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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."
"The debate over the taxation of the Internet isn't about feeding the already well-lined coffers of government. It's about the fundamentally American idea that there should be no taxation without representation.
"While there is no evidence that Main Street firms have lost business due to tax differentials, that is beside the point. The answer to these concerns should not be to raise taxes on the Internet, but to lower taxes on Main Street businesses."
Colorado Governor Bill Owens
In a letter to Congress urging the extension of the Internet tax moratorium, and opposing his fellow governors' plea for Congressional approval to force collection of sales and use taxes from remote businesses.
August 20, 2001
I may have an overy simplistic view of things though.
Perhaps, but I think it more likely that our elected leaders have an overly complex view of things.
The higher the technology, the sharper that two-edged sword.
Somehow I feel like they'd be more than happy to accomplish Step 1.
Step 2, I'm not so sure about.
Wizard Needs Food, Badly
Sales tax is just another way to transfer wealth from the poor to the rich.
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.
I don't respond to AC's.
As an Oregonian, I echo the OP's resistance to sales taxes. I'm also a proponent of keeping the taxing body as close to those taxed as possible. If you have more local control over taxes collected, there is less chance for corruption, inefficiency, and more control over how the money collected is spent. I'm very dubious of adding another layer of government between state and federal that would have power to regulate taxes even if states enter into that layer voluntarily. Taxation needs to have more controll by the general population and less by government, as the population has a vested interest in how their money is spent.
In the last story, California wanted to be a bland featureless part of the Federation letting someone else manage the citizen identification issues. Now in this story, California wants to retain full sovereignty over taxation. I know there's more than one person, and therefore more than one opinion on the whole statehood thing here, but come on, fellas.
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And while we're at it, let's also overhaul the tax system [linking to the "fair tax" {a national sales tax proposal} wikipedia page].
Federal sales taxes have a number of problems.
The biggest, IMHO, is that switching to them ends up taxing people's savings - especially retirement savings - twice. It was taxed once, at various rates, while it was was being squirreled away. Then it gets taxed again, at confiscatory rates, when it is spent.
Right now is especially nasty, since you've got the entire baby boom just reaching retirement age. They've already been massively soaked by the Social Security pyramid scheme to give bread and circuses to previous generations - amid constant predictions that it would collapse when THEY retired. So they had to build their own retirement nest-eggs on top of it, while paying the ever-climbing interest on the national debt (which first became intractable when their parents ran the Vietnam War on credit, back when the bulk of the boomers were opposing it). Now, as they're about to retire and have to live on what little they were able to save: And people talk about "replacing" the income tax (which they already paid on much of that money) with a similar percentage of sales tax.
That's one big voting block that will oppose such a measure until they die - by which time additional generations will be in a similar situation.
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. (See the "value added tax" debacle on the other side of the Atlantic pond for details.)
And: Sales taxes zap the lower income earners harder than the upper (since the lower-income people are working hand-to-mouth and need to spend pretty much all of it, while the upper can avoid spending much of it - investing it to make more, moving it to places and situations where the tax can be avoided before spending it, etc.). 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.
I could go on...
Bantam Dominique roosters crow a four-note song. Once you've heard it as "Happy BIRTHday" you can't NOT hear it that way
Most states have this, but compliance is pretty low, and nearly impossible to audit. While they could force you to give them copies of your credit card receipts, they would have to prove that you purchased items for yourself and not as a gift to Aunt Millie in Alaska, or something that you used on a trip in the state your purchased the item in...
I think the biggest challenge to a standardized nation wide sales tax is states with ZERO sales tax. So what are you going to do in these anti-tax states? Force them to implement a tax? Is it going to be a compromise mid-level, or is it going to be on the high-end like California?
I looked at my own internet purchases last year, and a number were from companies that already collect local sales tax since they have a business presence in my state, and the tax on everything else is a few hundred dollars at best. My state requires that I itemize everything for the use tax collection, which is just nuts. I put down zero as I have done every year for the past 25 years.
The problem is that sales taxes are spent in the state, not at the point of sale. Sales tax cover costs for roads and other services to brick and mortar establishments. All they are on the internet is mostly a money grab. In a lot of cases, the products being sold are not even delivered from the state where the sale was registered.
The second problem is that if states 1 to 47 have sales tax and 1-3 do not, then a lot of business is going to gravitate to those last three states.
Of course, if they tax them to be the same as brick and mortar, then folks will just shift back away from the internet.
She was like chocolate when she drank... semi-sweet at first and then increasingly bitter.
I think it's called a use tax because I believe it's technically illegal for a state to impose an interstate tariff (tax) on goods purchased from another state. Anyone confirm this? Something I was remembering from the federalist papers. I mean, it makes sense. Why wouldn't they just call it a interstate import tax? "Use tax" is a ridiculous name and is obviously weasel wording around something.
Wow, talk about making things complex for people. That would make most people, technically speaking, tax evaders, something that is illegal in 99.9% of countries in the world.
In Australia you just pay sales tax on something when you buy it, but you don't get taxed for using it. I can go to Melbourne and buy a car or a piece of furniture or whatever and bring it back here to Brisbane and not have to worry about any extra taxes on the product.
I'd hate to have to keep track of everything I bought interstate, I travel frequently for work and buy clothes and electronics while I'm away.
