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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.
Why don't we just try taxing imports? Works well for the Chinese and every other country that has positive GDP growth this year.
Free traders will say that it will hurt us in the long run, but in the long run "we're all dead".
What's next - taxing garage sales?
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.
With huge competition with prices and selection from traditional real-life retailiers such as Walmart and Best Buy, e-tailers are already having enough trouble trying to grow their new industry. Slapping taxes and removing incentives for consumers to use online services would only impair progress. We're already seeing the effects of fees on online services and its related decrease in usage (MSN, Yahoo, Hotmail), taxes would further the disincentive campaign that seems to be propagating through the online world.------
Amadaeus
The last bastion of Mathie-ism
That's great they do virtually nothing about the DOZENS pieces if spam I recieve every day, but when it comes to putting money in their pocket...
why run from Vincenzo?
My word, when will these overbearing government goofballs learn that having LOW taxes while surrounded by HIGH tax areas drives business AND revenues up for the low tax area?
Also, don't think that if there is no visible sales tax that you are buying anything tax free. The politicians conveniently forget all of the inventory, property, business income and other tax streams that they are already getting BEFORE they jack up/create a sales tax.
A perfect example of that was Washington, DC. They exempted "not for profit" organizations and had the highest sales tax in the area. This only resulted in the few businesses that were paying taxes to loose business to Maryland and Virginia.
Tennessee is now on their way to driving every bit of retail business near it's borders into the surrounding States with their 9.5% (or is it 10%?) sales tax. That is on top of their invintory taxes, "licensing" taxes, etc.
Solution? A small group of States make it inviting for internet business to locate their warehousing, data centers, etc. there and reap the benefits of elevated employment and higher volume of money due to a lower % of taxation.
Eve Fairbanks says I drive a hybrid!LOL
I know this is a long shot, but instead of raising taxes, how about we cut wasteful spending such tattoo removal programs in san jose, and then lower taxes so people can spend more of the money they earned. And how about we legalize drugs and tax the hell out of them. And how about ditching the income and going to a sales tax on non-essential goods and services so that people can choose when they will and when they won't pay a tax.
Man, in a perfect world...
Derek Greene
The governments shouldn't need to create any new laws to tax internet sales, because they should already do so.
Performing an age old activity like sending packages through the mail in exchange for money transmitted by credit card should be equally taxable regardless of whether the customer places her order via phone, email, paper mail, http, fax, or the trusty old carrier pigeon.
We've seen it again and again- government regulators/lawmakers/busybodies get tricked into thinking that activities are somehow inherently different when computers and internet are involved. This gives us special laws to prohibit computer intrusion (we've had wire fraud statutes since 1910) and special patents for "carrying out traditional business XYZ, but over http".
I can understand the argument that to support budding e-commerce, you want to give them a temporary reprieve from some normal costs of business. But the expiration of such grace periods shouldn't be newsworthy, it should just be expected.
Its about time this happened.
Democratic businessman Rollie Heath, Owens' challenger in November's gubernatorial election, is pushing for Colorado to join the tax project.
He said that not taxing online sales puts local businesses at a competitive disadvantage.
"I just have a strong bias against having our own business having to compete unfairly with somebody who can send the same product in here from out of state," Heath said.
Sure, some businesses have suffered quite a loss due to the internet, but many businesses rely upon the internet to order items for themselves. Restaurants for wine, bike shops for parts, used book stores that buy, sell, and trade on the internet. All of these types of stores and shops would be hit by this tax as well as Joe consumer. And on top of this point, would this not increase the amount of items ordered directly from countries such as Canada and Mexico?
Why not move your 'online store' to Montana? I'm sure some enterprising geek can setup an 'offshore' ISP for all those who don't want to deal with our money-grubbing, mismanaging Congresswores.
I'm sure there is a hole in my plan, but I just like saying "Congresswhores".
Drat, I was going to just moderate in this thread, but this is too good for me to pass up.
No one is stopping brick and mortar stores from selling online. Also, when online stores sell things to people who are within their own state they charge sales tax anyways. I think that this is fair and equitable. There is no reason why my state should be trying to tax a business that is located in california for selling something to me.
