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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."
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"
The problem is tax revenue. Sales tax makes up a considerable percentage of revenue for many states, especially states like Texas that have no income tax.
Back in the day, most people bought almost everything they bought from local merchants, meaning that there was very little way to avoid sales tax. Catalog mail order and later, telephone orders, made up such a small percentage of commerce that the items remained untaxed. The smaller northeastern states, and even some municipalities (like in the Oklahoma City area) sometimes lower their tax rates to encourage people to come shop in their malls. Delaware makes a big stink about not having a sales tax, and there's a lot of outlet malls that advertise as such. Still, it wasn't much money.
Now, thanks to advances in shipping technology and Internet ordering, people are spending more and more money online, especially in the holiday season. This money isn't being taxed.
Some states have provisions to attempt to curb this. Virginia, for example, has a "use tax" where if you purchase any item and do not pay sales tax, you have you pay a "use tax" on it. Problem is, it's hard to track and almost no one reports anything, much less what they really spent.
The tax system is so convoluted and fucked up it should be changed, I agree, but this is totally legal. The sticky point comes in where states are trying to force e-merchants to collect their own sales taxes. Depending on how this is accomplished (i.e., not a federal law) if you've got a state that isn't part of this agreement you're going to see e-merchants move to those states to avoid having the additional burden of collecting those taxes.
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?
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.
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.
In the telecom world, one does not usually find small business CLECs because we have to comply with several database requirements, including: Vertex (or similar tax databases), E911 and SS7.
Last time I had to deal with it (late 90s), a Vertex subscription for our Oracle-based billing system was about $220K annually. You are, of course, free to write your own and obtain tax information from every locale independently.
Of course, you can imagine that these great laws were proudly supported by the incumbant telcos who are pleased to have complicated taxes to merrily pass along to the customer. The more complicated it is, the less likely any up-start competitor can ever handle the up-front cost. Each barrier to entry pushes the benefit to the largest scale of business.
You can bet Congresspersons are getting heavily lobbied by larger institutions that favor taxes. And since 2/3 of our population doesn't understand that corporations don't pay taxes, customers do, we'll never have enough opposition to these ploys. Worse yet, not only will we end up ultimately picking up the cost of the taxes, but the drop in competition will push up the price of goods for us too. And you wonder why your paycheck goes less far each year!
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.
*scoove*
p.s. Did you collect and file taxes on your last Ebay sale?