IRS May Ask eBay To Snitch On Sellers

Makarand writes "The IRS thinks that many sellers on online auction sites are unaware of their obligation to declare their profits and pay their taxes to the IRS. Tax experts are now asking the IRS to require online auction sites like eBay, Yahoo, and Ubid to report the gross sales numbers for their sellers. Such a requirement will surely send a shock wave across the online trading world because it could drastically reduce the profits a seller would make on these sites. The IRS thinks it can collect an extra $2 billion in taxes from this requirement that auctioneers report sellers who complete 100 or transactions a year worth at least $5,000."

Comments

It's really simple.....

[Marthisdil]

Just figure out how much you paid for said item originally, sell item for less (many times), you get to reap the deduction....Now, dunno how depreciation rules work for some items...so you'd have to check on that....but it seems simple that if you paid more for something than you are now getting selling via ebay...

But yeah - they should pay taxes on the things like buying a pack of cards for $3....and selling a rare one for $30 just because they got lucky...all about capital gains baybee...

Re:It's really simple.....

[Chmcginn]

The catch here is that if you're audited, they (through Ebay) will have the proof you made, say, 10000 dollars last year selling stuff on Ebay. But you have to provide the reciepts proving that you spent 8000 (or 11000, or whatever) acquiring those goods for sale.

Re:It's really simple.....

[Anonymous Coward]

Yeah, I'm a little unclear on what happens if you don't have those receipts. Sorry, Uncle Sam, I don't have the receipt for the DVD player I bought back in 2001 for $599 and just sold for $100. If you insist on assuming that my basis in the DVD player was $0 and tax me on the whole $100, you can bet I will find a way to make up for it elsewhere.

Bring it on.

Re:It's really simple.....

[Anonymous Coward]

According to the IRS, if you can not prove how much you paid for the item, then the ENTIRE resale value of the item is considered taxable income.

If the IRS tries to tax eBay transactions, people will just move to craigslist...or go back to yard sales.

Re:It's really simple.....

[twiddlingbits]

They can use Fair Market Value based on the value of the DVD player today. Sorry if that means you pay more taxes but thats the way it is if you don't have the paperwork.

Re:It's really simple.....

[anagama]

With a 100 sale floor on reporting, I think you're safe. Unless you happened to buy 101 of those DVD players way back in 2001.

Re:It's really simple.....

[Anonymous Coward]

Which is fine, because I can make a good case that "fair market value" of an item is exactly what I just sold it for in a fair market, e.g., eBay.

Unfortunately, my understanding is closer to that of the other reply; that is, if there's no original receipt, it's all taxable income.

Re:It's really simple.....

[Anonymous Coward]

To some extent, the threat of making you bring it all in as taxable income is supposed to encourage you to keep track of the basis (cost) of your DVD player. If you were ever audited and you sold just that dvd player, or maybe you cleaned out your entire stereo cabinet, they may do something that'd sting a little, but probably not make you take the full 100 as income.

However, if in that year you sold 100 DVD players and said "sorry, no receipts," you can expect the full 10k as income. Plus penalties and interest, likely.

The whole point of this request by IRS is to ensure compliance by people running businesses on ebay, hence the $5k limit.

Did you know if you buy $5,000+ of goods from a business that you're planning on reselling... THEY'RE supposed to 1099 you for that?

Re:It's really simple.....

[The Rizz]

What if you bought 3 DVD players (1 for each TV), and a couple hundred DVDs?
Now, you decide that you're through with SD, and go to HD-DVD/Blu-Ray/whatever, rebuying all your movies in HD, and replacing those 3 players ... then you drop several hundred movies and 3 DVD players onto eBay.

Oops! You possibly just went over BOTH limits!
Looks like even though you're selling your old collection off for less than half what you paid for it, you're going to end up paying taxes on all of that. (Or do you keep receipts for every single thing you ever buy for 7+ years?)

The only way this could even out is if you could somehow subtract off the cost of the replacement items, but good luck convincing the IRS of that.

Re:It's really simple.....

[joystickgenie]

If you are selling several hundred DVD's each in their own auction (for it to go over the limit) they you are no longer just a person selling stuff online as far as taxes are concerned you are a small business with online sales. Sure it may be a one time shot but you still are selling a whole lot and should be taxed on the income just like every other business.

This is the way taxes have always worked. The IRS is just looking for proof to go after tax evaders here.

Re:It's really simple.....

[The Rizz]

So by that logic, every garage sale should be sure to send 30% of it's earnings to the government? After all, the average garage sale probably sells over 100 items.

Simply put, if you did not buy it to make a profit, and actually take a loss when you sell it, you should not have to pay taxes on it. This is why the IRS doesn't go after garage sales, and why they should not go after anyone selling off their own stuff on eBay. I don't care if you sell off one item, one hundred items, or one million items; if you sell it for less than you bought it for, the IRS should stay the hell away.

Also, this should be a two-way street; if the IRS starts taxing it as income when you sell your property, then you should be able to claim the difference as a loss if you get less than you paid for it. Somehow, I doubt they'd let the latter happen, so why should we allow the former?

Re:It's really simple.....

[Chmcginn]

Also, this should be a two-way street; if the IRS starts taxing it as income when you sell your property, then you should be able to claim the difference as a loss if you get less than you paid for it. Somehow, I doubt they'd let the latter happen, so why should we allow the former?

Actually, they do. A few years back, my wife took a year and a half off from work to try and start her own buisness. The first year, we got back almost all of both of our federal & state taxes, because her (sole proprietorship) had a loss of several thousand dollars. (Of course, the next year, when she made a decent amount of money, we ended up paying that back, and more.)

However, it has to be considered a 'legitimate buisness' - if you make no profit for (IIRC) three years, you can no longer claim a loss as a tax deduction.

(For the record, after taxes & expenses, we figured out that she was making about half the amount, hourly, as she had at her previous job, and she closed the business.)

Re:It's really simple.....

[DesertBlade]

The IRS is only requiring reporting if you make over $5000 a year. Most average Ebayers don't sell that much. It is really for the people running small busineses through Ebay and they should keep reciepts just like any other business.

Re:It's really simple.....

[Anonymous Coward]

To some extent, the threat of making you bring it all in as taxable income is supposed to encourage you to keep track of the basis (cost) of your DVD player. If you were ever audited and you sold just that dvd player, or maybe you cleaned out your entire stereo cabinet, they may do something that'd sting a little, but probably not make you take the full 100 as income.

As it stands right now, if you weren't in the business of selling these personal items, and you didn't make a profit off any of them, then it's not even a reportable sale. If you can convince the auditor that this is the case (should be easy if the items sold for way less than the price they'd go for as new), then you probably won't pay anything.

Did you know if you buy $5,000+ of goods from a business that you're planning on reselling... THEY'RE supposed to 1099 you for that?

That's absolutely not true.

I'm a professional tax preparer and special enrollment exam passer. I've made every effort to be as accurate as possible in this post. However, if you need tax advice for your particular situation I suggest you sit down with a professional and discuss that situation. You may not rely on this post to remove any penalties imposed on you. In other words, this post is not intended or written to be used, and it cannot be used by any taxpayer, for the purpose of avoiding penalties that may be imposed on the taxpayer.

Re:It's really simple.....

[The Rizz]

Also, this should be a two-way street; if the IRS starts taxing it as income when you sell your property, then you should be able to claim the difference as a loss if you get less than you paid for it. Somehow, I doubt they'd let the latter happen, so why should we allow the former?

Actually, they do. A few years back, my wife took a year and a half off from work to try and start her own buisness. Yes, but you actually set up a business - you went through the paperwork/etc. with your state agencies, etc. - in that case it's taxed/deductible.
What I'm talking about is selling off your own property, not as a business. What I'm implying is that the IRS wants to treat you as a business if you sell anything, but doesn't want to let you write off personal items that you later sell at a loss. They want it both ways; you're a business if you have no receipts for the personal property you sell, but you're not a business (and as such can't claim losses) if you do have those receipts.

Re:It's really simple.....

[Bob Uhl]

So by that logic, every garage sale should be sure to send 30% of it's earnings to the government?

Yup. And why shouldn't it? After all, the income from that garage sale is income, and we have an income tax in this country. Now, the simple fact is that's it's exceedingly difficult for the IRS to know how much income one has made on a garage sale, but it's still income, and is still taxed, and if you don't report it (and pay the appropriate taxes), then it's still tax fraud.

Ideally, we'd work to get rid of the federal income tax, but that's not going to happen anytime soon.

Re:It's really simple.....

[fyngyrz]

I'm a professional tax preparer and special enrollment exam passer.

That is not at all clear. What we know is that you're an AC posting without the slightest bit of attribution, and as such, your words are worth nothing at all, and your claimed skills and attributes might as well be sanitation engineer.

+ tax

[iknowcss]

Does this mean that sellers will now add a "sales tax" to what they're selling in order to compensate for this new tax? And who decides how much tax is paid? States? The National Government? (Please excuse my ignorance in American Government policies)

Re:+ tax

[LFS.Morpheus]

I believe they're after income tax - the amount of tax would be decided by the existing income tax code. It is likely that most eligible eBayers would be considered operating their own business (self-employment) and would need to report their income (and expenses) on a 1040SE.

Reporting of this income might also lead to sales tax as well, but that is collected by the state, not the IRS. In addition, this is the responsible of the buyer to pay, not the seller, unless the buyer and seller are in the same state.

Dislaimer: I'm not a tax expert, but I play one when I talk to my friends into letting me do their taxes. :)

Re:+ tax

[Anonymous Coward]

You don't just "charge sales tax". Sales tax is demanded by the equalization board. I'm sure they'd love to tax everyone both ways. Sales tax and income tax. Both go to the govt. :( :( :(

Re:+ tax

[ack154]

It'll probably be an option at some point (if it isn't already). The trouble is that sales tax varies by state/county. So if they leave it open for the seller to put in a % of their choice, buyers will pretty much get screwed on it just like they do on shipping (you know, like charging $10 to ship a dvd via media mail?). It would have to be something automatically added as needed per the buyer's ship to address and the tax rate for that location.

What a PITA that would be though.

Re:+ tax

[chaoticgeek]

It varies by state and local government... National, State, and local each have their own they tax. In my home town they have an extra 1.5% above the city where I go to college.

Re:+ tax

[patio11]

Sellers already have to charge sales tax in some circumstances but for small non-corporate sellers compliance is nil. This is an income tax issue, though, not a consumption tax issue. For example, if I make say $50,000 a year and am hypothetically paying a marginal 30% on additional income, if my bosses give me a $5,000 raise I lose the first $1,600 or so to taxes. However, if my eBay business profits $5,000 and I don't declare it I get that $5,000 taxfree. (If I do declare it I actually end up paying MORE than $1,600 due to self-employment tax but thats another matter altogether.) I suppose you COULD raise prices to compensate for this but you can't call it a sales tax surcharge and, indeed, with the amount you'd have to raise prices people would likely go spare if you tried.

Signed,

Guy who actually did pay taxes on his web-based small business this year

Re:+ tax

[dubl-u]

Does this mean that sellers will now add a "sales tax" to what they're selling in order to compensate for this new tax? And who decides how much tax is paid? States? The National Government? (Please excuse my ignorance in American Government policies)

This is not a new tax. The IRS is just saying that people are required to pay income tax, and that they believe that a lot of eBay sellers are failing to do that. In the US, the federal government is the main collector of income tax, but many states have one as well.

Sales taxes are purely a state and local matter. That's another big loophole. If I buy a computer locally, I pay sales tax, and it is collected automatically by the vendor. If I buy one from out of state, I am still obliged to pay the tax, but it is not collected automatically. At the end of the year on my state taxes, I'm supposed to declare and pay for the computer purchase. In practice, most people don't.

Re:+ tax

[pla]

Dislaimer: I'm not a tax expert, but I play one when I talk to my friends into letting me do their taxes.

Need any new friends? ;-)

Re:+ tax

[nmb3000]

Does this mean that sellers will now add a "sales tax" to what they're selling in order to compensate for this new tax? And who decides how much tax is paid? States? The National Government?

IANAA, but I believe any revenue generated by selling items via online auction would simply be added to your gross income for the year. You would add it to any other income (working, tips, bank account interest, investments, etc) and then figure you state and federal taxes as normal.

The issue strikes me as "no duh" and "simply a matter of time". As online commerce has grown of the last decade, I'm surprised they didn't go after that income sooner. There's nothing really wrong with it (unless you don't believe in paying taxes in the first place), but the execution of the idea might be a little more difficult. Tracking users and equating them to SSN might be kinda tricky.

Sellers could add sales tax I suppose, to try and cover their taxes, but I don't think it will cause a huge upheaval in online auctions. That widget you want on eBay will still cost $0.99, but now you need to add the obligatory $40 shipping cost and $20 in arbitrary "sales taxes".

Re:+ tax

[AK Marc]

Does this mean that sellers will now add a "sales tax" to what they're selling in order to compensate for this new tax?

There is no new tax. Income tax is paid by all people that run businesses (well, at least those that are profitable). Many people selling on ebay are running businesses, but are lying on their 1040 forms regarding income. The IRS is looking for one and only one thing, the ability to track people that lie on their tax returns. If you aren't a liar, then you have no new tax and nothing to fear.

Re:+ tax

[omeomi]

It is likely that most eligible eBayers would be considered operating their own business (self-employment) and would need to report their income (and expenses) on a 1040SE.

If you're selling old stuff for less than what you paid for it, it's not income. While there are several people that run eBay-based businesses, I would imagine that the majority of the eBaying population just uses eBay to sell old stuff that they don't want anymore, which doesn't constitute income.

Re:+ tax

[Ucklak]

If it's going to come to State tax, you might as well do Craigslist and avoid the Ebay tax altogether.

Re:+ tax

[Stewie241]

I would have said the opposite... eBay seems to have been taken over by online retailers using an auction format (or Buy-it now) to open a store front. I think this would apply to many many people. I'm sure some are already claiming their income, but for those that aren't...

Ian

Re:+ tax

[LFS.Morpheus]

Yes, that is absolutely correct, which is why I also said eligible. This provision says they want people who do more than 100 transactions or more than $5,000 - the $5,000 limit doesn't quite seem appropriate but I would guess that most people who do >=100 transactions a year are probably doing it for profit. I do wonder if we would see a "cost basis" field when making an auction to track profit.

Re:+ tax

[TheSkyIsPurple]

I'd be curious how it'd go with the income tax bit. I've never sold anything on eBay for more than I paid for it.
I've always taken a loss, but I have no real way to prove it.

Closest I could some to would be to try to find an archived catalog of the item, since I know I bought it new.

Re:+ tax

[Zordak]

Does this mean that sellers will now add a "sales tax" to what they're selling in order to compensate for this new tax?

It's actually not a "new" tax---it's tax on income you're obligated to report anyway. Ironically, if you add in tax to the sale price to compensate for the tax you'll have to pay, it's deemed income (because you got somebody else to pay your tax obligation). So the IRS will tax you on that. But then if you get somebody to pay THAT tax for you, they leave you alone, because that's what they had to say to win the case where this came up.

Re:+ tax

[Anonymous Coward]

Someone help me with this: isn't the concept of the federal government fretting about individual citizen income

• A trampling of state's rights
• A significant invasion of privacy

This is not a libertarian argument; I'm not as much arguing against taxation per se as pointing out what, in a software project, would amount to some lousy factorization.
With the current outcry against BeelzeBush teh neo-Hitler Chimp, it seems that the left, had they hair #1 in a useful location, would be arguing to curb Federal power, starting with taxation.

Re:+ tax

[Anonymous Coward]

I'm sure some are already claiming their income, but for those that aren't...

I have zero problem with the IRS collecting the taxes that are due. If the summarizer of this article thinks I'm going to feel bad for criminals who aren't paying their taxes they are barking up the wrong tree.

Re:+ tax

[anagama]

Don't forget the self employment tax, i.e., social security/medicare. That's 15% off the top. Then you get to income tax.

Re:+ tax

[Americano]

Not really a sales tax... a sales tax is typically added as a % of the cost of the product, and goes directly to the state in which the tax is levied.

This is an income tax, which means that of the profits a person makes, they will need to declare that income on a tax form, and pay a % of that to the government as taxes. In effect, the government is coming along and saying, "Yes, you owe us 20% of that income as taxes." This isn't really a "new" tax, as you're supposed to declare all income on your yearly tax forms. What it sounds like is an enforcement effort to collect taxes from people who aren't currently paying them.

Net result is that this will force the smaller-volume sellers to either raise their prices to offset the chunk now going to taxes, take less profits (20% goes to taxes, effectively reducing their income by 20%), or simply close up shop because they can't maintain a reasonable profit margin while paying taxes.

Re:+ tax

[DoctorRock]

It's simply the background noise of a waning presidency. We haven't heard from these creeps in eight years, now nobody cares, so the kids act up. It could be worse - we could all be Iranian Nuclear Scientists. (With apologies to all you Iranian Nuclear Nuclear Scientists out there.) And for the benefit of all you Iranian Nuclear Scientists who saw "Dr. Strangelove" - you know that part where General Turgidson says "Remember to say your prayers"? It couldn't hurt. After all, we're experiencing a waning presidency. George Bush will never face another election in this lifetime. He can do as he damn well pleases, so let's try not to piss him off too much, shall we?

Re:+ tax

[Anonymous Coward]

So, in total, you'd be paying right around 50%.

That's a nice fuckin' chunk.

Re:+ tax

[patio11]

You'll note I don't sell calculators. D'oh. In my defense, I guesstimate my personal tax burden as a third and wrote 30% to not have to worry about rounding error. *sigh*

Re:+ tax

[Maxwell]

Uh no, it's about tax dodging pure and simple. In the United Sates you pay an income tax based on your annaul earnings for that year. Your employer reports all the money they paid you directly to the IRS.

If you are self employed you must file report your earnings to the IRS yourself. (being self employed has advantages, tax-wise, so self employed people usually do report...) The IRS is , with good reason, questioning whether or not all those ebay sellers are reporting their income like they are supposed to and indeed if e-bay is not acting like an employer for them.

Makes sense to me, what were we getting all worked up about?

JON

Re:+ tax

[johnmcboston]

That's the problem - the article doesn't mention if there's a difference between people who sell new products vs selling 'stuff'. If I pay $10 for a book, then sell it for $5 on ebay - it's hard to declare that as 'income' (but the government does what it wants anyways...)

Re:+ tax

[Jeff DeMaagd]

I don't know if that would do it. Craigslist is partly owned by eBay. It is a minority stake, but it may be enough to get IRS attention.

Re:+ tax

[minus_273]

isnt the new deal grand!

Re:+ tax

[whoever57]

IANAA, but I believe any revenue generated by selling items via online auction would simply be added to your gross income for the year.

Only if whatever you sell on eBay costs you nothing to acquire, list and ship. In other words, you subtract your cost of goods, eBay fees, actual shipping costs, home office costs, mileage to/from the shipping center, etc. from your income.

Re:+ tax

[strength_of_10_men]

Does this mean that sellers will now add a "sales tax" to what they're selling in order to compensate for this new tax?

They're already charging you a tax. It's called the inflated "shipping charge."

Re:+ tax

[patio11]

Yep, its pretty easy to hit 50% *marginal* taxation as a self-employed individual in the US. 13.4% self employment tax, 28% federal rate, throw in a high taxing state like California and you're pretty well there. (Don't think you're getting off easy if you're not self employed though. Your company is paying that as a Medicare/SS contribution on your behalf. You never see it but it depresses the wages they're willing to offer you all the same.) This doesn't mean you'll experience 50% effective taxation, since parts of your wages are getting taxed at much lower rates. There are some countries you could live in though which have well in excess of 50% effective taxation... Sweden is one, for example. 60% and up, up, up.

Re:+ tax

[Kalten]

After working for a tax and accounting software company for almost 9 years now, I know far more about what you file on what form than is really good for me.