Also, some states don't have sales tax, so they already have an "unfair" advantage over businesses based in places which do have sales tax.
Of course, I'm fundamentally against "general" taxation and believe that our tax forms should include an itemized list that we can select to spend our portion of the tax we paid on. That way programs that were universally dislike would disappear quickly, programs that just a few people liked could be supported somewhat, but very popular programs would get even more money. I'm also against Social Security and Medicare. Mostly because I'll never collect SocSec, and even when my wife and I were both unemployed we didn't qualify for Medicare and as a consequence have large amounts of medical bills. So I'm paying all of this money out into services I will never see a return from, and a good 40% of my tax money gets taken to fund a military industrial complex that I don't support!
Kintanon
Check out JoshJitsu.info for Brazilian Ji
Products "Made in the USA" outnumbers products at least 100-1 in China. Products "Made in China" outnumbers products at least 100-1 in the USA. Putting further import taxes would actually INCREASE the prices of general products overall because import tariffs would give FURTHER dis-incentives to investors from importing products into the USA, and since there is less foriegn competition, domestic producers would be free to increase prices because they have a virtual domestic monopoly. Increasing import tariffs would actually be worse off for both the consumer and the long-term economic outlook. Sure, GDP will rise, but at the expense of worker livelihood and domestic morale. One more thing: China has a extremely high GDP not because of economic tariffs, but because of the political circumstances surrounding its tradidional isolationalist thinking of "Motherland products are best".
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Amadaeus
The last bastion of Mathie-ism
IMO the only real advantage to buying online would be not paying tax. I can usually get the same items at a local store for the same price, and not pay shipping. Nothing beats that instant gratification.
to get on board with this plan, states have to harmonize their sales tax regimes. So that the state, and local taxes are the same.
Good as a concept, VERY difficult in pratice.
Different states and localities tax different things and exempt others. Some places, food is not taxed. Some, clothing. Some places only certain types of food. Some places have no tax.
Let us take a hypothetical:
I live in State X that does not tax clothing. The etailer I wish to buy from is also located in that state. So now I have to pay not only shipping for the one piece (far more than the local store pays for bulk shipping), but additionally the country-wide Internet tax on that clothing. The balance has just moved from one side to the other. The local retailer I might visit to buy that same thing does not add on the tax. Or..it might even be the same company. Tax via the web, no tax in person.
hmmmm....
It's great to see that the internet has succeeded to the point that government wants to tax it. What's too bad is that many ecommerce businesses see their only advantage to be price. And if 4.5-9% in sales tax will cut into your orders that much, you are already among the living dead. Those that live by price, die by price. You can't make money selling $.99 for $1.00. For that matter, it's damn hard to make profit selling $1.00 for $1.10.
$G
-- $G
At the risk of being redundant, many states have "use taxes" on the books to cover this. If I cross state borders to another state that has a lower sales tax rate than my home state, use tax laws require me to declare the item and pay sales tax (or the balance of the difference) to my home state. This is the case for anything purchased over the phone/internet/mail. The problem is that this kind of tax law is impractical to enforce, so the money hungry state governments are looking for ways to get thier piece of the action.
..."
What's really funny about this is the "paper loss" mentality many people have about this kind of commerce. From the article:
Colorado is projected to lose $686.4 million in revenue in 2006 if it does not tax interstate e-commerce, according to a study released last year by the University of Tennessee for the Institute for State Studies.
The article should read "Colorado is projected to gain $686.4 million in additional revenue in 2006 if it finds a way to enforce existing tax law regarding interstate [e-]commerce
Simply because they estimate a dollar amount leaving the state doesn't mean that the money can magically be had for additional government spending. Once they find a way to do this, the e-conomy will adapt accordingly.
I'd be afraid for my wallet if they actually do figure out a way to do this, because it would be an additional incentive for states to have a higher tax rates relative to thier neighbors. If state A has lower use taxes than state B, then it won't get any additional revenue from its citizens buying out-of-state products. Even better (the constitution be damned), they could start setting up checkpoints at the state borders.
