California Balks At Internet Sales Tax

bob_calder writes "California has walked away from $2 billion a year in revenue by declining to get on board with a group working to standardize tax rates so a national tax on Internet sales could eventually be implemented by Congress. Supporters of the tax think they still have a chance in New York, Texas, and Florida. At the moment the largest states pursuing the Streamlined Sales Tax Initiative are New Jersey, Michigan, Indiana, and Ohio. California didn't want to give up its autonomy in setting taxes to a coalition of smaller states."

Comments

Who is the "orginization" behind this tax?

[Mc_Anthony]

I searched around and wasn't able to come up with the name of the group pushing for this Internet tax. Does anyone have more information on them? What are their politics? Who is funding them?

Re:Who is the "orginization" behind this tax?

[i2amsam]

Something I actually know about!

My Dad is working on Streamlined Sales Tax Committee
It's an initiative that's being run by the states, but
the big push is from big online realators like Amazon and
E-bay because they don't want to face 50 sets of rules of
tax for all of the 50 states.

The current system is stupid on the face of it, since now
most states only tax commerce for corperations which have
a actual physical presence in that state, it encourages
companies to not setup any investment in states where they
do a high volume of sales.

It's been going on for *years* and I don't know that they're
making much progress, too many cooks.

Re:Who is the "orginization" behind this tax?

[maxume]

Look up 'use' tax. Most states charge it, it is a tax on goods purchased in other states; in my state, it isn't owed on goods that have already had sales tax charged on them. It's on the honor system, so people don't worry 'bout it much, I imagine the state pays more attention to rich folks. For a lot of people, because the law is written with people not keeping track in mind(there is an option to itemize small purchases or pay a standard amount), it amounts to cheating for about $20-30.

Re:Who is the "orginization" behind this tax?

[alshithead]

I think almost if not all states require all companies who have a presence in that state are required to collect sales taxes for purchases from within that state. If a company has a retail outlet, warehouse, office, etc. they must collect and distribute that state's sales tax even if the sale is conducted over the phone or internet.

It's called Use Tax

[Anonymous Coward]

California already taxes internet purchases via a Use Tax law which is imposed on all goods purchased and then brought into the state by residents. You have to calculate the tax yourself when you file your state income tax return.

Re:Message from Oregon

[Marxist Hacker 42]

How so? That doesn't make any sense to me at all. Sales tax is the great equalizer. The more you spend, the more you pay in tax. Sales tax also encourages people to save and invest. I think you have your logic backwards.

Savings and investment are things only the rich can afford to do- a tax shelter in a state that lives on sales tax would be getting Howard Hughes Syndrome- living very poor off of your investments. Likewise, in a state like mine that is already cash poor, you don't WANT people to save. You want them to buy stuff and provide money that supports jobs for other people in your state.

Re:Message from Oregon

[Marxist Hacker 42]

If the rich consume more resources, presumably they're paying for such consumption, and so they pay a consumption tax proportionally.

Doesn't work that way because they hide behind fake persons called Corporations, and Corporations don't have to pay local taxes. Likewise, the corporations can afford to save, unlike regular people.

There are at least a few good reasons to have a progressive income tax instead of a consumption tax, but you have not offered a single one.

Ok, here's one: taxes as a percentage of income- the guy living on the street can't afford to avoid sales tax, but the billionaire living in the mansion only spends 1/100th of what he earns. With corporations being exempt from sales taxes- that leaves more money for savings and spending on out-of-state lobbyists to twist other laws towards corporate control. At this point, it's not even worth voting anymore- the candidates are always chosen by corporate lobbyists ahead of time, and they don't really care who wins, because they've paid off all viable sides already.

REPEAL PROP13!

[MilesNaismith]

If they want to make more tax money magically appear in California budget, they just need to repeal Proposition 13. This is the ridiculous measure from decades ago, wherein property tax is decided at time of purchase. So if you bought your house in 1979 well you never have to pay higher property taxes. This measure has also been called "Screw The Newcomers!" as anyone buying a house now, will not only get to enjoy the outrageous mortgages, but disproportionately high taxes. Unfortunately, much like Social Security, it's one of those FUNDAMENTALLY FLAWED ideas that nobody wants to do anything about.

Re:why standardize tax rates?

[walt-sjc]

The problem is bigger than you realize. It's not just 50 different state taxes, it's local taxes too. Cities in California can add their own sales tax. Also, in some places clothing is taxed, and not in others. The exceptions and special cases for sales taxes nationwide is a total freakin nightmare.

Re:So you want to tax the baby boomers twice?

[bnenning]

The biggest, IMHO, is that switching to them ends up taxing people's savings - especially retirement savings - twice.

That's true, and it's definitely an issue. But some of the double taxation already exists today; when I buy something with my after-tax income, a significant chunk of the payment goes to corporate taxes and other taxes embedded in the purchase price, which would be eliminated under the FairTax. And if I invest the money instead of immediately spending it I end up paying capital gains taxes, which also goes away with the FairTax.

Next: Like all taxes, once imposed it will never go away and will always go up. Sales taxes, being largely hidden, make it much easier for the government to jack the rates.

IIRC the FairTax calls for the tax to be clearly identified on all receipts. Because everybody pays, it would be harder to sneak in tax increases than with income taxes, where you can pretend that only the "rich" will be affected by an increase.

This scheme attempts to avoid the effect by "rebating" a certain amount of tax to each individual - approximating a flat-tax plus dole scheme. What a massive opportunity for cheating (by creating multiple fake identities to get multiple "rebates".) What a massive excuse for the government to impose a national ID / registration / citizen tracking system.

Well, you can do that today by inventing extra children for more deductions, and that's just one of the countless ways to cheat on income taxes. And I don't see why we'd need a national ID other than the existing SSN.

The FairTax isn't perfect, but compared to the current mess I'd say it's a clear improvement.