Warming Battle Over Online Taxes

mackertm writes "The NYT (free registration, blah blah) has an interesting story about the fight over Internet taxation. A coalition of states and some big clicks-and-mortar retailers are leading the charge to simplify the process of collecting taxes online. Amazon, Dell, and eBay are the biggest pure e-tailers resisting this movement. It's fun to see Amazon try and talk about how difficult it would be to implement taxes for all states, when it's already doing it for Target and Toys 'R Us."

Comments

To avoid this...

[Tebriel]

Can't I just start ordering things from companies based in other countries? Say, a Canadian company? No tax then, right?

Re:To avoid this...

[RazzleFrog]

Sure. Double your shipping charge so that you can get out of paying the tax. Legally, of course, you are still obliged to pay use tax to your state (if they require it). These are not new taxes but just ways of enforcing already existing taxes.

Re:To avoid this...

[phorm]

In Canada, we pay tax on online purchases from major retailers.

When importing across the border, I've also often got nailed with not only tax, but duty and border charges.

Unless you can save some money on the item itself and save on tax, it would probably cost you more in the long run.

Of course, we're always happy to have you supporting our economy, so buy Canadian eh!

Another Idea

[attobyte]

I would rather pay the sales tax of the state that the e-tailer is in. Then I can choose if I want taxes to go to my state or to another. If I don't like the current Governer I can shop at buy.com and let my money help their state. Why should a state hand over money when they do not depend on any resources from the state the are giving the money to.

Mike

Re:Another Idea

[HarveyBirdman]

Why should a state hand over money when they do not depend on any resources from the state the are giving the money to.

Because your state is where you are (theoretically, at least) represented. You are not represented by the other state, and thus you cannot be taxed by their system without representation.

taxes not good for little e-business online retail

[in_ur_face]

I think the little businesses just starting on the web will be hit bad if all sales were to be taxed. A lot of times, I bet the savings of sales tax is the reason for buying online. This will just reduce online sales and profits for these businesses. Everyone wants a slice of the $$$ pie...

Yeah, lower S&H first...

[tgagnon]

If they ever really start bringing taxes into online purchases you can bet sales will start to drop significantly...

I mean, usually, you have to pay more just because of S&H, then add taxes to the mix and ordering online almost becomes too expensive, especially when making larger purchases.

Amazon's argument is disengenious

[elflet]

Amazon claims "it would be too burdensome to collect and dispense them on behalf of so many different jurisdictions", but the major e-commerce engines (e.g ClearCommerce's engine) have a tax table broken down by zip code. This table is updated whenever the tax regulations change. Little companies such as Apple Computer, who is required to charge sales tax on online purchases, depend on this to keep the billing straight. It's all handled in the software, and has been for a looooong time.

Please.. tax me more...

[madshot]

Lets see.. Federal Income Tax, State Income Tax, Property Tax, Local Tax, Sales Tax, and now, Online Sales Tax.. Did I miss any? (probably missed a few) oh wait, I need to pay rent this month.. wonder if there is any money left from my paycheck.. I love this country very much, but someone needs to learn how to manage their money better and it's not me.. because I'm not the one spending it.. Could be worse I guess.. I could live in Canada.. eh?

as if you bought something interstate on business

[DABANSHEE]

Its simple really.

If you live in California & travel to Oregon to visity aunty Jill, you pay Oregan sales tax while there.

So wouldn't the simplest solution be one where you pays salestax in the state you visit vitually, IE the state the etailer resides in.

Sure it might mean some of the big etailers relocating to the state with the lowest salestax, but that sort of thing happens in regards to corporate/ business taxes anyway, so so what.

Why do the states have a right to tax this?

[HeelToe]

I'm lost.

There was a recent article on this on /. where I saw many good arguments about states trying to tax internet/mail order sales.

I am still at a loss to understand why the state I'm sitting in has a right to tax something I purchased elsewhere. Is it solely the fact that I'm sitting in their jurisdiction? Really, then, they're after me, and they're using the retailer as a collector for their tax. How can my state tell some company in another state they must comply with tax laws where I sit? Doesn't this interfere with interstate commerce, the domain of the federal government?

