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Are You Reporting Your Internet Purchases?
theodp writes "Over the next week, taxpayers in 19 states will be confronting new sections on state returns that ask them to fork over unpaid sales taxes for items purchased out of state, including Internet transactions. A NY Daily News editorial characterized the addition of use tax to state returns as a rip-off and advised taxpayers to fill in a zero on the line, although an accountant suggests doing so may even be worse than just leaving it blank and put you on the line for tax fraud."
Where is there a list of states participating in this? TFA only mentions two, and a lightweight Googling didn't reveal much more. I'm a Mass/Taxachusetts resident (so I consider the chances high), but I certainly didn't see anything on my state return about grey-area sales taxes.
Speaking of which, good luck if they wanted to collect. As the article mentioned, the honor system doesn't work. Not only that, being the organized person that I am, clearly I have kept an accurate record of every internet transaction I made in 2003. In short, the only way I can see these folks having a prayer of getting my money is by making a national system of collecting these taxes that is compulsory for retailers to take part in. Otherwise, it's doomed.
Auto-reply to ACs: "Truly, you have a dizzying intellect."
Alabama is one of them, though it doesn't apply it to only internet purchases. It applies to any thing that you bought out of state and brought back home.
C:\>
Now if that wouldn't be a violation of the Commerce Clause, nothing would be.
I understand there is an issue of fairness, assuming a state which doesn't collect sales taxes or has a very low rate sells a lot of merchandise to people in a state with high sales taxes, and local sales taxes (i.e. California)
A feeling of having made the same mistake before: Deja Foobar
That line has been on my tax return for as long as I can remember. Of course when I first started doing taxes we didn't have internet sales, and it was intended to only apply to mail order stuff. I don't know anyone who put anything in that line back then, and I don't see any reason to expect that to change now that internet sales should be added in as well.
$6.66 should get the message across loud and clear.
Send me a check for the amount you owe and I'll include it with mine.
I'm curious, what part of Article 1 Section 8 of the U.S. Constitution don't these boneheads understand?
I know the states get around this by calling it a "use tax", but come on. Do you really expect me to keep track of everything I've bought across state lines just because you charge so much sales tax that the price of shipping makes up for the difference?
Mass is definitely one of the states. It's on the tax return under "use tax".
This is my sig. There are many like it, but this one is mine.
As a brick & mortar retailer, I'm sick and tired of losing businesses to cheapskates who want to shave a few pennies off, and don't give a damn about the businesses they choose to support or not to support. I say that that's the price you pay for shopping online (along with not being able to see the product, not know who you're buying it from, shipping cost and time... etc) It's about time that the playing field is leveled. Personally, I can't wait until this country turns into nothing but a bunch of Amazon.com warehouses with residential apartments in between, with little to no retail. THEN consumers will finally understand what they got themselves into, and I'll be long gone.
From the article:
All states have provisions for "use tax,"
This is not true. New Hampshire has no sales or income tax. There is no use tax provisions. There are a number of other states without sales taxes and/or income taxes.
It makes me rather doubt the competence of the author who apparently didn't do basic research on his topic.
-- Dan Jenkins, Rastech Inc.
Your naivite needs to be addressed, while I am not even a paranoid person, I can think of 2 ways where they can go after you:
1. Get all your credit card info. When was the last time when you used cash (money order, etc) for your Internet purchases? Do not kid yourself, the banks would happily submit your finincial transactions to IRS for audit at the first request...
2. Carnivore. Nobody know what it is capable of. Would be trivial to monitor all e-commerce transactions if needed. SSL is not that secure...
Code poet, espresso fiend, starter upper.
If you want people to pay the tax it needs to be calculated and collected at time of purchase by the merchant.
If someone feels that this will kill the ability for some merchants to do business online, possibly, though it should not be any bigger of an inconvenience than figuring out shipping rates was when Ecommerce took off. Even so, I don't think it will hamper online sales anymore than consumers having to collect and collate receipts for taxes will. Plus there are a number of sites like Yahoo that will be able to use this as a new feature for their online malls.
Now, this galls me on several levels. One, they assume that every penny you earn is to be spent on sales-taxable goods in the Great State of North Carolina. Two, you definitely get the feeling that if you don't put some amount on the line, they'll be pulling your return for audit. It's almost a big brotherish attempt at coercing additional tax monies. Furthermore, if you buy something in say, SC, with a sales tax of 5%, they expect you to pay the difference between that rate and your rate.
Speaking of which, good luck if they wanted to collect. As the article mentioned, the honor system doesn't work.
That's exactly the problem they had with the income tax--once people realized how much they were expected to fork over, they refused. The solution in that case was to take their money before they ever got it. Now, states have some real control over employers and retailers within their jurisdiction, but they can't do a whole lot outside of it. I can't see this being very effective.
Of course, it's also convenient to have a system where everyone is a criminal, because you can use that against them on a selective basis.
One man's -1 Flamebait is another man's +5 Funny.
There are people out there who say that there is no legal requirement to pay income tax to the federal government. I read last night about a guy that used to work for the IRS who resigned after doing his own research and coming to the conclusion that these people actually have a case. He hasn't filed a return since 1999.
How these people propose to fund the building of the roads that they will march on in protest is unclear, but it's an interesting case they put forward from a legal point of view.
