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U.S. Ecommerce To Be Broadly Taxed?
fl!ptop writes "ZDnet has a story about U.S. Senators proposing sweeping changes to how Americans are taxed for online purchases. As proposed, businesses would be required to collect sales taxes and send them to the state the purchase was shipped to. As a small business owner that primarily sells via ecommerce, I am shuddering at the prospect of having to deal with government sales tax forms and coupon books for 30 or more states. Will I have to register with each state's tax department? As an ecommerce Web developer, I'm also wondering what implications this will have on maintaining code that calculates sales taxes, expecially in states like Ohio where they differ by county and municipality."
Start a company that acts as an intermediary and provides the taxation service for small businesses.
Throw in some mumble about Ajax and Web 2.0 and watch the VCs line up to throw money at you and beg you to have sex with their women-folk.
"I'd rather be a lightning rod than a seismometer." -Ken Kesey
Who wants to bet the low/no tax conservatives will let this thing through?
Why is the Gov't taxing us for these items? What is the justification? Maybe I am off base here, but the gov't doesnt have much to do with e-commerce.
CS: It is all sink or swim...oh and did I mention there are sharks in that water?
Why don't they just implement the fairtax and be done with all these other convoluted ideas?
"A revolution without dancing is... a revolution not worth having"
they have no shame
This is going to be a nightmare for small business owners to implement. Most states make you pay to register with their sales tax department. Multiply that by every state that you have customers in. No wonder big companies like WalMart are supporting it.
Bradley Holt
First Data Corp, which owns Taxware and handles taxation in multiple states and coutines nicely, even in jurisdictions that have different tax rates within the same zip code.
The other big e-commerce tax product is Vertex which has a bigger Fortune 500 footprint, but they are not publicly traded nor are they owned by a publicly traded company. Good acquisition target.
Send it in.
If your eCommerce business is run in, say California, then it should charge California sales taxes.
It makes no sense for a company in California to try to figure out the sales tax for an order from New Hampshire.
What they really should do is eliminate the sales tax system and the fedral tax system and come up with a Flat Tax on what you buy.. no loop holes or BS IRS This way the poor pays less and the rich pay more.. its a fair system
This actually surprises you? This was coming regardless. God forbid it sends all the shady ass people to the waist-side. You wanna run a business online? Do it right and hire people who can handle your financials, it will probably actually make you more legitimate and trustworthy, and hell with having to deal with this you will probably be better off. Im all for this.
Last time I checked there were a lot more than 30 states .. I'm not even American, and I know that.
I understand that mail order in the USA is not taxed, unless the purchaser is from the same state that the mail order house is in.
So far, ecommerce had the same rule (or similar).
If this gets implemented, then will it apply to mail order as well, or will it be for ecommerce only?
What about if an American buys from a Canadian business via the internet? Will the Canadian business be required to collect US state taxes too?
2bits.com, Inc: Drupal, WordPress, and LAMP performance tuning.
of interstate commerce?
I am by no means an expert on the subject, but my feeling is that this is somehow against the constitution. And for this to be trackble and enforcable, the states would have to collect their tax money with the federal government as the intermediary. Just on the surface, this idea seems unworkable due to the complexity.
And how about taxes for the local state? Do you get taxed twice or does one take precedent? I speak of situations where you buy from a company online and they have presense in your state as well as others. At present, if the company has presense in my state then I also have to pay local state tax. But what if the transaction is with a company in, say, N.Carolina (just pulled that from a hat) but they also have a presence in Texas where I am at now. Current practices say I have to pay tax to Texas. But with this, am I paying double tax?
Yeah, that'll happen. We don't have to worry.
I dont see how this could ever actually happen. This would make starting your own company so difficult that it would hinder the economic growth that the government wants. I am working at a small online startup right now, and it would be a terrible burden to file taxes in 50 states.
If they want to do this, then at least make a single flat tax rate that the federal government can then distribute to each state. But having each company deal with the taxes of all 50 states just sounds rediculous to me.
-- All that is necessary for the triumph of evil is that good men do nothing. -- Edmund Burke
Since all levels of government is greedy for taxes, would it not be more cost effective to say tax all purchases a flat rate of 3% and not force a million web sites to code in the complexity? And let the state, county, city fight over the 3%.
And if expensive tax states don't like it... touch $h1t.
The thing the ticks me off about this is that the mail order lobby was the group that started all this crap back in the 90s, because they saw their revenue going down. Back then, it was "oh, tax the internet, but leave us alone".
Personally though, I don't think either of them should be taxed, but if they do pass this, the better make all the regular mail order companies comply with it too.
Nothing creates business opportunities like gov't regulations. You will see clearing house companies spring up to process taxes for you. Funny about Ohio- when you buy someting in a county with lower taxes, and take it home, you are supposed to send the state the difference.
btw- Counties in Ohio have different tax rates. It has nothing to do with municipalities, so you only need to know the tax rates for each of our 88 counties... (Mine is Summit county, 6 3/4 percent)
And All I Ask is a Tall Ship And a Star to Steer Her By
http://www.boston.com/news/nation/washington/artic les/2005/12/09/house_approves_561b_cut_in_taxes/
From the above article: "They cut vital programs and services that benefit hard-working lower- and middle-income Americans, and with the money saved, are giving more tax cuts to the wealthiest of the wealthy."
From the ZDNet article:
"...Sen. Mike Enzi, a Wyoming Republican. "This is costing states and localities billions in lost revenue."
So the Senators think they shouldn't tax the rich, but its okay when it is everyone else.
Anyone think that this is unfair? Or is this okay with you?
He who knows best knows how little he knows. - Thomas Jefferson
That's what I'm talking about!
:)
How's somebody in California supposed to keep track of all that!
With tax plus shipping charges what advantage will shopping online have for anything other than hard to find niche items? The main advantage to shopping online has been cost savings for customers. Will online retailers be able to maintain this advantage when operating costs increase?
We have to be careful not to let lawmakers simply take whatever they want, and not simply what is justified and best for the economy.
They've already been there and done that.
Poster: As a small business owner that primarily sells via ecommerce, I am shuddering at the prospect of having to deal with government sales tax forms and coupon books for 30 or more states
Article: The legislation would apply only to businesses with more than $5 million in "gross remote taxable sales" each year.
Of course, maybe my definition of small business is different than the posters.
Tis better to be silent and thought a fool, than to open your mouth and remove all doubt --Abraham Lincoln
Right now, I am working on an app that calculates tax by county. What fun. There are roughly 3200 counties, parishes and independant cities in the US and every one has different rules on what is taxed and how much.
Something like this is really going offer employment opportunities for programmers. It will be a bigger boon than Y2K! Because if the states are getting their tax money, the counties will want theirs too. Of course it will crush commerce for the small guy and most everyone. Just think of the cost of tracking and sending these funds out on a regular basis. So it will be like a bigger bubble and a bigger crush. The nineties all over again.
Yow, Where's my aereon chair and foosball table?
Screw all this crap, man! I'm going back to the barter system and avoiding money and taxes altogether. Anybody farmers out there on slashdot? Wanna trade some chickens and vegetables for some IT work? Anyone? Bueller?
While I sympathize with the painful idea of dealing with 50+ tax codes, I think we all have to admit that the tax code (at some point), has to be adapted to include online purchases.
I hate taxes as much as the next guy, and I've certainly enjoyed nearly tax-free internet shopping for the past decade, but as more and more purchases are made online they begin to seriously cut into state and local government's revenues. Internet shopping has yet to eliminate my usage of roads, and someone has to fund them...
If companies only pay sales tax in their home states then I'd speculate that we'd see a rush on states like Oregon and New Hampshire by some dot-coms, so I think that sending taxes to the customer's state of residence may be the only good solution. I just hope we don't end up paying sales tax twice...
:::blink blink:::
:::blink blink:::
My Senator said THAT???
I'll have to swing by the Enzi's place later tonight and have a talk with him.
From TFA:
A related bill has been introduced by Sen. Byron Dorgan, a North Dakota Democrat
Good job reading the article, idiot.
The government. The only "organization" that demands money from working people without being accountable for it. Of course, they say they do it to for the benefit of the community, but if the same reasoning is used by a bank withholding money from their clients for the benefit of the community (read bank), then, all of a sudden, it's theft.
I think it is well past time to ditch the different taxation systems (income, property, inheritence, sales, capital) and replace them all with a single sales tax. That gets rid of this problem and also alliviates the massive problem with a competly wacked tax system that actually increases the difficulty of moving between the different classes.
I don't know much about the so called "FAIR Tax" although I have heard people say that it is similar to this idea. I dislike the flat tax because it unfairly impacts larger families (although I am sure the population nazis would love that).
But in general, why on earth do we maintain this system? It's not efficent, not effective, and benefits no one except politicans wanting to play social engineering!
Cue angry rants from reactionary libertarians about how all taxes are tyranny.
How come I can get moderated (-1, Flamebait) for making relatively innocuous comments, but we can't moderate stories (-1, Flamebait)?
With spending like this, exactly what are "conservatives" conserving?
...reciprocity, the legal tenet that says each state, being part of the United States, is obliged to respect the rights and laws espoused by the other states in The Republic. Which is why your driver's license is valid in all 50 states and the territories. This includes taxation for the purposes of interstate commerce - exemptions can (and have been) made in the past, but it requires the agreement of all 50 states. And it is also possible to recoup these sales taxes in certain cases.
GetOuttaMySpace - The Anti-Social Network
All interstate commerce should be subject to a 5% sales tax collected by the federal government. At the end of the year the feds would distribute the collected taxes to the states in proportion to their own sales tax collection from in-state purchases. That is if state X's collected sales taxs were 3% of the sum of all the 50 state's collections, it would get 3% of the federal collected taxes.
All of us, including me, love to evade sales tax, but we all want the roads, schools and police services that it pays for.
Here's some data about what people pay now (don't get me wrong, I think the Internet tax shouldn't happen). I'm posting the following to show how much those "rich" people really DO pay.
This was taken from another site, but it's good data:
Check this out.
It shows that the top one percent of taxpayers paid 34.3 percent of all federal income taxes in 2003, although they earned just 16.8 percent of the adjusted gross income. The top five percent of taxpayers paid more than half of all federal income taxes, the top 10 percent paid two-thirds, and the top half of taxpayers paid 96.5 percent, meaning that the bottom half paid just 3.5 percent.
And this.
The top one percent and found that the top ten percent of the top one percent (the top 0.1 percent) increased their share of all federal income taxes from seven percent in 1980 to 15.3 percent in 2003. These 129,000 tax filers earned 7.6 percent of the income and paid an average tax rate of 23.6 percent. This came to $114.6 billion--four times more than all the taxes paid by the 64 million taxpayers in the bottom 50 percent--who paid an average tax rate of 2.9 percent.
The "rich" pay a helluva lot of money. The data is there from the IRS itself for you to check the facts.
