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States Push to Collect Online Sales Tax
Carl Bialik from the WSJ writes "On Saturday, 18 states will implement the Streamlined Sales Tax Project, which will make it easier to collect local and state sales taxes on purchases made over the Internet while offering amnesty on uncollected taxes. In their longstanding opposition to collect sales tax, many online retailers 'have cited a 1992 Supreme Court ruling that said that it would be too onerous for e-tailers to calculate all the permutations of differing state and local tax rates,' the Wall Street Journal reports. 'One goal of the project was to remove the ruling as a key defense for online merchants.' Is your state involved? 'The states that have signed on are Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Nebraska, New Jersey, North Carolina, North Dakota, Oklahoma, South Dakota and West Virginia. Five more -- Arkansas, Ohio, Tennessee, Utah and Wyoming -- are in the process of finalizing the requirements needed to join, while Washington, Texas and Nevada are in earlier stages.'"
BTW, there's been a noteable increase in Wall Street Journal stories on Slashdot - certainly has improved the quality - kudo's to the editors and Carl Bialik from the WSJ
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Hulk SMASH Celiac Disease
Couldn't be any worse than what California already puts me through. They want you to report sales for each individual tax district in the state. Most of my sales are out of the state, and probably half are out of the country, so I've got very little to report there - I wind up paying 6 cents to one county, 12 cents to another, and so on. Or at least, that's how I'm supposed to do it. In reality I just go nuts and grossly over-pay them all - 50 cents for everyone!
So I'm a little skeptical about just how 'easy' they consider a reasonable system to be...
How is ordering over the Internet different?
No folly is more costly than the folly of intolerant idealism. - Winston Churchill
A guy named Guido broke my leg last week. He said that if I paid this year's protection money, he wouldn't break it three more times for the last three years I've been in business. In other words, rather than threatening or extorting, Guido enticed me into paying my protection money.
Entice. They keep using that word. I do not think that word means what they think it means.
Well, it sucks that they are getting around to figuring out how to tax online purchases. However, I can't really fault them for doing it. As more and more sales go online, there is a real issue with decreasing tax revenues. It probably won't be a critical issue for decades, but the fact is that governments need taxes to operate and I've always tended to prefer sales taxes over income taxes.
Here's to being from Mississippi, where they aren't smart enough to know to tax this here Inter-Net. ;)
Oh, it gets worse than that. For instance, what if you're a college student and you live in, say California, so your billing address is there. You use, say, Amazon.com to order a gift for someone's wish list who lives in MD, but you go to school in Texas, so that's where the transaction took place.
NOW who gets the tax?
My blog
I don't see how any of this gets around the fact that no State has the right to tax interstate commerce. Call it whatever kind of tax you want to; Sales, Use, Excise, whatever, it is still a tax on interstate commerce and a State has no right to collect it.
Prior to online sales, the rule was that if the seller had what is called a 'nexus' (meaning a busines presence basically) in a given state, then sales tax applied. The buyer and seller did NOT have to be in the same state if nexus could be established.
While I disagree with this arguement, it *could* be argued that the Internet creates a presence in every state, far beyond the old days of mail order catalogs.
What it really boils down to is politicians on both sides of the aisle hate seeing money being exchanged that they can't get their greedy hands on.
Many states, Ohio being one, tax all purchases that are made out of state and shipped to an Ohio address. There is even a special line on the Ohio income tax form especially for reporting the amount of goods you've purchased online, through mail order, over the phone, etc.
Of course no one I know of that lives in Ohio has ever put any amount there other than a 0. Nonetheless, it isn't accurate to say that interstate transactions are not subject to and have never been subject to sales tax.
For years, there was a myth that online sales were "cheaper" because you didn't pay sales tax. Rather, the truth is that states, counties and municipalities were being cheated out of collecting legal sales and use taxes.
If you don't like sales tax, then fight your local/state sales and use taxes on principal. But as long as 7-11 down the street has to charge it, why should a company that's in another state be exempt?
There exists no way of exchanging information without making judgments. --Bene Gesserit Axiom
The article mentions how some states consider candy different than other food as an example of the many little differences in tax code. Another one is different counties charge different taxes - in New York state, Queens county and Nassau county have slightly different tax rates. And then these tax rates change every time a new law is passed. So you have to update your tax tables whenever that happens. Most people who are truly concerned about this pay thousands to get regular Taxware updates. Luckily, right now I only have to worry about one state.
Now in general terms, I would not mind if some flat, national tax were charged on items going from me to a consumer. I could just say "add x.y%" to every sale, just like everyone else would be doing. But the way this is being done is ridiculous. What has happened in the US is that federal taxes have remained the same, I suppose to pay for the increased military spending for the war in Iraq and whatnot, while money the federal government used to give to the states was cut. So now the states are all scrambling to get money, and since the politicians don't want to go after locals, they are fighting to gouge out of state people for taxes. So we have this mess. And it doesn't effect Amazon.com who can afford to pay for Taxware updates and whatnot, it hurts the small businessman like me, who now has a lot more work to do and may have to buy expensive Taxware updates to be in compliance with this. If one steps back and looks at the whole country, this is a ridiculous way to do things. It's not even that I have to pay the tax, if everyone else had to, it's that now I have to be concerned about not just the tax laws of each state, but the tax laws of each county in each state. It's ridiculous. So much for "state's rights".
Article. I, Section. 10., Clause 2 specifically forbids states from collecting intrastate tariffs. But, for some strange reason if they call it a "use" tax it's ok. I'm also guessing that if the south reinstituted slavery under the term "Happy Fun Work" it'd be legal.
