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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."
...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,
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.
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.
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.