Drill baby drill - on Mars
Taxachusetts counts. There seems to be a big push to pay use taxes on items not purchased in-state. As I recall there is even a box this year on the income tax form to declare these unpaid taxes. Also remember that Mass. has invested heavily in a new system to catch tax cheats. From the Boston Globe Archives:" STATE'S NEW TECHNOLOGY GATHERS INFORMATION TO FIND TAX CHEATS Published on February 15, 2004 Author(s): Bruce Mohl, Globe Staff If you get the urge to fudge a bit on your taxes this year because you think, "Who's going to notice?" think again. The state Revenue Department is watching. The agency has launched a technology offensive with the goal of pulling together stray bits of information about every Massachusetts taxpayer, searching for clues that would indicate who isn't paying the taxes they owe." http://www.boston.com/business/taxes/articles/2004 /02/15/states_new_technology_gathers_information_t o_find_tax_cheats/
Here in N.H. there is no sales tax. I often forget that other states even have sales tax. It seems I am only reminded when I am on vacation, and the clerk wants me to pay $10.55 for the item that is clearly marked at $10.00. Then I get this dumb look from the poor person behind the register, "Uh, sales tax?"
It makes me wonder, how our state can run without sales tax, and without state income tax. I mean, it's a wonder we survive at all! Now, look at Mass, and California, loads of taxes! Boy, those people sure are better off with all those taxes and government programs! But, I digress.
Seriously, if you live in NH, and you buy goods over the Internet, no tax, case closed, Live Free or Die!
Modest doubt is called the beacon of the wise - William Shakespeare
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Did VA Software get audited, or what?
Ohio is one, but then again it was on *last* years form as well. In Ohio at least it's just application of the use tax laws that have been on the books forever to a new area which the states fear could significantly impact revenues. In other words they are just pointing out that you need to report this new area just like you always were, of course from a bit of old research it seems that use taxes were never a big source of revenue due to their inherint unenforcability.
There are 4 boxes to use in the defense of liberty: soap, ballot, jury, ammo. Use in that order. Starting now.
As to what states are "adding" this - actually only CA and NY are new to this. The article says they are joining 17 other states that ALREADY did this.
I was taking one day at a time, but then several days got together and ambushed me. (from a Rhymes with Orange comic)
Article I, Section Nine:
No Tax or Duty shall be laid on Articles exported from any State.
Additionally:
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.
One state cannot tax a purchase made in another state. Taxes are too high as it is.
Business isn't willing to pay for products, innovation and careers, so we get brands, mortgage commercials and layoffs.
Do I have to pay a use tax on the cost of my Slashdot subscription?
Remember the days when Republicans were the party of fiscal responsibility?
In olden days, most of the purchase used to be within state and making out of state purchase was very expensive. So the state level sales tax made sense. In today's world, the sales tax at state level makes no sense. Transportation, shipping is way cheaper than they used to be. There should be federal sales tax common for all state and each state would get contribution (from federal govt) based on where the product was purchased/shipped.
Speaking of which, good luck if they wanted to collect. As the article mentioned, the honor system doesn't work.
Tell that to my cousins who got audited. The IRS nailed them on this since they had made some rather big ticket purchases.
I just did my taxes with H&R block. I specifically ask whether there needs to be any Internet purchases claimed etc etc. Basically I am avoiding doing taxes twice / audits etc.
H&R Block said NO!!
And I have yet to report anything on that line. Not that I feel I am trying to rip off the state, but having at one time worked for a mail order company, who often did *NOT* have to charge sales tax on out-state purchasers.
I do not see how ordering something from a company who is based soley out of, say, CA, is any different than if I do it via mail order, or over the phone ordering.
I can see paying sales tax if I order from a company like Crucial memory, who most likely has offices in Michigan. The line on a state return though, just smacks of "you didn't spend all your money in-state, but we're going to pretend you did." Does that mean the next step will be to make people pay their state sales tax on items bought outside the state?
Will their be border crossings erected between Michigan and Ohio, and you'll have to declare what you purchased in Ohio, and pay the Michigan sales tax on it?
Sheesh.
Jason A.
Do you see the FNORDS? I refuse to post anonymously, as I am fireproof!
A smarter way would be to have a smarter tax system, like a Value-Added Tax. Tacking sales tax on as an after-thought is stupid, and creates many more problems than it solves. With a fairly simple system (Person A hands a stack of bills to Entity B; B hands A a Widget; B makes an entry in a book) its worst flaws aren't really exposed. With side-spread digital transactions for digital goods it simply cannot be maintained.
This isn't as much "normalization" as it is "don't take so many drugs when you're designing tables."
States with sales tax lines on their tax forms include Alabama, California, Connecticut, Idaho, Indiana, Kentucky, Louisiana, Maine, Massachusetts, Michigan, New Jersey, New York, North Carolina, Ohio, Rhode Island, South Carolina, Utah, Vermont, Virginia and Wisconsin, according to the Federation of Tax Administrators.
Read more about it here.
The IRS has a pretty comprehensive PDF online debunking most of these schemes.
4 ,1,7068670.story?coll=la-home-business
[registration required, blah blah]
http://www.irs.gov/pub/irs-utl/friv_tax.pdf
While clearly the IRS is biased, they do cite many court cases that have legal precident covering many of these loopholes or misreadings of the tax code.
