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States To Try Taxation Of The Net Again
kimbermatic writes "From the Denver Post comes this article that the states are ready to try and tax the internet sales once more. The poor economy is sending the 'hounds' sniffing for more money. An interesting, and alarming read if your interested in protecting online merchants from this taxation plan." 'though it's not really online sales that are the big ones people want -- it's catalog mail order sales, which are still much bigger then online sales.
Can you imagine having to try to figure out what sales tax to charge and who to forward the payment on to if local/state governments are allowed to tax online sales? Not only do you have to contend with different rates for different localities, but you have to mess with different exemptions and ways of classifying products for tax purposes. This will kill the small online merchants in a heartbeat.
This means the only time I buy at Fry's is when I either need it *fast* (which happens) or when it's so little it's not worth ordering (which also happens). I mean, the CA taxes on anything in the $50+ range makes it worthwhile to always buy online and pay shipping.
This, on the other hand, could change all that, couldn't it? I think this will just drive more people away from online business, sink a sector of the economy and drive prices up for the consumer (which means they'll probably spend less, which is a Bad Thing, especially when you're in a recession).
But hey -- if that happens, I'll start selling motherboards on the street in SF right next to the guy selling the fake Rolexes.
Every year during my review, I just pray the words "slashdot.org" aren't mentioned.
In any case, I see taxes as one of the prices one pays for living in a civilized society, so I see no problem taxing online folk at an equitable level.
That is all.
every other economic transaction is taxed. there is no logical explanation why these should be exempt.
From the article: Twenty-nine states will vote on a tax proposal next month that could be pivotal in their effort to tax all online sales.
... To regulate commerce with foreign nations, and among the several states
Section 8 of the Constitution: Section 8. The Congress shall have power to lay and collect taxes, duties, imposts and excises
But then, who cares about the constitution? Certainly not the United States.
The theory of relativity doesn't work right in Arkansas.
But the US needs free trade more than anybody to soften the risk of entering foreign markets. Most of the 'free trade' agreements in place (at least with Canada and Mexico) were the brainchildren of US business men in order to make it easy to get into other markets (well, really, to make it difficult for local governments to protect domestic markets - same thing) .. I'm not sure setting up tarrifs would go over well at this point.
It'd seem pretty hypocritical of the US, and it'd probably be difficult to get away with, given the amount of trade agreements in place that purpot to provide free trade with various foreign markets.
"Old man yells at systemd"
After years of disagreement, I no longer believe that Internet sales should be free of taxation as a class unto itself. I argued in the mid- to late-90s that the shipping cost was a barrier to the then dozen-or-so e-commerce sites, and we needed to not throw up more barriers to prevent the economic success of the Internet. The Internet has now had that development time, and I am no longer convinced that an exemption is necessary.
.com (and there are lots of them) would likely find having to file in so many different manners at different deadlines on different paperwork to be a significant problem.
My remaining concerns are not sufficient to convince me that Internet taxation should not occur, but they are significant. The biggest one is the logistical nightmare of paying sales taxes to 50 different states, should that be the nature of the changed laws. Though the software end of calculating the fees surely wouldn't be difficult, the average mom-and-pop
JM2C.
-Waldo Jaquith
To be a REAL retailer with inventory, rent to pay, etc. and have to compete with 12 year olds with online stores that don't have to pay sales tax. Why, exactly shouldn't online retailers be taxed like everybody else?
Yeah, but "the long run" when you're talking about the negative effects of tariffs on trade is, like, five years. Tariff wars were among the main causes of the Great Depression. I'd rather not see us go down that road again, thanks. The few countries that have success with big tariffs (e.g. China) tend to be developing countries that can sell their exports so cheap that when richer countries (e.g. the US) slap retaliatory tariffs on the poor countries' exported goods, those goods are still so cheap that the people in the richer countries will buy them. In cases where the economic situations are more nearly equal (e.g., the US and Japan) tariffs end up hurting both sides, and revenue goes down pretty fast because everyone's out of work, and bums don't pay taxes.
...
The other issue, of course, is that US States can't enact foreign policy. I think that there may have been a couple of times when state governments have tried to enact tariffs on foreign goods and have been shot down, though I'm not sure. And since we're talking state revenue, not federal
The correlation between ignorance of statistics and using "correlation is not causation" as an argument is close to 1.