Unfortunately Congress is just ignorant enough about how the internet works to pass a bill that will have a devastating affect on Ecommerce. They'll figure it out eventually but only after the damage is done. Most small businesses will have to ignore the law or simply go out of business. Many of the businesses are working on tight margins and given shipping costs are often offset by the lack of a sales tax they simply won't be viable. The convience is nice but there's always risk ordering off-line. If the costs are the same or higher than a local store I might as well buy locally. In some cases the States may see this as a win win but it'll harm the consumer and businesses. The internet is Federal so any tax has to be Federal in origin. It would be like each State setting up it's own import tariffs. The money would have to be pooled and paid out based on percentage of sales each state had. It's too complex to administer any other way.
Set up a nice simple webpage/web service that you can enter your values into and it'll tell you what you owe, and distribute it to the right people. That way, rather than you having to pay to every state you ship to, you only have one point of contact...
I mean, if they're going to take more of your cash, they can at least make it easy for you...
My Journal
I work for a company that has offices in all 50 states plus DC, and the hassel to collect the correct tax location is nearly impossible. We can get it right for about 97-98% but after that you hope the agents that have local knowledge or the default will be close (IE you "eat" a liitle on every transactions)
First you need is good address validation software, so the county can be determined. Then you need tax software on top of that, that understands the where the tax lines are drawn.
Example: There are "special" zipcodes that act as PostOffices. Banks, Clearing Houses, and State IRS all use them. The problem is that the number is 1 digit or 2 digits reversed from normal zipcodes. With address validation software, these normal are overrides making what every address that is enter valid. And the tax will be charged for wrong location. These zipcode exist is NYC, Colombus, Chicago to name a few.
Example: In a town in AR, there is section of land that is NOT incorporated into the town. Address Validation places the land in the town... but NOT for tax, the extra 1% for the town is not charged on that land. The same can go for Fed and State lands wrapped inside of city.
Example: Mobile AL. Every address is what we call MULTI-TAX. There is more than one tax that could apply, if you could get the tax software that define the sub-sub-distracting. Same goes for Dallas, Ft Worth, alot of MD, a good part of WA (follows Elemenary School Boundaries)...
The tax software we are getting only defines the US into 400,000 tax "districts" but they can not get closer than State, Zip(5), County, City. This does not help when you talk about multiple MTA or other agencies.
This will be mess.
If the states want to collect taxes, that's fine. However, we should be able to subtract the cost of shipping and related expenses (registered/certified mail, etc.)! I'm sure that shipping expenses and insurance for loss/damage would far exceed any meager taxation attempt. Let the mud fly!
Minnesota, and other states, have required businesses to pay sales tax on all mail order items for years before ecommerce even existed. Recently many states have been trying to force people who buy smokes online from tax havens to "cough up" the state taxes by subpoenaing sales records of these sites and billing the customers for back taxes.
Over in Europe it's called a VAT (value added tax). Here in Canada we call it the GST - Goods and Services Tax - or as some call it "Government Screws Taxpayers" :)
:)
In short, it is a nation wide, 7% sales that is collected on any sale, on-line or bricks and mortar store, and submitted to the Federal government. Also it is a complete pain in the ass. For example, 5 donuts are "fast food" and therefore taxable, but 6 or more donuts are "groceries" and not taxable. Even if you are buying the donuts from the same place. Lots more insane examples, but I think you all get the idea.
What I can see happpening is you will have many businesses complaining about the complexity of collecting so many individual taxes under this new proposed on-line tax, that even for large companies like Wal-Mart, it will be nothing but make work project for the bean counters and something of a logisitcal nightmare.
Yes, there is software to handle this kind of thing, but how many of you guys actually do bookwork not a an account but just as a small business person, on a daily basis? Sometimes I think computers are just an excuse to complicate things more than they have to be, but that's another story.
The bottom line is, my experience is, whenever any software engineer or account ever tells you "don't worry, a computer will / can handle it", well be afraid, be very afraid.
So, once (and if) this new e-commerce tax is passed in any form, and it becomes a book keeping nightmare, one possible senario is the federal government will "come to the rescue" - or something like that - and "simplify" the situation for business and introduce a nation wide consumption tax, using taxes in other countries like VAT, GST, etc as examples or precedent.
IMO, the end of western civilization will come not at the hands of terrorists, global warming or even bird flu, but from within, a collapse of pressure from just too damned much bookwork.
"From the above article: "They cut vital programs and services that benefit hard-working lower- and middle-income Americans, and with the money saved, are giving more tax cuts to the wealthiest of the wealthy.""
There's actually a web site* were the rich are asking for these tax breaks to be curbed.
*I'll see if I can find the URL. "NOW" on PBS mentioned them when discussing the deficit.
This is just a plot to create a national sales tax system and a flat income tax.
My wife operates an E-commerce store (which also has a physical location). I write e-commerce software for a living.
This isn't a big deal, so long as states simply have one rate per state, and there is an easy way to find the rates and be notified of changes. Collecting differently based on county, municipality, etc, is gruesomely inconvenient. Of course, it that were required, I'm sure a couple companies providing a tax-rate web service would spring up, assuming that you didn't already receive such a service from someone like your payment gateway service.
Why do we need states? Why do we need fifty separate miniature countries, each with its own tax system? We bitch about how complicated the EU is, for godssake.
The union of independent states was important for the original thirteen colonies, each of which was its own little fiefdom/nation, and damned jealous of their power.
Why not put 50 units of government out of business? What good is the division doing us? From what I see, I see business playing the states against each other, reducing wages and getting tax breaks in a giant "race to the bottom", the winner getting tax-exempt, 5.75/hour superstores, and the losers empty factories and high crime rates.
Honestly. One sales tax, one income tax, one of everything. "If you don't like it, leave", as the apologists always say.
Hell, with our new Homeland Secret Police, law enforcement is going national. What's the use of pretending anymore?
I've noticed the real reason the fifty separate units were popular was that it was a lot easier to hide out from the law and your own past since information was pretty much walled up in each individual state. It made it a lot easier to be crooked; wear out your welcome in Tulsa, and move operations to Santa Fe. But it's not that easy anymore. Frankly, I've always liked the fact that you could move around the country and lose a little of your past with each move. But that's not an option anymore. We're just supporting fifty moneysucking units of government.
To be legal doing that, you have to purchase a "transient vendor's license" and file a tax return (with the tax collected) EVERY QUARTER as long as you have the license or be subject to fines or penalties for not doing so. So, to sell a couple hundred bucks worth of crap on one weekend, I had to go through all of that nonsense all year long.
As for what this has to do with the story, the Ohio Dept. of Taxation (the name of that dept. gets right to the point, doesn't it?) sent me updated tax tables for every county in the state every quarter. Yes, every QUARTER some county is changing its tax rate. Ridiculous. So you could only imagine being an online vendor having to keep up with that crap times however many other states that do the same thing.
Ohio even has revenue enforcement officers at Hamvention going from booth to booth (and from tailgate to tailgate) checking for licenses. And, of course, after jumping through all of the legal hoops I get popped by the Ohio Stormtroopers of Death for not wearing a seat belt on my way to Dayton.
I finally called the ODT and told them that they could stick their transient vendor's license up their asses so that they would stop bothering me.
Makes me wonder why in the hell anyone would want to live there with that level of governmental nonsense. I make it a point to stay and eat in Richmond Indiana when I attend Hamvention just because I hate Ohio so much. I'll happily take my tax dollars to another state.
It is no wonder why the population of Ohio is stagnant or even shrinking.
Out of order? Fuck! Even in the future nothing works! - Dark Helmet (Rick Moranis) "Spaceballs"
In the legal wording, I would set a "default national sales tax level", which will be redefined each year, based on the highest state sales tax level nationwide. So if New York had a state sales tax of 10%, and that was the highest in the country, the default national tax level would be 10%.
Then, online retailers would simply charge that *one* amount for all sales. They would then send whichever state the customer came from that flat amount.
Minimal processing difficulties, maximum consistency.
At the state level, states would be responsible for determining the difference between that national amount, and the state sales tax level, and returning the difference *to the customer*.
Suddenly, the burden to implement is shifted to the party gaining the most benefit - the state. Less overhead and impact for online retailers, and more citizens who will see that the state is the one involved in the taxation - leading to more feedback in the political cycle.
I'm not saying an online tax is right or wrong. I'm saying *IF* it is done, the above is the only sane implementation I can see.
In the United States, 10% of the population owns 71% of the wealth.
He who knows best knows how little he knows. - Thomas Jefferson
During his speech on the House floor, Representative Edward J. Markey, a Malden Democrat, moved ''Monopoly" money from a box labeled ''poor" to one labeled ''millionaires" to illustrate the point.
"No Tax or Duty shall be laid on Articles exported from any State."
Article I, section 9
this was posted above from someone else, FYI
Intuit will be all over this ASAP, I'm sure. Since I, along with many other small business owners already use their stuff, I'll just pay whatever their subscription will be for it and do it that way. But you're right... if so many people were'nt already using something like Intuit with their payroll tax service, then this would be an excellent opportunity.
I don't respond to AC's.
No taxation without representation....
Screw'em. If they want me to pay taxes out-of-state, they can give me a representative to vote on my behald in their state.
How long until one state makes itself a no online tax state. And a company sets up "receiving/shipping" and you just have it sent to a PO Box and then it's routed elsewhere. You bought it in "x" tax free state.
If i offer you 1 ounce of gold for a desktop computer, how do they tax that?
All Troll + "offtopic" mods are meta moderated as "Unfair", because you abused the system.
I'm part of a team writing a business system from scratch, which has e-commerce tightly integrated. They problem isn't paying taxes to other states, the problem is you have to use their forms which most of the time are convoluted and you have to try and keep current on their tax rate/distribution changes.
If you didn't know, you don't just mail a check for the $1345 you took in taxes to the state of Colorado for instance, you have to break down that dollar figure for each county and municipality plus any extra taxes that are charged for a tax jurisdiction. Compound this by the fact that zip codes lie across jurisdictions, and it makes it even more of a mess. Find a zipcode that has residents that lie both within city limits, and outside city limits and right there you can see the problem. The residents who live outside city limits shouldn't be charged city tax.
Our particular circumstance is we have 13 branches in 3 states, which due to tax agreements between states mean we must charge tax in 5 states. So basically we have to have a tax jurisidiction record for every city in those 5 states. That's a lot of records to try to maintain.
Trying to regulate interstate commerce is treading on shaky constitutional ground, and I don't think that's the way to solve it. What needs to happen is representatives from all 50 states revenue departments need to get together, and form some agreement about interstate taxes. Figure out a tax rate everyone can live with, and let the state worry about disbursement based on population of cities/counties or some other metric, but don't make the retailer deal with it. We'd be happy to collect and pay taxes in all 50 states if it was as simple as "Alaska, here's a check for the $323.67 we collected this quarter based on the 5% all the states agreed on." Makes it easy for us, makes a level playing field for the states, and prevents small e-commerce players from getting shut-out because they can't afford filing tax forms for 50 states. Plus, does anyone like seeing a tax company getting rich off the pain of retailers?