There was also a related article in the LA times last week which touched on the same topics
http://www.latimes.com/business/la-fi-taxman4apr0
When I came across this last year, it surprised the hell out of me (definitely merited a "WTF?"). I generally don't keep track of my online purchases (in as far as differentiating them from non-online purchases). And what about things I've bought from outside the country (import CDs et al)? Do those count? Seeing as how I didn't want to get in trouble, I made a rough estimation, but then again, how about the places I've bought from that ALREADY incorporated sales tax? I don't remember which they are, I don't keep records that closely on that stuff. Let's hope little graduate student me doesn't attract attention and get audited on my cute little minimum wage income. Because that would sickening if citizens are getting in trouble for this, while 60% of corporations didn't submit taxes 1996-2000 (was in the news this week). *sigh*
That's why many people have moved to Vancouver, WA. Lower property tax, no sales tax in neighboring Portland, no income tax, and mooching off of Oregon tax dollars by traveling on I-205/I-5 everyday.
There are a huge number of yeast infections in this county. Probably because we're downriver from the bread factory.
Anyway, my question is simple - there's this line on my state taxes that asks me how much I paid in out-of-state goods over the past year so I can fork over sales tax on the items. My answer: I have no idea. Am I supposed to?
I was rather surprised to see this on my tax forms, since I don't recall being told any time that I should be saving receipts from out-of-state purchase. And while someone probably could look up my out-of-state purchases on my credit card, I don't have instant access to those records... Even if I did, I don't know what counts and what wouldn't. For example, some things aren't taxed in Massachusetts, like clothing.
I can't see how this will possibly work. I have no way of looking up this data - is it really my responsibility to keep track of my out-of-state purchases so the state can get their $5 or whatever? I don't make many purchases out of state anyway, and I definately don't bother keeping track of which purchases were made out of state and which were not.
You are in a maze of twisty little relative jumps, all alike.
since I run an on-line business in AZ, telling me to report any internet purchases I had made. I thought about it for a minute and then realized of the two known internet purchases one had been refunded entirely by the company (NewEgg, which resulted in me getting a server case for free after they jerked me around for several months) and the other was less than $100 and had just taken place a couple days prior. It's actually pretty rare that I buy things on-line and I don't keep records unless it's a purchase for the business since it's a tax write-off. The only purchase I could report was a business expense.
The tax only applies if you purchase tangible goods and import them into your state of residence. It falls under a "Use Tax."
If you're not running a business you most likely will not be bothered. I was probably sent a letter not only because I run a business but also because I don't pay any taxes on sales since they're all internet based and out of state. Every month I have sales to report but no tax. It also may have raised a flag.
Ben
Work Safe Porn
In the short-run, as the article says, there's essentially zero compliance for existing law, and the only way anyone is getting into trouble is if the state is out to get them for something else. In the long run, Liselle is entirely correct. This burden is going to be imposed on Internet vendors, the way investment firms and banks are required to do the revenuers' work for them.
What I'm listening to now on Pandora...
Article I, Section 8 of the US Constitution:
The Congress shall have power to lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defense and general welfare of the United States; but all duties, imposts and excises shall be uniform throughout the United States.
Amendment 16 of the US Constitution:
The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several states, and without regard to any census or enumeration.
Sorry, but I find it hard to argue with that...
Two words: Al Capone
C|N>K
States have no right to tax interstate commerce, buying something out of state is interstate commerce and constitution clearly states that states have no right to levy tariffs or taxes on interstate commerce.
Have you ever been to a turkish prison?
Liberty you never use is liberty you lose.
For example in Ohio...
When the retailer charges you sales tax on your purchase, you do not have to pay additional use tax to Ohio.
hey, try california here where the sales tax is 8.25% and they're talking about 9% :( My household pays ~40% income tax as well... it's quite a burdern.
Religion is a gateway psychosis. -- Dave Foley
For the typical consumer this is a non-issue. The government is not going to go to extraordinary lengths to figure of if I owe tax on the $50 worth of Amazon stuff I bought. It just isn't economically worth it. Now if they had all financial information in the country in one place, they could theoretically figure this out (although given the government's record of technology use this is extremely unlikely), but that would raise significant privacy concerns.
So who should worry? Well, if you are trying to buy expensive art (or any other pricey item) and trying to avoid the tax, then you are a target. If you figure that the cost of tracking down a non-payment is fixed, then you have to assume they will focus on big ticket items.
What the states are doing in this article is pretty reasonable if you think about it. They throw one line on a form and hope people will send them money. This is money they wouldn't otherwise have gotten and it cost them nothing. They won't get much but, hey, it's free money so why not.
... and bless New Hampshire too for not having sales tax or income tax.
After doing 3 years worth of work on a project under the direction of the State of Maine, a few things became very apparent to me. State governments are very inefficient -- and thus it takes more money each year to accomplish the same thing. Combine the general inefficiency with new government programs every year, and you'll quickly see that with a few exceptions, your state is likely out of control.
I happen to live in Maine at the moment, although New Hampshire is my "home land". Maine is the highest taxed state in the union. If you'd like a day long project some time, just for fun, add up all the money your government takes from you... start with the obvious stuff like taxes, and then move on to fees and tolls, etc. In maine, a little more than 50% of my income goes to government (federal and state combined).
Payroll taxes, sales tax, use tax, excise tax, room/meals tax, license fees (multiple), highway tolls, hidden taxes in communication bills, bottle deposits and so on.
