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Ban On Internet Sales Tax Ends Saturday
donnyspi writes "As reported in the Rocky Mountain News, among other places, the 5 year ban on collecting sales tax on purchases over the internet is scheduled to end Saturday. 'The original moratorium was established in 1998, renewed in 2001 and is set to expire Saturday. The U.S. House of Representatives passed a bill in September that would expand the ban and make it permanent. Similar legislation hasn't yet been voted on in the Senate.'
I bought it over the internet, obviously, and they still added $80-odd to my bill for sales tax. If the ban wasn't over yet, how come sales tax applied to my purchase?
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Can we ban charging for shipping too?
Quid festinatio swallonis est aetherfuga inonusti?
Africus aut Europaeus?
The ban that is about to expire is the one on taxing online services (such as ISP access). The "ban" on collecting sales tax over the internet is because of a law, but is the result of a court decision (which originally concerned catalog sales).
If Congress wants to allow taxing of internet access by the states, they will now have the ability, though they probably won't. If they want to allow taxing of internet sales, they'll have to get around Supreme Court decisions that say states can't collect taxes on residents in other states. But the issues are NOT related, despite the frequency with which people screw this up.
-Looking for a job as a materials chemist or multivariat
When mail order business was getting started, the traditional businesses and the government moaned and groaned about the lack of tax return... However, today nobody is looking to tax mail order. Why not?
Mail order is been around far longer than the internet.
The internet is a wonderful business model and vector. Let us not soil it with taxes just yet.
Davak
I see no reason why Internet sales should be treated any differently than catalog or telephone sales.
If I buy a widget from Company X via a catalog when I live in a different state than Company X, I'm not charged Company X's state's sales tax. But when this moratorium expires, I could be charged state sales tax if the purchase were over the Internet. And then, which state's sales tax would I have to pay?
Why should the medium of the purchase dictate the taxation rules? I, for one, would like to see sales tax laws universally applied for interstate commerce.
It bans "use tax". It prevents states from taxing ISPs based on people simply connecting to the internet, like they do now for phone lines.
State sales taxes on internet purchases have been, and are still legal, and congress is doing nothing to stop them.
In fact, right now it is only possible for a state to successfully collect sales taxes if the e-commerce provider has a presence in their state, but the states are banding together to try to rectify this "problem", by creating a uniform sales taxation scheme that will force an e-comerce dealer in, say, New Hampshire, to collect and forward California state sales taxes from anyone residing in California.
Just a few ideas rolling - I'm sure /.'ers will come up with more, and comment on this specific case. Not being an american, I lack the general "feeling" on the workings of the american economy.
0) Both empirical data and theoretical elaboration seem to concurr on that an Added Value tax would be the most efficient kind of taxation. Sales taxes don't quite distribute tax burden efficiently along the production chain. But how complex is really the production chain in a high added value internet reseller?
1) In countries with a high unemployed capacity, sales taxes will be very hurtful, as they will reduce consumption. But in a mature economy like the US, a carefully planned combination of consumption taxes and investment exemptions could encourage savings - and americans save four to five times less than their european counterparts.
2) The deadweight burden (the loss in welfare that doesn't become govt revenue) of a tax depends (among other supply-related factors) on demand elasticity - how much will demand react to a change in prices. If internet buyers are more price-sensitive than, say, buyers at the Walmart station in Dullsboro/OH, this could be hurtful to profitability perspectives as a whole.
3) How will this affect e-commerce with other countries? Foreigners are never happy to pay US taxes.
4) From a general equilibrium viewpoint, how large is the internet retail market in comparison to the large scheme of things? If not large enough, could it be the proverbial butterfly in south america causing a month-long storm in India?
5) I don't know if product-factor (Leontieff) matrixes are done by US bureaus of statistics regularly, but it would be interesting to take a peek if they did. Leontieff matrixes attempt to capture the interdependence of sectors in the economy - and while not being theoretically strict from a general equilibrium viewpoint, they're a very practical statistical tool. Anyone knows something about this?
6) Are they just trying to alleviate the govt. deficit? It doesn't seem to me the administration really cares about govt deficit.
7) Are they trying to impose stricter regulations on the internet on the grounds of tax evasions?
8) etc. etc.
Anyhow this probably won't be a big deal for most internet businesses except for the paperwork. It might not hurt them at all if there is a provision made for the expense of collection. It will hurt those that were only in business because they were a tax dodge.
You'd be surprised how much a little extra paperwork can cripple a sole proprietorship (I'm not allowed to have employees unless I change my business status and incur another whole world of complications), already being run in combination with a second job, like me. Collecting and remitting state sales taxes, along with regular accounting, and reconciling that with federal income taxes and piles of extra forms is already a huge hassle and confusing as Hell. The ONLY way internet sales tax will work is if they establish a tax system outside of the existing tax codes and districts... like if I no longer remit TX state sales tax and just collect (for example) a "national internet sales tax" of X% that's divided between the states or something.
If you ever looked at the tax districts, codes, what goes to states, city and metro jurisdiction... well, it's forked up. If they try to dump a convoluted national internet sales tax thing ON TOP of that, I think it would force a lot of small internet businesses like me to just throw their hands in the air and give up entirely.
My Webcomic: Asylum on 5th Street
Warning: This is slightly offtopic but applicable to internet taxation nonetheless.
One of the biggest complaints about sales tax is that (in brick and mortar outlets) you never know exactly how much you're going to pay for something. For example, I run over to Walmart and I want to buy a can of Spaghetti O's. The label reads $0.79/can. If I have $5.00 in my pocket, I can buy 6 cans... or can I?
If I'm in an area with a different sales tax as the one I'm familiar with (in Louisiana sales tax varies from parish to parish where parish is the rough equivalent of a county), I may miscalculate the tax and I might not have enough at checkout.
I REALLY wish the government would pass a law that all taxes must be included in the labeled sale price. The seller should take into account the appropriate sales tax when deciding how much to sell an item for and the state should just take a percentage out of the seller's gross sales. It would take an unneccessary burden of the consumer.
If they did this and got rid of the penny, think of how much easier shopping would be. Keeping track of $0.50 for this, $0.35 for that, $20.50 for something else would be a lot easier than $0.39 for this, $1.99 for that, $19.99 for something else plus tax.
They should do the same thing for the internet if they levy an interstate sales tax on items bought on the internet. Granted, it's a lot easier to hit "cancel" on a web checkout form than to put things back at a grocery but it would set a nice precident.
P.S. -- VERY OT, has anyone else been getting lots of Server 500 errors when browsing Slashdot over the past week? I used to never get any and now I'm getting them in roughly one out every five page views... weird.
If only there was a "WRONG" moderation and it applied to the blurbs!
The fact that Internet and catalog retailers don't have to collect sales tax for states they don't have a business presence in is a result of a Supreme Court decision and the Interstate Commerce Clause of the US Constitution (which reserves regulation of interstate commerce to the federal government). That doesn't expire. The states have been trying, since before the Internet was a big thing, to get Congress to change that. So far they've failed, but they are still trying.
What does expire is a moratorium on a tax on Internet services themselves -- e.g. a tax on your ISP's services.