Anyway, nitpick here: you report income and expenses from your own business, assuming you're the only owner, on a Schedule C that you file with your Form 1040. Just because you have your own business doesn't mean you have to file a Schedule SE (note that I'm assuming that the Schedule SE is what you meant by "1040SE")--you only have to do that if your net income exceeds a certain fairly low amount each year ($400, if memory serves).

Re:+ tax

[rsborg]

I don't know if that would do it. Craigslist is partly owned by eBay. It is a minority stake, but it may be enough to get IRS attention.

It's not a case of who owns whom... but more the case that in eBay, the final bid price is enforced and persisted in eBay's servers. Craigslist is merely a messageboard (with some great search functions) and since they don't make any $$ off the sale, the price, completion, etc are all not recorded on the Craigslist servers... thus completely anonymous.

Buyers and ellers on craigslist complete their sales in person, and in private, thus avoiding damning evidence.

Re:+ tax

[Danse]

With the current outcry against BeelzeBush teh neo-Hitler Chimp, it seems that the left, had they hair #1 in a useful location, would be arguing to curb Federal power, starting with taxation.

You're joking right? Members of the federal government arguing to curb federal power? Especially when they're just now getting back into a position to start funneling that money to their own interests? Seriously?

Re:+ tax

[brewstate]

Secrets to U.S. government's success 1. Tax your income. 2. Tax your purchases. 3. Tax the crap you already paid taxes on when new. 4. Tax the buyers of said crap that taxes have already been paid on when new. 5. Tax the crap that was taxed as crap that was taxed when new and now sold by the 3rd tier owner. 6. Increase taxes in a bracketed method such that you really don't make much more money until you are at the top of that tier. 7. Give loopholes in taxes such that only the very wealthy can afford then audit them. 8. Raise taxes. 9. Tax the crap left over after you die. Major problem is we are still in debt. hmmm

Re:+ tax

[AK Marc]

I did my taxes for last year. Since I get to write off most of the non-federal taxes, I have pretty much all my tax stuff in one place. I calculated my tax rate. I excluded taxes paid by my employer and by companies that I own (stock, I'm not a business owner), which are sometimes included by some of the people that like to calculate tax rates. I'm right at the edge of the top 15% of wage earners. I paid less than 20% tax for all federal income, Social Security, Medicaire, state, local, property, sales, vehicle, capital gains, and any other taxes I paid. My marginal rate was still 25%. Interstingly, I also did the taxes for my retired mother. Her gross was $40,000 less than mine, but her taxable income was higher than mine, and so was her income tax. So yes, I do realize I'm not "normal" but a worker can easily put away stuff in retirement accounts, get a rental property, and other such tax advantages. And no, I'm not even counting the $15000+ in cash benefits (retirement, education reembursement, health payments - not premiums but cash payments to an account in my name) that isn't even counted in my gross income.

Re:+ tax

[Don Negro]

Considering that it prevented the U.S. from suffering a socialist uprising/overthrow during the 20th Century, I'd say yes. Compare our history to that of any other western industrial nation. A little socialism to stave off a lot; probably ought to be a good deal in your book.

Re:+ tax

[Anonymous Coward]

Never start unless you have to, once you start, then its harder to STOP.

I suggest moving as much things off shore as you can, I get so much better service there anyway. For my stock trading I can short stocks that most American's cannot because a lot of offshore brokers will let you do what you wish with YOUR money :)

Re:+ tax

[Anonymous Coward]

This is already happening in the UK where HM Revenue and customs have started going after sellers running a business. Their definition is anyone who manufactures products for sale or buuys and resells. E-bay is cooperating and will probably do this in the US as well.

Re:+ tax

[reflector]

as someone who uses both craigslist and ebay extensively, i have to say craigslist has its own tax, it's not one of money, but of time.

it's taxing to deal with craigslisters who want to ask lots of dumb questions (i.e., can this laptop get on the internet?), to meet them in person, to let them look over the system they're buying for half an hour, and sometimes even to have them call you after the sale expecting to give them free tech support.

ebay on the other hand, while high in fees, is very nice in the fact that buyers send you the money, you send them the goods, and, viola! done!

Re:+ tax

[KDR_11k]

There is no difference, if you want to claim expenses you have to track them properly. That usually means keeping the receipts and some lawyer voodoo.

Re:+ tax

[bwcbwc]

Another possibility: It could be capital gains on the items sold. But I think you're right that they're primarily after the small businesses rather than the online garage sales. Not sure if it would be self-employment income if it isn't income earned as wages, though. It could just be straight income tax on business profits.

Re:+ tax

[letxa2000]

Bingo. And to think that there are those that think that taxes can be raised without hurting the economy. Amazing. I have nothing against the government wanting this information from eBay--if we're going to have an income tax and we're going to have banks and businesses reporting on money paid to other entities, then eBay should furnish that information, too. But this eBay/tax issue is a perfect easy-to-see example of what happens when the government raises taxes on anyone in the economy. Costs go up, profits go down, and prices are either increased to compensate or the seller stops selling.

Now if we could just get a few liberals to understand that.

Re:+ tax

[mrbcs]

Dunno bout you americans. Up here in the frozen north, you have to put the profits somewhere. They have to go through a bank and leave a paper trail. It's a lot safer and smarter to work above board.

All the guys on ebay that I deal with, that are businesses, charge sales tax based on where you live and keep decent books. These guys also have legitimate expenses like their warehouses that they will use as expense write-offs.

The incentive for them is that they can claim expenses against income. All this should do is to make sellers "shit or get off the pot". 100 transactions a year is a couple a week, maybe if you're doing that, you should go legit and keep decent books.

Re:+ tax

[srussia]

Makes sense to me, what were we getting all worked up about?

JON I'm with you here. All these people getting all het up about the technicalities of this thing and missing the big picture: taxation is theft.

Re:+ tax

[arivanov]

One of the very few cases when I am all on the side of IRS, her majesty customs and excise and the like.

Ebay is the tax evasion and stolen goods heaven heaven nowdays especially as far as computer and electronics products are concerned (one of the reasons why I have stopped using it)

It is the primary place to commit VAT fraud, sell grey (and contraband) imports, fence stolen goods, the lot.

Whatever is done to weed at least some of that, will improve the standing of companies who actually pay their bills and taxes and try to trade honestly. I am all for it. And the IRS will set a precedent which other country taxation authorities can use (for now they are mostly limited to crawling eBay with external crawlers). So for once, something done by IRS in America will have a positive effect elsewhere.

Re:+ tax

[Ph33r th3 g(O)at]

Exactly. People don't seem to get that all this social safety net stuff the well off resent being taxed for keeps them from being killed and eaten by a hungry mob. Same goes with philanthropy -- it's the price the super-rich pay for being allowed to stay super-rich.

Re:+ tax

[arminw]

.......indeed if e-bay is not acting like an employer for them.......

If your neighbor pays you for a service or some goods, he as the payer may be required to report that transaction to the IRS, giving them your tax ID and the amount paid. If he can be deemed your employer, he must even pay the IRS before you even get your paycheck.

However, the IRS requiring ebay or any other buyer-seller communication service to do this would be like that same neighbor being forced to tell the IRS the details of a transaction between you and someone else, where your neighbor also happens to have knowledge of. By this principle, every newspaper and other classified service could also be required to report all transactions between people who advertise. In the end, ebay is only a service that facilitates the bringing together of a buyer and a seller of a good or service. They do not participate in the transaction, other than charging a percentage of the final settlement price. I wonder if extending this snitching system would be doable by the IRS without Congressional action.

This is an attempt to catch sellers who are cheaters by not reporting their income. Forcing ebay and other third party buyer-seller go-betweens to become snitches for the government should not be the law in a country such as ours. People should be honest enough to pay their fair share of taxes.

Re:+ tax

[jrockway]

> I've always taken a loss, but I have no real way to prove it.

Not necessarily. If you buy a car for $20,000, and then sell it a year later for $18,000 but the blue book value is $16,000, then you've just made a $2000 capital gain which you have to pay taxes on. Yes, the tax system is fucked up.

Re:+ tax

[TheSkyIsPurple]

Good point. Fortunately for me, I've only sold one car on eBay. It's not listed in KBB, but it was well under what Hemmings said it should be.
I should be safe in either case for it.

But for smaller items, it gets a little weirder.

Even weirder having had my friend actually do the eBay stuff... so the account is in his name, and he just gives me whatever the sale price is minus eBay fees. Hope it wouldn't get too interesting for him.

Re:+ tax

[mcsuper5]

For a business (non-incorporated), you use a Schedule C to report gross income and expenses, the difference is your profit which gets transferred to your Form 1040. This increases your taxable income.

If your self-employment income is over $400 you must file a Schedule SE, for Self Employment Tax, which is Social Security and Medicare. You pay half and your employer pays half, since you are self-employed you get the whole bill. Half of the SE is taken as a deduction to taxable income (because it is a business expense.)

If you are married, and file jointly and both are in business (and each of you make more than $400), you should both file Schedule C and Schedule SE. If you're in the same business, split things down the middle. Do not just place both names on the Schedule SE. Someone might figure it out when processing, or they might screw it up, either way it will cause an additional delay.

My understanding is that if you are just selling off items that you have around the home, and not doing it as a business, you would then treat the sales as capital gains and losses and report them on a Schedule D. Which is not subject to Self-Employment tax.

If you wish to apply for EIC make sure that you keep your business records in case you are audited. Keep records for at least three years after the due date of the return, or three years after you filed, whichever is later.

Note: When you sign your return you are stating the information is true and correct to the best of your knowledge, your preparer is not responsible if they screw up, you are. Read your return before you sign it. Your return may not be considered filed until it is signed, and the IRS is not supposed to issue a refund on an unsigned return.

Dislaimer: I am a tax examiner.

Re:+ tax

[StikyPad]

Always read the fine print, contained in the period after "taxes," in this case. I've copied the text below, for the lazy.

[so I can route their returns into my offshore account]

Re:+ tax

[anthony_dipierro]

If you buy a car for $20,000, and then sell it a year later for $18,000 but the blue book value is $16,000, then you've just made a $2000 capital gain which you have to pay taxes on.

Please don't listen to this guy, he's utterly wrong.

Re:+ tax

[Americano]

The sick thing of it is, this will probably NOT be used as a reason to say, "We really should reduce taxes & cut government spending proportionately, because these taxes hurt these small businesses," it'll be an excuse for many to say, "Well, we just need to put MORE taxes on thos filthy rich people like Bill Gates. They can afford to have their profits squeezed some more."

Re:+ tax

[Xman73x]

This is an outrage to people who are only trying to make an honest living in The So Called Land Of The Free!-Shit maybe I should move to Germany.At least they have more freedom then America does LMAO!- I mean wtf is wrong with the USA?..I was born in this country but today I'm not proud of it as a True Blood American Citizen!-I have Relatives in Europe.And all I keep reading is how good the life is there compared to The Lazy as can be America!-Try calling for instance Dell for or Sony Computer Entertainment Of America, or most if not all companies in The USA today all you get is a person who can't speak in English or there rude as can be!-Lamo the way America has become.All taken over but other countries? Especially India-they can't talk for chit I'm sorry but if your going to be an American citizen then learn the language!.Sad..Peace

Re:+ tax

[Americano]

It's simply the background noise of a waning presidency. [ . . . ] He can do as he damn well pleases, so let's try not to piss him off too much, shall we?

Yes, because this is the first time in history that the IRS has attempted to collect taxes from people who weren't reporting their income properly -- Katy bar the door! Pass the ammunition, and praise the Lord, it's a vast right-wing conspiracy with Karl Rove and Dick Cheney pulling the strings!

I know this is Slashdot, where any negative mention of Microsoft and/or Republicans gets you modded "+1 Insightful", but get some perspective, man. Seriously.

Re:+ tax

[Stewie241]

agreed... if I have to pay taxes, they ought to as well! Although, this might not affect me if I had an eBay store... I'm in Canada.

Re:+ tax

[LunaticTippy]

There are a lot of low value items sold. I've sold 2000 items on half.com (now owned by ebay) in the past 5 years, with an average sale price of $3 or $4. I've lost money on every single one of these transactions, since I paid retail for the books and cds. I've also sold items for friends who don't have stellar ebay ratings who have high value items to list. Yeah, I sold a ps3 some idiot friend bought to speculate on. I got $1000, which was very lucky. This money goes to my friends minus fees, leaving me zero profit. It would absolutely suck for me, and countless others, to have this $10,000 "income" to pay tax on.

Can you imagine the hassle and expense of keeping receipts for every single thing you've ever bought and sifting through them to show your "business" isn't making a profit?

Maybe it would work to my advantage in a perverse time-inefficient way. My business would post huge losses every year. Perhaps this could offset my real income?

Re:+ tax

[LunaticTippy]

Isn't he right if you've been depreciating your car? You've written off $4000 already.

Re:+ tax

[LunaticTippy]

Damn, you're judgemental and narrow minded. What about people like me who sell maybe $2000/year on ebay, all of it bought retail and sold at a loss? Why should I have to keep books on all that and file a tax return showing my "business" operating at a loss every year? Because I'm a liar?

Re:+ tax

[anthony_dipierro]

Depreciation has nothing to do with blue book value. Furthermore, depreciation recapture is generally ordinary income, not capital gains. So, no, he's not at all right, though the details of exactly how he's wrong vary with the details of the situation (which is the main reason I haven't gotten into the details).

Re:+ tax

[LunaticTippy]

OK right, but let's say you buy a car for $20k, depreciate $4k, and sell it for $18k. You pay taxes on $2k right? (I don't depreciate anything on my taxes)

Re:+ tax

[AK Marc]

Damn, you're judgemental and narrow minded. What about people like me who sell maybe $2000/year on ebay, all of it bought retail and sold at a loss? Why should I have to keep books on all that and file a tax return showing my "business" operating at a loss every year? Because I'm a liar?

No, you aren't a liar, you are just stupid. You aren't running a business. If you do not make a profit and never expect to make a profit, it is not a business (according to the IRS definition). If you are running a business that takes a loss every year, you are stupid for not putting it on your taxes to get the deductions. Either way, you are certainly not a liar, but quite stupid. Either you are not running a business (based on your description, that is the case) and took offense at comments that obviously do not apply to you at all, or you are running a business at a loss and not takeing the appropriate business deductions, again making you stupid.

There, do you feel better? You aren't a liar anymore, just an idiot.

Re:+ tax

[LunaticTippy]

I'm not running a business, just selling things I don't want anymore.

The proposed limits would apply to me anyway. Am I an idiot for being concerned about this?

Now that you mention it, if I kept meticulous records about all my purchases I suppose I could claim a few grand a year of business losses. I buy a computer for $1k, sell it a few years later for $100 and write off the difference. Same thing for movies, cds, and books. Hmm. If I didn't hate paperwork so much it sounds like a decent scam.

At any rate, I would have been caught in their trawling maybe twice in the past 8 years. I "made" a bunch of money the year I unloaded all my vhs tapes and cleaned out my garage.

Re:+ tax

[AK Marc]

I'm not running a business, just selling things I don't want anymore.

Since I posted my comments specifically about people that ran a business, they obviously do not apply to you.

Hmm. If I didn't hate paperwork so much it sounds like a decent scam.

It isn't a scam if you have an expectation of profit. If you don't have an expectation of profit and do it, it is fraud. Some scams are legal, others are illegal (even though the implication is unethical, that does not necessitate illegality). Buy some of your used goods at garage sales and try to sell them for more than you paid, and all of them become write offs. But the downside is, yes, you would have to maintain meticulous paperwork.

At any rate, I would have been caught in their trawling maybe twice in the past 8 years. I "made" a bunch of money the year I unloaded all my vhs tapes and cleaned out my garage.

I have had incomplete reporting from a financial institution get me a letter from the IRS demanding lots of money. I sent them a letter of explanation back for why it wasn't income that needed to be reported. It all went away with a little worry, one letter, and one follow-up phone call. Even if you were reported to the IRS, that does not mean that they will audit you. But I don't think it should be ebay reporting, it should be paypal. Paypal is a financial institution and should be reporting its dealings.

The IRS rules are confusing, but part of the fun is the confusion. I took an international trip for a college class. Travel is not deductable for education, so I called the class a "business expense." I deducted more than my actual cost of the trip. And the great thing? It is 100% legal. I used the IRS's published rules and increased my refund check by $2500. I guess it fits in one of those legal "scams" there are. Such obfuscated rules are the reason why worse tax plans, like Fair Tax get lip service. Though, even with Fair Tax, I'm sure that lots of people would be cheating on ebay.

Re:+ tax

[anthony_dipierro]

OK right, but let's say you buy a car for $20k, depreciate $4k, and sell it for $18k. You pay taxes on $2k right?

Barring one of the myriad of exceptions, gotchas, and other complications, yeah. Of course, this message was not intended or written to be used, and cannot be used by any taxpayer, for the purpose of avoiding penalties that may be imposed on the taxpayer. Stupid Circular 230.

what to do with it?

[Anonymous Coward]

And extra $2 billion, huh? So we can just throw it away in the middle east or something? Ya, good idea.

So....

[whoop]

Just create multiple accounts, each keeping within the $5000 annual limit. Take that IRS!

Re:So....

[Anonymous Coward]

Too bad tax evasion is a crime, huh?

Re:So....

[chaoticgeek]

But since they are all yours you would still have so much over the limit even with multiple accounts. I don't think it works that way when you have multiple accounts, otherwise I think more people would already do that.

Re:So....

[Anonymous Coward]

What annual limit are you talking about? All income is reportable and taxed regardless of your age and amount. I guess if Ebay was your only source of income and you made a little money, you would not be taxed very much but your income from sales will just add to your overall income you made that year, just like all income from interest is taxed, regardless if you made $10 or $10000 in interest.

Re:So....

[Anonymous Coward]

Too bad tax evasion is a crime, huh? So is anything but Missionary Position in some states, what's your point?

Re:So....

[TemporalBeing]

What annual limit are you talking about? All income is reportable and taxed regardless of your age and amount. I guess if Ebay was your only source of income and you made a little money, you would not be taxed very much but your income from sales will just add to your overall income you made that year, just like all income from interest is taxed, regardless if you made $10 or $10000 in interest.

Not quite true. In US, there is a cut-off that if you make below a certain amount you do not have to (a) pay tax on it and (b) report it. Now, your employer is required to take the taxes out (regardless), so you might not get money back if you don't report it even if you don't have to. I believe for a single person (unmarried, dependent) it is about $4500USD. My wife (a tax accountant) figured it was probably about $17000USD (if I remember correctly) for a married couple. (There's a number of things to take into account, so that number could be way off. I am not a tax accountant so do not quote me (or her - since it is me saying this) on that.)

You also do not have to report something if it is pretty nominal (like $2 in interest). (Definition of nominal is defined by the IRS tax code.) Now if those 'nominals' add up to something that is not nominal, then you are still required to report it all. (The reason we need tax accountants - the tax codes are just so messy and full of loop-holes and gotchas that its too hard to follow if you don't do it full time.)
The best thing you can do, is report it and make sure you get back what you should and pay what you should.

Re:So....

[Anonymous Coward]

I almost give a shit.

Re:So....

[cliffski]

your wrong. what you mean to say is

"take that all you dumb schmucks living in my neighbourhood who will have to pay higher taxes because I dodge mine!"

If you don't want to pay taxes, go live in Afghanistan, but don't moan when you get there about the lack of roads, police and other social gods. Stuff like street lighting has to be paid for. What makes you so special that you think you should not contribute?

Re:So....

[Anonymous Coward]

What makes you so special that you think you should not contribute?

that's an easy one.
unlike the beer-swilling, sitcom-watching, over-breeding, 9-5 working stiff jackasses who vote for bush and cheney and all sorts of violence, waste, and corruption, i feel that my hard-earned money is better off in my pocket than in the pocket of cheney's friends at haliburton.

fuck, i'd rather give away my money to charity than let the feds have it.

what makes me so special is that i can get away with it.

or maybe, a better answer is, i'm not special, and i just don't think that ANYONE should contribute to the federal government the way it is now.