But if you really think about it... the worst part is that all of these taxes -- in most cases -- are paid with money that has already been taxed once. Before you even cash your paycheck, the government has already skimmed off the top... and a good portion too! How many of you actually take a good look at your pay stubs and notice the 25%+ OF YOUR MONEY that the government simply took from you? What do you get for it? Well, you get to pay sales taxes on stuff you buy with the remaining 75%. You get to pay excise taxes on the car you drive. You get to pay taxes on the gas you put into the car -- and it's your prime pleasure to be stuck in line at the grocery store while a welfare mother pays for her food with your money. You know, she's the one with the food stamps pile, the WIC pile, and then the pile of 2 or 3 misc items that she pays for with a $100 bill.
I think I've had enough taxation. The revolutionary war was all about freedom from opressive taxes... yet we've turned into a country far more opressive than the one we fought against!
Skiers and Riders -- http://www.snowjournal.com
It's pretty common along the Washington(8+% sales tax) Oregon (no sales tax) border too. Incidentally if you live in a state that doesn't have a sales tax you are exempt from other state's sales taxes (probably true about all states, but they might come after you for the use tax if you live in a state with a salels tax). You were supposed to report the items purchased and pay the sales tax on them (mail order too). Companies are only required to collect if they have a physical presense in the state.
Degaussing scares the bad magnetism out of the monitor and fills it with good karma.
The last couple of years, I did go through my old internet sales receipts and pay the tax on it. Although I *know* I overlooked some purchass
This year, my state gave me an option -- either pay an itemized use tax or an assumed use tax baed on your salary. If you pay the assumed use tax, you wouldn't be audited/fined unless you purchased items costing > $1000.
I assumed the actual use tax would be lower if I itemized. So I went through my credit card bills and discovered it would be *far* cheaper to pay the assumed amount than the actual amount.
I think it was about $20. I had about $1000 total of internet purchases (that would have been taxed at 6%).
- Alabama,
California,
Connecticut,
Idaho,
Indiana,
Kentucky,
Louisiana,
Maine,
Massachusetts,
Michigan,
New Jersey,
New York,
North Carolina,
Ohio,
Oklahoma,
Rhode Island,
South Carolina,
Utah,
Vermont,
Virginia,
Wisconsin
However, even though all these states have places to report this tax, in almost every case my firm just puts in a zero. Granted this policy may change if states become more active with enforcement, but that is our current policy. Just don't blame me if you put 0 and get audited.It's tough to say how much you are supposed to pay, even if you *had* kept track of your Internet purchases.
I moved from a Maryland to Michigan in December 2003. If I were to count all of my Internet purchases for 2003 on my MI taxes (which requires the use tax) then, I would be paying for mostly MD purchases (which, to my knowledge, does not). So, just divide it up before and after, right?
Not that simple. Around the time I was moving, I was purchasing a lot of last minute things on the Internet. Many of which, I ordered in MD, but received in MI. Or, the transaction was initiated in MD, but by the time the money was transferred, I had already moved.
Don't taxes frustrate people enough without introducing state taxes like this?
Florida also has a use tax and used to run extremely obnoxious commercials telling people that they were required to pay it if they purchased items outside the state.
I would think that a "use tax" that is applied only to people who make purchases outside the state would be attackable as an unconstitutional attempt to regulate interstate trade. You're applying a special piece of state income tax code to a class of people that isn't everyone. Since that class of people is only people who have made out of state purcahses, how can it not be an attempt to regulate interstate trade. It will certainly have that effect.
I would think that a far more legally solid method of applying taxes would be to tax a business in a specific state for any sale it makes, whether the sale was in-state or not. Of course, no mail order shop would ever set up shop in a state that did that...
I'm trying to teach myself to set people on fire with my mind... Is it hot in here?
Your credit card statements wouldn't be enough. For example, IIRC
shipping charges are exempt (at least in some places). Also, some
on-line retailers already charge the appropriate sales tax (companies
that already have a presence in your state are supposed to track and
charge sales tax, and I know at least some do).
Some online vendors charge local sales tax even if you are out of state. I believe that Apple is one such. Does this mean that I'm supposed to pay local AND remote sales tax?
plus-good, double-plus-good
-If- there is going to be a tax on interstate sales, the tax should go to the state where the product is sold, not the state that the product is shipped to.
I do give a damn. I gladly pay more in a store that has well paid, intelligent, and honest salespeople. As it is, usually I hate the shopping experience in many (but not all stores). You are lied to, or you cannot get served, or you can't find what you want, or things are stocked so that everyone trips over each other and the merch.
But there are stores that manage to keep me coming back and spending more. How? These stores are pleasant, well organized and well stocked, and the sales help and cashiers are helpful and fast. If you can't pull all this off, then don't be surprised that us "cheapskates" don't seen any reason to pay more at your store.
The tax issue is only one of a zillion factors why many of us have moved a lot of our purchasing online.
They can't possibly enforce it, and you aren't prepared to provide an accurate number, so ignore it.
If they want to create a significant revenue stream based on use tax, they're going to need to educate the population.
We're already taxed more than once on the same dollar. I'll sit this one out.
This is my sig. There are many like it, but this one is mine.
So if I eat dinner in a restaurant across the state line in a state that doesn't collect sales tax, and drive home, do I owe on the partially digested remains in my stomach? If so, how do I calculate the amount owed since evidently at least part of the food was used out of state?
