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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."
use the NYT archive
1 7ECOM.html
http://archive.nytimes.com/2003/02/17/technology/
Can't I just start ordering things from companies based in other countries? Say, a Canadian company? No tax then, right?
The Blaster Master Fighting for Truth, Justice, and Evil Pie since 1979
"Clicks and mortar"? "E-tailers"? That alone was enough to keep me from reading the article.
Texas is finally getting the internet!?
... :)
Wow, I thought this day would never come. I thought all them rednecks would just be sittin' there talking about their "inner net" (inner netting on shorts), for decades
why don't people post non-reg links to these NYT stories? http://www.nytimes.com/2003/02/17/technology/17ECO M.html?ex=1046062800&en=a7c25eb86d3b8b8b&ei=5062&p artner=GOOGLE
(I mean, people other than people like me who do it as a reply.. the ones that post the stories, or *cough*edit*cough* them).
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
I didn't use the preview button, so get over it!!!!
Mike
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...
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.
I'm selling medical equipment online and one of the main reasons customers like to purchase from us is because they avoid paying sales tax.
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.
I, for one, don't collect taxes when I'm running a garage sale.
--sex
Very popular slashdot journal for adul
Drop the internet sales tax idea completely. Want a package shipped to use? Delivery tax. Road Tax. What to connect to the net? line tax. Connection tax. Why not have all these 'toll roads'? It would make the people who are using the products/services pay for things.
"If you are on fire you can just stop, drop, and roll. If you fall into Lava you are just dead." - my 5yr old daughter
It's a very interesting debate. In my eyes it comes down to lazyness versus saving a 'buck or two'.
Personally, I like the lazyness route. If I can order something and it comes to me, I think it's worth the extra wait. On the flip side, many would prefer going to the store to buy what they want (though paying a few pence extra) so that they can get it now. How much do you enjoy instant gratification?
Another issue how might this affect small companies, like the guy that makes and sells mIRC. Taxes are complicated, and it might make it difficult for people such as him to sell his product w/o having to spend a lot of time and money creating an e-commerce engine (or partnering with someone that does) that customizes the amount of taxes per-state.
Go here for teh [sic] funny.
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?
Obama = Socialism.
Currently, they're subject to the same tax rule as internet, and as I'd said the last time this came up on Slashdot, they're 4-10X the size of all internet sales.
The recent changes merely clarified that, for instance, BN.com really is Barnes & Noble and subject to the same taxation where they have physical presences, i.e. everywhere.
There's lots of catalog sales out there. If they're not collecting sales tax, I shouldn't either. We collect it for Illinois, where we're based (and even that's fuzzy: my server's in Connecticut).
Always collecting for the 'home' state tax is a bad idea too: It'll just force businesses to incorporate in states such as Alaska without sales tax. But on $130K sales on our little company, a monthly check to 47 states is a huge burden.
Design for Use, not Construction!
So there I was; 15 years old, naive and about to go on my first date where sex was involved. I went to the pharmacy and asked the man for condoms. "Here you go, that will be 5 dollars plus 70 cents for the tax." the pharmacist said. I replied "Tacks? So that's how those things are held on."
Trolling is a art,
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.
I (and possibly others) buy more things online partially on the basis that it usually isnt taxed. I buy more things online than I should (as many many others do too) more-so on the basis that I can get more for my money. I definately would purchase less if I knew I was going to be taxed. Whats the incentive to buy online (when taxes are involved)? Prices are sometimes lower than retail stores, but when I buy a $1500 laptop at Fry's ELectronics and pay $125 in tax, thats a HUGE incentive to buy from someone online from out of state!!! If the internet plans on being taxed, I would seriously have to reconsider buying expensive items online, in the long run it would put many online retails out of business, for the sole purpose of funding the Gov't. Does anyone else feel this way???
I'm lost.
/. where I saw many good arguments about states trying to tax internet/mail order sales.
There was a recent article on this on
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.
I understood this sentence at the first "it".
It was a little vague by the second "it".
By the third "it" I was confused.
At the fourth "it" in it it was a little confusing what part of it "it" was referring to
You actually can get a tax refund for any taxes paid in the state of Oregon while you are visiting as long as you then pay the Use tax in California. You will also notice that if you buy something like furniture the store will ask you what state you live in so that they charge you the proper sales tax. I recently bought a dining room set in Connecticut but they charged me NY taxes.
"To calculate your sales tax, press OK noooooowwwwww."
"..."
"..."
"...Why don't you just tell me what your sales tax is?!?!"
--"It's Bradford Company, slash your last name, dot your first name"
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.
when religion is no longer the opiate of the masses, governments will resort to real opiates.
