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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?"
This will solve several problems, and make the states lots of money. Also, there is plenty of precedent for taxing spam as part of interstate commerce.
Forced registration of spammers (a spammer's license) would enable people to track them down (spam hunting) and make money from the spammers. Money strapped countries around the world could get on board with this one.
The extra bonus brownie points for having a bounty on spammers avoiding the law just sweetens the deal. And Spamming would no longer be a free ride on the back of the internet.
This is a match made in heaven.
Why not use the greed of the law makers to our advantage?
"It is a greater offense to steal men's labor, than their clothes"
All this does is reinforce the positions of the current big ecommerce players -- Amazon, Wal-Mart, K-Mart, etc. -- because they can most easily afford the software upgrades and new software packages/services that will be required.
A lot of small businesses found new life on the internet, becuase they were able to extend their reach. Now they're faced with huge new expenses to either develop new software themselves, or be chained to a third party who can. Unfortunately, this will probably Microsoft, Intuit, Yahoo Store, etc., who will rake in a fortune selling new ecommerce-in-a-can systems with tax tables built in.
I have a couple of clients who were thinking about expanding into web sales in the next year, but in light of this will probably nix the idea.
Frankly anyone who know anything realizes that an "Internet tax" would be hell for governments to implement and regulate.
People already have to pay taxes for things bought on the Internet, and do pay them if they are imported from another country. Customs looks at the sticker on the package, calculates the duty and tax, charges a fee for handling, and presto - Internet Tax.
This is not new stuff to anyone who sells on eBay for example.
Saskboy's blog is good. 9 out of 10 dentists agree.
There is no internet economy, you say? There are people making money off the internet who used to be school teachers or accountants or lawyers. Now, they have web sites and sell some product or service to the world via internet technology. People get things done by internet that were impossible or very difficult before, such as telecommuting. There exist online courses that there was no equivalent before except maybe closed circuit TV. Forums for exchange of ideas such as this one. Software and music downloading, whether for free or fee. And on, and on. Therefore, I put it to you that by definition there is indeed an "internet economy". How big it is, is open to debate, however.
Living in Massachusetts, I was able to buy a gift item from a store in southern Texas simply because I found them on the web and they had what I wanted, a relatively hard to find type of sand pendulum for someone's desk. They did not have to lift a finger; I found them via a web search. Internet technology enables this store to have a national presence for merely the cost of a few static web pages. That, I would argue, is an internet economy.
As for internet sales tax, it's a bad, stupid, unenforceable thing. The conventional wisdom is that it's folly to raise taxes in a recession; it can only hurt. Perhaps these states which spent so freely during the boom years should have put more away for a rainy day, just as private citizens are supposed to do. History has shown that we have a cycle of boom and bust.
But they'll never learn.
it's = "it is"; its = possessive. E.g., it's flapping its wings.
States had been pushing for internet sales tax for some time now...but now everybody's got a bee in their bonnet to see it occur. States feel that they are losing big bucks now because people are ordering online (though their calculations are only thinking about the internet sales going to their state, not necessarily the opportunity cost of jobs and stuff that may be created in their state because of internet commerce.)
Thing is, states have screwed themselves with progressive income taxes. Sales taxes do go up and down with consumption (obviously) but not as severely as income taxes. California for instance has this really progressive system where the top 10% of income earners are paying for some 75% of California government. So, the economy takes a tumble, income generally does go down...but the top 10% of income earnerrs have *huge* decreases in income, so suddenly California has a $25 billion shortfall. They can't increase the progressivity of the tax structure--you're not gonna get much more out of people who's income's dropping severely, so all ya can do is widen the tax base...meaning increase income taxes for median earners, or sales tax, or find new tax sources. I believe states are starting to understand how easy it is to screw the pooch raw with progressive income taxes (note that the states that have blown their budgets the most are those with income taxes, CA, OR, OH, IL, NY, whereas non-income tax states like TN, FL, NH, TX, are not looking at such bad looking budgets. Those states have much more reliable income streams from property taxes and/or sales taxes.)
"Progressive" taxes aren't. This class warfare stuff is really starting to get to me. All it does is get in the way of building a tax system that doesn't require me to hire / be an accountant.
We need a flat tax with a high minimum deductable (to keep all the kids / summer jobs out of the paperwork). Perhaps a $20k deductible with a flat percentage after that. Treat everyone as an individual (no lumping spouse in with you / marriage penalty). No deductible for children or interest on homes (we want people to save after all). Do not tax interest on savings (need more money for people to borrow).