States Push for Net Sales Taxes

Marnhinn writes "Lawmakers in several states are asking Congress for the right to begin collecting sales tax on interstate internet purchases. CNN has the scoop."

Comments

And what about mail-order?

[Atario]

Mail-order businesses have avoided cross-state sales taxes forever and a day, and no one makes a peep. Start taking the orders via 'net instead of via phone, and suddenly it's "me too" field day time for states? Feh. They can all bite me.

Re:And what about mail-order?

[TWX]

Well, if they start taxing internet-based purchases, I'll just use the Internet to find a vendor, and I'll start purchasing through them by mail instead of by phone or internet.

I personally don't give a shit if it's by email, web, phone, mail, smoke signals, shortwave radio, or whatnot. As long as it's interstate, it shouldn't be taxed by a state.

Re:And what about mail-order?

[ComputerSlicer23]

No, they haven't avoided those taxes. It is the responsiblity of the purchaser to pay the sales tax in their home state. It is not a liability of the business. A friend of mine's step father worked in the State gov't for the tax collections. At least in a the state of Nebraska, you are supposed to drive down to the local tax collector (possible it's only in the state capital), and file the mail order items value, and pay the sales taxes on it. I also believe that according the the current law, internet sales aren't taxed even when the buyer and the seller are in the same state.

He said his Mom always paid the taxes, just to avoid a scandal because it was her husband's job to enforce that law. In the end, they end up collecting what is given to them, but the prospect of collecting that money is more expensive most of the time, then the total value of the money collected.

I've got not issues with the gov't collecting taxes. No real issues with the gov't collecting taxes on Internet sales. I've got some issues with them attempting to regulate VoIP. I think that's wrong on so many levels (if you are going to do that, tax by the byte/packet, it's just data at that point VoIP isn't special on the internet, however, that's for a different rant).

When money moves around, the gov't wants a piece of it (they figure if you are spending money, you can afford to give some of it to the gov't, and generally they try and not tax neccessities, hence no taxes on food). The gov't has to aquire revenue to provide the services it does. The gov't doesn't need to provide a lot of things it does. So I don't think they truly need the revenue. However, if they decided to tax it, I've got no problem with that in particular. I do have a problem with them never cutting back services during lean years, and never saving money during the boom years. When they expand gov't services during the boom years, and then try continue will all the same services during the lean years, that's a problem. They needed to be either, returning the money to the citizens, or they needed to be saving it away.

I'm curious to see what will happen if the real estate market ever collapses, that'll directly affect revenue of the state gov't, in property taxes. That'll be a serious problem around here.

Kirby

Bad idea but...

[elvesRgay]

I think internet sales tax is a bad idea and will discourage on-line purchasing.

But I wonder if this could be good for Oregon if we decide not to do it. We don't have sales tax in Oregon. I don't know of any other state that doesn't have sales tax and whenever someone stops by to visit they are always surprised to get 1 cent back when they pay a dollar for something that costs 99 cents. Every time some politician tries to start up a sales tax it gets defeated. (so far). I don't know if we are one of the 45 states that require taxes on internet sales but hasn't been enforcing it that are mentioned in the article.

There are other things that could come of internet sales tax if its not enforced uniformly by all states. Encouraging on-line business to open up shops in their states could be done by lowering or removing state internet sales taxes for those companies.

Amazon is located in Washington State. However when someone orders a book from them its often shipped from Eugene Oregon. Does that mean they could avoid the internet sales tax through some loophole if Oregon doesn't start an internet sales tax?

Great, KILL our economy

[agent dero]

If I know that I am going to be charged an extra tax for buying stuff online, i'll buy from Canadian or other foreign vendors.

If I pay tax for selling stuff online, i'll try to sell from another country, such as Canadia.

it's that simple, nobody likes useless taxes, look at the german tax system, everybody hates that, and they have taxes on drinks, cigarettes, damn near everything.

The key to keeping taxes low and within reason, is to not spend so much on other unnecessary things! *cough*war, welfare, politicians paychecks */cough*

State arguments

[andyring]

I hope people see this for what it is: states experiencing financial hardships are looking for new cash cows to balance their budgets, thanks to years of overspending during the false and short-lived economic boom of the late 90s, that is now coming back to bite them. They will say that it is "lost" revenue. Something cannot be lost if it never existed in the first place!

I find it interesting that when a business experiences tight finances, they must improve efficiency and trim costs in order to stay afloat. Heaven forbid a government entity have to do the same thing! Cut one penny from a bloated government program (or even cut the rate of growth!), and suddenly the headlines scream about no school lunches and seniors losing social security.

Sickening.

Re:Please thank Mr. George W Bush!

[Richthofen80]

Or...
You could see that Mr. Bush is trying to stop the $pending $pree that states are on. Don't blame him for 'forcing' states to do anything. States have been relying on the federal tit for way too long.