Remote merchants use FAR less resources than local ones. The SFPD rarely has to respond to problems at the Amazon offices in Seattle, etc. Any wear and tear to roads, etc caused by delivery trucks should be borne by the freight handlers, and passed onto the merchants that way. By and large, a remote vendor will use basically no local resources.
"Politicians are interested in people. Not that this is always a virtue. Fleas are interested in dogs." P.J. O'Rourke
Why would you love to see import taxes? You do realize that means no more cheap TV's and other consumer electronics. Any tax on imports gets passed onto you, the consumer. Taxes on imports have little to do with generating revenue. They are more about encouraging people to buy American (which in turn increases tax revenue).
THink about it. If all a e-tailer offers, is an online version of a retail store. Then he truly does have to worry about things like salestaxes making the "experience" the same as retail, and thus not worth doing.
However, a smart businessman, will actually differentiate his store, be it online of offline, so that there's a compelling reason to shop with him.
I'm not in favor of more taxes, certainly. But arguing this strictly on the basis of "it'll kill generic online storefronts" doesn't sell with me at all. The government should NEVER be in the business of favoring one segment over another. If the online merchants have a reason to exist they will. But an artificial government subsidy shouldn't be in place.
"Politicians are interested in people. Not that this is always a virtue. Fleas are interested in dogs." P.J. O'Rourke
Since when is it the job of government to make certain sectors of the economy profitable? ok, since the early 20th century, propping up farmers and steel producers.
But the end result of not allowing taxes of online commerce is that there will be government subsidies to states that have online businesses.
That's ridiculous.
drive prices up for the consumer
Now, you're not even trying to see the state's side of this. They don't look at it as increasing prices, but rather, increasing tax revenue to increase services to the state's inhabitants.
Can you really justify not giving the poor people of California, Massachusetts, and Virginia the food stamps and Section 8 housing checks they so richly deserve?
-nd
The report estimates that all 50 states could collectively lose more than $45 billion in Internet sales tax revenue in 2006.
Hmm, states can lose money that they don't currently collect? Isn't this a bit like saying, "Microsoft could lose more than $10 billion in annual revenue in 2006 if the government switched to Linux"? [Note: No, not a gratuitous MS swipe - I don't think MS would be so obnoxious as to use this phrasing.]
How about, "All 50 states stand to gain more than $45 billion in revenue by imposing a new tax they are not currently in a position to impose"? Seems like a more accurate rendering of the situation, although still somewhat hyperbolic since all 50 states are not considering this proposal. Some states don't have sales tax, period.
Michael
"No live organism can continue for long to exist sanely under conditions of absolute reality;..."
In the long run, I'm dead but my heirs aren't. When my daughter is elected President in 2046, I don't want her to have to deal with the economic collapse caused by silly isolationist policies.
Logically, where does it stop? We tax their imports, they tax our exports at a higher rate. Inflation skyrockets, black markets are created, we try to force them to lower tariffs by raising ours, they raise theirs in response.
That first line in your post is hilarious. :P No tarrifs == sharing of wealth? Laugh.
.. lets see, privatization, liberalized trade .. for business for all of which, for some odd reason, seems to go to american multinationals!
.. and they wouldn't give a flying fuck how anybody sees the US, so long as they can start selling Pillsbury to Venezualans.
.. cause tarrif wars make it exeedingly difficult to gain access to foreign markets. The inevitable tarrifs that would go up in other countries as soon as the US started using them more would have the effect of making it more difficult to exploit foreign markets.
More likely it would piss off the world because multilateral free trade is how american multinationals get into foreign markets (b/c it weakens the foreign governments' ability to protect industries.) Consider all the conditions of IMF aid
The US doesn't _need_ tarrifs, which is why it doesn't have any. You don't really suppose American international trade policy has anything to do with whats nice, do you? I mean, the trading policies in place are pretty much what heads of multinationals want them to be
So no, its not foreign countries that would be pissed if tarrifs increased. It'd be heads of US corps that would freak
Just look at some of the prominant trade agreements in place. NAFTA was dreampt up by american corperate heads, and then pitched to Canada and Mexico through 'figure heads' inside those countries. The biggest opponants to increasing tarrifs would be growth-minded CEOs inside the US's border fearing a tarrif war with markets they're trying to expand in.