If you live in California & travel to Oregon to visity aunty Jill, you pay Oregan sales tax while there.
And yet, if you live in Oregon or Montana, and travel to Washington, you make a royal pain in the ass of yourself by trying to present your driver's license to every store you buy $2 worth of goods from, as a get-out-of-tax-free card. And then bitch about how long it takes the poor sales people to figure out how the fsck to write up a tax-free sale for your stupid ass. Disclaimer: I am a "customer service representitive" (aka min. wage retail slave) in the state of WA.
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.
[ home ]
Also, EVERYTHING I sell is used. Taxes cannot be charged on used goods. Taxes were ALREADY paid. I have heard of some states trying to come down on flea markets and yard salers in some states. If they are selling new, it's one thing. If selling used, again, taxes have already been paid.
Yell & scream & rant & rave... it's no use... you need a shaaaave ~ Bugs Bunny
What living bipedal organisms would ask for the government to put taxes on services rendered, that have already been taxed?
Obviously, we are not dealing with living bipedal organisms...
This is also an issue of TAXATION WITHOUT REPRESENTATION. What services are offered for paying such a "tax", why do they not recognize the contractual relationship as this "tax" being formed as an "optional" service, and who recognizes that the internet is composed of private communications networks that can't legally be taxed?
This "tax" is a violation all the way, up and down, my Constitution; me being a sovereign State.
But I'm sure you already Gnu that.
Do the states that are pushing for sales tax collection really expect all of these small-scale sellers to set aside and remit taxes to the hundreds of separate jurisdictions in the USA? Or, do they expect Amazon to collect the tax based on where the 3rd party seller says they are located?
-- Dave Aiello
Internet mail order is no different than phone or mail based mail order.
If they want to enforce sales tax on those sales, fine. But call it what it is.
Or will they actually tax mail order orders ordered over the web, but not the same orders from the same customer to the same vendor using phone??
That would be so stupid that it may just happen...
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
you need to readjust the lenses on your perspective goggles.
Apple is a *huge* comapany with a world wide presence and sales in the billions of dollars.
"Small" business is generally considered to be one with gross annual sales of 3 million or less. Even that's really pretty big.
A *little* company is my mom trying to broaden the market for her handmade jewelry by offering it online. Having to handle sales taxes for every jurisdiction would simply kill that. Dead.
KFG
It's smoking.
Yep, another thing to blame on the smokers.
See, states have been taxing cigarettes like mad. New York, for example. Some retailers in other states were doing a rather brisk business selling cigarettes online: no tax.
They all thought the government would clamp down on internet taxing before too long, and they were right. Not only do they get to claim they're protecting the world from smokers, but they grab some extra cash for the here and now. Never mind that sales taxes always have a chilling effect on spending. Technically, though, it's just the companies that are doing bad right now. Joe Six-pack has been spending his little heart out, and the economy hasn't budged.
So is it the state's fault for raising taxes on cigarettes, or the online retailers "cheating" the states out of the money they've already spent that was supposed to come out of smoke taxes?
I don't smoke, but think it's none of the government's business.
...
As an online retailer why should I spend my resources to act as a tax collector for another state of which I use no services or even visit.
This is an issue between the State's tax agency and the citizen of the that State, leave be the hell of of it.
And what if I don't. If I do not have any presence in that State of question can they really do anything. Can Florida AG enforce compliance in Idaho?
Target and Toys 'R Us should have been collecting sales tax all along. Since they have stores nation-wide, they have nexus in all of the states. By 'agreeing' to collect sales tax, they're just agreeing to start doing what they should have been doing already.
Behind the scenes, they probably made a deal to agree to these taxes in exchange for the states not going after them for past taxes on their Internet business.
The spin that the stores have put on this is pretty clever. By agreeing to the tax, they put pressure on Internet sites without nexus (like Amazon and eBay) to pay sales taxes on their business. They know full well that Amazon and eBay (without a network of stores) will have a difficult time figuring out how to collect all these taxes. Target and Toys 'R Us already have it figured out. This gives the chains with physical locations an advantage.
Also, this is just the beginning. Once sales tax is collected on online purchases (which won't add up to much money), what to stop a whole new wave of taxes on online sales? It's going to get expensive and complex very quickly.
Worse of all, big sites like Amazon and eBay will find a way to cope, but Mom 'n Pop Internet stores likely won't survive. Less competition, higher prices, less innovation. As is the case with most taxes, the consumer loses in the end...
The Christian ideal has not been tried and found wanting; it has been found difficult and left untried. -G.K. Chesterton
I'm a little sick of all of the "I buy my laptop online because it's $125 cheaper without taxes" argument.