I saw an argument that resources provided by my state are used in the transaction (things like the roads the UPS truck drives on and so forth). I just don't buy that. What am I (or the merchant) paying for shipping? We're paying a fee to a company that operates in my state which pays taxes based on its revenue which should be used to pay for those state services.

This whole internet tax thing just feels like a big attempt to get some budget revenue for states in budget crises. It's the big juicy target of today they're all hoping to nail. It seems to me they should be laying off state workers (just like so many of us were laid off from the private industry) instead of trying to cover their lack of financial prudence.

value added taxes are very regressive

[The_Rook]

while i sympathize with local and state governments having trouble balancing their books, doing so through value added and use taxes are the worst way to go about it.

value added taxes are favored by (wealthy) tax theorists because they tax consumption and therefore cannot be avoided. however, they are highly subject to the condition of the economy. any economic slowdown and sales taxes drop along with consumer spending. also, they are popular with the wealthy because the tax is paid only when you spend money, and not on income.

which is their biggest problem. low income taxpayers are disproportionately taxed compared to wealthy. for someone making a hundred grand a year, the value added tax on a computer is nothing. but for someone making 20 grand a year or less, that tax becomes significant. because they are a tax on consumption, value added taxes are a direct drain on the economy - they slow down and reduce consumption and reduce the total number of transactions that can take place in an economy.

if states and local governments really have a problem with colecting value added taxes, then the true answer is to drop the value added taxes completely, rely on income and/or property taxes, and build up the infrastructure that will encourage internet and mail order businesses to set up shop in their own state.

Re:value added taxes are very regressive

[Bassman59]

RocketScientist: .but rich people tend to spend more, so they pay more tax. It's the exact same percentage of what they pay on goods/services if you're rich or poor. That's why tax theorists favor it, its FAIR.

No, it's not fair.

The proportion of income that poorer persons pay for the necessities -- food, shelter, transportation -- is greater than the the proportion of income that a richer person pays.

And, no -- we're not talking extravagances here.

$20 for dinner may seem like no big deal if you're a working IT person bringing in the cash, but if you're making $6/hr, it's a huge expense.

And the argument that "rich people spend more money" doesn't wash, because the rich person doesn't need to buy the BMW when a Chevy would suffice. If the rich persons chose to be frugal -- which many of them do, which is how they get rich in the first place (unless they're like Dubya and born into it) -- that could have a serious impact on tax receipts.

The only truly progressive tax system is a graduated income tax. And that tax should not be so full of loopholes so as to make it unfair.

An income tax will also allow the governments to make a more accurate assessment of their tax receipts. Example: your city may base much of its budget planning on expected sales tax receipts. In lean times, like the recession we're in right now, consumers choose to spend less (because of fears over losing a job, or whatever). Thus, the city doesn't bring in the expected tax revenue, and there's a budget deficit. At least with an income tax, they can better estimate the revenue.

As you readers can tell, I'm in favor of an income tax over any sort of sales/use tax. That doesn't mean that I'm in favor of how our federal government is spending my money. Given the choice, I'd say NO to the war in Iraq, and YES YES YES to universal health care, education and services for the citizens of this country.

Why is use tax not unconstitutional?

[squarooticus]

The stated purpose of "use tax" is to tax the "use" of items not purchased in the state. But, since that tax isn't levied against in-state purchases in addition to sales tax, isn't that simply an underhanded attempt to regulate interstate commerce? I'm surprised these laws were not struck down by the SCOTUS in the past.

Re:taxes not good for little e-business online ret

[kfg]

No, where it will hit the small time operator hardest is in implimentation costs.

Toys Be Us and Shit already *has* a presence in all states, and accounting services to deal with it. For them paying online taxes, while costly, isn't really as big a deal as it might appear. It's more a question of how to put it into reasonable practice.

But for the little guy it means setting up tax accounts in every state before he can even do a lick of business, and the cost of maintaining them properly may well exceed his profit margin.

It's already hard enough to deal with the paperwork and compliance issues in *one* state. Having to do it in all 50 will be enough to force many of the moms and pops of the world into tending the fryer istead of being independent business people.

Think about that for a minute and think about why the big boys might be very, very, VERY much in favor of paying all these taxes.

KFG