Surely if I got to California and buy something, take it back to my state, I'm not obligated to pay a sales tax back here. And if I asked my brother to buy me something and bring it back from California, I wouldn't have to pay my state's sales tax. But for some reason, could it be greed?!, if I pay FedEx to bring it to me, suddenly I have to pay.
I have NO problem paying sales tax. I think that if I buy something shipped from California, for example, California's sales tax should be added to the order. But I see no reason to flush the Constitution merely because states are greedy.
If someone says he and his monkey have nothing to hide, they almost certainly do.
It's not, which should have mail-order retailers worried about this move, because it would almost certainly end up affecting them.
One way to apply this is to charge it based on the state of origination. It is a sales tax, not a purchase tax, even though the purchaser pays that tax for the seller. The seller would pay the tax on all sales to their home state, no matter where the product is shipped.
This would be good news for no-sales-tax states like New Hampshire, because it would encourage e-tailers to set up shop there. I'm sure that some creative loophole-hunter could work up a way to sell from one state, ship from a warehouse in a second state, to a destination in a third state.
Of life's two inevitabilities, they would prefer death to taxes.
No state sales tax there.
If you don't already live in one of these states, you may live close enough to set up a mail drop. If not, maybe you should consider moving - this was the intent of allowing states to set up their own laws - anyone that wants can "vote with their feet".
Yes, I realize this is considered impractical to most, but at what point should we finally say "enough"?
-bs
That that is is not that that is not. That that is not is not that that is.
Use tax =/= sales tax.
Use tax is assessed on any item purchased by the end user. There are many exemptions but the primary one is the end user is exempt from paying use tax if the end user has already paid sales tax.
If you are paying the "use tax" for the customer and not showing taxes paid on the receipt then CA may go after the customer for use tax. The customer can't prove sales tax was paid on his/her purchase.
I'm not a Troll, it's reverse psychology.
Yet, many states have already been doing exactly this. My home state of RI argues that sales tax is a tax on its citizens (and visitors i guess). therefore, they have a right to tax (last I was there 7%) your purchases regardless of where you bought them.
Since the state is so small, anyone in the state could (and often did) drive an hour and a half to Massachusetts and buy things like cars, appliances, etc. for only 5% sales tax. (ah the boon of living in small state country) You're supposed to declare what you've purchased and pay the difference to RI. Of course, nobody did, so the clever legislature monkeys (who had recently voted themselves a salary increase from $300 to $10k) made "deals" with large-ticket businesses just across the border to report you even if you don't.
This has been challenged many times and upheld on the grounds that the tax is applied equally to both in-state and out-of-state purchases. and so isn't an interstate tax at all.
Tricky lawyering no doubt, but then if they can argue about the definition of the word 'is' they can argue pretty much anything.
Can you be Even More Awesome?!
Hey now.... We Nebraskan's have a few things going for us. First off, we are a "red state" (both in politics and in football). Next we elected a college football coach to Congress. Third we were featured in SouthPark a few seasons back (when Ike was shipped off to our State by his Kyle because Ike wasn't his adopted brother). Fourth... ahm.. well.. *breaking down* *crying* Oh we got nothing. It really sucks being trapped in this hole. Over a hundred in the summer, below zero in the winter... Not to mention the exodus of young, educated people from the state to cooler states. *sniffle* Well at least our school boards didn't ban evolution from public schools - I am looking at you Kansas.
The tax goes to where the item is delivered, or "used"
It is the same way with counties and cars (and other big ticket items) here in Ohio- If I but a car in Cuyahoga County where the sales tax is 8%, but I live in Summit COunty where the tax is 7%, I pay 7% tax on the car....
Technically, If you live in a high tax county, and buy stuff in a low tax county, you are supposed to send the county/Sate gov't the difference each year. But of course if you live in a low tax county and shop in a high tax county, you dont get a refund at the end of the year.
And All I Ask is a Tall Ship And a Star to Steer Her By
I agree with your last sentence about cutting the pork, but you are wrong about everything else up to that point. Government expenditures always rise to meet revenue (and then some). Therefore if the Feds sent my $300 to my state government, they would have spent $350, which means they would still be looking to tax Internet sales. Government (at any level) won't even consider spending cuts until they have positive verification that the money is gone and borrowing is maxed out. The only way to put a limit on what government spends is to put a limit on how much they take in.
That says they have no ability to tax or regulate interstate commerce?
The supreme law of the land does mean something, you know.
http://lkml.org/lkml/2005/8/20/95
When is enough enough? I know we need taxes for things like policmen, firemen, the military, the courts, roads, etc, but fer cryin' out loud, when I have to work until July 1 just to pay my income, property, sales, gas, ticket, etc etc etc taxes, I'm ready to spend the winter at Valley Forge. If a politican and bureaucrat are getting less of our money to waste because there is no on-line sales tax, and they complain about it, then I for one am against any internet tax.
*sigh* Sorry, I'll go cheer myself up by reading some Thomas Payne and James Madison ... until the government tries to ban those books.
The Independent: Reverend Spooner Arrested in Friar Tuck Incident - ISIHAC, Historical Headlines
42%? Interesting. I make "fairly decent money" and my state income tax is about 5%. I played around with the Franchise Tax Board's tax table calculator, and couldn't get it to go over ~9.2%. Of course, my federal tax is 25%, so I'm assuming you're counting federal tax.
Combining federal tax tables and state tax tables, I'd guess your income is at least $146,000 a year (33% federal + 9% state). If you are working 10-12 hours a day you are spending too much time at work. Scale back your lifestyle a bit. I make $47,000 (working eight hours a day) and am happy doing it.
It's nothing but crumpled porno and Ayn Rand.