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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?"
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
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
Just call it Tax#, and everyone will just jump on board!
Neck_of_the_Woods
#/usr/local/surf/glassy/overhead
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"
It's not the governments that are maintaining the infrastructure of the Internet. Especially not the state governments who would be benefiting from Internet taxation. So you're saying we should tax the Internet and give the money to who? AT&T? MCI? Maybe Internet taxation would have saved the Woldcom situation, right?
This "Internet tax", it's not calculated per-packet, is it?
"Flyin' in just a sweet place,
Never been known to fail..."
You mean, tax us to pay for invasions of our privacy like Carnivore and Son Of Carnivore?
Otherwise, states don't pay for the "upkeep and maintenance" of the internet. This is not a gas tax that pays for roads, but a sales tax that goes into the general fund. If it's used for any internet-related purpose at all, it will be very anti-libertarian, like censorship, eavesdropping, etc.
-b
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
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.
US Military Budget this year is something like $780 billion US dollars. The ten year tax reduction plan Bush is babeling about is $670 billion over a ten year period.... In other words we are being given a tax break that is less then ten percent of the US military Budget, this year alone.
Now where is the government getting all that money from?
As to taxing the sale of products reguardless of what state the company and consumers are, via mail order (internet is just a means of communication) some companies (few) do it in a manner that the state the consumer is in determines what the tax is and also gets the money.
And what is taxes being spent on? Warmongering!
Where in business you are rewarded for saving money and being efficient to improve profits margins, government runs on a completely different paradigm. For a start, government usually takes on tasks that are not profitable and usually cannot be made profitable. They still have to be done, so it falls to government to fix them.
But the real problem is that there is ZERO reward for government spend conservatively, and in fact there are disincentives to do so. Agencies and departments that don't use up their budgets are often penalized by not having that money given to them in the future.
So the first thing we have to do is quit asking the government to wipe our hineys for us, because it takes tax dollars to buy toilet paper and hire certified personnel. Then we have to tell government that spending every dime is not desireable. Then we need to throw out the whole Congress and elect people who understand how money really works, instead of who think that money is in finite supply and that you solve all problems through unfunded mandates and increased taxation.
In space, no one can hear you moo.
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
Don't be a dork. The post should be more correctly be named "Internet Sales Taxation May Be Imminent", and FWIW, why the fuck not?
Don't get me wrong... I know that mostly, tax money is wasted, and government spending (on all levels) should be reduced, but that's not the point of these articles, or the post. If your state has a sales tax in place, you can- pay the tax
- vote in people who will repeal the tax laws
- move
but just because you buy your stuff over the internet doesn't mean you should be exempt from a tax. Hell, those most likely to buy things over the internet are probably the ones who can most afford paying a tax.I'd cast the 'real problem' in terms of the planning horizon for government solutions. That planning horizon is not much more than the next election.
/. wisdom.
To minimize fraud, most money has a lifespan of the next fiscal year. Prominent exceptions are things like procurements of nuclear aircraft carriers, where Newport News shipbuilding shant order the first part unless they know that the money will be there to finish it.
Too, there has been a shift from discretionary (pork barrel) spending towards entitlements (Socialist Security [who better to run a Ponzi scheme than your Uncle Sam, eh?], Medicare, etc).
Good news, bad news, who can say?
An unfortunate side effect of our representative democracy is that the dependant majority can legally pick the pockets of the minority through socialist-flavored approaches.
Reform is unlikely when you've got lobbies like the AARP on the scene. The rich, of course, need not pool their cash to purchase political decisions.
Waaah, waaah, waaah. I'd argue that our system is muddling along as designed, faithful to its two design requirements: be stable, and preclude tyrrany.
Are we in greater danger now than in any historical period? Probably not.
Do this:
Go to this URL and set a bookmark to your elected folks and keep their inboxes stuffed with your
Get thee glass eyes, and, like a scurvy politician, seem to see things thou dost not.--King Lear
I think it's a big mistake at this point to specifically tax internet sales. I purchase goods off the internet because they're cheaper than in retail stores. The prices are usually just barely cheaper after shipping. However, they are cheap enough to more than offset the delay in receiving the product.