Roads, the Internet, basic scientific research, education, unemployment, national defense, police, firefighters, food safety regulation, zoning enforcement, environmental safety regulations, occupational safety regulations, the 40 hour work week, parks, and the list goes on.
Anti-tax wingnuts amaze me, because they seem to think that nothing they use is touched by the government, when in reality, government is responsible for the vast majority of the things that make life for most people livable, and not some 19th century poorhouse sweatshop hell.
What amazes me is that cow mentailty attitude that if the government doesn't do it, than no one else will, no other solution will be good enough, nice enough, workable. That the only way is to coerce revenue from the masses. Well bullshit. 90% of the rest of us don't need that kind of coercive power to get results. Only a cow would just take it on faith that the government does.
espo
A friend of mine who's done use tax stuff for banks says that putting a "0" on that line is better than leaving it blank. If you put a "0", you have made a declaration that you don't owe any use tax, which might very well be true. If you put nothing, you haven't filled the form out properly, which is a Bad Thing.
Then your friend has no idea what he is talking about. Non-applicable lines on tax return forms are usually left blank instead of being filled with zeroes. My frickin' tax software leaves such lines blank, so I fail to believe that it's a big audit trigger.
ZFS: because love is never having to say fsck
The "honor system" doesn't apply here, because no one has agreed to pay sales tax on out of state purchases. If we had agreed as a nation or as individual states to report our online purchases, we would be on the honor system.
If we refuse to comply with unreasonable demands for money from the state, we are not on the "honor system" as far as our obligations are concerned.
-JemThen on this year's form I saw the Dreaded Line. I thought about it for a long time. I have always carefully avoided Web sites that charge taxes. But in the end I just paid the tax, for a combination of reasons:
Shamefully, I did contemplate lying. But how? I mean, it's nuts to write in "zero". When your auditor asks "why zero - haven't you ever bought anything from Amazon?" what am I gonna say? "No, I live in a cave and all my books are handwritten on vellum?"
I could claim that I didn't know what I had spent. Unfortunately, I save my credit card bills, since I want to have some evidence on my side after my identity gets stolen. Even more unfortunately, I own Quicken, which can print out all my interstate transactions for the year in, like, three minutes. Oops. So not only is ignorance not a legal defense, it isn't even a believeable defense.
I thought about only paying the tax on the big-ticket items. But the difference between that and just paying everything I knew about was, say, $15. It's worth $15 to be able to go before my auditors and NOT lie.
And there are karmic benefits. I no longer refuse to walk into my local stores because I know I can pay lower taxes on the Internet, even after shipping. Instead I refuse to walk into my local stores because they charge $25 for a book that Amazon is selling for $18. I mean, I know I am supposed to support my local stores, but $7 per book?
"That is really just an academic question though - you've got to play the cards your dealt, and we've got to deal with the federal income tax system, as much as it sucks."
This would be true if we lived in a totalitarian regime. We, however, live in a representative republic governed by principles, the Constitution, and the rule of law. Thus, one is quite welcome to challenge or attempt to change laws with which they disagree. This can be accomplished via court action, congressional lobbying, or state-initiated Constitutional Amendment. To challenge the income tax via the courts is perhaps the most interesting of the three. To do so successfully, one would have to convincingly argue to the Supreme Court that it effectively has the power to nullify Constitutional Amendments which are intrinsically counter to the fundamental principles contained within the Constitution proper.
An extreme example of this would be the unlikely situation in which a Constitutional Amendment were passed declaring women to be the property of their husband or, lacking one, their father. Thus, any and all rights normally given to a human being would be usurped by the will of their 'owner'. The question becomes, could the Supreme Court declare that such an amendment runs so contrary to the principles of the Constitution that the amendment, itself, is unconstitutional? As much as one would like to say that it can, you then call into question whether there is any check on the power of the Supreme Court, but I digress.
One would also have to convince the SCOTUS that a blanket income tax is effectively a head tax. One cannot survive without income; thus, one's very existence is taxable (head tax). The latter argument is far easier than the former, primarily because it doesn't create a constitutional crisis, relating to the seperation and balance of powers.
-- "Government is the great fiction through which everybody endeavors to live at the expense of everybody else."
Not such a bad system, honestly, but I don't think your assessment is fair since New Hampshire has no real urban areas or blight to deal with and just doesn't need a lot of the infrastructure that a "real" state (one with a more substantive population) requires.
You know...one really has to wonder.
The idea of urban areas is that they're more efficient. You can centralize and reduce transportation costs. New Hampshire lacks those, so presumably is under even tougher constraints.
Yet New Hampshire manages to do just fine with*out* urban areas, without a sales tax, and without an income tax.
What are they doing right?
May we never see th
How many pennies is that a day? In any case, living in California is a choice and having 3 or 4 kids is also a choice. You'll probably disagree with me, but that's ok I'm used to it.
In case you aren't familiar with this tax-evasion technique, a corporation sets up a shell subsidiary (in name, an independent entity) is some place like the bahamas. The third part of the triangle is in the country that supplies the raw materials. Say I'm making shoes, and sell them for $100 a pair. Ordinarily that would mean a lot of profit for me, so to lower my apparent profit, I buy the raw materials for $90 from myself (the bahamas subsidiary). The bahamas subsidiary, however, bought the raw materials for $9, not $90, from somewhere in argentina. The US-registered corporation in fact makes a profit of $91 per pair of shoes (less labor and other expenses), but appears to have only made $10 profit per pair. The actual income is in the bahama shell, which has no obligation to pay US taxes.