Re:So....

[LordKronos]

Too bad tax evasion is a crime, huh?

So is anything but Missionary Position in some states, what's your point?

He's just pointing out the IRS's eye-for-an-eye/crime-for-a-crime policy. You get caught for tax evasion, and they'll make sure you take it up the ass.

Re:So....

[b0s0z0ku]

Too bad tax evasion is a crime, huh?

The accounts weren't created for the purpose of avoiding taxes, of course. Different businesses, different accounts. One for the sale of used computers, the other for used DVDs, the other for used restaurant equipment.

Oh, and BTW, fuck the IRS and US government. We'll be getting reamed in the ass for the next goddamn decade due to our idiot president's imperialist adventurism in Iraq.

-b.

Re:So....

[b0s0z0ku]

or maybe, a better answer is, i'm not special, and i just don't think that ANYONE should contribute to the federal government the way it is now.

Cheers! Mod parent up "damn straight!" If you can't vote them out of office, you can at least starve them out :)

-b.

Re:So....

[Anonymous Coward]

Aha, the old classic "I disagree with the govt, and will withhold my taxes" argument.
Fine.
I'm guessing you take the money you dodge in taxes, and give it to charity right?

"what makes me so special is that i can get away with it."

Yeah, that's the kind of attitude I expect from people who dodge their taxes. Right up till the day the tax man knocks on their door. You can get away with it because the IRS doesn't spend enough on enforcement. If they spent more, you would moan about that and return to your bullshit "the govt wastes its money" defence.

Re:So....

[StikyPad]

Perhaps, but when you avoid missionary, others don't have to make up for it.

(Although I may be willing to assist in this matter on a case by case basis.)

Re:So....

[anthony_dipierro]

In US, there is a cut-off that if you make below a certain amount you do not have to (a) pay tax on it and (b) report it.

True, see Publication 501 for all the nitty-gritty details.

Now, your employer is required to take the taxes out (regardless), so you might not get money back if you don't report it even if you don't have to.

Employers usually have to take out social security and medicare (there are a few fairly rare exceptions, such as eligible student employees), but they don't have to take out anything else if you are exempt and give them a valid W-4 claiming so. Read the instructions for the Form W-4 for more details.

Cool as long as Europeans stop getting

[Timesprout]

fucked over for US sales tax.

Re:Cool as long as Europeans stop getting

[JeffSh]

can you site a case where europeans pay a state sales tax? I don't think i can think of any situation where they would.

Hell, I live in Michigan and even I don't have to pay state sales taxes.

If someone is charging a european a US State sales tax on a mail ordered item, they are pocketing the money. That makes them a reseller of questionable moral character.

Re:Cool as long as Europeans stop getting

[LFS.Morpheus]

Not sure what you're getting at--Europeans should never be charged sales tax from any state (there is no national US sales tax). This won't encourage or discourage sellers collecting sales tax from those people who they shouldn't be collecting from in the first place.

Re:Cool as long as Europeans stop getting

[adrianmonk]

It would be nice if you were to explain what you mean by this. Are you saying that Europeans pay US sales tax when they buy items online at a US company and have them shipped to Europe?

I would be very surprised if this were the case. I live in the US, and if I order from a web site in some other state, I don't pay any sales tax, because the order is coming from out of state. It's thus interstate commerce, and I believe that states do not have the legal authority to tax that.

In the US, sales tax is not figured into the price and is added as a separate line item, whereas in some (most?) places in Europe, it is included in the price. Is it possible that this difference in customs is leading you to believe you are paying US sales tax when you are actually not?

Re:Cool as long as Europeans stop getting

[fuego451]

But, but we have a long and glorious history of fucking over Europeans.

Re:Cool as long as Europeans stop getting

[R2.0]

The US history of fucking over Europeans only dates back to the beginning of the Bush administration - for some an eternity, but really only 6 years. I'll even give up 60 years, to post WWII - we all know the Marshall plan was just a big conspiracy.

The history of Europe fucking over the rest of the world goes back over 2000 years - Rome, Crusades, Colonialism. Find me a speck on the globe that wasn't exploited by some European.

Re:Cool as long as Europeans stop getting

[/dev/trash]

or even cite.

Re:Cool as long as Europeans stop getting

[Aokubidaikon]

You seem to be forgetting that in most European countries sales tax is 19%. Now who is getting fucked over by whom?

Re:Cool as long as Europeans stop getting

[Jeff DeMaagd]

Europeans should not be taxed by a US seller, but they are responsible for customs and duties which is roughly equivalent to the VAT/GST and such that Europeans pay for domestic purchases.

A Michigan resident is required to report and pay use taxes for out-of-state purchases on their 1040-MI form. Use tax is basically a renamed sales tax on items purchased out of state. You can dodge it by lying about it on your tax form, but it might become an issue if you get audited. Thankfully there is an inexpensive & honest way out of it by paying a few dollars, amount based on your income. No US resident is required to charge sales tax for out-of-state buyers. I don't know if in-state buyers have to be charged sales tax.

Re:Cool as long as Europeans stop getting

[Antique Geekmeister]

Have you looked at the EU's Value Added Tax? Now there's a ludicrously high sales tax: 40%! A colleague just tried to buy a laptop in Italy while at a trade show to replace his underpowered one. It's how Europe pays for a lot of their social programs, such as their various universal health coverages.

Re:Cool as long as Europeans stop getting

[KDR_11k]

The highest sales tax in Europe is 25% AFAIK, most countries are below that (here we have 19%).

Re:Cool as long as Europeans stop getting

[Liinux]

The history of Europe fucking over the rest of the world goes back over 2000 years - Rome, Crusades, Colonialism. Find me a speck on the globe that wasn't exploited by some European. Well, Europe has existed for a bit longer than the US - but the US is trying to make good for that. "Why should Europe have had all the fun and have had exploited large parts of the world for economic gain? We want too!"

Re:Cool as long as Europeans stop getting

[petermgreen]

Europeans should not be taxed by a US seller, but they are responsible for customs and duties which is roughly equivalent to the VAT/GST and such that Europeans pay for domestic purchases.
but i belive there is an exception to duty and vat for low value items sent through the postal service.

Re:Cool as long as Europeans stop getting

[Antique Geekmeister]

Thank you, I'm delighted it's not quite as awful as I thought. But 19% is still pretty serious.

Re:Cool as long as Europeans stop getting

[KDR_11k]

It's also applied to the price tag already so you pay what's actually written on the thing instead of having to calculate how much you would pay and foreigners can often get a refund for that (not sure how that works).

Re:Cool as long as Europeans stop getting

[nomadic]

That makes them a reseller of questionable moral character.

A reseller of questionable moral character on Ebay?!?! Don't be ridiculous.

Re:Cool as long as Europeans stop getting

[STrinity]

can you site a case where europeans pay a state sales tax?

European comes to the US, goes into a souvenir shop and buys a chotchke. Of course, in such a situation, it's perfectly reasonable for a European to pay sales tax, just as an American in Europe would do (even if in Europe he'd be unaware of it because it's a VAT).

Re:Cool as long as Europeans stop getting

[dkf]

foreigners can often get a refund for that (not sure how that works)

If I remember right (and it's a long time) you keep the receipts and take them to a special office at an exit port (either in the airport or often on board the ship if you're leaving by sea).

Now if only stores in the USA (particularly ones you visit in person) would state the price you pay up front, so that I can figure out whether to go to an ATM first (I'm not keen on paying with plastic; my bank already knows more about me than I like). State the other prices too if you want, but don't assume I know the local total sales tax rate, OK? And don't give me any BS about "but the rate may be varied at short notice"; other places can cope easily enough, so you can too.

Re:Cool as long as Europeans stop getting

[dkf]

It's lower than that in some EU countries (including mine); I think the minimum permitted value is actually 15%. The Germans want the minimum increased to (their level of) 19%, but other countries are resisting. Luckily, the minimum VAT level isn't a majority-vote topic, so the chances of anything changing soon on it are minimal.

Re:Cool as long as Europeans stop getting

[Eivind]

VAT is quite high in many European countries, but nowhere is it near 40%, I have no idea where you got that idea.

In actual fact, VAT in EU-countries vary from about 10% to a maximum of 25%. The countries with the highest VATs normally have a lower VAT-bracket for goods deemed "essentials" such as food. For example Sweden has 25% VAT in general, but only 6% of essentials.

Italy has 20% VAT on laptops. (and less for "essentials")

Re:Cool as long as Europeans stop getting

[Anonymous Coward]

go to ebay alternatives outside US. I don't see why you should use ebay when you can use other site which will not snitch on you to IRS.

Is there some law?

[Frosty Piss]

I'm not upon this stuff, but is there some law that says everything has to be taxed?

Re:Is there some law?

[AvitarX]

If you make money it is income.

Income is taxed.

Re:Is there some law?

[Anonymous Coward]

Yeah, sounds like a great way to fuck up an already crippled economy. OUTSTANDING!

Re:Is there some law?

[imageboard]

You must be new here.
Welcome to life.

Re:Is there some law?

[eebly]

eBay and the like get no special exemption. Sellers are *supposed* to pay an income tax on their earnings from those sites, it's just that relies purely on self-reporting. It looks like the proposal would be akin to requiring employers to report wages for employees. This proposal would just make it more feasable to enforce existing law.

Re:Is there some law?

[JeffSh]

in this case it's about taxing a business, so more accurately it's the profits that are taxed.

yes, I am aware that by some definitions, income is profit, but that's only as a wage. for a business, the difference between income (revenue) and profit (revenue minus cost) is quite clear.

Re:Is there some law?

[Anonymous Coward]

Pretty much any time you are paid by someone, it needs to be reported as income and gets taxed as part of your state and federal income tax. People tend to ignore small transactions, so the 50 bucks you made reselling a Wii on ebay is probably was never going to see the light of a tax form. This wouldn't change that unless you resold 15 of them and broke the 5000 dollar barrier for making it worth their time to go after you.

Re:Is there some law?

[Frosty Piss]

Than the Slashdot headline "IRS May Ask eBay To Snitch On Sellers" is inaccurate and sensationalist?

Re:Is there some law?

[Grech]

Yep. 26 USC 61 defines what is taxable income, and uses the phrase "from whatever source derived". 26 USC 1 imposes the tax itself on individuals, estates and trusts. 26 USC 11 does the same for corporations.

Re:Is there some law?

[Anonymous Coward]

Goes down to political theory, preference, and commerce ideologies.

To put it bluntly, NO THEY DON'T NEED TO TAX EVERYTHING. They just prefer to, so the money currently being wasted doesn't look like pork. When society is busy worrying about whether more money is going to be taken out of their pocket, its a fresh distraction from the current money being wasted to bullshit projects.

If you haven't been paying attention, The American Gov. is Greedy. This is nothing new, so I'd get used to it.

Re:Is there some law?

[xmundt]

Not so much a law, as a basic truth.
      That is...Money to a politician is like
crack to an addict.
        Regards
        Dave Mundt

Re:Is there some law?

[anagama]

Eliminating ebay and its fraudulent lousy customer service "I wanna make a million selling junk" L@@KIE HERE idiots would probably be more of a service than a detriment.

mod this: I would read this post again AAAAA+++++

Re:Is there some law?

[tomhudson]

Well, if you paid $250 for something originally, why not declare the $50 you made selling it on ebay a few years later, and getting a $200 capital loss? Plus being able to declare your internet connection, computer, etc. as business expenses.

Re:Is there some law?

[innocent_white_lamb]

I think you run into the concept of "a reasonable expectation of profit" before you can deduct anything as a business expense.

Re:Is there some law?

[ArsonSmith]

no, it is accurate and sensationalist. In case you didn't know, a snitch is someone who tells authorities of someone else's miss doings. This is typically considered bad when the miss doings are harmless and or minor.

Re:Is there some law?

[Kadin2048]

You're probably right, except for the part about taking the computer as a business expense. That's almost guaranteed to be more trouble than it's worth, if done legally. The IRS doesn't let you deduct the whole computer's value, just because you use for business occasionally. If you use it for personal use at all, then you are required to pro-rate it, and if you get audited, you might be asked for some sort of proof or documentation of your use. Plus, I don't think you can take the whole value of the computer as a deduction in one year; it's a capital expenditure so you have to deduct its depreciation, over the course of a few years. So you're talking about a pro-rated depreciation, of a computer that you probably only use a few percent of the time for bona fide business purposes. Not going to be worth it.

I looked into the IRS rules for home offices and they're similar. The fact that I have a home office, which doubles as a personal space when I'm not working, makes it devilishly difficult to claim as a deduction (and that's assuming that I could get a note from my employer saying that I work from home at their "convenience" rather than my own).

Re:Is there some law?

[Frosty Piss]

So, my broker is a snitch as well, for reporting my stock earnings to the IRS. I see...

Re:Is there some law?

[mutterc]

Umm... yes. Any money I bring in, from whatever source, is income and therefore subject to income tax. If I took bribes, sold drugs, ran a numbers racket, etc. the income from those activities are taxable.

Think about it. Where would we draw the line between these kinds of activities:

• I mow lawns for neighbors from time to time, with a nominal charge.
• I register a business name, get city licenses, advertise, and mow lawns for whoever wishes to pay me and I have time to fit in.
• I am a nationwide landscaping company with thousands of employees.

There's nothing legal that distinguishes the first two cases. A lot of people think there's something special involved in being "a business", but you're a business if you charge people to do stuff or to give them stuff, simple as that.

Not about sales tax!

[LFS.Morpheus]

The IRS is not involved in collecting sales tax--this is about company and/or personal income tax. In fact, here's the first paragraph of the article:

When it comes to paying income taxes, eBay's legions of small-time entrepreneurs are on an honor system in which they are supposed to declare their profits to the Internal Revenue Service. Many users, however, ignore the law or are unaware of their obligation.

Re:Not about sales tax!

[MillionthMonkey]

Conservatives like to insist that the income tax should be replaced entirely with sales taxes, which would make tax time "simpler", as well as discourage trade, not to mention being the type of taxation most conveniently avoidable by the wealthiest taxpayers. (Worst of all in this regard is the inheritance tax, or the "death tax", hated by the wealthy, but marketed as something that will affect most of us.)

Both the sales tax, and income tax collected from sites like Ebay, are taxes that will primarily fall on the lower and middle classes, as opposed to the upper classes. Rich people do not sell stuff on Ebay. A typical "successful" Ebay seller is typically bragging about $10K per year. Lots of Ebay sellers are just trying to clean out their garage.

The IRS does not have infinite resources available to it for enforcement, and has to carefully allocate what resources it has to different types of cases. Contempt for various segments of society has really been showing up in these enforcement allocations recently, and not just in this executive agency but others as well. Just look at the recent prosecutor firings in the DOJ.

Re:Not about sales tax!

[Bluesman]

It's not quite that cut and dried, as income tax is easily evaded by rich people too. It's actually much easier for them...the poor don't have extra money to hire accountants and lawyers.

The assertion that rich people don't buy things with their money, and would therefore be exempt from the sales tax, strikes me as odd, too.

If anything, a national retail sales tax would tax a whole class of people who don't typically pay taxes on income -- criminals, people who have inherited most of their wealth, foreigners buying things in the U.S., etc.

Whether or not it would be good overall I don't know, but I wouldn't discount the idea out of hand. I think the national sales tax's greatest advantage would be to reduce the amount of special tax favors that can be bought with campaign contributions now, which is a major drawback to a graduated income tax with millions of special rules and exemptions.

It's quite funny to do your state income taxes and see the questions like, "Are you a disabled veteran farmer who owns waterfront property that helps the environment?" and realize that it's likely that some large contributor likely fits that exact description.

Or maybe our politicians have a soft spot for disabled veteran farmers with waterfront property, I dunno.

Re:Not about sales tax!

[SCHecklerX]

But if you own something, you bought it. So it was an expense to begin with. Most things you sell on Ebay, I doubt you get the same as you paid for it, let alone more. So how, exactly, is that a profit? Hmm. Maybe this isn't such a bad thing. I'll just claim the stuff that I sell on Ebay as a loss.

Re:Not about sales tax!

[wuputah]

Yes, that is correct, that is why the limits are imposed. This is clearly targeted at "eBay businesses," not individuals trying to sell their 2 year old laptop.

However, you can't claim the depreciated value as a loss. Buying things are not investment - this is even true of things like doing stamp or coin collections because collecting is considered a hobby, not an investment.

Re:Not about sales tax!

[jcr]

Conservatives like to insist that the income tax should be replaced entirely with sales taxes,

It's not just conservatives who recognize how destructive our current tax system is.

-jcr

Re:Not about sales tax!

[lgw]

think the national sales tax's greatest advantage would be to reduce the amount of special tax favors that can be bought with campaign contributions now, which is a major drawback to a graduated income tax with millions of special rules and exemptions.

And we wouldn't see millions of special rules and exemptions on a national sales tax ... why again? Aleady there are exemptions for certian foods, special rules for rental cars, etc., etc.

Re:Not about sales tax!

[big4ared]

I feel like this whole discussion is missing the point. Any individual who makes a lot of money selling eBay has to report their gross income to the IRS. The question is, can the IRS force eBay to give them the information that would allow tham to actually figure which sellers aren't paying.

Re:Not about sales tax!

[drsquare]

People currently to poor to pay much income tax would be absolutely hammered by this.

The costs of doing business would skyrocket, many would go bust, meaning many people would end up unemployed.

Meanwhile the rich would just go abroad and spend their money where there's less sales tax.

I don't think this is a good idea.

Re:Not about sales tax!

[KDR_11k]

Well, yes, you can claim expenses. However there's a process involved, you can't just go there and say "I paid 200$ for that, deduct them", you have to follow the proper procedures to get that recognized. I don't think most eBayers do that.

Re:Not about sales tax!

[MillionthMonkey]

All tax systems are destructive. Not all are used as weapons in culture wars.

Re:Not about sales tax!

[jcr]

All tax systems are destructive

So are all weapons, but a tac nuke is rather worse than a taser.

Our income tax costs us far more than the revenues collected. Nearly every business and personal investment decision is affected by tax considerations. Thousands of people work full-time on tax accounting, who could be employed in capacities that actually contribute to the wealth of our economy.

-jcr

Re:Not about sales tax!

[MillionthMonkey]

Our income tax costs us far more than the revenues collected. Nearly every business and personal investment decision is affected by tax considerations.

You mean the money spent on avoiding rather than paying taxes is non-zero. I think I knew that already.

Ideally taxes are supposed to affect every business and personal decision in an equally burdensome way across all spheres of economic activity. That's the only way they can work. When they affect some of these decisions more than others is when they become a problem that requires hiring experts. Instead of a consistent predictable loss it becomes a lottery game of carrots and sticks designed to "incentivize" your behavior and affect your economic decisions by pushing you around one way or another. There are sticks, like the AMT, or the one discouraging marriage. Or there are carrots, encouraging you to have children and spread your savings among them (or not), or all the goofy deductions, with which they think they're doing you a big favor, but which get priced into the markets that they're trying to distort in your favor (e.g. the first time homeowner's deduction which has raised housing prices). The end result is you just end up with more homework and piles of receipts to go through. But the thing with looking up the bracket from AGI takes two minutes. I would prefer a continuous analytic function instead of brackets that you suddenly fall into but I don't run the world.

Thousands of people work full-time on tax accounting, who could be employed in capacities that actually contribute to the wealth of our economy.

You're probably referring to the health-insurance industry, which can always use people skilled at finding reasons for their employers not to make payments. Yeah, we need more of those people. We have practically a whole subcontinent of English-speaking workers being trained for jobs like that but I guess we need more. It would certainly "contribute to the wealth of our economy".

Re:Not about sales tax!

[Bluesman]

I understand why you say that, but think about how much the cost of business is affected by the income tax, in a hidden way.