States are refusing to accept that they must cut fat in their budgets in order to meet them. This means auditing the books and eliminating unnecessary services. Every penny of the 'surplus', i.e. the excess cash from federal/state taxes that happened during the internet bubble, should not have been spent. When you plan your budget on an economy that was continuously warned as overvalued, then shit your pants and refuse to roll back the increases when the economy finally re-balances itself, well, you have no right to complain.

Mr. Bush is not responsible for the economy. The economy is the results of millions of business transactions every day by businesses, individuals, and groups. It *generally* increases in the long run, with ebbs and flows in between. Planning on a good three or eight years of economy is just plain stupid. And that's what the states and governments did, and now their paying for it. Or not paying for it, as the case may be.

Sales Tax Bad, Period

[GrouchoMarx]

No no no! Internet sales taxes are bad, but not for the reason people think. Well, not quite. In truth ALL sales tax is inherently bad.

Sales tax is inherently regressive. A loaf of bred (or book from Amazon) costs the same regardless of whether I make 10k a year or 500k a year. Put simply, the cost of living does not scale with income.

Increasing the cost of the bread/book via sales tax increases it for everyone, but that's not equal taxation. A difference of $1 extra in taxes is a larger percentage of the disposable income of a person making 10k per year than it is for someone making 500k a year. So in fact, a sales tax hurts the poor and middle class MORE than it hurts the rich.

No wonder so many rich people like it.

Conversely, even a flat income tax scales the burden with income, so that higher income brackets also pay for increases in taxes. A progressive income tax is better still because then it scales the rate so that the burden of taxation is felt equally by everyone, but that's another discussion.

So no, don't put a sales tax on the Internet. Don't put a sales tax on traditional stores, either. STOP CUTTING MY INCOME TAXES AND CUT MY SALES TAX INSTEAD!!!

With an all-income-tax system, everyone bears the burden of taxation equally. Sales tax makes the poor bear the burden more than the rich.

(And by "burden of taxation", I mean whatever the tax rate happens to be and whatever it's used for. Those are separate issues.)

Constitution

[Dan Farina]

As I recall, States were not allowed to levy tariffs and such against each other. Doesn't imposing taxes on a particular method of transaction fly in the face of the rules that define us as a union and have been tested in the past in courts?

This is the price we must pay for the mess the Iraqi war caused budget-wise. Otherwise there would be the possibility that the federal government could assist the states, and businesses would not have to be so conservative because of the uncertainty lurking over the horizon. Instead we must bend the rules to work around this serious lack of funds.

Inevitable but for key reasons...

[Dukeofshadows]

Remember, the drop in the economy, unwillingness of the state governments to cut back on politically expedient expeditures (whether for the people as a whole or just the ones who finance the campaigns of current officeholders), and the laws passed immediately following 09/11 are putting the crunch on states. State governments are forced to pay for things like more security at airports, transit stations, etc. Kentucky is not releasing 600 prisoners because they feel generous. Federal laws are mandating implementations that states would have had difficulty funding before 09/11, but now states are stretched to the breaking point to do so. Federal fiscal responsibility is at an all-time low under the Bush administration, thus they have no money to spare and are using their resources to beg for what little cash may prove available to rebuild Iraq.

Sales taxes are one of the primary means of state government fundraising. In such a crunch time, they justifiably fear losing much of "their" income to retailers and possibly looking at struggling brick-and-mortar businesses disappear because someone can sell the same product for less while still making a profit because they can avoid sales tax. Thus the revenue lost is two-fold: tax from the item itself and from property, purchase, and income from any and all businesses that fail as a result of interstate competitors. In a free market this is just how life works, but this country is a regulated capitalist system, hence why MS can be prosecuted on anti-trust charges and slowed from trying to monopolize multiple Internet markets. How can we solve the problem?

The logical solution IMO would be to have the sales tax of the state in which the vendor is located applied to the item if purchased domestically and the sales tax of the state of the recipient applied if the items was purchased internationally. Does anyone have any thoughts on how to actually implement a (potentially) workable sales tax on internet items?

Unworkable...

[VivianC]

Disclaimer: I am not a CPA, but my wife is and holds a Masters in Taxation. We talk about this subject often.

With the state tax systems being the way they are, it would be impossible for a small seller on the internet to comply with the laws. Forty-seven states have sales taxes (or is it 48?) and each one is different. A seller on eBay would need to compute that tax for the buyer (state, county, city, in most cases) and then file quarterly with that state. Oh, and to file, you need to apply for a tax id number in that state which may require a business license depending on local laws. Say goodbye to all the small businesses who sell anything on the web.

Or, you could always have a store on the web and have an order form printed that needs to be faxed. That would make you a mail order business which no one seems to be talking about taxing.