How does this tie into income taxes? Well, ordinary people don't pay income taxes; they pay wage taxes, which are not the same. If I am allowed to deduct the cost of groceries, rent, gas, tuition, and healthcare, then I'll glad pay 30% tax on whatever's leftover.
Si la vida me da palo, yo la voy a soportar Si la vida me da palo, yo la voy a espabilar
I'm a fan of judicial activism where it makes sense, but it would be crazy -- and completely out of character -- for the SC to directly contradict a Constitutional amendment. If the SC ever just decided to nullify an amendment in such a way, we would basically have to abolish or drastically limit the court's power.
The head tax idea is interesting but extremely unlikely. People who want to get rid of the income tax are probably best reccomended to just convince the feds to stop using it. After all, Amendment XVI doesn't say the Congress *has* to tax income, just that it may do so. Obviously this is pretty unlikely, but far more realistic than getting the Court to do it at this point in time.
The other half of their argument is that federal law specifies income tax but does not specify that a person is liable for paying that income tax. Even if they are right about that, it would still be illegal to file the federal income tax forms with incorrect information (I, the undersigned, ... under penalty of perjury ...).
P.S. The accountant is probably right. You don't have to pay the taxes (as the state law is unconstitutional (Article 10 I think), but putting a 0 on the line could be seen as perjury. Best to leave it blank.
Or: all your tax are belong to us.
If I understand this correctly, this is how it works. I go to Nevada and buy a TV. I pay Nevada sales tax (which is a lot lower than CA tax) at the time of purchase, and head back to LA.
Now I'm supposed to pay ANOTHER tax to California for...what? The priviledge of USING the item I paid for and have already paid sales tax on?
Sorry, I'm not quite that stupid. But it shows how determined the CA government is to separate us from our money. They tax us to death and then wonder why people move away. Greedy fuckers.
" Article I, Section 8 of the US Constitution:"
If Article I, Section 8 allowed Congress to pass the income tax as it exists today, and create the IRS as it exists today, then please explain the necessity for the 16th Amendment. If Article I, Section 8 authorized the system we have in place, the 16th Amendment would never have been proposed, let alone ratified. Ratification of the 16th Amendment was also conditional on its being a temporary measure, as opposed to a cash cow for a massive Federal Totalitarianocracy.
You're also forgetting Article I, Section 2, which states:
"Representatives and direct taxes shall be apportioned among the several states which may be included within this union, according to their respective numbers..."[Emph Mine]
You're also forgetting Article I, Section 9, which states:
"No capitation, or other direct, tax shall be laid, unless in proportion to the census or enumeration herein before directed to be taken."[Emph Mine]
The Founding Fathers specifically stated in two seperate places that the Congress may not lay direct tax, except in proportion to the census. They couldn't have been more clear if they'd carved it into Jefferson's skull and stuck his head on a pike in the middle of Philly.
You could always argue that the 16th Amendment repealed these parts of the Constitution, but it does no such thing. Thankfully, the Supreme Court has already taken care of settling any dispute you and I might have about this. They did so in 1916, Brushaber v. Union Pacific R.R. Co., 240 US [1916], in which they held that the 16th Amendment did not alter Article 1, Sections 2 and 9, and that its only result is that the Income Tax remains an indirect tax. (Stanton v. Baltic Mining Co. , 240 US 112 [1916])
"So what?", you're probably saying. "They can still collect an indirect income tax." You're absolutely correct that Congress may impose an indirect income tax. Unfortunately for the IRS and personal income tax fans, the Supreme Court clearly defined an indirect tax in Flint v. Stone Tracy Co. , 200 US 107 [1911], in which it held that:
"Excises are taxes laid upon the manufacture, sale or consumption of commodities within the country, upon licenses to pursue certain occupations and upon corporate privileges; the requirement to pay such taxes involves the exercise of the privilege and if business is not done in the manner described no tax is payable . . . it is the privilege which is the subject of the tax and not the mere buying, selling or handling of goods."[Emph Mine]
Whoops, there it goes. You may find it hard to argue with that, but the Supreme Court would respectfully disagree. If someone has the money to take such a case all the way to the Supreme Court, we might all get a huge (as in 100%) refund from Uncle Sam in the next few years. The US Federal government was never intended to be the behemoth it currently is. Once we stop sending it all our money, we'll find that many other problems go away as well. It's tough to drop a billion dollars on a police-state inducing program (TIA, CAPPS/II, MATRIX) when your discretionary budget is smaller than a billion dollars.
-- "Government is the great fiction through which everybody endeavors to live at the expense of everybody else."
That's how New York works. It's pretty interesting to. If you don't actually look at the instructions they provide you with a handy dandy little chart to compute the tax owed based on your income. This is supposed to cover all purchases less then a thousand dollars. But only at the end do they mention that you can put a zero in this line. I wonder how many people that skim through their taxes just paid it without even looking at what it was? Quite the cash cow for the state.
They do apply it to everything though. Quoted from the instructions for IT-201 (the New York State standard tax return):
So it's not just the Internet they are going after. I don't know what I'm going to do with mine (haven't filed yet). I don't think putting a zero down is a good idea -- it could be considered fraud. That said many tax professionals have told me in the past that they won't audit you unless the amount of cash they can get back is greater then the cost of the audit. It probably wouldn't be worth their time unless you buy tens of thousands of dollars worth of stuff off the 'net or in a catalog.