- paul
http://www.paulpichugin.com.au/
Pmp @ DeviantArt
Most government services are funded through excise (purchase) taxes. Road maintenance is funded through user fees (the gas tax). National parks are funded through user fees (including fishing and camping permits). The patent office is funded through user fees. The national phone & electric services are funded through use taxes on your bill. Etc. The only real reason to tax the Internet is to pay for administering Internet services. But the Internet is largely run by private companies, not the government. What, exactly, would the Internet sales tax pay for? Lining politicians' pockets. There is no need to tax the Internet.
This post expresses my opinion, not that of my employer. And yes, IAAL.
I think this is an overly simplistic view. If my rich friend invites several people out to an expensive restaurant for his birthday, some people share dishes while others get for themselves, with one person getting something obscenely expensive that nobody else could even afford, what is the fair way to pay the bill? It wouldn't be fair to just split things evenly, because not everybody contributed to the cost equally. It could be argued that the fair way is for everybody to pay for what they ate, but what about the people who can't afford even that, and wouldn't have come unless explicitly asked to? Maybe, since it is his birthday, the rich friend shouldn't have to pay anything? Maybe since he invited the people out, he should have to pay everything? Maybe just the tip should be split evenly? There are dozens of different ways to split the bill, each with it's own rationale, and none of them clearly "the" fair bill payment method.
Taxes are the same way. Not everybody uses government services the same. Many government services (like having a military) are not directly used by the majority of people. Everything needs to be funded* somehow, and charging the people who both use less and make less an amount which is more than their annual salary is not fair by any means. What is the most fair tax plan, then? It doesn't exist! But a system that charges more money to the people who can afford it or who use more government services is a lot more fair than charging a homeless man more money than he has spent in the last decade while charging Bill Gates less than he makes in 5 minutes from bank interest.
*let's not debate whether the budget is just or not.
You can get most of the same effect as the (un)"fair tax" with less downsides (including avoiding the double-tax effect of switching):
- Stick with an income tax but make it DEAD flat. Collect the full amount as withholding at paycheck time. Everybody pays the same percentage, so there's no need to track I.D.
- Do the flat "rebate/dole" as a separate (though related) item: One to a customer, regardless of income. Registration is voluntary, as is picking up the payment. Anybody who wishes to trade in the money for anonymity can simply refuse to sign up or to collect his check that year.
This would also eliminate much of the financial incentive for illegal immigration / "undocumented workers" and their cost advantage over citizens and legals under the current "look the other way" system (which amounts to a subsidy to business paid for by the documented/citizen workers.)
- They'd be paying their taxes regardless of whether the rest of the money was spent locally or sent back to the old country.
- They couldn't get the "rebate" unless they went through the normal immigration channels.
- Decriminalizing their working would eliminate an employer's ability to impose unconscionable (but cheaper) working conditions and fire or arrange the deportation of any who complain.
- With the "rebate" replacing welfare most "services" and "programs" (and their costly bureaucracies) could be eliminated. "Undocumented" dependents would, of course, be ineligible, eliminating the major income "redistribution" from legal workers to the families of illegals.
Bantam Dominique roosters crow a four-note song. Once you've heard it as "Happy BIRTHday" you can't NOT hear it that way
I've done internet mail order, and it was enough work filling out and sending in one state sales tax return every year, based on the sales tax rate where my business is located. Filling out forty of them every year would be a crazy burden on a small business. Also, the rate is normally calculated based on the district where the business is located, for the very reason that they don't want the business to have to have the kind of database you're talking about. There are plenty of people doing mail order who don't even have computers.
Find free books.
What I'm saying is that the states are activly discouraging investment from companies, because that might force those companies' customer's to pay state sales tax. (E.g. there was talk back when Amazon never charged any sales tax except CA that if they built a new data center in state X, that residents of X would have to start paying tax on their Amazon purchases, which discouraged Amazon from brining that investment in)
1) All tax is a money grab by the states
2) Everyone wants lower taxes, but the current setup clearly creats a loophole where I'm encouraged to buy out of state because I can get it "tax free".
Right now if I buy a $100 widget in NY I'll pay $7 to the state for that right, or if I buy a $100 widget in TX, I'll probably pay (I don't know) $6 for that right. But if I buy it from woot.com with $5 shipping, I can get it from TX to NY for $105, saving me $2. Does that mean I'm "getting" NY? No, they'll make up their $7 loss with a raise in the Income, Gas, Sales, Luxury, etc. etc. tax, or a decrease in subsidies for farmers, or lowering of state employee raises or whatever. Who wins? I either pay the same amount in total tax burden, or get less services from my state, so it's a wash (remember, I only made $2, NY lost $7) or worse for me. Woot.com got the sale over NYBasedStore Inc, and FedEx / UPS got the $5 shipping. Remember, TNSTAAFL
Vermont has just signed on to this project. The biggest effect on most of us: Beer now has sales tax; that's part of this interstate standard. What does this accomplish? You cannot legally ship anything with alcohol into Vermont to a retail customer (unlike some states where you can buy wine that way), and none of Vermont's small brewers are trying to mail order beer out of Vermont. Would you want your beer delivered by UPS?
Those of us on the eastern side of Vermont already drive to New Hampshire to buy other stuff that's taxed at home. Now, since this new law to protect the taxability of future internet beer sales, we're getting our beer there too. Smart move, legislature.
"with their freedom lost all virtue lose" - Milton