I think most e-commerce retailers would rather have something like that in place, and collect and pay taxes to states their home state doesn't have a tax agreement with, rather than wait for the federal government to impose some regulation that will make it even more painful and expensive to conduct business on the Web.
My favorite solution: tax only stuff that isn't made by human hands. It's an old idea but study it for a while and I think it might make good sense. Google for Henry George for the classic arguments behind the idea. Just think, no taxes on income, goods or services and yet plenty of tax dollars available.
90% of the wealth is in 2% of the pockets. Bummer to be in the majority.
The simple solution is to implement a clearinghouse that hosts two web services. The first would allow vendors to submit a zip code and receive a tax rate. The second would allow vendors to submit a payment with a zip code. Given that ecommerce is already network enabled, this would not exactly create an undue burden when users check out with their online shopping cart.
This isn't exactly rocket science. Mobile phone vendors having been doing essentially the same thing for years, except not necessarily using the internet. Each mobile phone vendors sends each other switch records for roaming calls in a defined format. In the ancient past, this has even taken place on magnetic tapes. Given the ubiquity of the internet, it isn't all that difficult to do in the present.
I'm not paying for shipping AND sales tax. That would totally eat the price advantage online stores have on B&M's and decimate ecommerce. Sales tax is bogus to begin with, it's a terribly regressive tax, ESPECIALLY in states that still tax food and such. States ought to be able to raise their income through property or income taxes. I live in washington where sales tax is 8.8%, so I try to buy as much stuff as possible online, depending on shipping costs. As it sits there are online stores that actually charge sales tax allready. The iTunes store comes to mind, even though I'm pretty sure Apple is based in California. It's just wrong. If they start doing this I'm going to be extremely pissed.
--The universe will not be altered by forum threads, even those which are very wry. --Tycho Brahe (Penny Arcade)
I feel sorry for you all with a tax system that is impossible to track.
The obvious solution is to ignore the fact that it is ecommerce and treat the sale as though the person was standing at the shop counter ordering goods - this is the idea behind ecommerce - a virtual shop.
This way the tax that should be applied is the tax of the state where the business is located. The sales channel should not effect the tax rate.
Back to my origional point - having differing state and regional tax rates is nuts. NZ introduced a flat tax (GST) on every item purchased or service rendered - no exceptions- some 15 years back - this is working well. Aus introduced a similar thing a few years back and it seems to be working- even though they added a whole bunch of exceptions that are exempt which increases the complexity of administratioon (AKA COST).
The US needs to bring its tax system in to the 1980's level of thinking (we wont ask you to advance too far:-) )
You think that's bad? California alone has over 50 counties and each of them has its own way of doing business. Jobs handled by one official in one county may be handled by a different one in another place. Forms and fees are nonstandard. Even the process for serving legal papers against someone varies by county.
The benefit today to having states is pretty marginal but when you burrow down the benefit is that people who are like minded can group up together and live in a legal climate most appealing to them. For instance, pot smokers move to California, and gun fans move to Texas. It provides more legal choice.
"You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
http://www.fairtaxvolunteer.org/smart/faq-main.htm l#1
That's not any harder than calculating taxes. Come on! CZ
Love you fair tax people. Fair tax is the worst idea ever. No poor person protections are going to make this a good idea, except for the very rich. Not even the rich elite think this is a good idea. Warren Buffet had this to say about the Flat Tax (not the "Fair" tax idea, but close): I wouldn't support it. We have, in my view, a taxation system that's much too flat already. If you look at the payroll tax--which is over 12% now, and that applies on the first $80,000 or $90,000 of income--Bill and I pay practically none of that in relation to our income. For the people that work for us, their tax rate in many cases is the same or even higher than my own, since the rate on capital gains and dividends was cut to 15%. What has gone on in this country in recent years is a huge benefit to the very rich and not that much relief to people down below. Frankly, I think that Bill and I should have a higher tax rate on the income we get. We pay less than half the rate that I was paying 25 years ago when I was making a lot less money. They have really taken care of the rich. -- Fortune [fortune.com]
It makes sense to me.
And I say let Kansas and Georgia and wherever else have their Intelligent Design. Fifty years from now we can climb over the ruins of their interstate highways and make a fortune selling them fire and wheels.
Breakfast served all day!
Or you could just save yourself the hassle and move to Delaware, Montana, New Hampshire, or Oregon; none of whom have any sales taxes.
Free MacMini
It is highly likely that in the near future the price of oil will make shipping goods long distances to consumers economically prohibitive.
Unfourtunatly, this doesn't just affect internet commerce. Chains such as Walmart, which have massive volume and very low prices, will no longer be able to keep their prices low enough to compete with smaller chains that get their goods from more local sources.
In other words, buying the loaf of bread at Walmart will cost more than at your local mom/pop store because Walmart ships that loaf of bread 2000 miles to its store where as the mom/pop store gets it from a more local source.
As the price of oil sky rockets over the next 10 or 20 years there will be a dramatic shift away from the global economy to a more local one. This includes, but is definitly not limited to, internet commerce.
Well, I am doing it. But I do a lot of things people say can't be done -- that's basically my job description.
Harry Browne explains what life would be like without the income tax or the "fair" tax: http://www.harrybrowne.org/articles/IncomeTaxDay.h tm
I think, therefore I doh.
So we'd have the Congress involved in making laws for each locality? Yeah, that'd work - just ask the folks that live in DC how well it works for them...
I meant it the other way around. Calculating taxes can't be any harder than calculating how much it will cost to ship my 2.3 lbs package with insurance from LA to NYC with 10 different kinds of service (ground through same-day air ). CZ
The US Supreme Court has found it unconstitutional for states to require that out of state vendors withhold sales taxes for shipments into the state. Yet the US Supreme Court, however, has yet to strike down any state law where a state requires its residents to pay a "use tax" on new items ordered from out of state.
As internet commerce crosses state lines, it may very well be constitutional for Congress to enact a law requiring internet vendors to take part in a clearinghouse which would collect use tax on the basis of shipping address where such shipments cross state lines.
At least up through the present, the Supreme Court has already stated that any company with a physical presence in a state can be held liable for sales taxes to any shipments within that state regardless of where the shipment originated.
Seeing how anti-tax this administration is I can't see this suriving the veto powers if it were to ever pass. It's doubtful it would ever get even that far... We're coming up on an election year (as always) and this isn't popular and it's not something they can sneak in without people noticing. Besides I'd think the majority of businesses, with the exception of the retail heavy companies, would be against this.
Besides that it's a bad idea to begin with. So they start charging tax.. what's to stop people from setting up shop Canada or overseas somewhere. You'd have customs to deal with and shipping would be slower but they could find a way around the law I'm certain. Just like with perscription drugs.
What about ecommerce for things that you download? I will have to give them my address now, even though nothing is shipped to me?
I wonder if Amazon will finally allow merchants to charge tax based on buyers location. The company I work at use to do business with Amazon, and they down right refused to charge taxes, expecting the merchant to add it in.
How can you know how much % to add into the price prior to sell?
The only way to do it is look at which state charges the most and up everything that %. Then you're no longer competitive and charging people who may live in a state that doesnt collect taxes. Think only 5 do now, TN, CA, etc.
When you work on a 1-2% profit margin (minus the 8-15% cut that amazon takes) you can't just add 8% for taxes that may or may not apply.
Unfortunately it currently is not that simple. Tax areas are not zip code specific. I work with an ERP package and we had bought an outside software package to deal with state, county and city level sales tax. The problem is that Zip codes can span counties and cities. The only way to get completely accurate for all tax districts is to go down to the street level. This requires a ridiculously huge DB and constant updating. We pay dearly for this. I cannot imagine what this will do to mom and pop shops that ship and sell over the Internet. E-bay business would really be hurting. If they have to charge a tax just charge state tax then at most there is 50 rates to keep track of instated thousands and thousands.
My user ID is a palindrome!
Ahh but the devil is in the details isn't it? I would consider my car basic necessity, and while a $20,000 car I'd say was a basic necessity, is the same true for a $100,000 one?
... uh use... uh solely to... uh... um... um... uh! Entertain potential customers, and go on work related trips to, and from Miami, NY, and my suppliers in the Bahamas. I could also use a 23% discount on a purely "business use only" Learjet also. ...Shmucks
From the FAQ:
"Is consumption a reliable source of revenue? Yes, in fact, consumption is a more stable source of revenue than income. A recent study by former American Farm Bureau economist Ross Korves shows the FairTax base is less variable than the income tax base. Why? Because during difficult times due to loss of a job or an inability to work, people may not have as much income, or may have no income at all. They borrow funds or use savings. They may not have earnings, but they still continue to consume. Korves's Figure 2 below shows the yearly changes in the tax base, adjusted gross income (AGI) under the current tax system for 1971-2001, and changes in personal consumption expenditures (PCE) of the same time period."
Are they purchasing "basic necessities", or taxable goods in these periods?
"Yes, the FairTax is fair, and in fact, much fairer than the income tax. Wealthy people spend more money than other individuals. They buy expensive cars, big houses, and yachts. They buy filet mignon instead of hamburger, fine wine instead of beer, designer dresses, and expensive jewelry. The FairTax taxes them on these purchases..."
Ever heard of the millionaire next door? where do they dry dock their yacht when they're not towing it behind their 4 year old Honda Accord?
"If, however, they use their money to build job-creating factories, finance research and development to create new products, or fund charitable activities (all of which help improve the standard of living of others), then those activities are not taxed."
Anyone know someone that puts their BMW down as a business expense? I can name 2. How about the guy that says his Porsche Cayenne SUV is a work truck, and writes it off as a tax deduction, I know one of those too!
"When corporate income taxes are repealed, pre-tax prices can come down an average of 22 percent for goods and 25 percent for services according to Dale Jorgenson, Ph.D., former chairman of the Harvard University Economics Department. Furthermore, used goods are not taxed because they have already been taxed once - when they were new. Therefore senior citizens, like all Americans, do not lose purchasing power, but gain it instead."
How does replacing a 22% savings on goods, and replacing it with a 23% tax result in a savings?
I can't do this anymore, this is a BS pro-business, at the expense of the little-middle guy tax plan. They want to get rid of payroll taxes, plain and simple. It's all outlined right here.
"If, however, they use their money to build job-creating factories, finance research and development to create new products" they will now be tax-exempt"
So now that money is gone. Where do those job creating factories get built? Heck even if they're built in America, they still buy all the materials and labor tax-free, and the guy swinging the hammer making jack-50 an hour is now hoofing the tax burden. Yeah, nice plan... Heck I'm all for it actually, I have an addition I want to put on my house, I'll call it a home-office, and get it a 23% rebate. And the guy making still has to pay a 23% tax rate. I have the money, I already have an LLC, this thing is right up my alley! I can see no reason why this would be bad for ME... now the other 90% of the population, well... screw them I'm getting tired of dry docking my yacht... that I
While it is true that the tax system would create a disincentive to buy new. This is not entirely a bad thing. First of the fact that all new goods already include the cost of income tax and corporate taxes would mean that trying to sell US manufactured goods outside the US would become much more competitive. This would more then outweigh the loss in sales within the US. Also lets look at the US consumer for a second. It is already cheaper to buy used goods then new. By a fairly large threshold. But most consumers choose not to. Generally only those with a shortage of income make this choice. And they will still do so.