"Old man yells at systemd"
Am I alone in thinking the US economy is not so bad ? Yes companies are dropping like flies and people are losing their jobs. However I also see plenty of success within families and small companies. Looks to me like this unrealistic fantasy has burst for the large corps and their employees. We have simply come back to reality. The US is one of the most well to do countries, so I can hardly feel bad about the overall situation.
I listen to same drivel about why the US economy is bad and wonder who's economy they are talking about ! It bears no resemblence to economics I studied during school.
They neatly separate everything into consumers/spenders and sellers. If the consumers are not throwing down money on frivolous junk but rather save for more important things to improve their lives all of a sudden the economy is bad. Seems to me the economy they talk about is where the rich get richer and poor get poorer.
This net taxation is just another money grab with a convenient excuse. Unjustified and unrepresented. Hell if it has anything to do with the economy hurting state governments. Rather more of a result of the mismanaged bureaucracy that they are. Throwing more money at mismangement never helps.
Ahh Im done ranting..
What politicians fail to understand is that the major draw to e-tailing is the lack of taxes. Sure, shopping online a huge convenience, but people today would still choose to drive to their local retailer and actually touch and try out a product before making a purchase, and forcing taxes on e-tailing would take away any incentive for consumers to use the services of the fledging new industry.
So you're arguing that e-tailing should be tax-free (read: Subsidized) because it's a new industry? I've got news for you: There are dozens of 'new industries' out there today, and almost all of them pay State taxes.
I'm not saying that there should be new taxes, and I understand that a large part of the anti-tax argument has to do with "taxation over state lines", but let me ask you this: Why should we give tax breaks to a 'fledgling new industry' and but not 'fledgling new retail store' on Main street?
I don't care if it's a fledgling new industry. I don't care if a retail store has the "I can touch the merchandise" advantage over an internet store. The internet store doesn't have to pay the high rent on Main street, they can pay the cheaper rent of a warehouse on the edge of town, or in a poorer state. There are dozens of similar advantages and disadvantages in any industry.
If the state taxes a retail business, but does not tax the similar internet business, then it means they are subsidizing one industry over another, which is unfair.
The government should not favor one industry over the other by giving tax cuts to either industry.
"Can of worms? The can is open... the worms are everywhere."
What politicians fail to understand is that the major draw to e-tailing is the lack of taxes.
No, the major draw to e-tailing is the incredible reduction in price some companies (say Amazon) can offer by virtue of their huge centralized warehouses and vast economies of scale coupled with relatively low overhead and miniscule labour and other costs relative to sales.
In Canada, where we still pay the same taxes at Amazon.ca as we would if we bought things at the local bookstore, Amazon.ca's prices are a good 30-40% LESS than they are at the bookstore and 30-40% less than the next biggest online bookseller. THAT'S why I buy my books at Amazon now, NOT because I'm saving tax (which I'm not).
Because they don't use the states resources.
A local shop or store uses the states resources. It relies on the state's police officers to ensure that it isn't vandalized, and to prosecute anyone who steals. It relies on state money which supports and repairs the streets which give access to that shop or store.
Online businesses don't rely on state resources, or if so only very very rarely and in minor regard. Thus, they shouldn't be taxed.
The other problem with online taxation is that its taxation without representation. If a company is based in NY, it is only represented (in terms of state law) in NY. But lets say that the servers for its products which it sells online are in California. Thus, the company would be taxed in California, without representation. The same thing occurs for us citizens.
Those are some good reasons why online taxation shouldn't be allowed. Here's another one -- its called the will of the people.
How many people can you find (anywhere) that want to be taxed online, so they have to pay online taxes in addition to shipping and handling? Has anyone asked the people about this, or even mentioned it in an election? No. My guess, 99.99% of the people in America don't want online taxation. So we shouldn't have it. Its called Democracy.
"Most states are running budget deficits, and they're looking ever more aggressively for ways to stem the erosion of their tax bases."
Here's a suggestion: fire some of those useless paper-pushers. Get rid of obsolete programs and organizations. Stop letting greedy fucking politicians vote to raise their pay every year. The states have a money problem -- that's their problem. They mismanaged the money we gave them with our taxes. Now they want to punish us by adding more taxes (this very cowardly way to do it, add new taxes, instead of raising existing ones). Probably upwards of 80% of the money you give the state in taxes is wasted anyways. Try cutting off some fat first.