Note that proposals for a national sales tax are for a constitutional amendment that would eliminate all other forms of taxation. Most include a monthly tax refund that would cover the taxes you'd pay on necessities, that would be the same for everyone. Poor people who only spend on necessities wouldn't pay any tax at all.

Employers have to offer after-tax salaries that are high enough to attract workers. If nobody had to pay income tax, you'd immediately have that extra money available to you. Hidden costs would be eliminated. Prices would likely rise slightly, but the cost of doing business would be very much reduced, as employers wouldn't have to handle the income tax paperwork, which is a substantial cost now.

Think of it this way. The government would take out the same percentage of GDP as it does now, just in a more efficient way with less paperwork. Efficiency == wealth.

Re:Not about sales tax!

[jcr]

You mean the money spent on avoiding rather than paying taxes is non-zero

That's a big part of it, but I was referring mostly to the unfortunate consequences of investments being made on a basis other than the expected return. So, money gets put into tax shelters instead of being invested in new ventures which can create new jobs and new wealth.

-jcr

In that case,

[Anonymous Coward]

I'm taking you off my Christmas list.

"Shock wave"

[Anonymous Coward]

Such a requirement will surely send a shock wave across the online trading world because it could drastically reduce the profits a seller would make on these sites.

Yeah, and I'm sure that you too would stand to make alot more money every year if you and your employer didn't declare your revenue to the IRS...

Re:"Shock wave"

[Schraegstrichpunkt]

No kidding. I wonder if the IRS would be interested in that "Makarand" fellow.

Oblig Monty Python

[LordEd]

From http://www.ibras.dk/montypython/episode15.htm#4

Third Official: If I might put my head on the chopping block so you can kick it around a bit, sir...
Politician: Yes?
Third Official: Well most things we do for pleasure nowadays are taxed, except one.
Politician: What do you mean?
Third Official: Well, er, smoking's been taxed, drinking's been taxed but not ... thingy.
Politician: Good Lord, you're not suggesting we should tax... thingy?
First Official: Poo poo's?
Third Official: No.
First Official: Thank God for that. Excuse me for a moment. (leaves)
Third Official: No, no, no - thingy.
Second Official: Number ones?
Third Official: No, thingy.
Politician: Thingy!
Second Official: Ah, thingy. Well it'll certainly make chartered accountancy a much more interesting job.

        Cut to vox pops.

Gumby: (standing in water) I would put a tax on all people who stand in water ... (looks round him)... Oh!
Man In Bowler Hat: To boost the British economy I'd tax all foreigners living abroad.
Man In Suit: I would tax the nude in my bed. No - not tax. What is the word? Oh - 'welcome'.

Exciting new tax bases

[Original Replica]

So now eBay businesses are in it with other small businesses. With an estimated tax of $2 billion, it's not just some profitable hobby, like sellin' pot. Which makes me wonder how much income tax would be generated if pot were legalized and became a business?

Re:Exciting new tax bases

[dave1g]

Well according to wikipedia

"In the 2005 United Nations World Drug Report, the value of the global illicit drug market for the year 2003 was estimated at US$13 bn at the production level, at US$94 billion at the wholesale level , and at US$322bn based on retail prices and taking seizures and other losses into account."
http://en.wikipedia.org/wiki/Illegal_drug_trade#Or igins

94 - 13 = 81 billion

81 * 25% ~= 20 billion.

so $20 billion in income taxes. and 94*.06 `= $5.5 billion in sales taxes.

That would be nice to get a bigger tax return due to the legalization of drugs wouldn't it! not even including the tax savings from not incarcerating drug users.

Re:Exciting new tax bases

[LakeSolon]

Legalization would eliminate the artificial scarcity and prices would plummet, so it's unreasonable to assume your numbers would be accurate. Insightful bit of math none-the-less.

Re:Exciting new tax bases

[dave1g]

That is true it was wrong of me to assume the price would stay so high. But it is still a valued product by many people so I imagine it still wouldn't be cheap.

Thanks for pointing that out though.

I always prefer taxing and legalization compared with unenforceable "banning" for most problems that fit that generalization.

The other nice thing about drug legalization is the taxes can pay for the regulation and make sure they are safe. no impurities, no mixing drugs that could kill people in one dose. etc...

Some sells make you pay sales tax right now!

[Joe The Dragon]

So will this just may thing even harder for them?

Re:Some sells make you pay sales tax right now!

[Call Me Black Cloud]

This is not about sales tax. It's about income tax. The sellers are already supposed to be reporting their incomes anyway so this shouldn't change a thing for them...unless they're not reporting what they're making.

Re:Some sells make you pay sales tax right now!

[Joe The Dragon]

So that IRS want the Full $50 that you go form what you are selling even it cost you more to buy it or you payed $25 for it.

So much for that gig

[Joebert]

Damn, now when we hit people up for sales tax, it actually has to be used for sales tax.

This requirement will not reduce sellers' profits

[Anonymous Coward]

It will only force them to pay income taxes on profit they make.

Hmm

[bperkins]

When my employer tells the IRS how much I'm making it's reporting.

When eBay tells the IRS how much auctioneers are making it's snitching.

Funny how that works.

Re:Hmm

[ScrewMaster]

No, in the case of your employer it's still snitching: the business relationship is between you and company for which you work. The IRS inserted themselves into that relationship in order to extract their pound of flesh before the worker receives it. That doesn't make such "reporting" intrinsically right, in anything but a legal sense.

Re:Hmm

[omeomi]

I dunno, I can see the difference...your employer is reporting on how much money *they* give to you, so it's just reporting. With eBay, they're not giving you any money, they're reporting on how much other people gave to you. So yeah, it kind of is "snitching"...although, it might be wrongly pejorative, since it's just enforcing existing tax law.

Re:Hmm

[Penguinoflight]

Yeah, I gotta agree with "screwmaster" (and I'm hoping he's into carpentry). Reporting someone elses income is always snitching, especially when you do it wrong.

Re:Hmm

[wiredlogic]

That doesn't make such "reporting" intrinsically right, in anything but a legal sense.

A large portion of the US population can't even keep themselves out of long term credit card debt. If the IRS didn't get their cut before payday, most of the population would be in prison for defaulting on their income tax bill. More realistically, the government would have serious cashflow problems with very bad economic repurcussions.

The bigger transgression is from the states that want to collect consumption tax on cross-state transactions. The federal courts have conveniently ignored the constitution a upheld this practice.

Re:Hmm

[ScrewMaster]

Perhaps, but historically the United States Federal Government didn't require anywhere near the cut they currently demand. It wasn't really until World War II that the Feds got used to the massive cash flow from the personal income tax. The Federal Government, for a couple of hundred years, really, got along on tariffs and other such sources.

Either way, it doesn't make withholding any less sleazy, or morally bankrupt. It's MY money, and I earned it. The fact that they don't trust us to pay them the exorbitant amounts they currently demand is irrelevant, and in fact that should tell you something right there. Americans (like the Brits before them) used to pay their taxes in full and with pride. Not anymore, because we know that most of it is either wasted or used for purposes with which we don't agree. Yes yes, looking at the global scene America is a comparatively "low tax" nation, but on the other hand, unlike many of those higher-tax countries I don't get a lot for what I do pay. Certainly not anything useful like health care, although that also comes right off the top.

Re:Hmm

[Kadin2048]

Yeah, I suppose we'd just have to get along with a much smaller government. Pity.

Personally, I think they should get rid of withholding, and everyone should have to pay their income tax, in full, once a year, as a lump sum. And if you couldn't pay, the IRS would come and haul you off to debtor's prison.

Not because I'm sadistic, but because I think the withholding system hides the true tax burden from average people. I think people ought to feel the pain of every cent they pay in taxes. I want people to really have that money, before they hand it over to the government. I want that feeling burned into their minds in a very personal way, so that every time they see some government waste, every time they see a government employee wasting time, every time they hear about a pork-barrel project, or about Congress increasing the size of their paychecks, they'll think back to their money that they had to turn over to the government so it could be squandered.

I think we'd see a rapid decrease in government spending, if we did that. It's easy to spend somebody else's money; it's damn painful when it's your own.

Re:Hmm

[anthony_dipierro]

If the IRS didn't get their cut before payday, most of the population would be in prison for defaulting on their income tax bill.

Actually, defaulting on your income tax bill (because you can't afford to pay) is not a crime.

More realistically, the government would have serious cashflow problems with very bad economic repurcussions.

Well, the government already has serious cashflow problems with very bad economic repurcussions. This might make things worse, then again it might just force the government not to tax the lower-class so heavily. Or maybe the government will - get this - spend less.

The bigger transgression is from the states that want to collect consumption tax on cross-state transactions. The federal courts have conveniently ignored the constitution a upheld this practice.

Huh?

Re:Hmm

[ScrewMaster]

Well, in the case of my employer they not only report how much I make but they send the goddamn IRS whatever it decides I owe them that month. Way beyond mere "snitching", withholding comes perilously close to "stealing", given that they hold your money for a year and then give you back some chunk of it if you can prove they owe it to you (???). If this were put into simple business terms, it would be called "playing the float", which is unethical as hell and tends to piss people off.

Re:Hmm

[omeomi]

you know you can elect to have them withhold less each month, right?

Re:Hmm

[mr_matticus]

Well that's just nonsense. Of course a lower collection rate is going to be problematic. The tug of war with taxation in the US (and most other Western-style democracies) is the real weakness. Consider Program X. It will cost $80 billion to do it competently and completely. It gets whittled down to $60 billion in the legislative process, but $12 billion in riders are attached. In the end, that $72 billion program is toothless, inefficient, and only marginally successful. Only $8 billion was saved, but you don't get a 90% effective program for 90% of the funding; you get, say, 35% of the intended success for 90% of the money. If people would simply pay for the program in sufficient amounts to complete its mission and not try to cut corners, the amount of waste and haggling in the government would decline dramatically.

Historically, the federal government had a great deal less to contend with and needed a far lesser budget. Not all of this is government-generated. The people have come to expect a much more involved and accountable government, with a TV celebrity-style president (rather than the traditional presidency which involved a fairly private office). Case in point: until the 20th century the US president had just one secretary, and often s/he was paid out of the president's pocket. The president now has five secretaries and the White House staff is over 1100 people. Presidents didn't necessarily seek this colossal growth of the office, but rather the people wanted to see more.

None of that is necessarily a bad thing. Coupled with the introduction of interstate highways, information management, space travel, a global economy, powerful socialist movements of the 19th century (for retirement benefits and other labor concessions which required government oversight and spending), and other from-the-people initiatives, government has grown. As a percentage of GDP and looking and percentage of the workforce employed or relative tax rates, the US government is just about THE most classically liberal government in the world.

It's utterly unrealistic to think that government could be accomplished for substantially less--you know that's the case because it isn't happening anywhere. Out of 193 nations, you'd think at least one of them would be a successful libertarian state if the theory could work. There isn't, and it can't.

Re:Hmm

[ScrewMaster]

I disagree that massive spending and concomitant high taxation is or was a necessary, intrinsic aspect to the United States Federal Government. The single, most important reason as to why our government got so expensive was because politicians got ready access to massive funds because of various war efforts and they liked it. The personal income tax was first instituted for that reason, but people still had to figure their own taxes and pay them: it wasn't simply taken. However, the kicker was in 1943 when the Withholding Tax was instituted.

Withholding was of those things that was justified as being necessary to fight the war (and it probably was) and that would be eliminated once the war was over (and, naturally, was not.) We trusted them, again, and they let us down. No surprise there, I suppose. But it wasn't that way in this country for a couple of hundred years, and I refuse to accept that other nations' failures in this regard in any way justifies our own. We were better than that, once.

I don't actually understand why you would call our current government either accessible or accountable. In truth, it is now less accessible and less accountable than it has ever been in the history of this great nation. We may have wanted more accessibility and more accountability, but instead we got more taxation and less of either. Those are the facts, jack. What you are really saying is that, in the decades following "the Great Society" people got accustomed to more and more and even more government freebies and handouts. And they got them ... but at the cost of more taxation.

Realistically, the Democratic strategy for government has been one of continuous expansion and more welfare in direct exchange for votes. Unfortunately, the other party has finally figured out just how well that works: consequently, I think we're in bigger trouble than we realize.

Face it, once we made the mistake of allowing our leaders to take our money before we even saw it, the battle for small government was lost. A good capsule history of taxation in the United States is here

Re:Hmm

[mr_matticus]

And I disagree that tax levels in this country can be classified as "high" in any regard except in comparison to no tax. Further, it is historical fallacy to suggest that the end of World War II coincided with a reduction in government costs. Government spending remained high after the war (for good reason and out of necessity to prevent economic collapse in the postwar settlement/adjustment) and whether for good or for ill, military spending did not fall, either. Veterans benefits are tremendously expensive (and occupy a sizeable chunk of government spending), with high costs directly related to World War II involvement. Once you offer something, it is very difficult to take it away--for a variety of political reasons, it's a bad move and understandably one which politicians are hesitant to take.

Social security spending is mandatory and strongly correlated with inflation and population growth. Medicare and Medicaid also suffer from this simple and inevitable constraint. A universal solution cannot be offered privately in a more effective manner. You may have different values and might well be successful in a private program, but society as a whole cannot be served through that course of action. It is spending for these programs that drives the bulk of any increase in taxation. The "other party" you speak of has not realized or acted in any way to reduce the size of government--instead they cut taxes and increase spending, causing far greater long-term damage.

If you don't want withholdings removed from your pay, you can arrange for that to be the case (aside from mandatory contributions to Social Security and Medicare), and pay your actual taxes at year's end. If your employer doesn't offer that particular package, take it up with them. Ultimately, it's a moot point. The government needs revenue to function, and it cannot operate through a single lump payment every year--it would require an annual staffing surge to handle the operation, which would further increase government costs, and it would pose a problem of cash flow in entitlements in the months prior to the "annual deposit." You'd have a great deal of trouble with collections due to people overspending throughout the year, and the problem would compound with time. Putting people in prison for failure to pay taxes would only further increase costs in a constrained revenue situation. The fact of the matter is that the government has created the infrastructure which the economy requires to operate. The government should be entitled to its share of the currency produced.

It's not "your" money that the government is taking from you; it's the money which your employer is transferring to you and which the employer generated in part thanks to government infrastructure. You wouldn't be employed without the government. Yes, private corporations COULD have built the same infrastructure, but they didn't. Reality strikes again.

How the government operated in the distant past has no bearing on how it should operate in the present. Again, as a percentage of GDP, the US government is THE lowest overhead in the world. It has not grown dramatically over time. It has in the past been far higher an economic burden than it currently is. So you could argue that the federal government is smaller than it was in the 19th century. It all depends entirely on your point of view. Theoretically, it could be done better and more cheaply, absolutely. But like all other things human, theory doesn't define reality. No other nation has successfully survived with less in our time, so there is no factual basis for your "smaller government" hypothesis.

Cry me a river

[spiritraveller]

Such a requirement will surely send a shock wave across the online trading world because it could drastically reduce the profits a seller would make on these sites.

I hate the tax man as much as anybody, and my profits are already reduced by him.

So where did the submitter get the idea that eBay sellers are supposed to get a free pass?

If you already pay your taxes as the law requires of all of us, then your "profits" will not change. And if you don't... well, then you should go to jail like that guy from Survivor.

Re:Cry me a river

[Anonymous Coward]

I'm all for this. The price you sell something for on ebay is not your income. Its the difference between what you bought it for and what you sold it for. Most things on ebay are sold below market value. If you are selling something you bought 2 years ago for $100 less, that should be a negative capital gain. Then we can apply that to our regular income for a tax credit! Awesome!

Re:Cry me a river

[NotQuiteReal]

Most things on eBay are sold below market value.

How do you figure? The purpose of an auction sale is to determine the market value of an item.

I presume the IRS is after those who sell new stuff on eBay, as a business, not the "garage sale" types selling used stuff.

I have purchased many "new" items on eBay, from sellers with very high positive ratings, so high, that I presume they are using eBay as a storefront for their business.

If I get a better price because the seller isn't paying taxes, that is not my problem.

The interesting question is what taxing authority has jurisdiction over those Hong Kong sellers who sell items to US buyers?

Re:Cry me a river

[Adeptus_Luminati]

"if you already pay your taxes as the law requires all of us"...

Actually there is no such law at all. Everyone just assumes there is one! And the IRS goons come after you if you don't pay taxes, but in actual fact the IRS is constitutionally ILLEGAL! If you think I'm kidding, check this out:

YOUTUBE trailer
http://www.youtube.com/watch?v=rPypDaXfIV8 [youtube.com]

Download the full movie torrent from here:
http://btjunkie.org/search?q=Freedom+to+Fascism [btjunkie.org]

Re:Cry me a river

[ectal]

The interesting question is what taxing authority has jurisdiction over those Hong Kong sellers who sell items to US buyers?
I'm going to go out on a limb and say that taxing authority would be somewhere in Hong Kong.

Re:Cry me a river

[Anonymous Coward]

Actually there is no such law at all. Everyone just assumes there is one! And the IRS goons come after you if you don't pay taxes, but in actual fact the IRS is constitutionally ILLEGAL! If you think I'm kidding, check this out:

OMG!!! There's a video so it must be trues!

Please retard, sell your scam somewhere else.

Re:Cry me a river

[Anonymous Coward]

If your tax requires a gigantic government agency to invasively investigate every aspect of every citizen's life in order to ensure full compliance, then perhaps the tax is broken.

Income taxes are a good idea in principle. In practice, enforcement requires the government to know exactly how much money every single citizen makes every year. Something like a national sales tax would only require reporting from businesses, not citizens.

And before you think I'm paranoid or blowing smoke, consider this: the current epidemic of identity theft could never have happened if it weren't for the IRS causing your social security number to become a de-facto financial identity number.

Re:Cry me a river

[Anonymous Coward]

Anyone stupid enough to buy into the tax denier argument deserves everything they get. It's like Darwinian evolution; the more tax deniers that get thrown into jail for tax evasion, the smarter the remaining population is.

Re:Cry me a river

[xquercus]

The interesting question is what taxing authority has jurisdiction over those Hong Kong sellers who sell items to US buyers?

In most cases there are at least two taxing authorities when you make an international order. First of all, the seller likely pays some form of income tax in their home country. Second, the buyer may be liable for paying duty (tax paid for importing certain items) through customs in the buyers home country. If you notice the customs form on most items purchased through eBay from Hong Kong, most sellers note the shipped item is a "gift". In these cases the sellers are helping buyers illegally avoid paying duty on the imported goods.

Re:Cry me a river

[frdmfghtr]

Actually there is no such law at all. Everyone just assumes there is one! And the IRS goons come after you if you don't pay taxes, but in actual fact the IRS is constitutionally ILLEGAL! If you think I'm kidding, check this out:

Before you go making such a claim, you may want to read Title 26 USC Internal Revenue Code

No, I have not read it yet, other than a glossing over. It deserves closer examination, but it looks pretty much like the law that the income tax burdern is in fact written into law.

Now, as far as it being constitutional, you may want to take a look at the 16th Amendment . That one is pretty clear; an income tax is, in fact, constitutional.

My point is: Before you go off making a wild conspiracy argument, you may want to have some authoritative proof to back your claim. I hardly claim some YouTube clip as such.

Re:Cry me a river

[anthony_dipierro]

Income taxes are a good idea in principle.

What principle is that? Taxing income seems to me like a completely horrible idea, in principle, because income is so easily created from nothing in a capitalist society. If I give you a million dollars to babysit my kids and you turn around and give me a million dollars back to babysit your kids, we've just created two million dollars of taxable income. Income taxes are a horrible idea in principle.

Something like a national sales tax would only require reporting from businesses, not citizens.

Except that citizens can be businesses. This whole e-bay reporting requirement, for instance, would still be needed, because e-bay sellers make retail sales. And sales tax is just as bad an idea in principle as income tax. Under the "FairTax" proposal, for instance, someone who did the million dollar baby-sitting would owe taxes on those phantom sales - they're retail services, after all.