I'm impressed that it's 18 states doing this. I thought only New York and California pulled this sort of stuff. Guess all the budget crises probably have something to do with it?
I want peace on earth and goodwill toward man.
We are the United States Government! We don't do that sort of thing.
"income taxes are good ideas"
I fail to see how this is the case, unless you're a fan of big government and a socialist state. If you'd like to send all your money to the Federal government in the hopes that it'll provide for your every need, feel free. Personally, I see the Federal government as an out-of-control, digustingly large, billions-bleeding behemoth hell-bent on making itself as powerful and omnipresent as possible. The original intent of the Federal government was to act as a sort of UN for the several states. In cases where states might fight over an issue, the Federal government was given the authority (enumerated powers) to ensure relations between the states remained as civil as possible. Thanks to Lincoln, amoung others, we've obliterated any semblence of states' rights, fiscal discipline, personal responsibility, or adherence to the intent of the Constitution.
The Constitution is hardly a practical document. It rarely delves into details, and largely prefers to state a general idea or principle. It does this because it is a statement of principles. It describes an ideal state in which power is always balanced, poor leadership by a few is irrelevant, extremism can be nullified, and where the people truly are the ultimate authority. The system we have now shows that with 200 years, a fist-full of wars, and a willingness to bludgeon the masses with extreme and misleading concepts repeatedly, you can pervert even the most beautiful government.
-- "Government is the great fiction through which everybody endeavors to live at the expense of everybody else."
If you'll wipe the spittle off your face, you'll note I quoted the 16th Amendment right below my quoting of Article I.
Ratification of the 16th Amendment was also conditional on its being a temporary measure, as opposed to a cash cow for a massive Federal Totalitarianocracy.
Doesn't change the fact that they decided to keep it, eh? Like it or not, it's a constitutional amendment.
The Founding Fathers specifically stated in two seperate places that the Congress may not lay direct tax, except in proportion to the census. They couldn't have been more clear if they'd carved it into Jefferson's skull and stuck his head on a pike in the middle of Philly.
The Founding Fathers also established an amendment process in Article V, permitting an overwhelming majority of Congress and the States to change the Constitution.
You could always argue that the 16th Amendment repealed these parts of the Constitution, but it does no such thing. Thankfully, the Supreme Court has already taken care of settling any dispute you and I might have about this. They did so in 1916, Brushaber v. Union Pacific R.R. Co., 240 US
From that decision:
Whoops, there it goes. You may find it hard to argue with that, but the Supreme Court would respectfully disagree. If someone has the money to take such a case all the way to the Supreme Court, we might all get a huge (as in 100%) refund from Uncle Sam in the next few years.
Article. I, Section. 9. No Tax or Duty shall be laid on Articles exported from any State.
9/11 Eyewitnesses to Explosive WTC Demolition 1 of 2
"even most libertarian states require some money to operate."
:)
They certainly do, and the Constitution provides the means for legal taxation to ensure the government has all the money it needs. If the government has grown to such a size that it can no longer sustain itself via legal means, the solution should not be to throw more money at it, nor extract money from citizens by threat of imprisonment. The reason the government is as large as it is is because it has usurped authority and responsibilities from the states and individual citizens in violation of the 9th and 10th Amendments, amoung others. I'll bet if we went over every inch of the Federal government with a fine-tooth Constitutional comb, we'd be able to cut the Federal budget in half simply by eliminating aspects which are illegal to begin with.
As for taxation, I think a consumption tax is the best way to go about it. Think about this for a moment: you're suggesting we should tax the wealthy more than the poor. I would agree with this entirely. My question for you is this: who buys more, and who buys expensive things? Joe Sixpack makes $30,000 a year, and is (presumably) spending that money on a bunch of little things for the family and such. As such, his spending habits are limited to buying a maximum of $30,000 worth of stuff. We could define certain necessary items as non-taxable, like simple foods. From there, the consumption tax takes form. Joe Sixpack buys a $19,000 Honda, and pays a tax on it. Joe Millionaire buys a Jaguar, a Porsche, an H2, and a small jet. He pays a tax on each of those items, which, when based upon the value of each, turns out to run far in excess of Joe Sixpack's tax. Thus, the wealthy are indeed taxed more (assuming they choose to take advantage of being wealthy), and the little people don't have to worry about April 15th killing their rent money.
There are far more things to discuss when it comes to a comprehensive taxation system, but I think the overall simplification and fairness of a consumption tax, as opposed to an income tax, far outweighs the difficulties of moving to a totally new system.
In the end, I continue to support the elimination of the (unconstitutional) Income Tax, in favor of a more fair tax plan, a vastly reduced Federal government, and perhaps even a might bit of fiscal discipline.
As for my previous post, I would assume at least one issue you'd raise would be with regards to Lincoln. I wouldn't bother with that one; you wouldn't understand/care if you're not a Southerner by birth as well as by heart.
-- "Government is the great fiction through which everybody endeavors to live at the expense of everybody else."
Not only that, NYS has agents that check the plates in these out-of-state clothing outlets and they leave leaflets on the windshields pressuring citizens that they are evading sales tax. How's that for heavy handed tactics?