Seriously. . . I've read today more childish arguments from people who are basically saying, "Well, if I have to pay tax, then so should everybody!" --Which stems in part from the barely legitimate fear of losing the precarious toe-hold on their own income through a Bricks & Mortar business, which won't happen unless they are nincompoops who don't know how to run a business in the first place, (Why not set up your own internet order department and get one of your clerks to manage it? DUH!), and from a rabid sense of unfairness which has precisely nothing to do with what is good for the nation and everything about, "MOMMM! BILLY GOT MORE ICE CREAM THAN ME!!!"
As for more new & wonderful taxes. .
Bullshit. Greed and nothing else. For one thing, the economy is mostly a make-believe game anyway, and for another, if you want to live in the 'good little consumer' head-space and play the make-believe 3rd edition rules to the letter, well then if the government would just, say, tax Microsoft properly, punish corporate criminals, (like Bush), and stop plans to drop a billion dollars worth of bombs on Iraq every week, then MAYBE we could dispense with all this other nonsense.
Internet Tax? Fuck off. When the net is taxed, it'll also be so tightly controled that a pipsqueek like me won't be able to speak his mind. And wouldn't that just make for a bad day?
-Fantastic Lad
P.S. Is it just me, or has Slashdot been particularly 'careful' these days to steer clear of political and social topics which actually 'matter'? I've asked it before and been modded to shit for it, but I'll keep on asking until my Karma is dead and gone. . . "Who is whispering into the ears of the Slashdot Editorial staff these days?" I notice the story about the story about implantable microchips broke several days ago and hasn't shown up here. . . Hmm.
The European concept of VATs takes care of this but it rubs against the grain of most Americans. The tax code in the US is way too complicated already and the government would find a more efficient way of taxing to be more profitable in the long run.
Everyone is down on lawyers, but it's tax accountants that chap my hide. I hate the fact that compliance with the law and only pay my share almost requires me to pay someone else for assistance.
*stands on soap box and prepares to shield himself from tomatoes*
I think that taxation of goods on the net is a good thing. I think we need it. Now, let me explain why.
If you buy a good or service on the net there is no tax (usually) that you are forced to pay. Yes, you do end up paying the equivalent of or possibly even more than the cost of tax in shipping.
The biggest problem with taxing products on the internet is the number of tax zones that there are in the US. I forget the number, but it's not 50. It gets down to the county, and then to the city, and then finally down to the actual product sometimes (it is not uncommon for food, or prepared food, to have a different rate of income tax, or for their to be an extra penny tax on certain goods). The problem is with all of these tax zones and the diversity of locations where shoppers and businesses are located is that keeping track of this data tends to be a pain, plus it means that while one person from Maryland may have to pay 30.00 for a product plus 5% tax, the person buying it from Florida might have to pay 7%.
Enter the net tax: What I WOULD be willing to support is a broad, internet-wide sales tax, say, all products bought on the internet have a set tax rate of 4% (or 6%) but something low. This would be divided in some way where each entity (city, county, state) from both the region where the buyer and the region where the seller are located.
Here's WHY I would be willing to support a sales tax on tangebile goods bought on the internet. Think of where that money from sales tax goes. Yes, some of it does go into silly programs, and into the pockets of city and state officials, but most sales tax money is used for programs such as education, fire departments, and other local services that you may use on a daily basis and not even think of. In reality your local city government provides more services to you, and effects you more than the national government in most situations.
I do however REFUSE to support any tax on things such as access, hosting, online payment systems, or other SERVICE related items on the internet. I am STRONGLY against any sort of 'internet access' tax.
In closing, let me say that before you speak violently out against taxes, think about what it would be like without them. Think about how much money could be lost to your city and state if more and more people start purchasing things online, maybe even purchasing online and then being able to pick up at a local retailer. Yes, I hate paying taxes just as much as the next person, I'd like to be able to hold onto as much of my money as I can, but I also am able to see the money being used in the community around me. As long as I can still see that the money is being put to good use, I feel that I can support taxation. If placing a tax on goods purchased on the internet means that I can continue to see this money being used in the community around me and in education, then yes, I'll support it. But in closing, they have to make it easy, if the tax is not just a 'general' tax that you are required to pay (a nation-wide tax that is divided between the different state/local governments) then it will end up being even more of a pain in the neck.