And before you think I'm paranoid or blowing smoke, consider this: the current epidemic of identity theft could never have happened if it weren't for the IRS causing your social security number to become a de-facto financial identity number.

Umm, sure it would have, people would just be fraudulently getting loans under some different identifier. Or do you think credit reporting agencies wouldn't exist? And if so, do you think that's a good thing?

Identity theft would be greatly reduced by one simple action. Publish the social security number of every single person who has them in a public document accessible on the Internet. Once the SSN is no longer a secret, "stealing" it won't be useful any more.

Re:Cry me a river

[anthony_dipierro]

Actually there is no such law at all. Everyone just assumes there is one! And the IRS goons come after you if you don't pay taxes, but in actual fact the IRS is constitutionally ILLEGAL!

Who cares if there is such a law, and if the IRS is illegal, if "the IRS goons" are going to "come after you if you don't pay taxes" anyway? Murder is illegal (and unconstitutional), but if I happen to be walking through Harlem at night and some guy with a gun tells me to give him all my money, I'm still going to do it.

The fact of the matter is that there are laws requiring people to file tax returns, there are laws allowing the government to come take your possessions if you don't pay your taxes, and there have been numerous court rulings stating that the IRS is constitutional. So de facto there is actually such a law, even if de jure there isn't.

Re:Cry me a river

[MindStalker]

Yea, the main argument is that constitutionally IRS only has power to govern foreign trade, therefor you should only have to pay income tax on foreign trade or foreign earned income. Either way thats the idea among many groups. Though many groups try to say all in all income tax is illigal, thats a bunch of bayhoie.

Re:Cry me a river

[jvkjvk]

Umm... Hong Kong, since that's where the revenue flows?

Re:Cry me a river

[Lumpy]

So where did the submitter get the idea that eBay sellers are supposed to get a free pass?

because the majority of things sold on ebay are sold at a LOSS. I buy a DVD player for $599.00 use it for 4 years and sell it online at $199.00 that is a LOSS.

No they do not have a right to tax me for selling something at a loss. And everyone else that is sane thinks that way as well.
The localcity I live in wanted to charge sales tax to garage sale people. The backlash was so great not only was there a grass roots fight against it but most of the council and the mayor were not re-elected the next term.

Re:Cry me a river

[Anonymous Custard]

because the majority of things sold on ebay are sold at a LOSS. I buy a DVD player for $599.00 use it for 4 years and sell it online at $199.00 that is a LOSS.

No they do not have a right to tax me for selling something at a loss. And everyone else that is sane thinks that way as well.

You're not talking about selling something at a loss. You're talking about depreciation of a durable good. Read more about how the IRS accounts for depreciation here.

Re:Cry me a river

[honkycat]

Maybe that'd be the case, except that the 16th Amendment is part of the Constitution. As such, it is not superseded by the other limits on the federal government outlined in that document that might otherwise limit its reach to foreign (or perhaps interstate) trade. Were the basis of the taxation founded only in law, there'd be a legitimate argument that its activities were unconstitutional. It's such a legitimate argument, in fact, that it was recognized and the taxation was given firm footing as a Constitutional Amendment. That's not a process that's undergone lightly...

Re:Cry me a river

[Anonymous Coward]

>>If I get a better price because the seller isn't paying taxes, that is not my problem.

Of course, on the other end of the transaction, many US residents are required to pay a use tax if the seller does not charge sales tax. That could be your problem.

Re:Cry me a river

[honkycat]

If both sales tax and income tax are bad ideas, what kind of tax isn't a bad idea to you? (I'm legitimately curious) It seems like you've got to fund the government somehow.

Your example of "Million dollar baby sitting" is a little silly simply because you've blown the cost of the exchange so far out of whack with the actual market value. Of course, it'd be absurd to pay $300,000 tax to the government simply for a barter exchange of babysitting services. It's less absurd to pay $30 of a $100 exchange and that's a more realistic cost for a service like that.

Re:Cry me a river

[sydb]

A fair form of government funding is to ask what services they provide and what am I willing to pay for those services. If I want the service, I pay. If I don't I won't. Of course, our world is not a fair one.

Every way you turn the state is looking for a piece of the action, like a school bully stealing lunch money from smaller kids, and it's not all to the good of the taxed public.

I don't think the $1M example was quantitatively significant so no need to waste your words on that. What has the state done to deserve it's cut of a baby-sitting fee in which it contributed no value? I admit it helps create the "environment" for trade - cash and regulations - but is it really worth your proposed 30% share?

Where is the competition in government, when as a consumer of their services I have no voice if I disagree with the polled majority? Democracy is not a free market.

Re:Cry me a river

[anthony_dipierro]

If both sales tax and income tax are bad ideas, what kind of tax isn't a bad idea to you? (I'm legitimately curious)

Excise taxes aren't too bad. A gas tax to fund roads and environmental regulations, a cigarette tax to subsidize hospital care (let's add in a trans fat tax too), various fines for breaking laws, lots of so-called "user fees", etc. A land value tax is another one which I don't mind. Inheritance taxes on million dollar (and up) estates. An intellectual property tax. Taxes on licensing of radio frequencies (television stations, cell phones, etc). There are an awful lot of types of taxes I don't mind. Basically if you're getting taxed it should be directly tied to something the government is providing you with, though. The government doesn't really provide me with anything when I earn income.

It seems like you've got to fund the government somehow.

Well, I'm a big believer that government is best which governs least, so I wouldn't mind taking a huge chunk out of the government's spending.

Your example of "Million dollar baby sitting" is a little silly simply because you've blown the cost of the exchange so far out of whack with the actual market value. Of course, it'd be absurd to pay $300,000 tax to the government simply for a barter exchange of babysitting services. It's less absurd to pay $30 of a $100 exchange and that's a more realistic cost for a service like that.

But...why? Why should the federal government get $30 just because I exchange baby-sitting services with a stranger? The federal government doesn't do anything even remotely close to helping me exchange baby-sitting services with a stranger, unless you want to say they printed the money (in which case, I'll just start using Euros). The argument for the state government is slightly better, but my state doesn't even have an income tax (they do have a sales tax, but not on services such as baby-sitting).

Re:Cry me a river

[Anonymous Coward]

Sure, your idea is fair, it just doesn't work.

Look up Tragedy of the Commons, then think about how it can apply to things like fire and police services, roads and all sorts of other infrastructure, military protection, etc.

To paraphrase Churchill, taxation is the worst way to fund these services, except for all the other ways.

I believe our current system of government is far too large and overbearing, but I also believe that some taxes are necessary in order to provide essential services that simply don't work when provided through the free market.

Re:Cry me a river

[anthony_dipierro]

I don't think the $1M example was quantitatively significant so no need to waste your words on that. What has the state done to deserve it's cut of a baby-sitting fee in which it contributed no value? I admit it helps create the "environment" for trade - cash and regulations - but is it really worth your proposed 30% share?

Actually, the federal government doesn't even do that. Contract laws are regulated by the state government, and not all state governments even have an income tax (and I don't think any of them tax income at 30%). I'm not sure of the numbers, but I would think that the civil court system which governs contracts could run off the fees it charges. If not, maybe the fees should be raised. As for the government providing dollar bills, I for one would gladly switch to another form of currency if I could live income-tax free. I'd even go fully barter if it would mean the elimination of the taxman. But I don't have that choice - income in Euros or gold or barter is still taxable income.

Re:Cry me a river

[anthony_dipierro]

Look up Tragedy of the Commons, then think about how it can apply to things like fire and police services, roads and all sorts of other infrastructure, military protection, etc.

Umm, you're thinking about the free rider problem, which is different from the tragedy of the commons. The tragedy of the commons, which out of your examples is only really applicable to roads, is resolved through private ownership. The free rider problem applies most strongly to military protection, and that is one place I can see a need for taxation. Of course, for that I favor a land value tax, not an income tax. As for fire and police services, these are only free rider issues because the government makes them free rider issues. There's no reason the government couldn't directly charge fees for these services. They could even do so on an ability to pay basis, similar to the way private hospitals are able to provide emergency room services.

Re:Cry me a river

[honkycat]

For many government services, paying what you're willing in a competitive environment just doesn't make sense. Law enforcement, military services, etc, you simply can't choose not to use. If everyone except you decides to fund them, you still benefit, so it's not fair to let people opt out and take a free ride. I guess you can say this isn't fair in some sense, but as you say, life is not fair. Once you're an adult, you are free to find somewhere that doesn't have the onerous tax burdens and move there instead.

I do think the $1 million example WAS quantitatively significant. It was an example clearly designed to shock by the obviously ridiculous amount of "income" it generated. There's no way you can justify a million dollars worth of transactions for babysitting like that, and the government doesn't purport to. It DOES claim a percentage of the actual market value of service exchanges -- the exact number isn't important to me. What I don't see is why income is an inherently bad metric to determine tax burden. In many ways, it correlates with ability to shoulder a payment better than, say, a property tax. Having a valuable piece of property doesn't mean you've got liquid assets, whereas a large income probably does.

Re:Cry me a river

[honkycat]

Well, it's clear that we have some philosophical differences. I find income and sales taxes attractive simply because they are straightforward to compute (most of the time) and relatively amoral. I have a problem with vice taxes (like cigarette or your hypothetical trans fat tax) simply because it's rather arbitrary to decide what is taxed. It ends up pushing an agenda... should canola oil be taxed more heavily than olive oil, etc. Income and sales are just a percentage of some liquidity in the market. It might not be 100% fair, but it's easy to figure out what'll be owed.

It also has the benefit compared to a property tax system that it is a tax on liquid assets. It's easier to set aside a fraction of that asset than, say, to have to come up with a very large tax payment if you happen to have a small income and a large, valuable piece of real estate. You can't just carve out a few hundred square feet of your house and sell them to pay the tax man.

I'm not one to argue that our tax rate or system is ideal, but I do note that it's hardly out of whack compared to other developed nations. I don't see it as deeply unfair, though, and I don't see that arguing it to be unconstitutional will fix the problems with spending.

Re:Cry me a river

[anthony_dipierro]

I find income and sales taxes attractive simply because they are straightforward to compute (most of the time) and relatively amoral.

I'm really not sure where you get the fact that they're straightforward to compute. The income tax system is horribly complicated, and I have no reason to believe that a national sales tax meant to replace it wouldn't be nearly equally complicated. As for it being relatively amoral, I suppose you're correct.

Then again, I think the same could be said of a land value tax, even moreso actually.

Income and sales are just a percentage of some liquidity in the market. It might not be 100% fair, but it's easy to figure out what'll be owed.

I'm sorry, but I don't buy that. It's easy to multiply a percentage times your taxable sales or taxable income, but defining taxable income or taxable sales is what is difficult, and that's what the tax code is all about. (If you only tax goods, and not services, using a VAT tax, then I suppose you can come up with a relatively straightforward sales tax solution, but doing so would wind up being extremely unfair and easy to manipulate.)

I have a problem with vice taxes (like cigarette or your hypothetical trans fat tax) simply because it's rather arbitrary to decide what is taxed. It ends up pushing an agenda... should canola oil be taxed more heavily than olive oil, etc.

I suppose the tax could be exempted for anyone who maintains health insurance, but cigarettes and trans fats are two huge causes of costs to the public, so unless you're going to completely privatize health care and hospital care, I think you've gotta tax these items. Of course, in the end those two taxes will likely make up a small portion of tax revenues, so we're kind of arguing over something negligible there.

It also has the benefit compared to a property tax system that it is a tax on liquid assets. It's easier to set aside a fraction of that asset than, say, to have to come up with a very large tax payment if you happen to have a small income and a large, valuable piece of real estate. You can't just carve out a few hundred square feet of your house and sell them to pay the tax man.

That's actually a relatively good point, though most people with large, valuable pieces of real estate do have liquid assets or income coming from somewhere. If not, I think they should downgrade to a less valuable piece of property. Why should we let people live in luxury if they aren't contributing anything back to society? Property taxes could easily provide enough revenue to fully fund all the government services we currently have. And really they correspond fairly well to the main service the government provides, protection of people's property, much moreso than income tax or sales tax.

Also, don't forget that an income tax is meaningless unless you also tax barter income. And with barter income there is not necessarily any cash left over to pay the tax.

I'm not one to argue that our tax rate or system is ideal, but I do note that it's hardly out of whack compared to other developed nations.

Especially since Bush took office and gave us all those tax cuts, the income tax system has been extremely light here in the US compared to other nations. My family, for instance, which is not poor, pays payroll taxes (social security and medicare), but we didn't pay a single dime in any other income taxes. And I'm not saying I'm a fan of Bush. The tax cuts he gave us was about all he did that was positive, in my opinion. And I still voted against him both times. But he sure did cut those taxes, at least for those of us who know how to play the game.

I don't see it as deeply unfair, though, and I don't see that arguing it to be unconstitutional will fix the problems with spending.

The constitutionality argument is, quite frankly, a crackpot one.

Re:Cry me a river

[AndrewRUK]

A land value tax is another one which I don't mind. Inheritance taxes on million dollar (and up) estates... Basically if you're getting taxed it should be directly tied to something the government is providing you with, though. The government doesn't really provide me with anything when I earn income.

What is the governement providing you with that's dependent on the value of your land? Or the size of your inheritance?

And regarding your view that taxes should be directly tied to serives provided, how would you fund servuces such as law enforcement? "That you for reporting that rape. The fee for our investigation will be..."? Or fire-fighting: if your neighbour's house is on fire, you probably want the fire to be put out before if spread to your house, even if your neighbour isn't going to pay the fire fighters.

Re:Cry me a river

[anthony_dipierro]

What is the governement providing you with that's dependent on the value of your land?

A deed.

The main purpose of the government is to protect property. There might not be a purely one-to-one relationship, but it's a lot closer than the relationship between items bought or income earned. Ownership of land is the right to keep everyone else off that land. You should have to pay everyone else to continue that right. Now I suppose we could collect the property tax and distribute to everyone, but since there are some services the government has to provide everyone anyway (such as police and military), we might as well use these taxes to pay for those services. Same argument as a tax on intellectual property and on exclusive access to the public airwaves.

Or the size of your inheritance?

It's only because of government laws that you are given title to that inheritance in the first place.

And regarding your view that taxes should be directly tied to serives provided

I'm pretty sure I didn't say that. Taxes should be at least approximately tied to services provided, though.

how would you fund servuces such as law enforcement? "That you for reporting that rape. The fee for our investigation will be..."?

No, investigating and locking up rapists benefits everyone. It's one place I can see a justification for a tax on everyone. Of course, fining violent criminals can probably cover some of the costs. And most likely the government could just charge a little extra for providing certain police services that don't benefit everyone (like those extra cops that hang out around Best Buy and Circuit City on Black Fridays) to make a profit which can go toward things like locking up rapists. Now eliminate victimless crimes like drug and gambling laws and your prison costs are going to drop dramatically. If there are any additional funds that are still needed after cutting costs and increasing revenues, I'd fund these services like locking up rapists with all those taxes I've already listed: inheritance taxes, land value taxes, etc.

Or fire-fighting: if your neighbour's house is on fire, you probably want the fire to be put out before if spread to your house, even if your neighbour isn't going to pay the fire fighters.

So pay for the fire-fighters yourself. Or better yet, get your insurance company to agree to pay for it. It's their loss if your house burns down, after all. Of course, for something like fire-fighting I don't see much problem with just rolling that into your property taxes. And of course charge fees for all those false reports. I used to be a volunteer firefighter (that's right, I fought fires without getting paid anything), and we spent more time responding to false alarms than anything else.

Finally, I should note that neither of these two services (police or fire) are handled by the federal government. It's handled by the states, and not all states have income tax. In fact, some states don't have sales tax or income tax.

Re:Cry me a river

[anthony_dipierro]

One more comment...

What is the governement providing you with that's dependent on the value of your land?

From Wikipedia:

LVT is often said to be justified for economic reasons because if it is implemented properly, it will not deter production, distort market mechanisms or otherwise create deadweight losses the way other taxes do. It is also said to be justified for reasons of fairness in that it recovers for community purposes the value the community creates. It is a cheap (and therefore efficient) tax to administer or pay because much less effort is required to track land ownership than to track income, deductions, capital gains, sales transactions, etc. Tax evasion on land is much more difficult than on financial wealth. For the same reason, it is also much more effective than a development or planning gain tax, which can be avoided by just keeping the land out of productive use.

As well as these pragmatic arguments, LVT may be justified with the philosophical premise that the natural world was originally the common resource of all persons, and therefore LVT is not really a tax, but simply the collection of rent on behalf of those who waive their right of access to the resources they would otherwise have been free to use. Some LVT advocates argue that in consequence, land value should be taxed at a high enough rate to recover effectively all its economic rent from users, and the proceeds should be equally distributed to each citizen in the form of a citizen's dividend. Others favor a combination of citizens' dividend and economically efficient provision of public services (i.e., government provision of services that yield an increase in aggregate land rent at least equal to their cost). Any such implementation of LVT would amount to a substantial land reform. The most influential advocate of this type of LVT was the 19th C American political economist and activist Henry George. Many contemporary American advocacy groups trace their heritage back to his thoughts and writings.

Re:Cry me a river

[Anonymous Coward]

I take your point, but the main thing here is that there are various market failures that occur when you use the free market for these services.

Your idea about charging for fire and police services is interesting but I don't believe it's workable. By charging for fire services, for example, you give a strong incentive not to call the fire department until the fire is obviously out of control. This will lead to more large fires and more danger to neighboring structures. Similar problems exist for police services and crime reduction. The free rider problem exists here because everyone in society benefits from these services even though only a small portion of the population actually uses them directly.

You also propose a sliding scale for these charges. Guess what, you just reinvented the income tax! Only instead of being collected from everybody, it's "only" collected from people who directly use fire and police services (and not collected from all the other people who indirectly benefit). How does the government know how rich you are so they know how much to take from you? Now you're back to the same problem we have now, just with a somewhat different set of victims. Imagine having to prove that you're poor or else the government will take the maximum fee, which is naturally much larger than the actual cost incurred by your call because you have to subsidize all of the people out there who were able to prove their poverty.

I don't see how private ownership of roads will solve anything. Private ownership implies either altruistic maintenance done by some local property owners' association (and implies free rider problems all over) or toll roads everywhere. The cost for collecting tolls often far outweighs the cost for actually using the road, and this represents a major economic loss. Tolls can be usefully collected on major highways but imagine a large city constructed along these lines: "tollbooth operator" would be the #1 occupation!

Re:Cry me a river

[spiritraveller]

No they do not have a right to tax me for selling something at a loss.

Of course they don't.

And when you do your taxes, you point out that it's a loss, and you DON'T get taxed for it.

You probably don't even have to report such small and infrequent sales, but that's something you'll have to figure out yourself.

Re:Cry me a river

[BuckFushNhisMinions]

You find me ANY LAW that says I need to pay taxes to the Federal Government on wages earned and I'll give you $1,000,000!!!! Even IRS officials are unable to cite the law upon which their entire organization is founded http://stopthelie.com/taxes.html In 1894 Congress passed a law allowing the Federal Government to collect income taxes, but the Supreme Court ruled it unconstitutional. In 1913, Congress passed a constitutional amendment (in a clandestine midnight session)allowing the government to collect income taxes, but the amendment was not properly ratified by the states. They call it Tax CODE for a reason.........It is not the law and imposing it upon wage earners was never the intent of the tax. It was intended for corporations, in particular, foreign corporations doing business on US soil. The government wants you to believe that your taxes go to pay for wessential services....this of course is bullshit.... How did the US government provide all of the services it did prior to the implementation of this tax upon citizens??? For nearly 150 years, all the services the country needed were borne by the taxes collected from corporations as well as legal tarrifs and duties on goods. The corporations were able to successfully lobby congress to changes the way taxes were imposed in order to shift the burden to individuals and allow for corporate profits to grow. Ever since, you and I have been getting the shaft and have been told that it is our responsibility. The fact is that the services that the Federal government claims are supported by your taxes are actually supported by state taxes....income taxes, sales taxes, alcohol taxes, gasoline taxes, tobacco taxes.....Almost every penny paid to the federal government in income taxes is spent on paying interest on the national debt to the tune of $50,000,000 AN HOUR, supporting the bloated government infrastructure and the goals of world domination by the US Military. It is a wealth redistribution scheme! It takes money from hard working citizens and gives it to BANKERS (aka the privately owned and operated Federal Reserve Bank which prints money (which the government can legally print for free) and charge the American people interest to borrow) and corporations like Halliburton, Carlyle Group, Bechtel, KBR who in turn, find ways to pay NO TAXES on it. No matter how you look at it, the average citizen is getting screwed and we are being told it is our duty!!! It is time to stand up and do something about it!