NYS has done a great job of taxing citizens and jobs out of the state and I am moving away once I am in a position too, because I have just become unemployed and there are no jobs here. Good riddance NYS, and to hell with your Gestapo tactics and your broken tax system!
Eternity: will that be smoking, or non-smoking? I Corinthians 6:9-10
Yeah, that's illegal, and always has been. Every once in a while people get busted on big purchases (car purchases are pretty routinely caught, because the authorities know which dealerships are just on the other side of the border, and there's all the registration and whatnot).
"The question of whether a computer can think is no more interesting than that of whether a submarine can swim" -EWD
>The same way roads were funded up until 1913
E.G. they weren't. Until that point, most roads in this country were unpaved disasters, generally two-land roads. Imagine driving from Boston to Washington DC on all local streets and country roads. It wasn't until the advent of federal taxation and the grants that went along with it that enough resources could be mustered to build large highways (starting with New York State in the 20's thanks to the work of everyone's favorite megalomaniac, Robert Moses).
And don't kid yourselves - parasite states like Delaware (my own) which have low/no income tax, or no sales tax, find ways of compensating for the lack of money. Delaware, for instance, poaches its section of I-95 mercilessly, charging outrageous tolls which cause miles-long backups on the interstate while doing virtually nothing to actually improve the quality of that road - all of the toll money goes to local road construction. Or, another Delaware invention, they attract huge corporations to the state so they can earn incorporation fees, thus earning several thousand dollars for themselves while depriving the original homes of those companies of millions of corporate tax dollars. If you're paying Paul, you've got to screw Peter somewhere.
IANAL either. However, I have read the Constitution in its entirety and contemplated the meanings within, something I'm convinced many of today's lawyers have not done. I have also studied and researched Constitutional issues for my personal development and university coursework.
I feel that you're overlooking a very big checks and balances system. The members of the federal Congress, though elected from states, are largely outside the sphere of influence of the state governments. I think the 2/3 vote to send an amendment to the states for ratification would likely not occur. Fortunately, there is no method in place for the Supreme Court to mandate an amendment be sent to the states.
Beyond the amendment issue, you are reasoning that because someone can get a better deal in another state on a purchase, the deprived state has a legitimate claim. That is not the case. If a state cannot attract profitable businesses or develop a solid revenue model, they have no business taking the revenue from states that encourage commerce and have taken steps to simplify their own tax systems. The "offended" states should study the open market's behavior and find out what they are doing wrong.
Also, you are assuming that every state that is drawing these sales has no sales tax. What if they merely have less of a sales tax? To paraphrase from the Constitution, "full faith and credit" should be applied to the acts of other states. So, if your citizens have already been taxed on a purchase in another state, they have fulfilled their obligation. If the state in which the purchase was made did not require sales taxes, they have also fulfilled their requirement. Therefore, their home state has no jurisdiction. Residents of states can claim states as their home, but states can not claim residents as their property (slavery by the state?) to control at whim.
References: Article IV, Section 1; Article 1, Section 10; and Article V of the Constitution of the United States
> Also, you are assuming that every state that is drawing these sales has no sales tax. What if they merely have less of a sales tax? To paraphrase from the Constitution, "full faith and credit" should be applied to the acts of other states. So, if your citizens have already been taxed on a purchase in another state, they have fulfilled their obligation.
I think you might have inspired a great idea. Think about this: It would be hard to make a case for having to pay sales tax in one state, and in the next as well. For example, if you went across from NY to NJ, bought an item in a store, and came back. Right?
So the solution is, the states with 0% sales tax should change their tax rate to 0.0000000000000000000000001% so that it still wouldn't amount to anything but a customer could point to the receipt from say, NH, saying "NH Sales Tax paid" and claim immunity from further--technically "double"--taxation. They wouldn't really have to put in a tax collecting infrastructure; they could just ask that businesses pay that percentage of their sales, probably a couple of bucks a year for the largest businesses. Just add it to the business tax forms.
My idea's not very well thought through, but it's a thought. It would really only help, in the online case, for purchases you made from businesses located in NH, OR, and other states with currently 0% sales tax.
The concept of sales tax is ridiculous in itself.
Why do we pay taxes ? To fund services provided by the government.
What service is provided by gov't when I go pick up a 61" Plasma TV for 9999$ that justifies blowing another 1100$ in taxes ? NOTHING!
Property tax is reasonable (water/police/firemen), driver's license is another honest tax (to pay for road maintenance). Income tax is kind of fishy since gov't has little to do with my work and employer, but it is one way of taxing somewhat fairly across working classes. Now to be 100% fair they should get rid of the indexing/bracketing and just charge a fixed percentage for everyone.
Sales tax ? Why should we pay the state/country for someone else's product and labor ? Because they will hunt us down and lock us up if we don't ? That's no good reason, that's racketeering no better than the mob.
[soapbox ON]
The only reason such excess funds are required is because gov't is grossly inefficient and corrupt. It's all been said before, but the main problem is that gov't is getting special treatment. The truth of it is that it should be no different from any other private company. If you put an owner on top, someone whose wealth is in the hands of the company, then suddenly you will see efficiency improve tenfold, but when you're spending other people's money you really don't care if you're being overcharged for this or whether such-and-such project is bullshit.
[soapbox OFF]
The bottom line: taxes suck. =)
-Billco, Fnarg.com