Slashdot Mirror
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."
...well, not exactly. But once the price advantage of no sales tax goes away, goods that incur a shipping charge will be better bought locally, all things being equal.
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 would have better luck legalizing and taxing drugs (and it would be more moral) than trying to enforce crazy e-commerce regualtions across state lines. Seriously, the money gets taxed once as income in the state is is spent from and once as income in the state it gets spent in. Isn't that good enough? Why try to put a brake on the great whell of e-commerce that is just starting to get our economy spinning again?
Legalize and tax drugs, don't tax e-commerce. Are you listening, Dean?
When I (in North Carolina) buy something on the Internet from, say, Oregon, where does the sale actually take place? I would certainly say Oregon. Add to that the concept that any extra tax on it by North Carolina certainly is an unconstitutional infringement on Interstate trade. The state provided no benefits to such a sale (one can argue, although lamely, that they provide things like police and fire protection to "real" stores), their only claim on taxing the sale is greed.
I'm an American. I love this country and the freedoms that we used to have.
It seems there's some controversy in how this thing would be implemented. The authors wanted stores with annual sales of less than about $5 million to be exempt from the tax, since keeping track of sales tax for fifty different states is incredibly cumbersome. Amazon, however, wants a much lower limit. They're trying to force businesses who take in at least 25 or 50 grand each year to pay sales tax.
I think it would be a real shame if this thing goes through, with taxes kicking in at sales in the tens of thousands of dollars. As Amazon must well know, setting up sales tax collection and payment for 50 states would be an absolute nightmare for small sites.
I mean, what a disaster. You're running a site with $55,000 in sales, and now you've got to administrate collecting and routing sales tax for 50 different states, even though you only take in 1500 orders a year. Think of all the paperwork and hours lost, all for the sake of, say, $60 tax per state.
That explains why sites like Amazon.com would be willing to endorse a proposal that cuts into their profits. It's obviously worth losing a few percentage points on the bottom line, if doing so creates new barriers of entry to tiny upstarts.
I'm generally "Interesting," "Insightful," and even "Funny" here. What the hell happens to me at parties?
"No Tax or Duty shall be laid on Articles exported from any State."
That about wraps it up.
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 asked about this in the previous thread, but got no explanation, so I'll try again... how can such a law be reconciled with what is explicitly specified in the U.S. Constitution?
"No tax or duty shall be laid on articles exported from any state." (Article I, Section 9.5)
That is, after all, exactly what these laws mandate, for merchants to collect a tax on some State's behalf on goods that they are exporting out of the state. How is this legal?
AnotherBlackHat also pointed out another relevant provision:
"No State shall, without the Consent of the Congress, lay any Imposts or Duties on Imports or Exports, except what may be absolutely necessary for executing it's inspection Laws: and the net Produce of all Duties and Imposts, laid by any State on Imports or Exports, shall be for the Use of the Treasury of the United States; and all such Laws shall be subject to the Revision and Controul of the Congress." (Article I, Section 10.2)
I am genuinely bewindered as to how proponents of such a law can think it would pass Constitutional muster. If anyone could explain the legal rationale behind such legislation, I'd really appreciate it.
I know this is ./, but geesh!
The bill doesn't talk about taxing internet sales, it talks about taxing remote sales. Sales includes mail order, phone order, internet order, any order.
The bill only applies to states that agree on a unified, simplified tax system. The same items will be taxed in every state that agrees.
Let's see. I have a computer. I input the zip code of the person who has placed the order and it tells me the tax. Hasn't anyone reading slashdot heard of computers? They sometimes can be used to do computations for people.
Once a quarter, I fill out at most 50 forms and send 50 checks. A burden? Yes, but not that great. If the system is truly simplified, my computer should be able to fill out the 50 identical forms for me for the 50 different states.
The bill as introduced only applies to those with more that $5,000,000 in "gross remote taxable sales." Note it does not include local sales or sales of non-taxable items.
I don't know about your mom and pop, but mine don't take in more than $5,000,000.
Shout outs to my peeps in Oregon and New Hampshire too! :)
The small, independent, one and two man ecommerce sites are the ones that will be hit the hardest with a new tax system. They really won't have the resources to figure out the tax system. It will pretty much wipe out those silly little independently coded ecommerce web sites that you see here and there.
This is a loss for Linux, as it is easy to talk these small sites into using unsupported ecommerce software running on Linux. Gearing up for a big nex tax will require a type of support the free software business will not be able to deliver.
It is also interesting to see that the government is talking about big increases in taxes at this point of the business cycle.
Greenspan has been pursuing massively inflationary monetary policy for awhile, there's been a gradual devaluation of the dollar. Just about every part of the market is really geared for a big spurt of inflation...except, of course, wages.
Workers and small businesses should be prepared for some very serious belt tightening in the years to come.
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.