In any other facet of life, people are held financially responsible for their money-management. Where else in the US can you keep on fucking up with money and always get more precisely because you fucked up? Where else do you get to run enormous budget deficits without the plug being pulled on you?
I get really sick and tired of hearing about how the states don't have enough money. Taxes are raised at a much faster rate than inflation devalues money, and they always need more money. Apparently, the government is like God. All-powerful, all-knowing, all-wise, but just can't handle money.
social sciences can never use experience to verify their statemen
"Projected Sales-Tax-Revenue Losses in 2006" heads the chart in the Denver Post article.
A "Revenue Loss." What a crock.
"The US doesn't _need_ tarrifs, which is why it doesn't have any. "
That is a bald-faced lie (you might also want to find out what the US is doing in regards to steel, it's the same back-stabbing).
The US government is very happy to force tarrifs, taxes, etc, on imports. They don't like it when an unrefined resource producing country like Canada has a competitive advantage, even though it makes more sense economically for both parties (as you pointed out: the US gets the resources it wants, Canada gets the refined goods it wants, companies make the money they want).
If you wonder why this situation exists, it is because the US government continues to pander to special interest groups. Why do they do this? Because, as the most recent election showed, voting for a republocrat is throwing away your vote -- only a few people, the special interest groups, get to decide the entire fate of the country.
--
Internet Explorer (n): Another bug -- that is, a feature that can't be turned off -- in Windows.
"Can you really justify not giving the poor people of California, Massachusetts, and Virginia the food stamps and Section 8 housing checks they so richly deserve?"
Tongue in cheek here, methinks. Yet, the states are approaching this with a completely straight face; they would say you are exactly right. Having squandered their huge surpluses during the boom years on pork barrel spending, they are now looking to save their own jobs by attacking a sector that has no political voice in their locale.
Most online merchants are not profitable, investors have stopped buying their stock, and the economy is in recession. It's both stupid and crazy to levy new taxes right now, and unfortunately it's all too likely to pass, if the Demos can get their way. Of course they'll then find a way to blame the resulting destruction of tech businesses and related tech infrastructure companies on GW Bush.
it's = "it is"; its = possessive. E.g., it's flapping its wings.
Two things about this bother me. First of all, these provisions are only addressing "Internet" stores. This leaves traditional phone-in mail order services exempt from sales tax (as they currently are as well). I'm seeing a huge loop-hole here. Place your order online, call a number, press a button to confirm your order, and all of a sudden it's not an internet sale anymore. Tax free!
Second, this is simply unfair to mail order companies in general. Having worked for one the better part of my life, I see the costs that go into such a business. Not only does the warehouse pay all of its traditional taxes -- property, employee taxes, and whatever else you have, they have several high expenses on top of their costs. Since accepting cash is not practical, they pay an additional 3-4% of EVERY DOLLAR that passes to them in credit card fees. I'm not sure exactly how the credit card companies pay their taxes, but I'm certain they do. Also, you have shipping fees on top of all that, in two places -- receiving product and sending out product. These shipping companies are definitely taxed -- the gas they use in their trucks, the employees, their infrastructure, everything. So, point being, a mail order business of any kind, internet or not, is already paying 10-15% of its goods' value in various expenses that directly translate into a tax revenue at some point for governments.
Adding yet another tax on these companies will certainly make them struggle, reduce sales, and greatly affect revenues collected from the other sources. And since online merchants margins are generally very low, we're talking less than 10% in some cases, this extra burden could very easy put a lot of them out of business. Now, we can't tax someone who's out of business, now can we?
The government should be supporting commerce, not stifling it with extra taxes that really don't have any return value for the merchant. How is paying 5% to a box I ship to colorado from florida going to benefit me? It can't! At least local sales taxes have a direct, tangible effect on our daily lives, which makes them somewhat tolerable.
Basic economics.. higher taxes = less money to spend, thus lower overall tax revenue..
Here in my state they are pulling the stunt of raising sales tax an additional 1% because tax revenue is low. Just in time to ruin the shopping season. ( oh and after voting themselves a pay raise, and better insurance benefits.. but canceling all non-political state workers raises for the next 2 years because of the poor revenue )
Will they ever realize that lower taxes is what stimulates the economy? Or do they just have to take it all and keep the populace down until the next, WAY overdue revolution happens when everyone has had enough.
---- Booth was a patriot ----
"Can anyone put forward a well-reasoned argument why the Internet should be exempt to sales tax?"