Also The cost of goods will change very minimally. As I have said there is already an embedded tax in the cost of goods. When you tax a corporation this tax will be passed on into the product. And as employees will no longer be paying income tax there take home will increase to counteract the residual increase.
When a item is sold second hand it is sold based on the new cost and what someone is willing to pay for it. If the cost of new items has increased then the price of that same item used will increase to match.
If I am selling item x for 100usd and you see item x used for 50usd then the bargain seems good to you.
If item x goes to 120usd then if you are not willing to pay 60usd for the used version I can assure you another customer will be.
From the article: "The legislation would apply only to businesses with more than $5 million in "gross remote taxable sales" each year."
-beaker
Why do we need states? Why do we need fifty separate miniature countries, each with its own tax system?
Because if we had one central government collecting the money, and then distributing it, it would go to whoever happened to be in favor with the powers in office right now -- just the way the federal money is currently distributed.
Someone should do a study where we compare just how much of our money the government gets versus how much of the money England got from the colonists before they got fed up w/ all the taxes and revolted. My bet would be that we're currently paying about the same, if not more, to the US Gov't. than the colonists did back in the day.
We can all agree there's just too much pork, fat, expenses, waste, etc in government today. Let's address that before allowing the government to take even more money away.
I'm not sure what the secret to success is, but the secret to failure lies in trying to please everyone -Bill Cosby
Maybe the poster should have actually read the PDF of the bill. It calls for a registery of member states -- and that all local jurisdictions have a common tax base identical to the member state. Everything is supposed to be set up to be "one stop shopping" for merchants who need to do it. And those are companies with more than $5M in gross sales -- that is those who can afford a little overhead in implementing the system. It's supposed to make things easier, not harder.
The US will be re-districted into 6 super states: New York, Florida, Ohio, Texas, California, and Montana. Governors will be appointed by the King. All taxes will be administered at the Federal level to avoid confusion. Collecting sales tax will be easy this way. In fact, businesses won't even complain because the government will be monitoring every single transaction 24 hours a day 7 days a week (they already do this) so they will be able to take their cut off the top of every transaction.
This is just the start of things to come. Once they get the laws pressed out for the over $5million companies to pay state tax it's only a matter of time before it's everyone paying every ridiculous tax.
You're talking about money here. Once the wagon gets rolling, everyone is going to want on. Give it time.
Once the big fish are forced to pay, rather than fight the tax they'll lobby that it's unfair that every goof on ebay isn't paying, too. That limit will come down faster than the tax went up.
Sometimes reading an article involves actual 'reading'.
So they want taxes from one state to be enforceable in another, but not marriages? I love double-standards.
I worked for a small ecommerce site and these were the current rules as explained by our lawyers:
We were required to charge sales tax to all customers in states where we had a NEXUS. "Nexus" being defined as any office or building where we conducted business. We had our offices in San Francisco and a fulfillment center in Chicago somewhere.
We were at first concerned with the multiple county and municipality taxes, and after many hours of expensive lawyering, the ruling came down that we only needed one tax rate for each state. Thats what we did, and paid quarterly taxes. There was never any heat brought down on us from either state for conducting business that way.
I do beleive we chose the tax rate for the state acording to the tax rate for where our physical presences were. Of course, these were the highest taxes in both states, which wouuld be an easy shortcut.
-----
As far as making a list of what taxes go where, it shouldnt be that hard tor the feds (through the IRS) to make a flatfile with the breakdowns and just put a friggin torrent of it somewhere. You check it every day, and if the file has changed (easy md5 hash, no?) you go get it again.
Of course, being that the this would be a gub'ment thing, it would take roughly 3-7 years to implement in a way that would protect them from getting sued and have their hardened seurity all over it.
The data is already out there, it just needs someone to aggregate it.
s'wut i sed.
Couple points:
1) If somebody comes to my online business hosted in CT from New York, why would I have to pay NY taxes? I have no representatives in New York, I am not a citizen of New York, and my business is not incorporated in New York. We have no New York offices or interests, save being taxed. How then, would I have recourse to adjust my taxation from New York? Move there? Payoff a politician from there? Seriously, how is it that a state in which I have no connection with able to impose it's legislative will on me? And if it is allowed to do so, where does it stop? Can they apply extra taxes to out-of-state purchases to allow for more in-state businesses? Tax certain businesses but not others? States are notorious for adjusting their tax systems to have some sort of social impact. Should CA be changing economic conditions in TX?
2) Somebody is going to start doing the math on this one. If I buy big ticket items, it would probably be best to tranship them to a tax free entity (Canada? NH?), deliver them there, then continue shipping to the original destination. For anything with a tax over 30 bucks or so (and a small item) it would be cheaper. (And for those of you who say it would be illegal, please see #1. Illegal where?)
Town Attacked By Giant Snowman (on my blog)
I have dealt with systems that calculate tax in the US. it is totally crazy ... things like how do you decide what taxes to charge, the common methods are
... Internet service in texas has no sales tax up to $25.00 ... then 5% on the portion over $25.00
...
1. telephone #
2 ZIP+5
with telephone number portability you can take your existing phone to a new location but then still get the same taxes as you had before.
then identifying the type of product to map to a tax category.
if I remember correctly
in total there was something like 14,000 tax agencies that you have to deal with to collect taxes in the US.
municipality taxes
county taxes
state taxes
federal taxes
and it gets crazier
municipality taxes collected by county
county taxes collected by state
Zip codes don't map to tax rates. I used to live in a zip code where the post office and part of the zip code was in Washington, D.C. and the rest of the zip code was in Maryland. This used to confuse many companies whose software assumed that all of a zip code could be associated with a single state.
Mea navis aericumbens anguillis abundat
It's already a balancing act: is it cheaper to pay sales tax but not shipping or pay shipping and handling, but no sales tax. For some types of products it's already close enough that if I had to pay tax on top of S&H I just wouldn't shop online.
Just use the ZIP code (postal code) of the delivery address. Make the Secretary of State of each state responsible for creating a table of effective tax rates by ZIP code, and publish it on the web in XML or other easy format. Anyone (including customers) can check the table by themselves. Then file *one* return with your *own* state, which is responsible for settling with the other states, which are responsible for distributing to local jurisdictions.
Yes it can. When I send that 2.3lb package I can forget all the details about sending it (or if you are responsible you keep the tracking info until it's known to be received + 1 month). The analogy here would be requiring a monthly or year end document keeping track of the total weight of packages sent into each locality (as others have pointed out the county level taxes will soon follow if state is enforced). Moreover, you would probably have to pay a fee to the locality for the privilege of getting to keep track of all that. Sure that wouldn't be horrendous if you were running a large operation. For the small ($5M gross) business it will be a disaster.
ammm... but there are so few rich folks. And many definitions of what makes someone rich. Is a person making $200k/y rich? how about $500k? how about $15 million? Or how about a person who makes $35k/y, but owns $45 million dollar house? (you do realize that bill gates doesn't `make' much money---until he sells his stocks or takes out a yearly $1 million dollar salary). Many "rich" folks just take $50k or so salary (to live on), and leave the rest invested somehow/somewhere, btw.
:-)
Also, increasing taxes on 98% of the population more than offsets than cutting taxes on 2% of the population
Besides, once -you- get into that middle high tax bracket (where you're not exactly poor, and not exactly rich enough---and end up paying the highest rate), you'll be singing a different tune.
Ok, with normal business, arent you charged from where the business your buying from is? If I drive all the way to New York (I live in CA), and buy something, they aren't charge me my sales tax rate at home, regardless of the fact that I could turn around and drive it right back. Thus is makes no sense for online businesses to have to do that.
PLUS, Don't physical businesses at least get some benifit from Sales Tax they collect (some might go to road contruction / repair, etc)? What would an online business get? Shouldn't sales tax we collect go to improve the local internet lines for people (our "roads" to our business, if you will), perhaps faster connections, less downtime, and so on.
Oh, but wait. I guess that's our ISP's job, not the governments.
Either way, if you ask me, they are out of line collecting sales tax, and it's only made worse by how they want to do it. If their going to do it, it needs to be re-figured-out so A) We're collecting for where we are based and B) The money goes, at least in part, to benifit us (see the roads example above).
Scott Swezey
The U.S. Gov't can't charge sales tax to Canadian companies. Can they?
It's a good thing we live in a global economy.
023AD01("Child", "Evil");
Coupon books? Why would you care about coupon books? Do coupons have some sort of different meaning in the US than they do in the rest of the world?
"I'm not impatient. I just hate waiting." - My Dad
How nice of you to avoid talking about non-income taxes. You've got payroll taxes, gas taxes, sales taxes, gas taxes, and so on. I guess you like regressive taxes.
There are legitimate reasons for lowering capital gains taxes. But it has to be driven by what is going on in the economy. IMHO there are four taxes/fees which can be used to control the economy. Capital gains, sales tax, tariffs/duties, and fed interest rates. Lowering capital gains is only a valid solution when the problem is under investment. When you increase the benefit for investing you get more investmants made. Makes sense, doesn't it. Sales tax is the odd guy out since it strictly speaking is a pain in the @$$ and quite difficult to use in a positive way. Better control comes from the fed interest rates. (Which of course affects the incentive to invest in the national debt) Tariffs are IMHO usefull for adjusting minor trade gaps. But in the case of what is going on between China and the US there is definitely more that would need to be done. (After all we do need the chinese to continue financing our debt until we fix it)
There are both companies and software that kept track and distribute local and state taxes in all US zip codes. These had anticipated taxes long ago, but the feds have kept the internet mostly tax-free so far.
This would be a heck of a lot simpler than having every small business in every state register with the tax department of every state. Simply have the small business require out of state sales to be placed on a credit card, and report to the credit card company that the sale was of taxible goods. You credit card company bill you the sales tax, and sends a check to the state.
Another alternative is to have an alternate 10% federal Value added tax (higher than most state sales taxes). A merchant would have the option to _either_ charge its customers their state tax (and fool with all the required paper work) _or_ pay the federal sales tax. A merchant would then have the option of figuring out which was more worthwhile. Give your customers a small break in price, or simply their paper work.
if you're a small business don't worry. "The legislation would apply only to businesses with more than $5 million in "gross remote taxable sales" each year."
And piss off all those campaign contributors, I mean bankers? Get real.
Credit card companies and other financial institutions have HUGE lobbying stables and it would never get passed.
There is no "-1 offended" or "-1 you don't agree with me" mod options for a reason.
The Government Pirates attack again.
No elections to Crack?
Constitution Shreaded? (ala Patriot Act again)
Couldn't steal enough money in IRAQ?
No more fake Declaired Wars? (The War on Terror, which country is that?)
Tax the internet!