Re:Cry me a river

[anthony_dipierro]

Your idea about charging for fire and police services is interesting but I don't believe it's workable. By charging for fire services, for example, you give a strong incentive not to call the fire department until the fire is obviously out of control.

Not if the insurance companies cover the costs, and also not if you're subject to a lawsuit and possible criminal charges for damaging the property of others and/or killing people through such negligence.

Of course, you also ignore the fact that I agreed that charging for fire services and rolling the costs into property taxes is another reasonable solution.

Similar problems exist for police services and crime reduction. The free rider problem exists here because everyone in society benefits from these services even though only a small portion of the population actually uses them directly.

How so? You do realize that the police already charge for many of the services they provide, including my example of stationing officers at Best Buy and Circuit City on Black Friday, right? The police need not charge for all services, as some clearly benefit everyone. But many services they can and should charge for, because they clearly don't benefit everyone (at least not in any significant way).

You also propose a sliding scale for these charges. Guess what, you just reinvented the income tax! Only instead of being collected from everybody, it's "only" collected from people who directly use fire and police services (and not collected from all the other people who indirectly benefit).

I don't really consider that a sliding scale, and I think you overstate the indirect benefits of most police and fire services. I suppose in some theoretical sense I benefit by the fire department putting out a fire 2000 miles away, but we're really talking about something negligible and theoretical there.

How does the government know how rich you are so they know how much to take from you?

I never proposed charging different amounts for people simply because they are rich. I think you're taking this from my analogy to hospitals, who don't really charge people who can't afford hospital care. But they do actually charge these people, they just find that those people aren't able to pay when the collection agency comes up empty handed.

I don't see how private ownership of roads will solve anything.

Then you don't understand the tragedy of the commons which you so nicely claimed is the reason we need the government to subsidize loans.

I don't see how private ownership of roads will solve anything. Private ownership implies either altruistic maintenance done by some local property owners' association (and implies free rider problems all over) or toll roads everywhere. The cost for collecting tolls often far outweighs the cost for actually using the road, and this represents a major economic loss.

And I never suggested that we move to a situation where all roads are privately owned, I merely said that this would solve the tragedy of the commons. The problem with collecting tolls is not an example of the tragedy of the commons.

Roads can and should be (and usually are) paid for by the institution of a gas tax.

Re:Cry me a river

[spiritraveller]

In 1913, Congress passed a constitutional amendment (in a clandestine midnight session)allowing the government to collect income taxes, but the amendment was not properly ratified by the states.

The most obvious problem with your whole spiel is that it assumes that in nearly 100 years, noone else has had enough sense to "stand up and do something about it" They have. The courts have held that they were full of shit, and they went to prison. And the courts (though not always right) were right about it.

16th Amendment: "The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration."

Notice how it says "whatever source". That includes wage earners.

The 16th Amendment was proposed by Congress in 1909, not 1913. 1913 is when the Secretary of State declared it ratified, which was after 36 of the 50 states properly ratified it.

Because of scam artists like you, many people have gone to federal prison all the while arguing the "unconstitutionality" of the Federal Income Tax.

I hope you die an extremely painful death on your way to hell.

Re:Cry me a river

[BuckFushNhisMinions]

Lemme guess.....You work for the IRS huh? Such anger from a "spirit traveler" tsk tsk tsk

Re:Cry me a river

[spiritraveller]

Idiot, I am not with the IRS. I am just a decent human being who hates a scammer. I'm sure that sounds very strange to a con-man like you.

It pisses me off even more that you pretend it has something to do with your politics.

If it were a bona fide political protest, you would tell people that if they follow you they will very likely go to prison for their beliefs.

But it is not a political protest. It is a scam.

Tsk tsk??? Fuck off.

Re:Cry me a river

[BuckFushNhisMinions]

Anger like that will lead you to an early death. I was simply stating my opinion on the matter as I understand it. I have encouraged no one to stop paying their taxes, even though I believe there is no law that requires them to. I am selling nothing. You should learn the definition of words like con man and scam artist before you start throwing them around making yourself look like a moron! Intrinsic to both of those terms is my expectation of gain which is clearly absent. Get a life and consider seeking some professional help for your anger.

Re:Cry me a river

[kenshin357]

Sorry, the IRS has already responded to this and other frivolous tax avoidance arguments.

Their direct response is a very interesting read:
http://www.irs.gov/pub/irs-utl/friv_tax.pdf
(warning, pdf)

However, you can always choose to ignore this. I'm sure your cellmate might find your tax theories interesting.

Re:Cry me a river

[mutterc]

I've not seen the video, but I'll bet something on this page applies.

The IRS's response, with legal citations, to the most common frivolous tax arguments

Stop putting the first half of

[nmb3000]

your reply in the subject line.

And when have Europeans had to pay a "US sales tax"? Considering the US does not have a federal sales tax, you must be referring to a state's sales tax. However, if you order something online and specify a delivery (or perhaps billing) address that is *outside* the US, that tax won't get applied. Last time I checked, Europe wasn't in a US state. Of course if you buy something and ship it to a friend/relative/whatever in the US, you might then have to pay sales tax depending on the state. When I lived in Montana, I didn't pay sales taxes for anything online. Now I'm in Utah, I do, and it blows.

Besides, I have one word for you: tea :)

We need to fight these tax laws

[minion]

This really is crap. According to the government, ANY thing you sell, you need to be taxed on it. That is complete BS, but it'll never change unless we start fighting these insane tax laws. Anything I sell on eBay (individual here, not a business) has already had taxes paid the first time I bought it. I'm sorry, but I do NOT agree with having to have tax collected AGAIN for something that I already own.
 
They either need income tax, or sales tax, but not both. If they made our tax laws sane, the size of the government could be reduced enough that the loss of one of those tax categories would not negatively affect income to the government.

Re:We need to fight these tax laws

[baptiste]

It's clear you do not understand tax law and what you are talking about is quite simple. If you are buying goods to resell, you can buy them without paying sales-tax if you have the appropriate registration/license/etc with your state. The idea is exactly what you refer to. If you will be selling to an individual and collecting sales tax, the states shouldn't tax YOUR purchase from your supplier as well. It works best for both. The state gets to charge sales tax on the highest $ transaction and it makes your life easier (plus increases your margin) So if you're paying sales tax on the goods you buy, get a resale certificate and send it to your suppliers. Then you can buy your inventory tax free because it's for resale.

What this post is about, however, is INCOME tax. It has nothing to do with sales tax. You buy widgets for $100 and sell them for $150 on ebay - you are making $50 profit - that's income and it should be taxed like any other income generating work. You aren't getting a bum deal more than anyone else. You're making money, ie income, and thats taxable.

Good for the IRS - no reason eBay sellers should get a free ride because their income isn't reported.

Re:We need to fight these tax laws

[twiddlingbits]

You can also deduct the cut eBay gets when you calculate your profit. So you make less than $50. It adds up over time if you sell lots of items. Plus you can deduct other business expenses...but be careful the IRS loves to audit small biz!

Re:We need to fight these tax laws

[Adeptus_Luminati]

I agree, and I bet you'd love to learn that the IRS is actually an illegal and unconstitutional organization that behaves like the mafia when you don't do what they tell you to (pay them illegal taxes). Just watch this to see what I am talking about:

YOUTUBE trailer
http://www.youtube.com/watch?v=rPypDaXfIV8 [youtube.com]

Download the full movie torrent from here:
http://btjunkie.org/search?q=Freedom+to+Fascism [btjunkie.org]

Pass this on to ALL your friends...

Re:We need to fight these tax laws

[Anonymous Coward]

If you're selling an item then you can deduct the purchase price of the item from your taxable income. Therefore, you only pay income tax on the difference between your purchase price and your selling price. This is how it should be.

Re:We need to fight these tax laws

[Anonymous Coward]

Actually, now that I think of it this could seriously backfire. If we took the accounting seriously, a lot of people are selling things they bought previously for more money. Couldn't they actually write the difference between purchase price and sale price of as a loss? In other words, I buy an oscilloscope new 4 years ago, keep the receipt. Now I upgrade, sell the old one for 50% of what I paid. I say that my "business" I guess that's the way the IRS sees it, purchased something, which depreciated in value, sold it, and lost the difference. Does that work?

Re:We need to fight these tax laws

[Anonymous Coward]

I agree, and I bet you'd love to learn that the IRS is actually an illegal and unconstitutional organization that behaves like the mafia when you don't do what they tell you to (pay them illegal taxes).

What part of "The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration" do you not understand, dipshit? Wages are a source of income. Period. End of discussion. You lose.

Pass this on to ALL your friends...

Why would I pass bullshit like this on to my friends.

Re:We need to fight these tax laws

[Adeptus_Luminati]

QUOTE: 'What part of "The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration" do you not understand, dipshit? Wages are a source of income. Period. End of discussion. You lose.' ...ACTUALLY... that clause is not a valid part of law, because of the way in which it was instituted. If you read the details of how the 16th amendment came to be you will learn that most states did not actually ratify it, that it was imposed on December 24th (when most voting government officials were not in office) and that the few that voted it in were actually bribed! And if you think I'm full of it, then perhaps you might believe the MULTIPLE IRS agents that have quit the IRS, stopped paying taxes & went on national television about it explaining to the american citizens admiting that as soon as they discovered the truth that they took the actions they did. They have now joined 67 Million Americans that do not pay income tax.... but hey if you want to continue to be an ignorant sheep, that's your perogative.

Here's the video backing up all my statements. Watch the whole thing, then judge for yourself.

http://video.google.com/videoplay?docid=-431273027 7175242198&q=Freedom%2Bto%2BFascism

Adeptus.

Re:We need to fight these tax laws

[SrJsignal]

You're wrong, on at least two counts. 1. This is not a new tax law, techically sellers already have to pay taxes on their profit from selling stuff on ebay. 2. Anything you sell on ebay is NOT taxable, which is why they don't want people who sell one or two things reported. Tax is paid on the profit, not on the income. What this means is that if you sell some old furnature for $50 less than you paid for it, you haven't made any profit at all, thus you don't have to pay tax on it. The IRS is only interested in "ebay stores" people who are purchasing something, and selling it for a profit, on a continuous basis, just like a normal business (which would have to pay taxes on profit).

Re:We need to fight these tax laws

[iggymanz]

nonsense, the IRS is a legal government agency. http://en.wikipedia.org/wiki/IRS Don't get mad at the IRS, get mad at the U.S. government who formed it and the Congress who makes federal tax code.

Some sells make you pay sales tax right now!

[Joe The Dragon]

So will this make them not be able to charge you for it?
What about seller that are stores?
What stores that sell your stuff on ebay?

The real enemy...

[dada21]

...isn't just the IRS -- it is the CPAs and tax accountants and "experts" who have waged war on the common man. Taxes do NOT have to be as complicated as they are, but when they are complicated, the tax preparers have a huge "monopoly" of fear over the average taxpayer -- or even the non-average taxpayer.

The tax experts surely want the IRS to inquire to eBay and Yahoo because that means more business for them. For me, my biggest tax preparer prepared filings were years that I had more than a few businesses. They make a bundle on business returns, which in my case always had to end up as $0 income (S corp). They were dozens of pages in length, and I was never able to really ascertain what forms I really needed myself. Each year, it changed.

I hate every CPA and tax accountant I've met. I tell them this. They are scum of the earth, to be thrown into the pit of fire with the taxmen and Congressional Representatives that let this happen. It happens on the "watch" of the Democrats, and it happens on the watch of Republicans. It would happen on the watch of Libertarians if the ever were elected.

Re:The real enemy...

[ScentCone]

I hate every CPA and tax accountant I've met. I tell them this.

How's that working out for you?

Anyway, please don't sugarcoat it. Tell us what you really think.

Alas, a simple flat tax is as likely as that Libertarian watch.

Re:The real enemy...

[ArsonSmith]

I don't think flat tax is as simple as you think it is. Basically it only gets rid of the easiest part of the tax code, Brackets. You still have to figure out how much you made minus the things you spent in order to post how much you pay.

Abolish income tax and having a national sales tax would be the only way to simplify the taxing situation.

Re:The real enemy...

[Sigma 7]

Taxes do NOT have to be as complicated as they are, but when they are complicated, the tax preparers have a huge "monopoly" of fear over the average taxpayer -- or even the non-average taxpayer.

I've filled out a tax form - it's not that difficult since you just need to follow the directions as shown. The worst case scenario is trying to find line 323, which is between lines 145 and 146.

If you have trouble filling out a tax form, claim that you have a disability that prevents you from completing it. It isn't your fault if you had an untreated disability, have no one else able to perform your taxes for you, and too impoverished to hire an accountant. You might not get the best return, but you will at least get someting basic enough.

FYI, the government already knows how much you need to pay, as demonstrated by post-submission adjustments that are sometimes made in your favour - they just want to make sure that you agree with their assessment.

Re:The real enemy...

[Swave An deBwoner]

My mom was a tax accountant, and in her "retirement" she often helped people with incomes around $20K to settle back taxes (that the IRS was demanding, sometimes properly, othertimes, incorrectly because the people didn't provide the documentation that IRS required).

You're a litle naive, perhaps.

Re:The real enemy...

[anthony_dipierro]

The real enemy isn't just the IRS -- it is the CPAs and tax accountants and "experts" who have waged war on the common man.

Umm...first of all, let me get this out of the way. I am a tax accountant. Now...huh?

Do you hate firefighters because their job is dependent on houses catching on fire? Do you hate doctors because they make a living off people getting sick? Do you hate computer programmers because they "have a monopoly of fear" over people who don't understand the "way too complicated" computers? Just what job do you have?

I can't speak for every tax accountant out there, but I personally would be much happier if the income tax was just completely abandoned. In the mean time, I'm all for simplifying the system, though knowing as much as I do about tax laws I realize that you can't simplify the system all that much without opening up a ton of loopholes. I'll gladly get another job if my skills become obsolete. Anyway, I think your hatred is way misplaced, if you are being at all serious in your post.

The tax experts surely want the IRS to inquire to eBay and Yahoo because that means more business for them.

Actually, what I like best about this idea is that it makes it easier for those with businesses on eBay and Yahoo to prepare their income taxes. Without this reporting, the clients still are supposed to put these figures on their tax returns, they just don't have it totaled and calculated for them. Without this reporting, the government will be forced to do more audits, and the business owners will have to produce detailed records to comply with those audits, which means more work for people like me and more expenses for the small business owner. Without this reporting, I'm going to have to be the bearer of bad news when someone tells me they made $100,000 selling items on eBay and I have to tell them that it's taxable. With this reporting, my job is easier, and therefore my fee is smaller.

That said, I'm not sure if I support this reporting or not. If this reporting means that the government is going to get more money to spend putting people in jail for victimless crimes and blowing things and people up in the name of regime change, then I guess I'm opposed to it. But whether or not that's true isn't all that clear, since if this type of reporting becomes a requirement it'll probably cause people to demand lower taxes overall.

Re:The real enemy...

[mutterc]

If you have trouble filling out a tax form

Then call the IRS at 1-800-829-1040. They'll answer your questions, authoritatively, for free.

I had to do this when my wife and I set up our consultancy as a partnership. (Husband-and-wife businesses have to be partnerships, or have one as an employee of the other, or be in a community property state). Try as I might, I could not figure out how the "adjusted basis" rules would apply to us. The revenooers themselves got me the answers that I needed.

Easy solution for Ebay

[CrazyJim1]

Let the taxes ride for a year or three. Move the buisness out of the USA, and raise ebay fees. All you need to do is state that the fee raise is less than you'd have lost for taxes, and everyone wins, except for the US government.

Re:Easy solution for Ebay

[skelly33]

The only thing eBay being in the U.S. has to do with this is that they are more willing to bend to the pressure of the IRS pushing for this information. eBay is not being taxed. Sales are not being taxed. Even if eBay moves off-shore, the fact remains that when the sale completes and the seller receives cash for the transaction... that is by definition "income".

While it is unarguably legitimate income that is required to be reported for U.S. residents, eBay is only one of COUNTLESS sources of non-employment based income that are absolutely untracable by the IRS. Tax evasion of this sort probably only amounts to a relatively small adjustment to the overall taxable income that the IRS handles. My guess is that IRS is just going for the "low hanging fruit" with eBay since all the transactions are recorded in a database and are easily deliverable; it is unlikely that they will be met with the same success in many other venues.

Re:Easy solution for Ebay

[leek]

While it is unarguably legitimate income that is required to be reported for U.S. residents

You mean U.S. citizens. U.S. citizens are taxed on their income by the IRS even if they live outside the U.S.

From Freedom to Fascism -- that's what it this really is.

Re:Easy solution for Ebay

[Phoobarnvaz]

Even if eBay moves off-shore, the fact remains that when the sale completes and the seller receives cash for the transaction... that is by definition "income". While it is unarguably legitimate income that is required to be reported for U.S. residents, eBay is only one of COUNTLESS sources of non-employment based income that are absolutely untracable by the IRS.

I do have a weird question. Being a US citizen...what if I renounced my US citizenship to become a Canadian or other citizen of another country...what would the IRS do to me in this situation???

tax bullying

[lostinbnw]

What does it matter to the common person using it to find "just what they need." This will only effect the people using the auctions as primary income. and they are already in the know of finding the loopholes to being able to sell anything and everything no matter legal or not. many of wich are making enough to be paying taxes no problem on their auctions. So in the end will the government actully make anything? Or is this just a scare tactic by the IRS to get people to stop cheating on their taxs.

Walking Mage on taxes. . .

[Fantastic Lad]

Quinton on taxes.

-FL

Off shore ?

[ron raw]

Whats next Pirate sellbay ?

Re:More War Funds

[jeremiah411]

Your a little to gung-ho, but I agree with at least part of what your saying. The government really does stick its nose in where it doesn't belong to many times

It's about time..

[rebewt]

First of all, for you really clueless people out there, this all comes down to paying INCOME tax. SALES tax is a whole other can of worms. As a small business owner myself I think it is perfectly fair to have ebay sales be taxed (at least the higher-volume sellers) like anyone else. Anyone doing higher volume (over 100 sales/yr) is obviously running some sort of business recognized or not and making a profit. There is no reason these people should be exempt from the laws the rest of us have to follow.

By the way, I -do- support cleaning up/simplifying the tax codes!

Re:It's about time..

[clay_buster]

I wish I had mod points. You are dead on with your comment. We know some folks make a good 2nd income from ebay. I don't see any reason that they should be exempt from the income tax that the local shop owner or the local hourly worker has to pay.

I've been done by the IRS

[bmwloco]

I got reamed royally by the IRS for working for 14 months at the South Pole and subsequently taking the overseas tax exempt credit. For twenty years previous, no one had been taxed for working at the Pole. 5 years later I pay nearly $20,000 as two IRS agents looking to make a name for themselves decided to challenge whether or not Antarctica was a "Foreign Country". Raytheon was involved. Tada. A Federal Tax Judge decided for the IRS and Raytheon. It turn, anyone who worked in the first year of Raytheon's contract in Antarctica got hit. Five years later I get a bill. Epilog: I'm no longer a network administrator but now a car salesman, struggling to just get the bills paid as Raytheon ditched a whole generation of folks that worked on ice. The only ones left are suck ups and sycophants. 12 years of my life and memories McMurdo, Palmer Station, The South Pole and working on the RV/IB Nathaniel B. Palmer are now tinged by thoughts of the IRS reaming I took. At least I had a good ride.

