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

I thought us Aussies were taxed weird

[inphorm]

That is a strange tax law, this is from TFA

"The state also requires its residents to report purchases made over the Internet and pay taxes on them"

How can they enforce that? Our tax laws are pretty uniform across the country, but I buy something from overseas, I don't have to pay our local GST (Goods & Services Tax) of 10% on the item. I may or may not have to pay the import tax to get it through customs, depending on what it is and how it is sent over.

I see buying something over the internet as the same as actually traveling to the state / country where the item is and buying it. As long as the seller obeys local tax laws, who cares what the buyer does?

I may have an overy simplistic view of things though.

- paul

http://www.paulpichugin.com.au/

More than just the autonomy.

[WindBourne]

Many of the servers reside in CA. In addition, so many sales. As such, CA gets to collect the sales tax on those sales. Once an internet tax comes through, then you can bet that many of the servers will change location basically to asia. Now California loses not just the tax base, but all those lucrative jobs.

Fair Tax

[John.P.Jones]

I direct you to FairTax.org where the dream lives on, although I believe its more like 23% to be revenue neutral.

True fair tax formula.

[NotQuiteReal]

(Cost of Government) / (Number of Citizens) = the fair tax per citizen.

Anything else is unfair, but necessary simply because not everyone can afford their fair share.

All the shenanigans of modern tax code boils down to the politics of extracting unfair amounts of money from whomever will pay.

Re:It's called Use Tax

[Professor_UNIX]

What I don't understand is why vendors aren't required to charge sales tax on out-of-state sales, collect the money, and then give it to the state in question.

Article 1, Section 8 of the Constitution: The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;

...

To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes;

The States don't have the power to tax interstate commerce, that is a power specifically allocated to Congress by the Constitution... that's why they try to skirt the issue by demanding "Use Taxes" and the only time you need to pay sales tax is when a company has a brick and mortar presence in that state.

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

[fkicker]

The big push is from brick-and-mortar retailers who want to "level" the sales-tax playing field. The Direct Marketing Association (DMA) which represents e-commerce and catalog retailers opposes the initiative. Amazon is carefully neutral.

The current proposal is a huge burden on small businesses. The biggest problems with the current proposal are:

Each participating state wants me to remit the collected sales tax to them separately. Why can't I send in one payment to my state and then they can make sure the money gets distributed fairly?

The use of certified (meaning expensive) tax software is required. If the program is "streamlined" why do I need $50,000 dollars worth of software to figure out how much tax to collect?

Each participating state wants the right to audit me. What happened to that whole "No taxation without representation thing?"

Product and service definitions are insane. For example, a Twix bar is a cookie but a Snickers bar is candy. In some states buying a Twix bar is tax free while a buying a Snickers bar is not.

It's a lot simpler to re-locate a rack of servers to a more tax friendly state than a brick and mortar retailer. But, hey, maybe re-locating to a small Caribbean island wouldn't be so bad?