You'll have to update your software several times a year to keep track of the changing tax rates and codes. You've stuck the software jackpot - a necessary product that requires a subscription service to function properly. Better yet, you can even make the software stop functioning if it doesn't get an update, because you wouldn't want to be liable for submitting false data on taxes, right?
Oh, this is going to be good...
Is it just my observation, or are there way too many stupid people in the world?
One of the reasons why I like the FairTax is that it takes away a few of the games the politicians can play to repay their big campaign contributors for putting them in office. Oddly enough the Buffet quote you highlighted doesn't seem to illustrate his opposition to a flat tax, but his opposition to special taxation categories, like capital gains and dividends, set up by politicians to benefit their high-dollar campaign contributors. These favored categories wouldn't exist under a the FairTax or flat tax scenario.
To me the FairTax is just that, "fair." Any spending up to the poverty line is essentially exempt from taxes. Everyone, not just poor people would receive a check in the mail every month to rebate the taxes they paid on all essential items. If you choose to consume beyond what is generally agreed on as essential, then you pay the tax.
In the meantime, everyone, gets to take home more of their paychecks and you and I get to choose where that money goes, not the government. If the essentials are tax-exempt, how is it unfair to tax people when they buy a TV, or a DVD player, iPod, whatever?
How does that benefit the rich any more than it benefits the middle class, or the poor? When a rich guy buys a 150,000 car they have to pay the tax, just like me when I buy my 15,000 car, or a $400 MP3 player.
Besides, the theory goes, that with the 23% embedded tax burden removed, even with the added sales tax, we would be paying the same price for non-essentials as we were before the FairTax. So, we pay the same price for things, but we have more of our paychecks to buy things with. That sounds good to me. So, if you're going to attack anything attack the embedded tax premise.
Under the current system a lot of rich folks' money sits legally untaxed in offshore trusts. So, the "soak the rich" mentality only ends up hurting people who can't take their money offshore and/or those who don't receive most of their income through passive investment, namely the middle class.
The weak point to the FairTax as I see it, is the relative leap of faith required that the embedded tax burden is actually 23%, and the all or nothing implementation it requires. It also would discourage the purchase of new items in favor of used items, because used items have already been taxed, they aren't taxed again. Encouraging conservation in our current economic system could be problematic.
If anyone can explain to me why this would only benefit the rich, I would like to hear it. I'd like a reason to maintain the status quo, it's easier that way, right?
Well, the ones in Government at least...
When are they going to figure out that we live in a global economy? I've from Canada, and I hope they tax the crap out of US internet purchases, so I can open a nice tax free store up here and sell the same products not only for cheaper ($CDN) but tax free.
That's some brilliant governance... how much will that add to the deficit?
This is exactly why I favor a gross receipts tax. You get money, you pay a 3% tax (call it a receipt fee, if you like) on it. Normally I like to say "no exceptions", but I make one, single exemption: Each person, as defined by the posession of a social security number, who receives income, goods, or services, may deduct up 2087 x Federal Minimum Wage.
Get a subsidy? Pay 3%. Sell Stock? Pay 3%. Sell your house? Pay 3%. Think of it as a fee for making your transaction possible through military defense, regulation, adjudication of wrongs, etc. At the end of the year, I receive (say) $80,000 from my business, and I get to deduct 2087xmin wage, then pay 3%. OF course, the company I own received $150,000, so it pays 3% on that $150k. No SSN, no deduction. Did I pay twice? Yup. And I should have. If I were a sole proprietor, I would receive the money only once, but I would not get the governmental/legal protections afforded to my by corporate law.
Don't worry, it won't happen. Companies, who buy these laws, won't want their gravy train to end, and the Democrats would never let go of their EIC, a negative tax bracket for the poor.
Is it just my observation, or are there way too many stupid people in the world?
Until recently I worked at one of the more significant Salestax / VAT software places.
Frankly it's all a bit of a mess. Some place, like Louisana with its Parrishes, are just crazy. These tax companies are hoping to get in on the Streamlined Sales Tax Initiative, where they would act as Service Providers, giving retailers an easy way to cover their bases, but not every state wants to play along, because a lot of the states have different definitions for how to handle locations and what not.
In the 90s, I used to be against online tax just because I wanted to see companies like Amazon etc suceed. Now that online shopping is a pretty well established part of life, I can kind of see the desire to level the playing field a bit more.
SO YOU'RE GOING TO DIE: The Comic for Dealing with Death
Software has always had this double standard disconnect . You pay for a license which states that you do not own the program, just allowed to use it under the terms of the agreement. It is explicitly non-chatel. But sales tax is collected ( unless you buy in line from and out-of-state retailer) always. Licenses are not taxable, chatel is . So I figure that the box costs $629 and the software is actually no charge.
I think that this bill may be a non-starter, the large catalog retailers that are not incorporated in every state will fight this one for us.
Our company sells to end users and resellers over the web. We keep a copy of the resellers (tax exempt) certificate for those in our state. On the web resellers can just enter their number and we trust that it is a valid one. So more paperwork in order not to become a tax collector for other states. Will we have to require a fax copy of out of state resale certificates for a web order?
Another nightmare will be the paper mail orders. Those orders are often summed incorrectly. If someone sends a check and shorts us $5 on a $100 order we ship it anyway and eat the mistake What if they stiff you $4 on sales tax to their home state, do you eat it?
The charge card companies enjoy a tremendous benefit from this increased ecommerce. Maybe they could just report my out of state purchases to my home state and I would pay the summary use taxes. Right. I am saying that the states already have a kind of reciprocal agreement, If I paid taxes to another state I am exempt from the use tax here. Sales tax is the most regressive of all taxes, it is also the most prone to downturns in the economy.. It is a shortsighted way to run a railroad.
How about there is just a flat 4% eCommerce tax for all out-of-state sales. 1% goes to the fed and 3% goes to the state reagardless if they have sales tax or not.
Then all the eCommerce sites move offshore and the problem is solved!
In Rhode Island you get a little form with your tax packet every year. It's called the RI Use Tax report.
You're supposed to figure out the approximate value of items bought out of state at a lesser tax rate, items bought online, etc. and then remit either the difference or the whole tax to the State of Rhode Island.
Right now this is all honor system and the RI Division of Taxation does not have the technological know how to go and see what you purchased where at the current moment.
More interesting is that what the congress critters are pushing is somewhat in violation of the Constitution in that only the federal government can tax interstate commerce. So this law is in direct violation.
Hopefully someone will challenge it.
From the article: The legislation would apply only to businesses with more than $5 million in "gross remote taxable sales" each year.
1. Make a product.
2. Form Corporation A.
3. Sell $4.9 million worth of product.
4. Form Corporation B.
5. Sell all rights to product to Corporation B for $1.
6. Shut down Corporation A.
7. Wash, rinse, repeat as necessary.
Taxes due on $5 million at 5%: $250,000.
Accounting cost to shut down/start new corporation Satisfaction of beating politicians at their own game: priceless.
How do they propose dealing with international businesses?
What if we just start buying everything from the other side of that pesky border? Or the one to the south as well? I am sure some internet based companies make enough money on their lower prices and no sales tax to move operations costs across the border and pick up the slight increase in shipping costs without too much trouble.
I do agree to some degree that this is a bit harder then they realize since many states have quiet variable sales tax laws. There are several states with tiered systems where food is taxed differently and other items are on another level aside from regular purchases. I think some states with extremely high sales tax rates are the ones complaining the most because they are the ones who are probably losing the most money.
"Some days you just can't get rid of a bomb."
This is why you keep the rates in an updateable table and set up a relational database where you can hook up customer tax location w/the current rate table.
Currently the office keeps these tables on paper and do the calculations by hand.
Time to move all these online retailers offshore to India or China to escape state taxes.
But knowing our government, they'll probably impose import taxes that might be higher than the state taxes.
Oh well, there's one thing I'm 100% sure of, you can't escape death or taxes!
Seems to me there is a simple solution to this (which means no politicians would ever go for it, of course).
Create a tax pool and use some tax percentage that is a reasonable average. Businesses would simply report how much of their taxed revenue went to each state, then each state would get a payment based on the revenue derived from shipments to that state. Perhaps purchase data could be kept as granular as the county being shipped to, and then states could divy up the money appropriately.
So, for example, a flat 7% could be charged on all goods ordered via mail, phone, or internet and shipped. If California accounted for 20% by revenue of all orders, then CA would get 20% of "the pot". Then CA could divide the money however it wished. Maybe they could apportion it based on per-county purchase amount, or they could just rebate income taxes to counties based on each county's contribution, or whatever.
There will be some states (namely those currenty without sales tax) that will find this a great boon, and those that won't like it so much (namely those with sales tax rate higher than whatever flat rate is chosen). And yes, it means that the money won't get distributed precisely as it would if the purchases we actually made locally, but I suspect it would be close enough to matter little in reality.
Overall, this would be far simpler to administer and probably no more prone to abuse than any other system that might be dreamed up.
In Europe, every country has it's own rate of VAT, and it's own rules (e.g. food and books are zero-rated in the UK). Here in Canada, if I buy over the internet from Vancouver, the merchant will take tack on Ontario's 8% PST. It seems businesses in other jurisdiction are already coping with selling to different tax regimes.
Interesting isn't it?
The music companies are loosing money because nobody is buying albums. The internet is bad.
The movie theaters are loosing money because nobody is going to theaters. The internet is bad.
The adult media companies are making money and growing exponentially. The internet is bad.
Middle and lower class people in oppressed societies are getting truthful information. The internet is bad.
Governments are loosing income because people aren't paying sales taxes. The internet is bad.
Maybe there are clues in this. Something along the lines of:
People don't want to pay so much for music and movies.
People like porn.
You can't fool all of the people all of the time.
People buy stuff when there isn't a sales tax.
But, then they would get thoughts in their heads like:
We'll reduce the price of music and movies.
We are wrong about our inhabitions.
Our people are going to revolt unless we give them some freedom.
Lower sales taxes means more cash flow.
Having to work for a living is the root of all evil.
I would go with a web service, perhaps an interchangeable xml based format linked in from over the web by secure connection.
That is probably the most efficient way of doing it.
I'm telling you, besides a flat tax, we need to elminate federal taxes being collected from individuals. We should pay the State, and the State can dole out their funds to the Feds. This is the only way we can get the greedy working for us rather than in coordination against us.
~Gildas
How are they going to enforce this if I start buying from outside the U.S. ?
Remember when Republicans eschewed taxes as an undue punishment on trade and wealth? Remember when the Republican Party was committed to cutting taxes? And now a fully Republican/conservative US government wants to implement what would be the biggest tax since excise tax?
Do parties even mean anything anymore?
Terrorists can attack freedom, but only Congress can destroy it.
A solution is the fair tax, but it's boring to one half of the population and misunderstood by the other half, so expect to continue to get screwed by the partnership between big government and big business.
