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Internet Taxation May Be Imminent
redfenix writes " Here, there, and everywhere, the words "Internet Tax" are being uttered with intentions of bolstering state budgets. It may be inevitable that products purchased on the net will be taxed someday. The real question is: can the fragile internet economy really help local tax economies now?"
Why not just cut out all the waste/fraud before they raise taxes again?
And we go back to mailorder, out of state purchases, called in by phone..
It seems to me that most internet retailers are operating on such razor-thin margins that adding a sales tax would probably shove them further over the edge in to non-profitability.
"Moderate drinking can help prevent amputated limbs" -- Abigail Zuger, NYTimes, 12/31/02
This makes a lot of sense. Sure, I'm a libertarian who believes in a very limited government, but I also believe that taxes should be used to pay for infrastructure and civil defense. So, with the Internet becoming an increasingly important part of our national infrastructure, it only makes sense for the states to be able to tax us for the upkeep and maintainence of this valuable service.
--sdem
If the goverment takes more of our money, that doesn't help the economy recover -- it hurts it. When taxes are lower people have more money to put back into the companies that power the economy. While it is true that the government is the biggest "company" in the country, it is also one of the most inefficient and wasteful.
Perhaps the states should learn how to use their existing funds better, rather than forcing people to give them more money.
Travis
How am I represented with my tax dollar in the state of Ohio when the tax income is going to the state of, say, California? That's the whole reason interstate taxes don't exist in the first place. Ah well, it's all for the better.
The more taxes we pay, the more Iraqi we can eradicate. Thanks Mr. Bush.
"Maybe they wouldn't need to tax internet sales if Bush weren't pushing a $674 Billion Tax Cut [216.239.33.100]."
Um. This is insightful? Somebody doesn't know the difference between state and federal taxes, but that's okay because they made an anti-Bush joke?
So the question to ask is not if Internet transactions will be taxed -- but when and how.
-Thomas
Depends on what you use it for. The money I pay when I stop at a toll on the road is a tax used to pay to improve the roads. The social security tax I pay on my paycheck is used, for social security (the fact that it's dying is anohter story). So if there is an internet tax, it should be used to improve/maintain the infrastructure of the internet. Otherwise, screw it.
The GeekNights podcast is going strong. Listen!
I don't see the big fuss from a tax perspective - the paperwork is the problem. Of course the level of government waste and high rates of tax are a disgrace but this is not really a new tax, just a shift in enforcement of an existing one.
Not wanting to give the money grabbers any ideas, but I have not been directly taxed for viewing a web page, sending an email, etc. Sure, I pay lots of indirect taxes related to connecting to the internet (just try to make sense of all those charges on you phone bill sometime), sales tax on my hardware, utility tax on my power bill, etc.
The so-called internet tax is not a new tax. Most states require the purchaser of out-of-state goods to pay a "use" tax on those items. Of course most people don't. Note, this also means that out-of-state sellers have an unfair advantage over local businesses.
The real shift of the "internet tax" is to place the burden of collecting the tax on the sellers. This is a real burden as it could dealing with 50 (or more considering local tax districts) rates, returns and such. The overhead of dealing with the government could be far more damaging than the effect of the tax itself.
Of course (as always) someone will build a business around handling the government overhead for you but that'll cost, too.
Final comment on taxes:
"If you could steal all the money you want and print all the money you want, don't you think you could stay out of debt?"
~~~~~~~
"You are not remembered for doing what is expected of you." - Atul Chitnis
Let me get this strait. You're blaming the state's tax revenue loss on the Federal regime? Hugh?
Just admit it. You are so liberal that you just hate anything to come out of a Republican administration.
The federal tax cut does NOT affect state tax revenues. At least this tax cut has a chance of helping the economy. States are experiencing lower tax revenues because the nation's economy as a whole is suffering. The federal tax cut if anything should help the state economy by giving more money back to the people who can then spend it on taxable goods and services.
