some furniture. We went to a couple of places in NH and he found a living room set. When he asked about delivery, they told him if the furniture was delivered to him, then he would have to pay Mass sales tax. However, if he picked it up, he wouldn't have to pay any. Apparently, the way the law works in regards to taxes (at least AFAIK) the transaction's location is determined by where the goods are received.
How would the taxes collected be distributed to each locality. Would the taxes be payable to the federal government, who would in turn distribute monies to the appropriate localities, or would the web merchant be responsible for mailing out tax revenue to hundreds of different local governments?
Well, I don't see how the first option could ever work, call me skeptical, but I don't think the states will be crazy about this one. On the other hand, if I recall correctly, businesses are under no obligation to pay taxes to governments they do not have a presence in. In fact, I think I remember seeing the arguement made that online businesses should be treated the same as mail order businesses the last time this debate came around. This is why you'll often see that box on the bottom of mail order forms that say something like "CA Residents Only add xx.x%".
How would this system be integrated into existing e-commerce solutions? How much time and money would it cost to upgrade current order processing software to automatically charge and allocate local sales tax for each order?
Well, I suppose it depends on the e-com solution in place. For the ones that were well thought out, it might actually be a breeze. I would think companies who already do some form of their business in the retail or catalog space this will be an easy thing to do. The online only "e-tailers" may have rough seas ahead. Of course, all this would depend greatly on how this tax plan is put in place.
How would the government propose to enforce that sales tax is actually being collected and paid out? What measures are in place to ensure that vendors abide by these regulations?
I'm not sure about this one, but we could probably see a greater emergence of eCom in "tax havens" (using the term very loosely). Depending on the implementation of this tax, some of these businesses could move into more "tax-friendly" states or even countries. As for enforcement, the big guys in the ecom world would probably be watched pretty closely, while the smaller vendors could/would slip through the cracks, at least for a little while.
How would orders placed on international websites for delivery in the US be affected?
I'm pretty confident that this base will be covered to some extent. It'll be hard to enforce, damn near impossible, on the consumer level, but business would probably be hit with use taxes or some other kind of delivery clause. Something like I mentioned above.
The idea is feasible, but it seems like there are quite a few questions that need be answered prior to implementation.
Definitely!
"The words of the prophets are written on the Slashdot walls."
In most states you are suposed to be a responsible citizen and go to the department of revenue or whatever and pay the use tax on interstate purchaces. So you were suposed to pay sales tax
The reason that the catalog retailers didn't charge sales tax is because it would be a nightmare to have tax permits in all states, know all the rates and so on. But with the increase in mail order volume brought on by the internet states are getting itchy for that money.
I don't have a problem with paying sales tax on mail order any more than paying sales tax at my local book store. I do however beleive that there shouldn't be any different rules for the internet vs a regular catalog.
As x approaches total apathy I couldn't care less.
So you buy a case of your favorite BBQ sauce from Wyoming to be delivered to your home in Massachusetts. Your Wyoming webtailer charges you Wyoming sales tax and Massachusetts sales tax. Cheaper to go the Safeway, isn't it?
That's going to happen unless you deal with the fundamental issues at the bottom of this:
Local & State governments practically have no other source of income.
The Internet blows away jurisdictional elements and creates the equivalent of a tarrif between states (illegal under the U.S. Constitution)
OK, so how can you get local & state governments their income without having a jurisdictional nightmare?
A Universal sales tax. Everything ordered out of state is exempt from local & state taxes, but must pay a Federal sales tax. This includes mail order, telephone ordering, Internet, etc.
How to you distribute it? By population to all 50 states. The Universal sales tax will be aportioned to the states depending on their populations. It is then the responsibility of the state government to distribute it to their local governments.
I'm sure this will be a touch controversial, but it's sure as heck better than dealing with 7000 taxing jurisdictions.
P.S. I place this idea under the GPL. Take it, use it, extend it, print it out and use it for toilet paper. Hopefully this way, no one will patent it as a "business process. :-)
The bitter lessons of a veteran coder: http://bitterprogrammer.blogspot.com
>>"The 'Main Street' retailers have a legitimate fairness argument when they see customers come to the store to locate items they want to purchase, only to leave and order the items over the Internet just to escape the sales tax," C'mon, who buys stuff off the internet to avoid paying sales tax? go to pricewatch and you'll see incredible ram prices but with 13$ shipping charges. I've shipped ram before, and i know that it doesn't take 13$ to ship. But, even with that high shipping, it's still cheaper then stuff they sell at Best Buy. I buy stuff over the internet because I don't feel like paying the high mark-up that local stores add. The best prices that i've seen come from small businesses. This isn't about people escaping sales taxes, it's about the 'Main Street' retailers not being able to maintain their profit margins on items. If this passes, the computer and internet industries will follow Nasdaq. I'm not a Republican, but keep government out of the Internet.
"Tread softly because you tread on my dreams"