3 20566
Uh the fair tax would be a partnership between big government and big business, in an effort to screw the rest of us...
http://slashdot.org/comments.pl?sid=171953&cid=14
There are companies that sell software to calculate sales tax for any jurisdiction in the U.S. A quick Google search turned a company called Vertex that has a product which they claim "blends the most accurate and timely state and local tax research in the industry with advanced open systems and Windows® technology to take you to a whole new level of tax compliance confidence." (This is NOT an endorsement!)
Yeah, I know, it's only for Windows. Give them a reason to and they'll port it to Linux or whatever OS you want.
Even if zip code alone doesn't work, complete address will.
I'm assuming you know what a clearinghouse is. If not, go look it up and then we'll talk.
A simple web service is not too complicated for mom and pop shops to use. You could even put a pretty front end on it.
The best part is that you could make the localities that charge tax responsible for updates.
There would be a 23% disincentive for a rich person to buy a $150,000 car. They might just say, "Why do I need that expensive a car? Is it really worth $184,500?" While in some cases the answer will still be yes, in others the answer will be no. To compensate for the decreased economic activity the rate will have to increase from 23% to keep the plan revenue neutral. This will create more incentive to save and less economic activity.
Additionally, it would be a disincentive for buying goods in the US. If I can buy a 10 million dollar Lear jet in Europe without paying 23% tax on it, I'm going to. There also are no provisions to keep people with more money than they can spend from exporting their excess cash out of the US. BAD news.
The thing to think about is that this discourages spending, especially in the short term. While it would all settle out in the end and money that people saved would get spent, for the first few years consumers would try to avoid paying the tax by now purchasing new goods (buying used, repairing). This would have severe and dire consequences in our economy which is driven by the movement of money. Consequences that we may not be able to recover from.
And that's just one facet. There are others.
PREFACE: IANAL and IANATaxAccountant
In at least one state sales taxes are titled 'transaction priviledge tax' and the venue for taxation begins at the location of the origin of the transaction. Thus taxes arising from a transaction originating in another state are not locally collectable.
Currently the revenues from such online or mail order sales are reported in gross transactions and then listed as tax exempt with notation for the state of origin (or the shipping destination as it may be)... If the requirement is added to mandate that one state collect the tax revenue for other states and municipalities then the easiest solution for the small business vendor is to require customers to enter into a non-retail sale agreement and provide thier business FEIN or state tax ID... the reporting burden still remains to account for the non-taxed gross receipts, but the collection burden is back in the lap of the purchasers state and rests with the purchaser instead of the seller.
FWIW, thats my humble opinion.
~ shimo
The legislation would apply only to businesses with more than $5 million in "gross remote taxable sales" each year.
/.ers who run small online businesses are carping about this, I assume they must all be rolling in dough! The day my little online business reaches $5 mil in sales, I will GLADLY collect sales taxes. Of course, that threshold will be reached on approximately the same day that it can be reliably determined that hell has frozen over.....
The way
People hear no income tax and think "ooh.. how nice, I'd only have to pay that little bitty sales tax instead of my huge painful income tax". This is incorrect. Unless they cut spending you have to pay just as much, just in a different form. Since the tax is regressive a higher tax rate would be needed on most people to raise all the money. In order to average 1/3rd (which is about what income taxes average) it would need to be around 50%. That means that nice things like that new $100 video card would now cost you $150. The $600 one you dream of, now a cool $900. No thanks.
It's basically a cheap way of cutting everyone's saving in 2/3rds. Savings are now post-tax (for the most part.) You pay the tax, then you put the money in the bank. Doing this switches it to pre-tax which basically makes everyones savings double-taxed reducing them by 30% or so.
Sales taxes should be banned permanently. They are evil and unfair and ineffcient and I hope to never live in a state with one.
The answer is simple and hard:
No need to throw everything out, just un-screw up the system that used to work.
set softtabstop=4 shiftwidth=4 expandtab nocp worlddomination
This will be VERY BAD for small internet businesses and thus the internet as a whole b/c it will greatly increase overhead costs. Not only will the customer have to pay the tax but also the additional cost of handling all the accounting invloved. In most cases, this will push online prices beyond local brick & morters, which will pound online resellers and in turn plumet the shipping companies that are currently expanding thanks to online sales.
If such a tax is really necessary, then it should be put it in the lap of the shipping companies. They are large companies which already manage forms of interstate taxation, so they can more easily absorb the overhead and thus hold the costs down for the consumer.
:T:R:A:N:S:
How about Zollverein ? :)
New idea, really rad, a wave for the future.
Just as so many taxes have been introduced and backed by Republicans in the last few years, both overtly and quietly. And still the rest of us will be lectured endlessly about the tax-and-spend Democrats.
This double-talk shit really gets tiresome after a while.
Rich people pay less tax. This is a huge thing that I had NO idea about until recently. There are a few taxes that are capped and simply stop at a certain point. This is worth noting since we always talk about our tax system as "Progressive" and as if rich people are somehow overtaxed. They simply arent! If a company shells out $200,000 per year for you you keep a higher percentage of that than if they shelled out $100,000 per year. That's wrong.
set softtabstop=4 shiftwidth=4 expandtab nocp worlddomination
You've misunderstood the problem and the proposed solution. No one is asking you to pay out of state sales tax. Your state is asking you to pay sales tax on items that you purchase from out of state. Technically, this is already required, as has been pointed out numerous times already.
I'm incorporated and resell parts to my customers. I am required by the state to collect sales tax from customers and hold that money in escrow. I do not pay the state sales tax; I am merely holding the funds for the state for the amount of time specified by them. I currently pay quarterly, but if my sales exceed a certain level, I will have to pay it monthly or weekly.
I am in Florida. If I sell a computer part to a person in Georgia, I do not have to collect sales tax. Under this new legislation, I would be required to hold sales tax in escrow for each state in which I wish to sell. It is my option not to sell to individuals in that state if I decide that the state's tax practices are too much of a hassle to implement.
for all the winging and whining about VAT that you'll hear, it is the only kind of taxation system that makes sense for a large, convoluted modern economy
our current tax system is an artifact of federalism (which let's be honest, is basically in its death throws)... it's economical mayhem to try to apply local taxation schemes to business whose nature defines local borders
if we're going to tax online purchases, some kind of federal (maybe let's call it "interstate commerce tax", or some kind of VAT makes heaps more sense
IANAL....
I will accept this as a fair system when one of two things happens:
1) The Federal Gov't offers to act as a intermediary and bills the states for the collection effort, thus simplifying things and offering a single point of contact or
2) Retail stores are required to check drivers licenses for each purchase and submit the sales taxes to the state of residence.
3) Ecommerce is taxed at a fixed reasonable rate (6%) and remitted to state of shipment regardless of tax status of that state (yes, even for states w/o sales tax). This tax would be in lieu of use tax.
Ok. Neither of these are going to happen. But there are a bunch of really *stupid* aspects of this. For example, what if I am selling apples online. Lets say that apples, being food, are not taxable in Washington but are taxable in another state. Do I really have to keep track of what state wants to tax which items? What if it is a non-food item?
LedgerSMB: Open source Accounting/ERP
I know it's much easier to take a dig at those evil rich folks with all the money, but the fact is the rich carry the greatest tax burden in this country, and therefore rightfully get the biggest tax breaks.
And no, I'm not rich. But even at my level (middle class), I can see that the way the current tax system is devised precisely so your class warfare complaints allow the politicians to divide the country, and more importantly, buy votes. (The rich are a minority, so it's pretty easy to make promises to the non-rich in exchange for votes.)
Ironically, the word ironically is often used incorrectly.
What part of this phrase of the Buffet quote, "Frankly, I think that Bill and I should have a higher tax rate on the income we get" let you to your mis-guided flat tax analysis? It just is not a workable system.
If it was an American car, according to what I've read, the "theory" is that because of the removal of the 23% embedded tax that results from the current tax system, the before tax price of car would actually be 23% less, when you add the fairtax in, it would be the same. So, a $150,000 car now, would still be a $150,000 car after the FairTax.
As far as people buying foreign cars, there would still be import taxes. Also, with the cost of doing business in America becoming 23% less expensive due to the elimination of payroll taxes, American goods should be cheaper to export than most foreign made goods. Companies in other countries would also want to take advantage of American productivity at the new 23% cheaper rate and would probably start building factories here again.
Am I wrong or do people seem to be missing the part of the Fairtax argument that deals with the 23% "embedded" cost of the current tax system. It really is the crux of the argument. Everything hinges on it.
I really want to understand why a lot of people really hate this idea.
I do understand why it will probably never get implemented. If everything doesn't go according to plan, we could really screw ourselves over. Whatever happened to America the great experiment, when states had more control over their policies, and these things could be adopted at a state level and not risk failure on a grand scale. Actually, that was rhetorical. I know what happened to it.
I mean we have had mail-order laws on the books for over a century now, right?
Why do we need to change them?
Oh, that's right, to pull another con job on the average citizen.
"You pay taxes on the money you earn at your job."
Correct
"You invest it and pay taxes on any dividends that are paid and when you sell it,"
Yes, you are taxed on the newly made money, not on the original investment.
"you pay a capitol gains tax on the profit."
yes, on the money you made, not money that already been taxed.
"Then you pay taxes on the goods and services that you buy with the thrice taxed remains."
sometimes.
Your example shows money being taxed twice
once when you get it(whether it be through dividends, income)
and another when you buy goods.
ANd you are being taxed on goods, not themoney. Onle a semantic change for this example, but when talking about taxes semantics are important.
The Kruger Dunning explains most post on
it's not a fair tax it's an effort by big buisiness to get rid of payroll taxes.5 3&cid=14320566
http://politics.slashdot.org/comments.pl?sid=1719
This is NO time to be messing with new taxes. The US economy has way too much debt, and anything that slows down online commerce is going to slaughter the industry and the US economy ....
There is way too much housing debt,
way too much credit card debt,
way too much municipal debt,
way too much state debt,
way too much federal debt,
way too much trade debt,
and there is way too much commercial and financial debt.
All it takes is a stupid little thing like this to slow things down a little and the people will have no choice but to default on some stuff which would almost certinly cascade and force a great depression, or even worse the US would print up money to pay down bad loans causing immediate hyperinflation. This is almost certinly NOT the time to be messing with macro economic tax increases.
http://politics.slashdot.org/comments.pl?sid=17195 3&cid=14320566
Because it's realy just a way for big buisiness to walk around getting taxed, you're either promoting it because you're a buisiness, and are savvy to what it's realy for. Or you havn't realy read that deep into it.
I agree with the government about taxation on online sales, however, this is being approached the wrong way.
The taxes should be collected by the State that the business is located in. This has many benefits and realistically, it is how taxation is now. If I purchase something in Texas I don't pay taxes in Minnesota because I live there.
First, it eases the burden of an online retailer having to deal with multiple state registrations and making payments to multiple states.
Second, States would be more likely to welcome and even help the small businesses to their state purely for the added tax revenues.
Paying taxes to the state that the purchaser is from (unless it is their resident state) is not a sales tax but rather an import tax.