The complexity of current systems of sales tax in the US are so complex that only larger retailers would be able to justify the use of online sales. Smaller retailers would be forced out of the market. In the event of some sort of simplified "internet tax" system, there still is the problem of submitting the taxes to the various states, no small headache.
Because, many of the most interesting, innovative, and creative products offered online are from small businesses, including mom & pop internet retailers, those products would disappear from the internet in the event of internet taxation of the sort mention in the original post.
An example:
I'm very into bass fishing. Fisherman often develop a preference for certain lures that have become their favorites. New lures are introduced to the market, and become the hot bait of that year, season, etc.. It's not uncommon that the new hot lure, or an old favorite will not be available from local tackle shops. Local tackle shops have limited space, indeed even the biggest names in the mail order fishing tackle such as Bass Pro Shops, and Cabela's don't have the space to carry ever model, of lure, in every size, and color. (1k of models, 10 different colors on average, and lets say 5 sizes on average yields 50,000 different lures, and this is a conservative estimate.) Thus, I have on many occasions ordered lures direct from small manufactures, though, I prefer to do business with local tackle shops. Often these manufactures are ran out of a garage, or the shed in the back 40. As such they are quite capable of selling online to anyone in the US give the current tax structure. However, if these small manufactures were to be subjected to the complexity of having to determine, charge, and submit sales taxes to umpteen different taxing authorities in 50 different states the paperwork would overwhelm them. Even under a simplified system they would still have to submit taxes to 50 different states. Thus, in either case they would then only be able to sell wholesale, and/or retail only within their local taxation district.
Not being able to sell to the fisherman directly would deprive such companies of the ability to be profitable, and the consumer of a broader choice of merchandise.
Ergo, the consumer is harmed, and both local economies, and the national economy is diminished.
I would also point out that catalog sales have always been "tax free" as the purchaser was responsible for state, and local taxes. So this sort of tax "problem" has been around for quite a while. I've been ordering from Bass Pro Shops, Cabela's, L.L. Bean etc. since at least 1976. I clearly recall that in the early 80's there were calls for taxing catalog sales. Such calls occurred with a fair amount of frequency for 15 years, or more. With the advent of the internet such calls morphed from "tax catalog sales" to "tax internet sales." This whole thing is nothing new, not unlike the push to prevent music, and video coping. First it was cassette decks, then VCRs, and now it's mp3 etc.. Same song, somewhat different lyrics.
"Oh drat these computers, they're so naughty and so complex, I could pinch them." --Marvin the Martian
Most states that carry a sales tax require you to report and pay tax on all untaxed sales from out of state exceeding a certain dollar amount. So if you've ever bought a computer over the net, you've most likely met the threshold and could be guilty of tax evasion if you didn't report the purchase and pay tax on it. Since this is all on the honor system and there's no means to track it, states see only a negligable income from this.
Not only do you have to contend with different rates for different localities, but you have to mess with different exemptions and ways of classifying products for tax purposes
This is why out of state taxes have to this point not been forced on sellers. Also, states lack jurisdiction to force outstate merchants to report taxes. Sales tax is always linked to the buyer because taxing the seller would put them at a competative disadvantage in national markets, hurting the state's overall tax by reducing sales and income. (And really pissing off your constituents)
Of course, any economics professor will tell you that a sales tax is fundamentally regressive. Makes me wonder why we have a sales tax at all. Oh, wait, I know, politicians are dumb. In any given heirarchy, people will rise to their own level of incompitance.
bance.net
taxes are already too high. i don't oppose national sales tax (in fact, i think it would be more fair than the current national income tax). the problem is when new taxes are created in addition to existing ones.
many people (many of them in washington, unfortunately) believe that nothing else changes when taxes change. if a tax hike is proposed, we see predictions of how much extra revenue will be generated. if a tax reduction is proposed, we hear about how much it's going to "cost" the government.
the fact is, many people buy online because of this tax break. if a tax is added, people will buy less stuff--not good for an economy. in the end, lower taxes actually lead to higher tax revenues through a stronger economy.
critics are fast to point the finger at reagan's tax cuts for national debt. the truth is that tax revenues doubled during his presidency--it's just that spending rates increased even faster. determining whether that blame should go to congress for social program spending or reagan for military spending is an exercise for the reader. i'm just talking about revenues here.
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