That's not really true. While banning spam would be a possible violation of corporate free speech, Taxing spam is no different than taxing movie tickets, publishing houses or radio stations.
Someone you trust is one of us.
It seems to me that something like this can only serve to hurt an already weak economy. Seems like a bad idea to ask people to pay more for online goods when people are already spending very little.
Just a thought.
- Sighuh?
You can disagree with the tax cut, but it has absolutely nothing to do with state budget shortfalls.
This is also the most anti-coporate corruption idea proposed by a president in recent memory. It's effectively a tax increase for corporations and a tax break for people and investors.
Someone doesn't realize how much of state funding is federal grants, or how much is spent on unfunded federal mandates (which could be funded, for example, if you didn't have the $674 Billion Tax Cut).
Guess you wern't as informed as you thought.
paintball
and when the govt. borrows, that puts them in competition with me for borrowing that money. If I want to buy a house or car, and the govt. wants to buy guns and airplanes to use in Iraq or North Korea, we're both borrowers. If there's only so much money available that means that according to supply and demand, the COST for borrowing that money goes up. In other words, we both pay a higher interest rate. This means that the govt. has to either borrow more money or raise taxes to make the payments (something like 18-20% of the federal budget goes just to pay the INTEREST on the loans the U.S. already has (AKA the deficit)). It means that my monthly mortgage payments go up (if I can still afford to buy, that is). It also means that I have a larger mortgage deduction which means that I pay less income tax which forces the federal govt. to borrow more $$ to pay for next year's guns and airplanes. See how it's interrelated? It isn't an easy problem that has an easy solution. The only way to really help the deficit is for the federal govt. to SPEND LESS MONEY.
"If you let me write $50 billion a year of hot checks, I'll give you the illusion of prosperity too!" - Lloyd Bentsen in a 1984 vice presidential debate against Dan Quayle
"Yeah, you're right. The governor of Missouri has NO IDEA what he's talking about:"
Okay, let's point out a few interesting things about this fruitless debate:
1.) Brought to you by the gubner of Missouri. Incidentally, the dude's talking strictly about Missouri, not the rest of the country. Gee, MO's in the shits. What about the rest of the country?
2.) We are left with the choice of cutting programs that help citizens."
So what's the solution here? Give them the bill they need? Okay. How does that help them balance their budget? It doesn't. It buys them a year. Their budget problems are their problems. I don't mean to be insensitive to the issues here, but the problem is they need more people making more money paying more taxes. His shortfalls will always be a problem until that happens.
So yes, the Gov. of MO has no idea what he's talking about.
Considering that they had to slash their discounts just to stay afloat. I searched two cds and found that I could save 32% on one and 0% on the other. And has the company even hit the black for a full fiscal year yet?
Sure, we can say "fuck 'em" but usually crushing a fledgeling industry (especially after the backlash of the Dot-bomb and now this Recession) isn't in our best interests.
And I especially like how they say this will solve the States' budget woes. Heh, Michigan alone has a $500 million dollar deficit. Do they really think that much internet merchandise is heading out of state to make up for that (roughly $10 billion in sales would be needed if a 5% internet sales tax was enforced)? Hell, even a fraction of that would still require a ridiculous amount of sales anyway.
And even then, who the hell is going to enforce it? What about ebay? Are they going to raid Paypal.com and demand that they turn over their records so the member states can bill people accordingly? How much bureacracy is that going to cost? I think they might be playing around with 1998 numbers here. Pfff. Try again.
What is music when you despise all sound?
"When federal taxes are cut, the states suffer," said Holden, who is struggling to make up a projected $1 billion budget shortfall. "The problem is that the federal government can run a deficit, but Missouri government must have a balanced budget. We are left with the choice of cutting programs that help citizens."
You know, I hear lots of criticisms of Bush's plan, but I'm not hearing a lot of people with alternative and potentially better plans.
Anybody can whine. They can point out problems with internet taxation, for example. But they can't say "Here's a better idea, chew no this."