Of course, many States will use the approach that our half-assed Governor in Minnesota did with cigarettes. Rather than call it a "cigarette tax" he called it a "health impact fee". The only difference will be that every state will call this an "internet purchase because you are afraid to venture out of your house to shop fee"
If any senators or congressmen would like to see my proposal that I submitted to Governor Pawlenty in regard to taxing online purchases, please feel free to contact me. Try listening to the consumer and the small business owner before you make any decisions.
* Si hoc legere scis numium eruditionis habes *
Just have to kill off the golden goose dont we?
Between this, and over regulation, and 'content controls' the net's days ( as we know it ) are numbered.
---- Booth was a patriot ----
The Flat Tax and the FairTax have some similarities but quoting a statement about one in a discussion about the other is disingenuous at best. Please read the details of HR25/S25 and then let's try to keep the discussion on topic, m'kay?
"Michael, I did nothing. I did absolutely nothing - and it was everything that I thought it could be."
Every senator --as far as can tell-- is a traitor to the American people. Time to indict all American senators for treason. They have given this country over entirely to the rich and the corporations. This is war, economic war, and the Senate, along with the rest of the Washington DC politicians, are all traitors to the AMerican people.
THey are now trying to give us more sales taxes instead of taxing the income and wealth of the upper class.
Treason!
I call for trying all American Senators for treason in a court of law, and if convicted by a jury of their peers, I call for them to be given capital punishment by a judge, in accordance with the rule of law and due process.
eat shiat and bark at the moon
The part where he appears to be talking about the current system, which gives him a lower tax rate on dividends and capital gains and actually has nothing to do with a flat tax. If we had a regressive flat tax where everyone paid the same rate then Buffet couldn't say his employees paid a higher rate.
Or, we could institute a progressive flat tax where people paid higher rate the more money the make, as long as it was simple with no exceptions. The problem is that there is a huge cost to the economy to comply with the current system. A lot of money gets poured down non-productive alleys.
Anyway, I didn't feel that the quote was very convincing.
if your small business has more than $5 million in "gross remote taxable sales" each year, I think you can handle a little paperwork. Unless you're too busy rolling around in your piles of money.
in the business world, sales != profit. this is expecially true in the cutthroat ecommerce industry.
When you recognize love in another and realize how precious it is, everything else seems so insignificant.
0 tax and the Federal govt is bankrupt or are you insisting every country in the world has to implement fairtax too?
And what about rich people taking all their funds offshore and living offshore. That way they earn all their money by running businesses in the US but they dont pay any tax as they are not spending it here. Massive capital flight much more than under any VAT.
While I believe the current system is crap giving a free pass to the rich and putting the entire nation on the dole is not an answer. Also how do you deal with the large number of foreigners working in the US ( I am referring to the legal workers) Do they or do they not get the dole. If not foreigners would stop coming to work in the US. And if you think the US does not need foreigners to come and work just look at Germany who are now desperate as noone wants to come and work there due to the high taxes.
Also all the Fair Tax website says is the proposal is revenue neutral yet everyone will save money so where is the extra money coming from? Thin air?
A better system would be to abolish income tax and have a fixed vat and a constitutional amendment saying the tax rate on all goods,services,transactions has to stay equal. Depending on the situation Congress can increase the rate (say fighting a war) or reduce the rate (just won the war) but not have different rates for different goods- hence no room for lobbying.
Also I think the payroll taxes,social security and medicare need to be abolished. People should be taken care of by their family and friends in theri old age or if they fall on hard times. If people have been so selfish as to not have children or friends who care about them ; then I say "Tough luck! Go starve on the street!" The establishment of socila security and medicare where you dont need to have your own support systems and rather depend on the Nanny state is what has led to the breakdown of the family, abuse of children and a host of other problems. I mean if a pervert knows that the daughter he is abusing is going to be the only person paying for his food and meds when he is old do you think he will abuse her???? I think NOT!!! And if people have to have friends to fall back on in hard times in good times they will help out a lot more and increase the morality of society. Social security and Medicare were artificial inventions made possible by the demographic boom of the early 20th century. They are not sustainable in the long run. And the nanny state needs to get out of our face. We could easily lose CPS,SSA and a host of other government organizations and survive just as well.
The only thing required is law enforcement and regulatory bodies like FDA,EPA etc. The rest is not government's job and should be done by civil society whether through Church based or secular NGOs.
A few exceptions to the case of people not having anyone to take care of them would be if their children die in war( in which case the VA should take care of them) or are murdered ( In which case the local law enforcement authority should have to pay a pension equivalent to the murdered persons last salary indexed to inflation for the period of time he was expected to live. This would have the additional aspect of giving police departments an economic incentive to do a better job. Currently we live in a capitalist system but our public services are communistic. No policeman gets docked pay if he messes up an investigation or frames the wrong guy. No fireman gets docked pay if he makes a mistake and someone dies. Public servants need to be held accountable and with the reduction in the size of government we will finally have few enough to actually watch to see if they do their job)
**Life is too short to be serious**
counties in Ohio have different tax rates. It has nothing to do with municipalities...
That's usually true, but there are exceptions.
Ohio law does permit certain municipalities to levy sales taxes. I believe these are "resort" cities like Put-in-Bay. (I wanna say there's a Put-in-Bay resort tax, and it's assessed as a sales tax on everything.)
Another peculiarity is Columbus. As I recall, the issue is the 1/4% sales tax that is levied in Franklin County for the Central Ohio Transit Authority.
Somehow that tax applies not just to Franklin County, but also to the city of Columbus that extends outside of Franklin County.
The result is that the Polaris Mall, which is located in the City of Columbus in Delaware County, has a sales which is 1/4% higher than what is the normal sales tax for Delaware County. (I believe the same applies for any retail establishment in the City of Columbus in Fairfield County.)
There are only a handful of situations like this, but they do occur.
"We don't have one."
"You don't have one? How the heck am I to know what to charge then?"
Long period of phone transfers and whispered conversations. I eventually end up shuttling my way up to the person in charge of our county. She agrees that it's ridiculous for the state to require me to charge according to my customer's location since they don't have a database that tells me what to charge. There were areas in the Santa Cruz mountains that you have to know what side of a street the house is on to charge the right rate. Further south, which side of a river you're on determines the local tax. In both cases, the zip codes don't vary but the tax rates do.
"Just charge your local rate like you've been doing. That'll be fine," she says.
At this point, I'm a bit suspicious so I ask her to write me a letter re-iterating that sentence. She did and things were fine. But now I knew that the rules weren't very clear. So when I bought my next car a few years later, I insisted they bill me at my local rate instead of the higher rate in the Bay Area where I bought the car. The took my word for what the sales tax rate was in my hometown as there was still no database. I saved enough to buy a nice dinner on the way home.
Like I said, I'm a geezer. I remember in the early 60's that sales tax was 4%. Now, 40 years later, it's doubled to 8% what with local add-ons. Now they want another .5% to pay for buses. Services haven't improved, in fact they're worse. The reason has to do with so many state workers retiring in their mid 50's and collecting significant pensions. Prison guards, for example, earn just shy of $100k and collect 90% pensions when they retire after 30 years. So while that newly retired prison guard is fishing for the next 25-30 years, you have to pay his replacement. You think GM has problems with their $1800/car medical costs? There's no one more generous than a politician spending other people's money.
Whatever the national sales tax rate is when it's first enacted, it won't stay there. It'll rise faster than local tax rates because you won't have anywhere near the leverage over Congress that you do over your local city hall. Remember that income tax was 1% when it was first enacted. Social Security was low when it got going as well. The best time to kill a tax is before it gets going and the revenues nurture an interest group that wraps itself so tightly around the national weal you can't cut it out for fear of damaging the patient.
Anyone seen my walker?
I do run a business, but I'm a one man LLC, so I pay more taxes than most people. About 50% when you include the full share of FICA, Medicare, Social Security, income tax, state tax, city tax, NYC unincorporated business tax and probably a few others I forgot. I even have to pay mandatory unemployment insurance for myself, even though state law says that if I fired myself I couldn't collect :-)
I don't have withholding, so I see exactly how much of my money is going out the window every quarter. Not to mention the money I spend on my tax guy every year, and the weird stuff that he recommends that I do, because my decisions have tax ramifications.
I'm really not being coy. I do believe the premise that you can't really tax a corporation. Besides the fact that they can move offshore and many have, you have the fact that taxes paid to the government means less money to shareholders and a higher price for consumers. So, they pass the cost onto the consumer or shareholder eventually.
So, I don't believe that what is good for corporations is necessarily bad for us. Perhaps, you're right and I need to look deeper, I was just hoping someone else would do the hard work for me and present a convincing argument against it.
Give up, run screaming. There are 50,000 tax jurisdictions in the US. Any given transaction can be taxed by 3-5 of them (state, county, city, optionally a second county, and a second city). You should record all 5 tax rates and amounts. Tax on shipping and tax on handling depend on the judisdiction. There are 30,000 different product classifications, each possibly with a different tax rate in each of the 50,000 jurisdictions. (In reality many rates are the same or zero, but you can't know). Furthermore the rates change all the time as the 50,000 tax jurisdictions pass regulations. Get Taxware or Vertex (the acknowledged leaders). We use Taxware and they send updates every month electronically.
My guess is that what they'll do is keep the threshold at $5 mill and just let inflation do the work for them (see the AMT).
Sig cannot be found.
"The only way to keep on track of this for 50 states is to be a huge company, or to hire it out at additional expense."
Some geeks you all are. Each taxing authority can present the XML information (TXML)* as a web service using UDDI. After that it becomes a GIS problem.
*Rhymes with Taximol (Tax-'em-all if you want to be cute).
My grandfather is very poor and goes hungry. He has no money at all and my aunt takes care of him and she does not make that much money. Luckily they pay no money at all in taxes.
Fair tax would servely hurt htem and cause a hug tax increase on the lower as well as lower middle class. The site talks about the poor getting help but does anyone know what the poverty line is?
Last time I looked the poverty line was $1400/year! No one can live off that and it encourages inviduals from working harder and finding better paying jobs. Also if I read fairtax correctly is that the poor would get a big refund back every year but still would have to pay taxes! Well their landlords wont wait until after April to collect rent and neither will their autoinsurance companies.
Its not fair nor proportional at all. Ignore the name. Nothing is fair about it and its called fairtax to make it sound fair. Just like the clean air act is a way to deregulate EPA regulations on air pollution.
Under the current tax system someone rich loses a new BMW, while someone middle class loses their childs college tuition, while the poor loses on food. Doesn't sound fair to me.
http://saveie6.com/
One great way to eliminate small operators from online sales would be to create enough red tape that only a coporation with it's own legal department could comply.
Everyone who matters wins. Political donating corporations get to poach the sales of small operators, political parties get the "donations", read remuneration, for sticking the knife into the small operators and the consumer gets to be simultaneously denied competitive pricing while being subjected to bald faced lies and denials of the same. OK USA!
except to a bunch of useless bureaucrats that want to dip into the money flow - your pocket. These guys seem to have been taking lessons from patent holding companies that lack research staff, facilities, and products.