Re:I've been done by the IRS

[/dev/trash]

You had me til you said 'now I'm a car salesman'

Re:I've been done by the IRS

[wiredlogic]

The overseas tax exemption is for people who already paid taxes in the foreign country they worked in. Unless you paid tax to the countries that claimed the slice(s) of Antarctica you were working in you still owed the IRS. Even more remotely, American astronauts who live on ISS for a full year still have to pay US taxes.

Re:I've been done by the IRS

[smchris]

Sounds to me like you should blame Raytheon only because the lazy asses apparently led you on to think you didn't have to pay taxes (and they didn't have to do any paperwork). Unless, of course, they had you believing a mediocre salary was a great deal. There aren't any "countries" in Antarctica and never have been. Everybody who paid attention in geography knows that.

But you aren't alone. I've known two people whose employers didn't take any taxes out: one because the employer was a crook and the other was, believe it or not, an honest muck-up and they offered the employee a loan to work it out amicably.

Re:I've been done by the IRS

[TheLink]

If you actually weren't paying any taxes to any country, that's like happily walking on thin air. Or thinking you will never die.

Ask???

[vic-traill]

IRS May Ask eBay To Snitch On Sellers - emphasis added

I don't know about the IRS, but I can tell you that Revenue Canada doesn't *ask* anyone for anything. I suspect it's the same in the States.

Revenuers don't *ask* for nothing; they *tell*.

Re:Ask???

[kent_eh]

I don't know about the IRS, but I can tell you that Revenue Canada doesn't *ask* anyone for anything. I suspect it's the same in the States.

Revenuers don't *ask* for nothing; they *tell*.

The last *ahem* request I got from Revenue Canada was entitled "Demand for payment".
And that was their initial correspondence.

gotta pay for the war somehow!

[Anonymous Coward]

ok - go on, mod me down 'troll'

Re:More War Funds

[TapeCutter]

And they say education doesn't need fixing, it's about income tax, I repeat, income tax. You make a profit, you pay tax. The "tea party" was about tax collected in the colonies going to an offshore king, tax is nothing new to either the US or the colonies that preceded it. Ranting about forefarthers and slaes tax just demonstrates how clueless you are about the civilized world around you. If you really want to change the world then rant about how they spend it, because they're not going to stop collecting it

"Join the movement and bring down a shit storm upon their heads."

Just goes to show the 2nd ammendment also has a downside.

Disclaimer: I picked an AC as an example of the idiotic reactions to be found in this thread.

Re:Pound of Flesh

[sasha328]

I see a lot of people complaining about the taxman taking money from me. Well, I for one welcome the opportunity to pay taxes. You see my taxes are used by the people I've placed in office (efficiently or not, that's besides the question) to do things that benefit me. I can see a doctor for free. If I need an operation, I can have it for free. I drive on a road paid for by my taxes. You see, I see the benefits of my taxes everyday.
I have also lived in a country (3rd world, non-oil rich country) where there is no income tax, or at least no one pays it. It's not nice. It's every man to himself. There are no utilities, no good roads, health costs an arm an a leg (literally in some cases). Are my taxes high (33%), I sure would like to take home more.

Move along

[telso]

The IRS wants people to pay their taxes. People try to justify why they shouldn't have to. People look for technicalities. People find none. People whine. People say income tax is unconstitutional. The rest of us end up paying more taxes because some self-righteous tax-cheats aren't paying their fair share.

Nothing new here. Move along.

Re:Move along

[HappyEngineer]

The government could always cut spending if it wasn't "making" as much money from taxes. That's what everyone else does when they don't make as much money as they expect.

Re:Move along

[AK Marc]

The government could always cut spending if it wasn't "making" as much money from taxes. That's what everyone else does when they don't make as much money as they expect.

Hmm, and when I see businesses where they should be paid but someone lies in order to pay them less, they go after the people defrauding them. It isn't about finding money that they aren't due. It's about hunting down people committing fraud and perjury on their returns in order to hide income.

Whether you think taxes are too high is irrelevant to whether you want to encourage some people to cheat on their taxes. By the estimation of the feds, our taxes would be about 60% of what they are now if no one cheated. For one, the cheats would have covered the dept so we would have no interest payments, and also the direct contribution. I don't know about you, but I don't like the $6000 stolen from me every year by the tax cheats. So, why do you encourage the tax cheats?

Re:Move along

[HappyEngineer]

Don't be silly. Taxes wouldn't be that much lower. The government would just be less in debt (which would be a good thing of course). I'm just pointing out that government spending and government taxes have a one way relationship. Low tax income does not impact spending, but high tax income encourages high spending. If the government got more money from taxes then they'd feel flush with cash and decide to provide lots more services to compensate. When the government wants to spend more but tax income is low, it just spends and lets us all live with the consequences of tremendous debt.

I suppose it's a lateral discussion at hand. Sorry for the division. I was just responding to your ridiculous statement that you're paying more taxes as a result of tax cheaters.

It's more correct to say that government is farther in debt as a result of tax cheaters.

Re:Move along

[AK Marc]

Don't be silly. Taxes wouldn't be that much lower.

Sure they would. The tax cheats would have covered every deficit we have ever had. We would have $0 debt if every deficit was covered. The debt interest payments are now over 25% of the budget. I'd save 25% on taxes if there was no debt. There would also be the direct savings of the cheats paying in as well. It's the cumulative effect that makes the cheats responsible for the debt. Of course, if you don't agree with that, then it was the Republican presidents that signed all those spending increases and tax decreases because of their financial irresponsibility. Changing either one would have fixed the problem.

Re:Move along

[HappyEngineer]

During the boom, the federal deficit was balanced without cutting any spending. They had a surplus. What did they do with that surplus? Did they spend one dime on paying down the deficit? No, they spent it. What happened when tax revenues went down due to economic decline? Did they cut spending? No.

The correlation between spending and taxes is one way only. It goes up when there's a surplus, but it doesn't go down when there's a deficit.

That said, the democrats are making at least a bit of noise about being more responsible. They clearly are itching to have universal health care, but I'm hoping that they'll fail to do that while also thwarting the crazy spending that the Republicans want.

I voted for a Democrat for the first time recently (2004 I think) and I certainly have no intention of ever voting Republican again at the federal level unless I see some indication that they'll act fiscally responsible.

Anyway, this has all been a diversion. You clearly have a far more optimistic view of how the government would react to a sudden influx of additional cash. Without hard data I guess there's no way of determining which of us is right.

and then...?

[Grinin]

"The IRS thinks it can collect an extra $2 billion in taxes from this requirement that auctioneers report sellers who complete 100 or transactions a year worth at least $5,000."

Which could then be wrapped up in bricks, loaded onto a crate, shipped off to the middle east... never to be seen again. Thanks government!

Re:Is there some law? - Actually no there isn't !

[Adeptus_Luminati]

Actually there is no such law for ANY taxes in the USA! Everyone just assumes there is one! And the IRS goons come after you if you don't pay taxes which kind of gets the population to file taxes out of fear, but in actual fact the IRS is constitutionally ILLEGAL! If you think I'm kidding, check this out:

YOUTUBE trailer
http://www.youtube.com/watch?v=rPypDaXfIV8 [youtube.com]

Download the full movie torrent from here:
http://btjunkie.org/search?q=Freedom+to+Fascism [btjunkie.org]

Why pay income tax

[kahrytan]

Why should you pay federal income tax?
  Why pay social security tax?
  You don't have to. Just tell your Representatives in Congress to vote YES to Fair Tax

The FairTax plan is a comprehensive proposal that replaces all federal income and payroll taxes with an integrated approach including a progressive national retail sales tax, a rebate to ensure no American pays federal taxes up to the poverty level, dollar-for-dollar revenue neutrality, and the repeal of the 16th Amendment. This non-partisan legislation (HR 25/S 25) abolishes all federal personal, gift, estate, capital gains, alternative minimum, Social Security, Medicare, self-employment, and corporate taxes and replaces them all with one simple, visible, federal retail sales tax - collected by existing state sales tax authorities. The FairTax taxes us only on what we choose to spend, not on what we earn. It does not raise any more or less revenue; it is designed to be revenue neutral. So it is also cost neutral - the final cost for goods and services changes little under the FairTax. The FairTax is a fair, efficient, transparent, and intelligent solution to the frustration and inequity of our current tax system.

  Because under Fair Tax, even illegal immigrants pay their fair share of taxes yet don't get a monthly prebates.

Re:Why pay income tax

[JimXugle]

If I had mod points, I'd mod you up.

Fairtax FTW!

Re:Why pay income tax

[Adeptus_Luminati]

Actually the 16th Amendment was never legal to start with. Most states never actually ratified it, and the ones that did had their senior government officials bribed. Think I'm kidding?

Check this out:
http://video.google.com/videoplay?docid=-431273027 7175242198&q=Freedom%2Bto%2BFascism

Re:Why pay income tax

[AK Marc]

Actually the 16th Amendment was never legal to start with. Most states never actually ratified it, and the ones that did had their senior government officials bribed.

That's the great thing about bribery. Once the vote is over, you can not undo it because of bribery. So, even if everyone was bribed, it is still legal. And, you are right that there are some irregularities with the initial ratification, however, it is now properly ratified. The insane tax-deniers don't pay attention to what actually happened. They just look at a single snapshot in time and ignore everything before and after. If we were to agree that it wasn't properly ratified initially, many more states have ratified it later, making it legal now by any standards. Well, unless you believe that "because I don't like it" is sufficient for invalidating Constitutional Amendments. Oh, and "most states never ratified it" is a lie by any definitions you can come up with. 42 of 50 states ratified it. If you think one or two were invalid (and bribery can not invalidate a vote), there are still many more than half.

You are a liar. Those that claim the 16th wasn't properly ratified are liars. Enough ratified it to make it official even if the few that they don't like were thrown out. So, why are you ignorantly repeating their lies? Are you delusional like they are, or are you just too stupid to find out what happened for yourself?

Forgot about Cost of Sales

[flyingfsck]

Selling Price - Cost of Sales = Profit

Therefore tax is very little and should not be calculated on the gross.

It just means that sellers must do their bookkeeping properly.

Most people sell second hand schtuff and don't really make any profit at all.

Questions on implementation?

[SonicSpike]

How would this be implemented?

Will everyone who sells now have to enter a SSN or fed tax ID?

What about selling from overseas?

What if one doesn't have a SSN or fed tax ID?

How will the auction sites verify this information?

Will they be held liable if someone gives false information?

Re:Questions on implementation?

[Anonymous Coward]

Those selling overseas would not be liable for income tax.

For those without SSNs in the U.S., presumably it would be like 1099-MISC requirements - if you don't provided a TIN, eBay will be required to withhold a certain percentage. This is very common - in fact, keeping track of small vendors for 1099-MISC submission is a very annoying thing for small businesses to deal with. The IRS requires electronic submission for those with more than a certain number of 1099s to submit.

The penalty to eBay would be liability for the amounts that should have been withheld.

My company made a decent amount of money selling a program that helped banks issuing construction loans comply with 1099 requirements. Reporting requirements are fairly costly, but eBay can probably do it relatively cheaply - everything's in their system already.

Re:Pound of Flesh

[Anonymous Coward]

Noting the ".au" web address:
>I can see a doctor for free. If I need an operation, I can have it for free. You see, I see the benefits of my taxes everyday.

In the US, we get to pay taxes, buy health insurance and still pay to see the doctor. No, I don't want socialized medicine in the US (actually, we already have it - it's just run by the mega-insurance corporations instead of the government).

Sounds great in theory.

[Anonymous Coward]

Tell me, does this proposal extend to other nations? Suppose I am a Chinese seller on eBay. Is eBay required to report my sales to the Chinese government, or just the American one? If not, then you'll drive sales to offshore sellers with an uneven playing field. If so, then you are going to burden eBay with the intricacies of 193 different nations around the world (194 if you count Taiwan, which then opens a whole other can of worms with China). That drives up eBay's costs, which they'll pass along to the seller, who will pass along the increased cost of doing business and now the price of taxes to the buyer, and that will drive buyers away in droves to zimbabweBay.com or some other overseas eBay clone outside the reach of US tax law. Good job America! I knew you could drive more business overseas if you put your mind to it!

Re:Sounds great in theory.

[Paradise Pete]

Is eBay required to report my sales to the Chinese government, or just the American one?

This is a possible change to US reporting requirements. How in the world would the require ebay to report to China? And it hasn't happened yet in any case.

Why blame CPAs? They hate IRS also.

[walterbyrd]

I think your anger may be misguided. I know of one CPA who gave up his practice due to the insane IRS regulations.

Private CPAs do not make tax code. The IRS doesn't give a damn what CPAs think.

The USA Treasury gets all of it's power from the USA congress, maybe that's who you should blame.

Re:Why blame CPAs? They hate IRS also.

[b0s0z0ku]

I think your anger may be misguided. I know of one CPA who gave up his practice due to the insane IRS regulations.

You know of _one_. A lot of the rest are only needed *because* of the insane regulations. If the tax codes were simplified, I'd suspect that 75% of CPAs would be begging on the street.

-b.

Why should ebay comply?

[walterbyrd]

Ebay snitching would only hurt ebay's business. Why shouldn't ebay say: "sorry IRS, collecting taxes is *your* business - you figure out who owes you what."

Re:Why should ebay comply?

[ArsonSmith]

Because trying to play hardball with the IRS is a bad thing. Suddenly eBay has a full audit by the IRS. Then they find they are having a 7 year history full audit then next year they are doing it again. the year after that eBay says, "why are we getting audited every year?" IRS points to thier saying no and people ebay sales start going to IRS.

It's only fair

[wheresmymomma]

It is only fair that large eBayers have to pay income taxes on what they make. They are not only competing against large retailers, but are also competing against small and medium sized brick-and-mortar stores (mom and pops!). We talk so much of free markets balancing itself, but by not collecting taxes (corporate rate of 35% of profits), this already gives ebayers a distinct advantage.

This article is NOT talking about the following:

• Sales tax. TOTALLY different issue, and usually if you already paid sales tax on the item, then you don't need to charge it again.
• Used stuff. For the most part you're selling it for less than you paid for it, so technically you haven't made any money.
• Small guys. If I made $5,000 on ebay, I would have probably spent $3,000 on purchasing the items, and on top of that, now I can deduct the cost of my computer, driving to the post office, internet, home office, etc. So it's not like i'm being taxed on ALL of my revenues.

But what do I know, I'm just a pretend accountant.

Re:It's only fair

[HPNpilot]

Let's say I buy $10,000 worth of stuff then after a while sell it on eBay for $5,000. I have a loss, right?

Technically, yes, but not necessarily to the IRS. The IRS, not seeing that you are running the sales as a true business (separate bank account, profit motive, etc etc) will consider it as a "hobby" in which case they treat it like a one-way valve: *any* money coming in must be taxed, but you cannot deduct expenses.

Bottom line: if they implement this and you are considering selling significant amounts of stuff, first talk to your accountant to work out a way to protect yourself from this trap. It's not all that hard to set up if you know what to do.

Re:It's only fair

[Anonymous Coward]

You can't claim a loss. You can however deduct up to the amount you made. SO you end up in that case with 0 taxable income.

Re:It's only fair

[tkrotchko]

"They are not only competing against large retailers, but are also competing against small and medium sized brick-and-mortar stores (mom and pops!)."

If you are a local store and you can't compete with some guy hidden on the Internet for business, then you've got issues as a store. Just considering all the horror stories with crooked ebay resellers, paypal issues... I'll bet the bulk of the population is afraid to type in the URL "www.ebay.com".

If you can't compete with that, then you really don't know how to run a business.

Re:Pound of Flesh

[Anonymous Coward]

If you're paying taxes to get these things, how are they "free"?

Not a problem

[russotto]

Since eBay's high fees would be deductible from income earned by selling items on eBay (yes, even if it doesn't qualify as a business), most sellers would have no additional tax burden to speak of.

Cost of Goods Sold?

[marklyon]

I've sold a lot of things on eBay, but never for more than those things cost me. For instance, I use a laptop for a year or two, then sell it on eBay for less than it cost me.

If forced to account for the "income", can't I also offset it by the "expense"?

Re:Cost of Goods Sold?

[innocent_white_lamb]

Only if you have a "reasonable expectation of profit".
 
At least, that's my understanding.

Re:Cost of Goods Sold?

[mapmaker]

They aren't talking about you. They're talking about people who make their living selling things on ebay.

Re:Cost of Goods Sold?

[ArsonSmith]

$5000 a year is a shitty living.

Re:Cost of Goods Sold?

[compwiz312]

IANAL, but with depreciation, I think you can. I don't think it's some layperson like you or me they're trying to go after, but some big powersellers who are probably not reporting income.

Re:Cost of Goods Sold?

[sheldon]

Not much of a concern, I would think. Considering the item is clearly used.

What's probably more of a concern is all the people who are shoplifting from department stores and selling the stuff online. This is really going cut into their profit margins!

Oh!

[romland]

And if eBay refuses, ask the Mysterious Vladuz!

Fair Tax = Screw the middle class

[The Rizz]

The so-called "Fair Tax" idea is pushed by the rich, as it is of great benefit to them.

Under the "Fair Tax", the rich keep amassing wealth, but will pay absolutely nothing on what they gain but do not spend. Now, with this very large amount of the nation's income sitting around being completely untaxed, all that's left to tax is what is actually spent each year: The very rich, while spending more than the average person, spends a much, much smaller percentage of their income each year. Let's think this through: You are only taxed on what you spend, minus the "poverty level rebate" - the poor pay nothing, so only the middle class and rich really pay taxes. Let's say the average rich person spends 20% of their income each year, and the average middle-class home spends 90% (this is not unrealistic when you consider just how much basic living expenses and a few basic luxuries cost).
This means that the rich are paying 80% less taxes on their income than currently, while the middle class only gets a 10% break. Where exactly do you think that loss of taxes will be made up? Well, there's apparently only one place they're allowed to - the "Fair Tax". If this tax rate then doubles to make up for the short fall, the rich are paying 40% of their previous tax rate, while the middle class is paying 180% of their previous tax rate!

When you consider how much time and money the rich spend abroad, you can see that their share of taxes falls even lower, since they will pay no taxes whatsoever to the IRS when they spend it overseas.

Simply put, "Fair Tax" is a bullshit name for this concept; it's the same old "rich get richer, screw the middle class" idea that drives most unfair tax law changes.

You want fair, easy, and simple? Have the IRS tax be "X% of income over $Y minimum", with deductions only for those truly altruistic reasons, such as recognized non-profit charities.

Re:Fair Tax = Screw the middle class

[Anonymous Coward]

>Simply put, "Fair Tax" is a bullshit name for this concept;

And anyone who has actually read up on the proposed "Fair Tax" laws/reforms and has critical thinking skills knows that your above argument is bullshit.

You don't get rich and stay rich by simply not spending part of your money. Most rich people cycle through most of their money regularly...you know, paying employees, buying and selling property, paying for components that go into consumer goods that they sell, investing in new technologies, funding start-ups that either fail or make you even richer after a few years...the same old "spending money to make money" routine.

Add to that the money saved by getting rid of unnecessary federal institutions if a "Fair Tax" is ever passed.

I wish people would actually think this through instead of knee-jerking every time it's brought up.

Re:Fair Tax = Screw the middle class

[The Rizz]

anyone who has actually read up on the proposed "Fair Tax" laws/reforms and has critical thinking skills knows that your above argument is bullshit. Oh? Let's see these things that are supposed to make up this money...