Funny thing is that both of you don't seem to understand the idea that the money isn't disappearing, it's just being redistributed. America will cope. Just chill.
Besides, it's painfully obvious that the main reason everybody's critical of it is that they're being critical of the President. All I can say to that is: Grow up.
"Derp de derp."
IMHO, states should think about eliminating unnecessary government programs instead of looking for more revenue. That's the best in the long run. It ensures a fiscially responsible government that isn't bloated. It also allows private companies (who can do the jobs for cheaper) to save money and provide better services.
This is a collection of preconceived misconceptions. First, let's discuss "unnecessary government programs." Typically, these don't exist. If something is not necessary, it gets cut. Most of the things you think are unnecessary are really very necessary, though perhaps not for you. For example, you may not be in a public school or have children that go to a public school, but I don't think you would consider public school unnecessary. The same applies to many other programs -- senior benefits, medical programs, education, parks and conservation, whatever. If you still don't agree, please name a specific government program which you consider unnecessary.
Now let's address the other issue - the mistaken belief that a private company can save money and provide better services than a government agency. You are 100% mistaken on this count. Private companies are inherently more costly than government agencies. They not only need to provide the same service, but they also need to make a healthy profit - often to the tune of 30-60%. Thus, a well-managed company would have to charge 30-60% more than a well-managed government agency.
Now enter the reality. Most companies are fairly poorly managed. Companies that deal with the government are particularly notorious in that regard. Thus, they would be less efficient, and would have to charge much more in order to make a profit. Furthermore, profit-boosting initiatives in such companies would most likely focus on cutting costs and reducing services as much as possible while still charging the taxpayers or its clients a hefty fee.
To sum up: with a private company, you typically get a poorly-managed, government-sponsored monopoly that provides fewer services of inferior quality to taxpayers while charging more than the equivalent government agency and, many times, still having problems with making money.
For example, if the US Postal Service (one of the more efficient government agencies -- how many times have they lost or stolen one of your letters? How does their price compare with Fedex?) was suddenly replaced by a private company, you would have an unreliable mail system with 75-cent postage that would lose your mail at least once a week and constantly beg for more government subsidies. It would also need constant government intervention and regulation to keep it from acting completely unreasonably.
These types of things have happened many times, both in and out of the US. Just read about Edison Schools to get an idea of what this would be like. And next time, I would suggest advocating laws that would make government agencies more efficient rather than replacing them with poorly-managed, profit-driven corporations.
Firstly, the administrative costs of Internet Sales Taxes would eat up any profits involved, unless it were (a) strictly Federal or (b) so staggerinly high that it would wipe-out the online sales market.
Secondly, sales tax is a horrible way to raise money anyway. Of the three forms of taxation (income, property, sales aka "outgo"), it is the most regressive (meaning impacts the middle class more than the upper class and the lower class more than the middle class). A sales tax discourages purchasing. Sales tax HURTS the economy more than any other form of taxation.
If the states wanted to raise taxes to get more money, they should be looking at the income tax, specifically at the upper-end. Income tax may reduce spending (since people have less to spend), but unlike sales tax it does not also discourage spending as well. If taxation is the only answer, then at least tax the right thing! Sales tax only hurts the economy more.
"But my income tax is too high already!" Only because the current federal income tax system (state income tax is typically around 2-3% compared to the up to 33% federal) is effectively regressive. If we didn't give upper-class income brackets all sorts of effective loopholes to reduce their income (eg, Congress just declared the capital gains tax to be zero, eliminating BILLIONS of dollars of federal income, and returning money to the people in the country who are in the least need of additional cash), because, and this is the important part, different income levels tend to get their income from different sources, and those sources are taxed differently.
You want to raise more money through taxes? Fine. All income from any source whatsoever is treated the same. Wage, stock options, capital gains, everything. Then impose a staggered, progressive income tax on it, without any loopholes or exemptions or "business deductables". Then drop the percentage rate from where it is now by, say, 25%.
Then eliminate all sales tax, Internet or otherwise.