Yes, you're right, it's cheaper to do that, but that's primarily because you're breaking the law. Just because you don't pay taxes at the time of purchase does not mean that your laptop is tax exempt. You should be filling out the appropriate "use tax" form for your state and sending the money to them.
I realize that hardly anyone actually obeys the use tax laws, but that doesn't make your argument any more valid. It's basically the equivilent of saying "Laptops would cost more if they stopped letting me steal money from banks!"
So, would this tax enforcement at the time of purchase hurt online sales? Maybe. But, please realize it's not a new tax, it's just forcing you to pay one you're already supposed to be paying.
Why should we discriminate against bricks-and-mortar retailers? Why should it only be their customers, who support their local economy, who are penalized?
Granted, implementation of sales taxes for all fifty states plus potentially scores of international jurisdictions is a nontrivial endeavour (understatement), but it's part of the cost of doing business. Look on the bright side--online retailers get to save a lot of money on mortar.
If the only added value an online retailer can offer is "I can offer marginally lower prices because I skirt tax laws"--do they deserve to be in business?
~Idarubicin
I made the following comment recently in another thead, I think it applies here as well:
I'm assuming that the majority of Slashdot folk are in favor of keeping the Internet tax-free -- at least for the time being. (IMO, new regulations forced on the internet sector for online sales and Internet access would have a horrible affect on an already hard-hit portion of our economy... but then again, I'm biased... but aren't we all.)
As mentioned in the article, legislation has been introduced in both the House and the Senate that will extend the current moratorium on new taxes for Internet access and e-commerce activity.
Contact your members of Congress and voice your support for House Bill H.R. 49 and Senate Bill S.52
Contact Congress concerning H.R.49 Here
Contact Congress concerning S.52 Here
Polite emails (and/or snail-mailed letters, as they carry the most weight) simply stating your support for these bills will suffice.
While Amazon and Dell are the loudest complainers, they will be laughing all the way to the bank when the aftershock is over.
Small Businesses which sell online will be killed by this as I understand (which I may not) it's present form. Small one or two people web stores just don't have the resources to collect and pay sales tax to all 50 states. It's hard enough to do for the one they are in. For example, some states don't charge tax on clothes while some do. I know in my state certain types of groceries are taxed while others are not. With all the differences, not to mention the actual payments to each state, the overhead of maintaining this is huge.
I am sure this could run many small web sites out of business. Amazon at least should welcome that.
-Pete
Soccer Goal Plans
We have the same, but opposite, situation here in Washington. The legislators want to institute a state income tax to go along with the state sales tax. Where I live, sales tax is currently 8.5%. In Seattle, I think it's as high as 8.9% now. Just what we need - another income tax on top of that, right?
As far as the internet/interstate sales issue. If we would just abolish the damned federal income tax, I'd be fine with paying a federal sales tax instead. Change the IRS code to make them responsible for collecting sales taxes and let me keep the money I make until I decide to spend it. Where and how I spend it won't matter - it would still be subject to federal sales tax. This way the federal government can collect their tax at a reasonable rate. Oh wait, I used the word 'reasonable' in the same paragraph as 'federal government'. Sorry - my bad...
"Michael, I did nothing. I did absolutely nothing - and it was everything that I thought it could be."
I can only hope Internet Taxation proposals fail as horrifyingly as your attempt at FP! YOU FAIL IT!
One god, one market, one truth, one consumer.
Nolife: "The federal gov wants to lower taxes so you will have more money to buy more things and hopefully jump start the bad economy."
No, the Federal Gov't is in the grip of a conservative orthodoxy whose mantra demands zero tax collection. Unfortunately, it's not clear how a government is supposed to run on zero revenue.
It's been shown that tax cuts, especially those that benefit the rich, have no effect on "jumpstarting" the economy, especially when the majority of consumers are scared that their job may be axed.
"The states want to start collecting taxes to collect more revenue because the economy is bad and they are in the red."
They're in the red for many reasons, not the least of which is that the federal government mandates all sorts of programs and policies (like, um, the "Homeland Security" clusterfuck) and then helpfully decides not to fund them -- leaving the states in the hole for the costs of these programs.
Remember that a lot of states have their state income tax rates pegged to the federal tax rate -- so any time the White House starts talking about abolishing capital gains taxes, or taxes on dividends, or reducing the federal tax rate, the states start quaking because THEIR revenues go down. And, unlike the feds, state governments are not allowed to run deficits.
So, think about it: which federal, state and local taxpayer-funded programs would you like to see shitcanned? Do you like your roads to be paved? Your police officers and firemen to be trained and paid? How about your teachers?