------ The only greater hazard to your liberty than n politicians is n+1 politicians.
As someone who just completed both micro and macro economics I happen to %100 agree!
Fairtax != Fair and is sponsored by wealthy corporations. Hmmm why do you think that is?
Regressive == the rich are taxed less and the poor are taxed more. For example a pack of cigarettes costs someone poor alot more hard work then someone rich. Sales taxes therefore charge the poor more than someone rich. Federal taxes work exactly opposite. The rich are taxed more but this is chaning under Bush.
However this is where I disgree with the poster.
Spending creates more growth than any tax cut. Yes its politically incorrect to say in today's conservative political environment but its true. However we are going into debt and have serious problems with the deficit.
I %100 agree with deductions create the unfair regressive tax. For example most deductions yhou wont recieve until after tax time. The poor have bills to pay and can't wait fpr their refund checks from Uncle sam. So using it as a way to say they are covered is not accurate. The rich will get it back but they are not under a financial burden as much as the poor. The rich can create more deductions.
So
- Bob makes $120k/year taxes = $ 35k -$22k deductions = $12k total taxes
- Joe Sixpack makes $50k/year taxes = $18k - $3k deductions = $15k total taxes.
That doesn't seem right. Keep in mind the above is very inaccurate and I just made it up off the top of my head but deductions are used for things like investments that Joe Sixpack can not really afford besides the basics like his home.
http://saveie6.com/
Here in australia we just have one federal GST that applies to most things (except basics like basic food and some other things) plus a few wierd extra taxes here and there (like a tax on luxury cars and taxes/excise on petrol, alcohol and tobacco)
The states each get a chunk of the GST revenues with the federal government getting money from other taxes (including income tax and company tax).
The states do not have either an income tax or a consumption tax.
As a small business owner that primarily sells via ecommerce, I am shuddering at the prospect of having to deal with government sales tax forms and coupon books for 30 or more states.
Is this because you do more than $5 million in "gross remote taxable sales" each year, or because you didn't even read the article you submitted?
I think it's time to implement moderation for summaries.
https://www.eff.org/https-everywhere
Article I, section 10 specifically forbids any state to lay any imposts or duties on imports or exports without the consent of congress, and the proceeds of such taxes must go to the Federal Government, not the State. Section 9 of the same article prohibits taxes on exports from any state.
It was the founding fathers clear intent that goods and services move untaxed between states. They specifically wanted to avoid the fifedomes of taxation that prevailed in europe at the time (which even the europeans have finally gotten around to eliminating).
Sig Battery depleted. Reverting to safe mode.
The may get a rebate at the end of the year. Their landlords and car dealerships dont care and want their money now before teh refund comes.
Also what is the poverty rate? Last time I checked it was $14,000/year. It may have changed but its not livable.
Last it would discourage those who live at home with mommy/daddy to earn more or get a second job since they would be taxed more. This in turn would hurt our nation's productivity and economy as people would own less money.
flat tax is regressive and heavily favors the rich who will be taxed less.
http://saveie6.com/
...where he does business. If his business is located in California, he pays taxes for his sales to california. A department store doest charge different sales taxes based on where their customers live
Its a SALES tax, its the seller who collects the tax and the sale is made wherever his business is located regardless of where the customer is when the sale is made.
Dont treat sales to distant customers any differently than local ones.
Section 9. The migration or importation of such persons as any of the states now existing shall think proper to admit, shall not be prohibited by the Congress prior to the year one thousand eight hundred and eight, but a tax or duty may be imposed on such importation, not exceeding ten dollars for each person ...
...
No capitation, or other direct, tax shall be laid, unless in proportion to the census or enumeration herein before directed to be taken.
No tax or duty shall be laid on articles exported from any state.
Buying something online and having it shipped from a warehouse in california to florida sure sounds like exporting from a state, thus per the A1S9 can't be taxed. on the face it appears fairly straightforward and an easy legal argument to make.
This is my sig. There are many like it, but this one is mine.
Look at it for what it is, a way to run you out of business so you will not compete with large domestic state businesses! The way to fight this is perfectly logical as well. Inasmuch as all your problems now stem from the nation, and your income is derived from your business, and your location is irrelevant to your being able to do this business as you maintain no fixed 'store' save a warehouse to store your soon to be trans-shipped orders, then the answer is already in your pocket. Just pack up your computer and your records an move out of the country to someplace out of reach of American law. You would bot be breaking the law because as a foreign business you would have no responsibility to any but the laws of your new nation, and if the one you choose has no internet tax structure with respect to online transactions, especially those involving foreigners (Americans), then you have no liability. You are not even 'avoiding' this liability, since now you have no connection to any American state from which customer state tax authorities can claim reciprocity. You
then happily sell to anybody and everybody and let your customers worry about their own taxes and not bother you with them by proxy. Many will do this and not tell anyone. Many who do this will have never heard of slashdot. When they leave, they will take with them a few more American jobs. Multiply the job losses by the number of business that leave and the average lose per business and the cost picture begins to emerge as the real price of this frivolous legislation. Internet taxes are an unfriendly act. If the United States comes down on you in your new country, you can now take the United States to WTO court and win for restraining 'free trade'. Wonder how those 'brilliant politicians' will like THAT!!
Just base the sales tax on the location of the seller/warehouse. That will actually give companies an incentive to locate in states that have low or no sales tax, which could in turn give some states an incentive to lower their sales tax to attract businesses.
As mentioned elsewhere, some states (many? most? at least three...) which collect sales tax also impose varying forms of "use tax". These "use taxes" are supposed to be paid on goods which are purchased tax free from out of state.
It is true that vanishingly few individual taxpayers report such purchases and pay the tax.
It is also true that businesses which make such purchases and fail to report them can end up in serious trouble. The last time I checked the Illinois Use Tax was 5%, which was still cheaper than the 6.5% sales tax.
We sell consumables to businesses. When we sell to an Illinois customer (i.e. if either the bill-to or ship-to address is in Illinois) we must collect the sales tax unless we have an official resale or machinery exemption certificate on file. [If a customer is going to resell our product then they collect the sales tax, not us. If our product is consumed as part of a larger manufacturing process it is also exempt. Only the final purchaser of the finished product gets hit with sales tax. Things like cutting oil and filter elements are not taxed when they are used up during the of manufacture taxable goods.]
We were recently audited by the state sales tax guys and had to pay a modest penalty because one of our customers failed to renew their machinery exemption. We now pay a lot more attention to expiration dates. -sigh-
My point? Here's the kicker: In many cases we now have to collect and remit Wisconsin Sales Tax even though we have NO physical presence there. Basically, Wisconsin threatened to sue us because we weren't collecting sales or use tax from certain large corporate customers. We now collect this tax.
But, but, but... can they do that? They do it. We collect it. We pay it. It's not our money, and we have no desire to become a test case in Federal Court. The extra paperwork is a pain in the ass, but not worth losing the sale over.
P.S. In order to get the Illinois tax audit guy out of our offices quicker I offered to extract relevent data from our SQL server and put it in an Excel spreadsheet for him. His state issued laptop had no CD-ROM drive or internet email capability. An embarrassing interval passed while we arranged for a floppy disk.
You haven't a clue what you're talking about, do you. Congress shifted the responsibility by issuing debt. The federal government has virtually nothing to do with property taxes... it doesn't even have authority to tax real property.
If your property taxes are going up, it's likely because your state government isn't providing as much local assistance as it did before. But this isn't necessarily true as every state and municipality are different.
For more information, read a book about federalism.
That's fair, and I realize that, but still, anyone doing $5M+ in out of state business alone, is likely running a large enough organization to handle the extra paperwork.
Here's my bias: I run a small (just barely $1M in sales) electronics shop, specializing in high end video gear. As a small shop I deliver a 1-on-1 experience to local customers, which is how I survive. I am getting KILLED by out of state dealers with a 6.5% advantage over me (I'm in MN). Often, on a $4000 camcorder, I'm only earning 3 or 4% to start with, so it's impossible for me to match out of state prices. All I'm looking for is a level field.
If there are going to be any changes to taxation in the USA, it should be to abolish the per-county taxation system and replace it with a flat federal sales tax.
The current system is ludicrous.
About time the USA should modernise itself so that goods for sale can be and are advertised with a final sale price on them, rather than a "base price" and sales tax added sometime later.
But we can't have the USA entering the 20th century when it comes to taxes, can we?
I'm sure if there are any problems with the constitution getting in the way of this or the currently proposed changes, it or the laws will just be "updated" so that this goes away.
Just become a Freegan ;)
Just raise gas taxes instead. Money is money.
I am right on topic. If you are so passionately going to support something and try and influence peoples opinions, but they have very negative concequences, I have no problem using the same information over and over to give people all the facts to, in this case, discover that fair tax is a bad idea. You should be as responsible as to provide all this information.
I didn't see anything about city taxes mentioned in the article. The biggest problem is not with the State taxes, it is that there are local taxes in most cities as well. For example, Minneapolis has an additional 0.5% tax on top of the state tax rate of 6.5%. So, does that mean the web developer has to not only take into consideration the state the order is shipped to, but the city as well? I would say it is highly unlikely that this will pass as there is some legal construct(?) that states that the computation and collection of taxes should not be onerous.
As a business owner I can tell you that there is a whole side of this that you don't see. Businesses pay matching employer-share of federal income taxes, so the taxes you get taken out on your paycheck, the company pays nearly the same amount on top of that out of its own money.
Sales taxes certainly aren't our choice either, and it's hardly a barrier to competitors because everyone has to pay them. Businesses basically get to be the tax collectors for the government at our cost, don't make a dime on the paperwork involved, and even get sharply penalized if everything isn't done perfectly.
Bottom line, don't crap on business for this situation, as they pay Uncle Sam through the nose just like individuals do. It's government that gets the money from both sides and wants even more.
Dude. You think the fairtax is bad. Fine, that's your opinion. I happen to think it's a huge improvement over the current system that we are currently saddled with. Furthermore, I don't see a better alternative being discussed in any seriousness by anyone that might be able to change things.
When I talk about tax reform, I don't feel that I am trying to influence anyone's opinion. Each person is free to draw their own conclusions. As a matter of fact, I posted merely to point out that the text of the bill before Congress is available for people to read and to point out that you were inappropriately applying a flat tax quote to the fairtax. You're right, the Buffet quote is on-topic in a discussion about tax reform. My point, which still stands, is that it is off-topic when applied to a discussion about the fairtax. There is a distinction there, no?
"Michael, I did nothing. I did absolutely nothing - and it was everything that I thought it could be."
The Buffet quote is one target and illustrates the poor choice that fairtax is. And just to gall you I am writing this. You seem like someone who cannot stand to not have the last word. Guess we will see.
Unless something significant has changed, the government of Canada is just shy of 500B$CAN at the moment. The liberal government has been lowering that number for a little while(although way too slow for my liking)
source.
GENERATION 26: The first time you see this, copy it into your sig on any forum and add 1 to the generation.