Not only will 90% of the population have MORE money to spend (stimulating the economy), it will reduce the cost of operations for the IRS and for state tax agencies (reducing the budget), and still give the government (at various levels) more money to play with to fund social programs or invasions of other countries (whichever they're in the mood for this week).
Internet Sales Tax? No. Let's not have an Internet sales tax. Let's not have a sales tax at all. There are far less damaging ways for governments to raise money, and they involve smaller (and cheaper) armies of accountants to do it.
--GrouchoMarx
Card-carrying member of the EFF, FSF, and ACLU. Are you?
It seems to me that what is really standing in the way of all of this is a simple agreement over who really "has" the right to tax. Take a for instance; I hop on the computer in Austin Texas. Look up a CD on Amazon (based in Seattle). I then have the CD Shipped to my friend in Brighton England.
Who has "the right" to tax that? You could make a legitimate argument that every city, county, state and country involved in that transaction can claim a peice of the pie. In that case either I or Amazon would be responsible for tracking all of those different agencies and laws and ensuring that everyone gets their share. The case gets even more complex if you start factoring in the fact that both servers and stock are colocated. For all I know the "Amazon.com" that I contacted may be served from somewhere in the midwest, and the CD may have been shipped from some Amazon warehouse in France.
Obviously that would stifle any and all internet commerce. One alternative is a moratorium on all taxation. I disagree with this because it gives Amazon and other online outlets an unfair advantage over their "bricks and mortar" competitors. It also exempts them from paying for the infrastructure that sales taxes are (or should be) spent on, infrastructure that they depend upon.
The problem with the middle ground where some people can tax but not others is that you have to make a convincing argument (or carry a big stick) to explain it. In the past I know that the U.S. Federal government has used its power to regulate interstate commerce as a means to control or "simplify" interstate taxes. I suppose that could be one with internet purhases in the U.S. but when it comes to international purchases thewre's only groups like the World Trade Organization (*Shudder*) or local elements such as NAFTA.
WA has one of the worst budget shortfalls in the country, and we have no income tax.
Red All Over: Rambling Missives from an Aspiring Revolutionary
A lot of people are arguing how Internet sales taxes are fair, since taxes are already levied on purchases in 46 states. But you need to remember that Internet sales are not entirely taxless.
1) The company that sells the goods has to pay taxes on their annual profits.
2) The person buying the goods had to pay tax on their income.
Those taxes more than cover the buying chain. Why should everyone be doubled taxed for things? They were already taxed on their income, so why tax them AGAIN on purchases?
I can two viable solutions. 1) Raise income tax and ditch sales tax. 2) Ditch income tax and have a federal flat rate sales tax.
I'd prefer the 2nd option myself.
mogorific carpentry experiments
That's funny; if you look at the anti-libertarian rants on, say, freerepublic.com, aside from the crazed Drug Warriors, you'll see people claiming that every time someone votes Libertarian, he or she is voting Democrat. If you're both right, I must be getting two votes--what a deal!
Said ranters manage to argue both that Libertarians are laughably few in number and that we're a deadly danger because we deny victory to their preferred candidate. It's not clear how these can both be true.
Some states exempt some items such as food and clothing even that isn't done very well in Michigan prepared food is taxed but groceries are exempt. It makes sense to me that a bugrer at the resturant is taxed but the ground beef at the grocery isn't; but I can't figure out why a bag of potato chips at the grocery store isn't, but the same bag of chips at the gas station is.
For this to work they are going to have to co-ordinate definitions to classify goods so that taxability can be defined, and as the above example shows it could very well be a double edged sword for the states involved.
Sales tax is a bit more honest because its added to the price for the customer to see. I wonder which state gets the tax when sombody orders with a billing info a Michigan address for his credit card, and ships to his second home in Florida? Or Even more common I buy a gift online, from Michigan and have it shipped to my son in Hawaii.
This will get even more interesting when Cities start complaining, some cities charge sales tax too.
Apocalypse Cancelled, Sorry, No Ticket Refunds