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New U.S. Sales Tax Regime For Internet Sellers?
morganew writes "As reported last week on Slashdot, States are pushing for new sales tax rules that would force Internet sellers to collect taxes for up to 7500 jurisdictions. Legislation has been introduced. The House Judiciary Committee held hearings today; here's CNet news on the bill, and here's a report (PDF link) on what it could mean to internet sellers."
Will this put US online sellers at a disadvantage to, say, Canadian ones for importing? For example an amazon.com order plus the taxes verses an amazon.ca order with shipping and the exchange rate differences?
Trolling is a art,
They are trying to turn internet shopping into something similar to ordering out of a magazine...
I like ordering things online because you know your getting what you order(if you go to the right place) and its almost always cheaper, even if you include shipping costs.
This will wreck havoc on all of that though, take away the main advantage of online sellers...
Sigh, net may turn into place to buy specialty items, Best Buy or whatever for non obscure things. I find that kind of depressing really
The convenience, and ability to comparison shop by seeing prices from a few dozen retailers side by side for that new video card, is still there.
It still beats living in a town that has only Best Buy and a ridiculously overpriced little shop that sells second rate chinese hardware.
Even with tax and shipping I can get that Radeon 9800 almost 100 bucks cheaper online.
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...the very moment it is passed, it will be voted down unanimously by the Supreme Court because states cannot tax other states. This is black-letter Constitutional law.
So, the online vendors will simply stop selling online, and you will only "prepare" your order online. Then the customer will call over the phone to finalize the order, and the sale will be just another phone order.
Just after reading the CNet article, this looks as though it could cause real headaches for small business owners.
Let's see. Small scale businesses would be collecting sales taxes for virtually every jurisdiction in the country, dealing with the choking amounts of spam, fending off people who want to steal the domain or commit other mayhem, paying the self-emplyment tax, and contending with all the other paperwork. Where's the incentive to keep going (much less the time to devote to the actual goods or services)?
We could probably save a bundle by doing away entirely with the Small Business Administration. At this rate, they won't have much to administer.
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In a globalized economy, taxing e-commerce isn't going to work well. For the sake of fairness, traditional brick-and-mortar retailers shouldn't have to suffer from sales tax either. Time to move to a totally different tax system; I'd propose to tax energy consumption and nothing else (not even income tax); calibrate it so that the total tax burden remains unchanged.
So what is to stop internet sellers from simply putting up a printable order form? If you have to snail mail in your order, it is mail ordered and exempt. No different from the situation now, but it takes a little longer. Certainly worth the effort on bigger ticket items.
But how is it that mail order would be exempt and internet sales would not be exempt in the first place? I'd love to know how they are going to just explain away
"No tax or duty shall be laid on articles exported from any state."
"No preference shall be given by any regulation of commerce or revenue to the ports of one state over those of another: nor shall vessels bound to, or from, one state, be obliged to enter, clear or pay duties in another." (Article I, Section 9 of the US Constitution)
I think that speaks for itself, or shall we have the revisionist telling us that 'vessels' meant spaceships, just like 'the people' means the National Guard in the Second Amendment? Maybe some of our fine lawmakers should have taken the time to read our Constitution at it's recent unveiling.
I believe the state of the buyer collects normal sales tax, as I've never had to pay sales tax when buying things from out-of-state.
You know what?
450 billion goes to the military
150 billion goes to corporate subsidies
the federal budget is in total something like 1.2 trillion dollars. so basically half our tax dollars are going to the military and various failing big corporations(ie. telcos, many airlines). and then you count the various Justice Department pet projects and Bush's landing on aircraft carriers and you get 3/4 of our national budget spent on waste and war.
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If you really want to be a dick about it, assuming you are an ecommerce merchant, perhaps you could ensure that you only had a physical presence in the least populated state in the continental (to minimize shipping costs) US. That way, only people in that state would have to pay sales tax. Since it is the least populated, the majority of your customers would probably be out of state, and thus would avoid it.
You can't always figure out the sales tax rate based on the zip code.
Many of those who do charge sales taxes depend on the zip code to determine how much to charge. I hate having to argue with them every time I buy something.
For example, the Texas sales tax rate at my office is 8.25%. But at home, it is 6.25%. Both are in the same zip code, but my office is in town and I live 20 miles out in the country.
The odd thing is that if Fed Ex drops off my package at the office because they don't have the foggiest idea how to get to the house, the sales tax rate is still 6.25% since the official delivery destination has no local sales tax component.
This bill isn't the answer. The state sales tax situation is a complete and utter mess, and local sales taxes make things even worse.
How does this propose to handle county or city sales taxes? It doesn't.
F'rinstance: in Blount County, TN, purchasers at local stores are subjected to a 6% state sales tax and a 2-3/4% local (county, IIRC) sales tax. Purchases made on the Internet, or via mail order, from outside of the state are not subject to sales tax, either county or state. This bill would subject said purchases to state sales tax, but the county still gets shafted (or the buyer gets lucky, whichever way you want to look at it).
Michigan's state 1040 has a "use tax" line where you can (if you kept receipts) enter 6% (the state tax rate) of the total amount of out-of-state purchases made in that tax year and pay your state sales tax that way, or if you (intelligently) didn't keep receipts, you can "estimate" it using a formula they give (which will usually save you a bundle if you do much out-of-state purchasing) based on your AGI.
What if I'm on vacation in Oregon and buy a backpack, or some other non-consumable item, for use in Illinois? Oregon gets the sales tax money, but clearly, the purchase is intended for use in Illinois, so Illinois is getting screwed here. People who live in states adjoining those where there is no state sales tax whatsoever have the benefit of being able to cross the state line and purchase whatever they want tax-free. Obviously, the bordering states don't like this.
Sales taxes need to be abolished, and the federal government should implement a national sales tax (hereafter abbreviated "NST"), akin to the UK's VAT or Canada's GST. When a remote purchase is made, the state to which the purchase is billed gets that portion of the NST. The state can then let the local governments do their own fighting over whatever scraps are left. I can't say as I particularly like local taxes anyway, and VAT and GST work extremely well in the UK, Canada, Australia, etc., so perhaps these folks are trying to solve a problem by reinventing the wheel...
p
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Using this as an oportunity, someone could start pitching a national sales tax. As much as the states will try, there won't be a law making it legal to tax items purchased in another state. I know that here in Wisconsin we are technically supposed to pay sales tax on out of state purchases via our personal income tax. Anyway, back to my point.
While cash strapped states might not like the idea, the federal government could impose a federal sales tax on ALL items. I would find this ideal over our current tax structure and now would be the perfect time to pitch this federally.
The only fears I have is congress (Money grubbing freaks on both sides of the spectrum) will want to use it as an income suppliment rather than a replacement for our current tax structure.
I'm going to stop short of preaching and trying to sell the idea of National tax and say that States will try, and may even pass laws but in no way be able to enforce such laws.
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