[Something witty and intelligent should have appeared here.]
{Traicovn}
The first problem with this statement is that sales taxes aren't a tax on the business, but rather a tax on the buyer. They appear to be a tax on the Business because the business is forced to collect and forward the tax to the government.
The other problem with online taxation is that its taxation without representation.
Again, not true, the person being taxed is the buyer not the business.
My guess, 99.99% of the people in America don't want online taxation. So we shouldn't have it. Its called Democracy.
So which tax isn't that true about? No one wants to pay taxes. Also, most online purchases are already subject to a use tax that most people simply don't pay. Most states have tax statues on the books that require residents of the state to pay a use tax for any item that they purchase from an out state vendor that isn't subject to sales tax. Most people simply ignore this because the state typically doesn't have the resources to enforce the laws.
Where else do you get to run enormous budget deficits without the plug being pulled on you?
This isn't the federal government we're talking about it is the states. Most states have state constitutional limits on deficit spending, in a lot states it is completely prohibted. Which means that in times like this they can't borrow in order to get through the recession and then pay it back later, they need to the revenue now!
Taxes are raised at a much faster rate than inflation devalues money, and they always need more money.
Where are you living? I know that in the state I live in, and in a lot of other states, taxes have been reduced over the last 5 years. In fact the rash of tax cutting during the boom is what is causing this problem. Taxes were cut well below sustainable levels because of the boom. Now that the boom is over the states are feeling the results of those irresponsible cuts.
Probably upwards of 80% of the money you give the state in taxes is wasted anyways. Try cutting off some fat first.
80%, don't be silly. Some fat may exist, and will always exist, but lets be serious. The fact of the matter is that any bureaucracy is going to include some waste, but we all need a certain amount baseline services from our state and local governments and those services are in jeopardy right now. Most people whine about their tax load, and then in the next breath whine that the police don't answer calls fast enough, or fix the potholes fast enough, or that the school system sucks, etc. All these things cost money, and there is only one place to get it, taxes. Online transactions seem to be a perfect place to get the taxes to politicians. It is the classic hidden tax, they figure most people won't notice and won't complain.
If you really want to make an argument against online taxation you should talk about how it is unfair to force businesses in Texas to collect the state of Arizona's taxes. Or make an argument that taxing online transactions will kill this growing market and the states need to wait until the market matures to tax it.
No one is stopping brick and mortar stores from selling online.
They do, and they're at a disadvantage. Walmart.com and bestbuy.com have to charge sales tax because they have physical presences in all states. Amazon.com doesn't, and they don't have to change sales tax. Is there any possible justification for that kind of discrepancy?
All fine and good except for the fact that the Constitution states in Article 1, Section 9 that taxes are not to be levied against goods "exported" from the States. Essentially any goods sold from an entity in one State to an entity in another State is tax-exempt.
States can't make an end-run around this just because they lose money.
For them to try and force this taxation would be tantamount to several States getting together and saying "We know the Bill of Rights protects the right to Free Speech, but we don't like that and want Congress to enforce our newly-passed restrictions on speech." Just because a State wants it and passes a law to that effect, doesn't make it right, legal, or binding.
Apple has a business presence in all 50 states. That's why it's good to buy Macs from smaller resellers.
(quote)"Online companies don't use state services," he said. "If you're going to the store to buy something, you're going to be driving on the roads and the store will be using police protection or fire protection and other state services for which it would be appropriate that they charge a tax."(endquote)
What a load of crap!
Do the UPS trucks not run on public roads, and do the online stores not get billed for that? Or the trucks which bring goods to the warehouse? Speaking of the warehouse, does it not require police and fire protection?
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Let's throw forward another scenario:
I'm a legal resident of Pinellas County, Florida. I live in Montgomery, Alabama, as a consequence of being stationed at Maxwell Air Force Base. So, can someone tell me why I should owe the state of Florida a use tax on a product that I order from, say, Maryland?
!#@%*)anks for hanging up the phone, dear.