Since I'm currently in New York State (which has outrageous taxes, at least compared to Idaho), I am often taxed for internet purchaes. For example, ordering from CDNow (which I did before they were 'swallowed' *cough cough* by Amazon.com it was about the same price ordering from them (after shipping and taxes) as buying the same $18-$20 CD from a retailer. It simply wasn't cost effective. I only continued because I don't have a car to drive to stores :(. If they start taxing internet sales, it won't be worth waiting a week to get a product that I'll end up paying full retail for. It will destroy online stores. I for one won't buy from them, because it won't be cost-effective for me.
<soapbox>
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.
</soapbox>
neurostarFrankly 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.
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.)
A very good question. Let me endeavor to give you a good answer.
The purpose of state sales taxes is to provide services to the people and businesses of your state. If I own a business outside of that state, it's not really fair to ask me to pay for services that I am not able to utilize, even if I am selling an item to somebody who lives in your state.
Now, you could point out that a sales tax almost always is passed directly to the consumer, so it's really my customers who are paying the tax, but it's still being collected from my business, which means it's my accounting headache.
Furthermore, as a consumer, I don't mind paying state and local sales taxes on items I buy in brick-and-mortar stores. It's logical... that money goes to pave the road so I can get to the store, and to pay the cops to keep the store from being ripped off, and to pay the fire department to keep it from burning to the ground, it even pays for public education so they can hire minimum-wage 20 year-olds who have an outside chance of getting my change correct. Since state and local infrastructure makes our transaction possible, it seems reasonable to me that we, as buyer and seller, help fund that infrastructure. In the case of something I buy from Amazon.com or EBay, how does the state justify its claim to a slice of the pie? It didn't do anything to facillitate the trade. [Flamebait Warning] Collecting a compulsory percentage without offering anything in return is called racketeering. [Flame off]
Information wants to be anthropomorphized.
And, let me add, why should businesses in states that don't have sales taxes, like Delaware, New Hampshire, Oregon, and Alaska, have to collect sales taxes for other states? It's a big overhead to calculate and handle all that paperwork.
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?
Hmmm, riiiight. The point was news articles quoted are all about the buyer paying the sales tax to the state he lives in. Michigan already has such a "use tax": you are supposed to pay a tax on the goods you use in that state, regardless of what state (or country, as Canada is mere minutes away from the South East corner) (<Eminem>Detroit! What?!?</Eminem>) you live in. New York will often has "tax inspector" coming New Jersey shopping malls looking for New York license plates on cars. Changes are, you owe your home state sales tax no matter where you buy your shit, this is just about collecting it.
So? "p2p hurts the RIAA", but we tell them to adopt or die. If you don't have a working/profitable business model, get out of your chosen business. We can't all make money being net geeks.
As I wrote above, you probably already owe the sales tax, even if it isn't automatically collected. I buy form the internet 'cause I of the selection and convenience: if I want a specific main board or book, I don't have to go to all of the local CompUSA/Frye's/Barnes and Nobel/B. Dalton/etc. to see who may have it in stock. Playing "best price" is a loosing game, markets win on selection and service.
See above re: find a profitable business model or get a new job. Also on this point... why should "online" stores have an advantage over brick-and-mortar stores?
You think so? How many people are employed in a MeatSpace mom-and-pop shop vs. an internet mom-and-pop shop? How many small business employ really employ more than the owners?
Welcome to Civics 101: bureaucracies are seldom efficient or logical. And again, government misspending is not the point of the articles quoted in the original post.
Ditto.
Frankly the person who griped about how the state did not provide anything to deserve the tax seems to think that the package somehow myseriously appears on his doorstep and did not have to travel on roads and infrastructure that his city and state provides.
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.
Real example from about 15 years ago:
One of the major aerospace companies wanted to build a big new plant in Palmdale CA (one of the most economically-depressed areas in all of California), where they already own a major swath of bare ground. City of Palmdale said, "Sure thing! Just cough up this $14,000 application fee, and we'll discuss it."
Aerospace company said "Fuck you very much" and dropped the whole idea; instead, they renovated an existing plant they owned in Atlanta.
Palmdale lost out on an estimated 25,000 long-term jobs that the area desperately needed, not to mention all the fresh tax revenue that would have been paid not only by those workers, but also by the increased business infrastructure required to support them (grocery stores, etc.), plus all the immediate construction jobs that would have come from building the new facility. All because the city got greedy for a little income up front, instead of waiting for a LOT of income over the long haul.
~REZ~ #43301. Who'd fake being me anyway?