You don't get rich and stay rich by simply not spending part of your money. Most rich people cycle through most of their money regularly... How so? Most rich people dump their money into stocks. Stocks are not considered a "purchase", but are considered an investment, like putting money in the bank (but more risky). You only ever pay income taxes on stocks and other investments, not sales tax .

you know, paying employees, Tax free.

buying and selling property, Like houses/etc? Property taxes, not sales tax.

paying for components that go into consumer goods that they sell Tax free.

investing in new technologies, Mostly covered by employee wages and component purchases, above. i.e. tax free. There will be some "purchases" of new technology for internal use (thus taxable), but that's not what I think you meant.

funding start-ups that either fail or make you even richer after a few years... Holy crap, you actually came up with something that would be taxed under "Fair Tax"!

Add to that the money saved by getting rid of unnecessary federal institutions if a "Fair Tax" is ever passed. You mean the same savings you'd get under a flat tax plan? (Actually, more savings with flat tax, since you don't need to send out monthly "rebate checks", or totally replace the infrastructure we currently have in place for tax collection.)

I wish people would actually think this through instead of knee-jerking every time it's brought up. I have thought it through. Unless a whole lot of stuff gets added to the "Fair Tax" that isn't currently covered by sales tax, you're still looking at a massive shortfall that will end up with raised taxes that burden the middle class more (as stated in my grandparent post).

How about you show me exactly where and how this extra money will be recovered, rather than listing a whole lot of areas that are never going to be taxed under the "Fair Tax" plan?

Re:Fair Tax = Screw the middle class

[Dachannien]

What you fail to realize is that people who get rich don't get rich for richness's sake. They get rich so they can use the money to do other things.

If they're using the money to invest in new businesses, it helps the economy and employs more people at better wages. If they're spending it on stuff for their own enjoyment, they get taxed on it.

BTW, I'm not rich. Far from it. But I still support FairTax.

Re:Fair Tax = Screw the middle class

[ArsonSmith]

I think you are missing a big part of amassing wealth. Other than their $10million dollar house and probably that much more in toys, all that wealth is in the hands of the middle class and working poor in the form of investment. Allowing rich people to have capital to post is a good thing not a bad thing for two reasons. It takes money, lots of money, to make certain business happen that is an intricate part of our way of life. And the other reason is it gives the working class something to strive for. A carrot if you want to call it that, but it is still a goal and a good driving factor.

Re:Fair Tax = Screw the middle class

[kahrytan]

Um, dude. Whats wrong with you? Taxing the rich more is unfair. These people who have made millions earned their money. They deserve to keep the money they earn. They have worked hard to educate themselves. They worked day and night and they have sacrificed time with their familes. The rich worked so very hard to make their millions so support themselves and family. And what do they get for it? Disrespect. Dishonor. Forced to pay excessive taxes so the government can pay welfare to some poor uneducated people. This is not right. And I dare say downright UNCONSTITUTIONAL.

      Government has NO RIGHT to take THEIR MONEY from them to pay welfare to some poor ass person at McDonald's that can't even do their job right. I walk into fast food places and retail stores and all I see people who can't work. These so-called workers mope around and slowly doing tasks. Doing as little as possible while making $5-$9/hr. I believe these retail and fast food workers should be paid what their worth -- $1.00 to $4.00. And get paid $7.25/hr when they have earned it.

  Government should not and has no right to distribute wealth to anyone. It is not their job. Their job is protect us from foreign countries and provide the infrastructure necessary to survive. And by infrastructure I mean water, electricity, natural gas, roads and etc. Americans are not entitled to the money they have not earned. They are not entitled to free education. They are not entitled to free health care. Read the US Constitution.

  Fair Tax is fair because it a sales tax. People only pay what they want to pay. Prebate checks are to pay the taxes that will be paid on living essentials (food, water, clothes). If you choose to buy expensive things, you will end up paying more in sales tax. The good thing is you don't have to. You can just buy bare essentials. Let's take for example Plasma screen tv. The rich, middle-class, and poor will pay the same amount of tax on it. Truly Fair. Rich may fly overseas allot but they still pay taxes on those tickets. They still pay taxes on those big fancy cars they drive. You can choose not to pay any taxes at all by buying used items. It's your money and you should choose how much tax you pay.

    Wake up America! You are not entitled to free education, free health care, or those big fat welfare checks. You are only entitled to what the US Constitution says you are entitled too. And the distribution of wealth through excessive taxation is not the government's job.

      Now I have spoken the truth and my mind. I don't care if I get modded down. Long live Freedom of Speech.

Re:Fair Tax = Screw the middle class

[The Rizz]

I think you are missing a big part of amassing wealth. Other than their $10million dollar house and probably that much more in toys, all that wealth is in the hands of the middle class and working poor in the form of investment. ...and it's this attitude that causes much of the problem. Why does it have to be only the rich who have any working capital to invest in something? You think that nobody in the middle class makes any investments? What do you think IRAs and 401(k)s are? Your entire argument here is based around the idea that the rich are the only ones who invest in businesses, but that is hardly the case. The money isn't going to "disappear" if you give it to the middle class and poor - it'll be spent and invested as much or more than it is now.

Allowing rich people to have capital to post is a good thing not a bad thing for two reasons. It takes money, lots of money, to make certain business happen that is an intricate part of our way of life. One word: Corporations.
This precisely what corporations, and the stock market, were formed to allow. The rich are not needed to create these types of companies - it doesn't matter if the money comes from one source or one million.

And the other reason is it gives the working class something to strive for. A carrot if you want to call it that, but it is still a goal and a good driving factor. FUCK. YOU. "Here's your carrot. You probably won't get it, but be happy that you can see it from there." Prick.

What I think is the worst thing about what you've said is that your entire argument makes it sound like the rich are intrinsically better than everyone else. "Only the rich are qualified to invest money." "Rich people are great. It's good that we have them to show to the poor, so the poor will work harder for us."

I'll happily take a million people living well instead of 999,999 people living barely adequately so one asshole can live like a king.

Re:Fair Tax = Screw the middle class

[The Rizz]

Um, dude. Whats wrong with you? Taxing the rich more is unfair. No, what's wrong with you? You obviously can't read: I said that they should be taxed the same as the rest of us. Figure out a base percentage and apply it uniformly for any money made over a base minimum "poverty level" income.
How is "tax them the same as everyone else" = "Tax them more" ?

These people who have made millions earned their money. Actually, most of them inherited it. But that's beside the point.

They deserve to keep the money they earn. And nobody else does?

Re:Fair Tax = Screw the middle class

[The Rizz]

If they're using the money to invest in new businesses, it helps the economy and employs more people at better wages. Uhhh... do you realize you just said that the middle class/poor should get less money so the middle class/poor can be given more money?

Besides, this whole myth that only rich people invest in business is unbelievably false.

Re:Fair Tax = Screw the middle class

[raduf]

Yeah, and the rich are evil and eat puppies for breakfast. Get over it. The reason taxing income isn't such a bright ideea, especially for high-income people is that most of it (hell, almost all of it) gets reinvested. Money you just hoard don't make wealth, money you invest make wealth for more then the owner.

Yeah, maybe when you think at movie stars or hip hop singers spending like crazy you feel like scratching your eyeballs (totally understandable) but most sane people made money for a good reason. And while on the subject. this is most interesting.

Re:Fair Tax = Screw the middle class

[Anonymous Coward]

The Rizz: although I'm just an AC, you are my hero. I live in the middle of Boortz-land (Georgia). Thanks for putting up the good fight against these Fair Tax wackos.

It's amazing the following the Fair Taxers have, and their mixed-up priorities. These pseudo-libertarians talk a good game (at least they know their talking points), but they don't realize that they're doing nothing "conservative" for our nation. "Hey - let's give everyone a government check every month" and "let's change our entire tax structure WITHOUT cutting spending" do not sound like a good ideas to me.

They live on slogans and evangelism. It's almost a religion. "Abolish the IRS!" - but it just becomes another government agency with a BIGGER enforcement arm. "Keep all of your paycheck" - but it's an accepted fact (by Boortz, Linder, and their economists) that your pay will have to be cut to the current take-home level. That's the ONLY hope to keep consumer prices at the current levels. And if someone in the supply chain doesn't play along, well guess what? Consumer prices rise. Don't get me started on the 23%/30% fiasco. And don't get me started on the ability of Fair Taxers to critically look at their plan, and compare it to others. I've read the book, and the website, and I can say it's rubbish. Most Fair taxers haven't done any reading beyond the book.

Fair Taxers also hate government waste, the government in general, and our elected officials, but live in some weird fantasy world that the same politicians who have screwed up our tax code are going to magically decide to fix it ... without compromise! The best that the Fair Tax will create is a consumption tax AND an income tax, which will further squeeze the middle class.

Anyway, those are my thoughts. Thanks again for putting up the good fight!

Re:Fair Tax = Screw the middle class

[bhmit1]

First, I'll say that our tax system is pretty screwed up, and your proposal to change it to a flat tax would be a welcome change.

However, there's an underlying theory that says you should tax bads, not goods, if you want to encourage good behavior. We should find a solution that encourages people to earn money and grow the economy, not to discourage income. For a healthy economy, we need to be encouraging more people to be producers, inventors, business creators, etc. And yet, these are the most taxed individuals when we tax the wealthy, their investments, and their income. When consumers pay the tax, we encourage more efficient behavior.

For example, I would be happy to see the tax on oil or gas climb faster than inflation, and so should every other environmentalist. And if I see one more Habitat for Humanity homeowner move in with a Lexus SUV, I'm going to find a better place to volunteer. The system we have built encourages people to have a low income and lots of goods, which is exactly what the large corporations that hire lots of people and sell goods want to encourage to keep their corporation sheltered profits high.

Your philosophy that we should adopt a tax based on what impacts the rich the most stems from lumping three groups of people into one. The wealth of this world is divided among the kleptocrats, heirs, and entrepreneurs. I think we all agree that the former should be eliminated. Messing with the second is up for debate, but I'm personally against it. And messing with the third group is unhealthy for your nation. The desire of entrepreneurs to create a better life for their heirs is the reason I'm against strongly taxing them.

Note, the last part was blatantly stolen from rlp who said it better than I ever will.

Re:Fair Tax = Screw the middle class

[Anonymous Coward]

So? I'm not out to punish the rich simply because they're rich. I just think the system should be more fair. How about a Fair Tax system with one simple change: cost-of-living expenses would not be taxed. So, food, board, health, and education expenses would be entirely tax deductible, and the rest would be taxed at a flat rate. Now the people who can barely get by aren't penalized for existing, and the people who have enough money for the finer things in life ar all taxed equally.

Re:Fair Tax = Screw the middle class

[xeno-cat]

"Taxing the rich more is unfair. These people who have made millions earned their money. They deserve to keep the money they earn. They have worked hard to educate themselves. They worked day and night and they have sacrificed time with their families. The rich worked so very hard to make their millions so support themselves and family."

What delusional world are you from? I'll point to the a la mode rich jackass to refute this claim: George W. Bush. Rich brat extreme.

"Government has NO RIGHT to take THEIR MONEY from them to pay welfare to some poor ass person at McDonald's that can't even do their job right."

      I have never had a problem ordering at McDonalds.

"I walk into fast food places and retail stores and all I see people who can't work."

      [Now the psychosis is starting to show]. Yet these stores function and make billions for those hard working rich folks who pay their employees as little as they can, with as few benefits as they can get away with.

"Government should not and has no right to distribute wealth to anyone. It is not their job. Their job is protect us from foreign countries and provide the infrastructure necessary to survive. And by infrastructure I mean water, electricity, natural gas, roads and etc. Americans are not entitled to the money they have not earned. They are not entitled to free education. They are not entitled to free health care. Read the US Constitution."

      You have no idea what Government is for. As for the Constitution, I'll just point you to this: "For the people, by the people".

"Fair Tax is fair because it a sales tax. People only pay what they want to pay."

      You mean people only pay for what they want to *buy*. What is it with you people who think that "consumerism" is the central function of human existence. You can not base a tax code on consumerism. You need to tax the wealth of the nation.

      Hopefully you will grow out of your juvenile world view. Unfortunately, someone will probably take your place.

Kind Regards

Re:Fair Tax = Screw the middle class

[ArsonSmith]

No. 1 Sorry the stock market doesn't create companies. The stock market is little more than a way to get companies that have already proven them selves successful more money. There has yet to be a company that sold stock in order to open it's doors. It takes money, Lots of money, right off the bat to get a business going. This comes from rich people in the form of capital investors. All the stock market has really done is given you a trade-off. A relativity safe place to put your money, yet you're stuck shopping at Walmart. Big hideous corporations are the way they are because you demand that your 401k makes money.

No. 2 you have given up on making money. Perhaps you didn't know that according to Fortune Magazine 80% of the millionaires in the US are new money. These are people who didn't inherit money and actually made it them selves? Another interesting fact from that same article, 60% of the fortune 500 are also new money. That is over half of the 500 richest people in the world have gone for that caret and got it. I may not ever reach the fortune 500 list buy I am well on my way to make that 80% margin. It is attainable. Has nothing to do with who's better or worse. I have no such opinion of "Rich people are better." Just that "Being rich is better." All money does is amplify the person. If you're an asshole you'll be a bigger asshole if you become rich.

I'd happily take people living according to their desire and ability. With desire left up to the individual and ability being evaluated and helped with as needed. (Things like public education, working welfare, etc) As it is now if you desire to sit on your ass and do nothing you can. You wont ever be rich but you can actually survive that way. There is no way out of a million people you are going to have the same number of people working hard enough to help support the people sitting on their ass if they are not going to get anything out of it.

And for the record I'd very happily trade a million people living well instead of 999,999 people living barely adequately so one asshole can live like a king as well. How you plan to make it so a million people are living well and are prosperous enough to continue to do so intrigues me. So far the only example close to this was Kuwait. Although not quite it was a country that had enough oil exports to support it's people living well. But in the end they were really just a rich country that did well for it's people.

Re:Fair Tax = Screw the middle class

[Anonymous Coward]

  Fair Tax is just consumption tax and NO INCOME TAX.

Re:Fair Tax = Screw the middle class

[maxume]

I agree that the Fair Tax likely isn't, largely because the level it would be at to be revenue neutral with the current system would not always match up well with the prebate amounts. The problem isn't so much that the tax rate and prebate couldn't be tuned to be reasonably progressive, but that it would discourage the thing it relied on for revenue(spending), and would encourage all sorts of black and gray markets(that the wealthy would be best positioned to take advantage of, as it is worth quite a lot of effort to reduce the tax on a yacht, but not so much on a loaf of bread).

The current system often makes very little sense though. A well run corporation exists largely to benefit the shareholders, usually by giving them money in some way. Money that is taxed as corporate income is taxed again as personal income, and supports a many billion dollar compliance industry. This is driven mostly by popular resentment of corporate greed, and because it limits the usefulness of the corporation for tax evasion, but it seems like a good place to look for some simplification(perhaps there is a cheaper way to limit hidden wealth transfer).

Re:Fair Tax = Screw the middle class

[Anonymous Coward]

FUCK. YOU. "Here's your carrot. You probably won't get it, but be happy that you can see it from there." Prick.

Funny, although I'm not one myself, I actually do know quite a few "rich people." None of them have that attitude; none of them ever did.

It sounds like you have some personality issues that are getting in the way of your long-term goals. There is no lack of opportunity in this particular country, in these particular times, compared to most of human history. Maybe you should look into Scientology, or alcoholism, or televangelism, or something... anything's going to work better for you than the way you're thinking now.

Re:Fair Tax = Screw the middle class

[LibertarianWackJob]

What are you, some kind of LibertarianWackJob? Oh wait, that's me. Never mind.

GREAT idea! I just wrote to Rep Jeb Hensarling (TX Dist 5) asking him to support HR25.

Re:Fair Tax = Screw the middle class

[Anonymous Coward]

My comments were to point out the BS of your assumption that the rich just sit on their money and never do anythng with it, which couldn't be further from the truth.

None of those were supposed to be examples of thing taxed under the proposed laws. Nice job patting yourself on the back though.

Re:Fair Tax = Screw the middle class

[kahrytan]

What delusional world are you from? I'll point to the a la mode rich jackass to refute this claim: George W. Bush. Rich brat extreme.

And President Bushed earned his money. And just being Presidents takes it's toll on him. Look at before and after shots of former Presidents.

I have never had a problem ordering at McDonalds.

You are obviously blind to the fact workers work too slow. Employees don't work as they should work -- Hard and Fast.

[Now the psychosis is starting to show]. Yet these stores function and make billions for those hard working rich folks who pay their employees as little as they can, with as few benefits as they can get away with.

That's Capitalism for you. America was founded on it. And Employees aren't worth $5.15/hr or $7.25/hr until they actually WORK. Unlike the majority minimal wage workers.

You have no idea what Government is for. As for the Constitution, I'll just point you to this: "For the people, by the people".

That doesn't say entitled you to everything. Constitution was written by citizens of America and not some Kings across the ocean in the British Empire.

You mean people only pay for what they want to *buy*. What is it with you people who think that "consumerism" is the central function of human existence. You can not base a tax code on consumerism. You need to tax the wealth of the nation.

Do you know what happened when British started over taxing American colonist? Let me refresh your memory. The Colonist had themselves damn fine party in Boston. I think America needs another one. Instead dumping tea into the water, we all should bring our W-2s and burn them in front of the Capital Building.

Re:Fair Tax = Screw the middle class

[AK Marc]

What you fail to realize is that people who get rich don't get rich for richness's sake. They get rich so they can use the money to do other things.

I'm getting rich for richness sake. Income is useless. You get one chance to buy something with it, then it is gone forever. Wealth is what you use the same money over and over. Wealth is the power of money, not income. I am saving over $30,000 a year. I am getting rich for the sole reason to build wealth, not to buy more things. I don't want a nicer car, to own a business, own more property, or tp spend more per year on things. I will be able to quit someday (or retire, depending on your definitions and the timing) and live off no more money that I'm making now. Sure, that'll take around $5,000,000 in the bank, but regardless of whether you like unFair Tax or Income Tax, I'll be paying very little tax on that pile of money. Hoarding money is the builder of wealth, not income (though higher income lets you save more, but there are many, like sports figures, that manage to make lots and end up broke).

BTW, I'm not rich. Far from it. But I still support FairTax.

I'm at the edge of the top 15% of wage earners. I would save lots of money under Fair Tax. I am against it. One reason is that the conversations I have had with the people actually invoved in it lead me to believe they are insane. Seriously. Clinically insane. They think that the government is out to get them. I asked what other percentages were considered, and I was accused of being against the plan (and this was before I was against it - it sounds like a good plan at first). All I wanted to know is what the tax rate would have to be if the "rebate" level was 50% or 200% of poverty level, not just 100% of poverty level. And that question, asked in a polite manner, was met with dismissive answers or personal attacks against me. Until someone other than a nutcase is behind this, it will never be treated seriously, so it doesn't matter how good a plan it is. And I'd never recommend someone else look into it, because if they have a similar experience with the supporters of it, they'll think less of me by association.

Re:Fair Tax = Screw the middle class

[Anonymous Coward]

The rich use the services of the government more and have more to lose. Or at least potentially. The middle class person mostly uses the roads, some telephone wires, sewage, etc. A rich person uses the ports for importing, depends on the military not to allow someone to invade and destroy their business or source of income, needs the SEC to make sure his stocks are traded fairly so he can make even MORE money, needs the FBI and ATF and all the rest more because he's rich and thus more likely to be targeted, etc.

Re:Fair Tax = Screw the middle class

[tmortn]

Why would you have to create a whole new infrastructure for collecting taxes? We are already set up to take in taxes at the cash register which is the primary avenue for tax collection via the Fair Tax system.

As for your argument about the middle class families spending a higher percentage? Well that is true and bully for you. But the effective tax rates for the rich are ALREADY lower than they are for the middle class. The key issue for a successful adoption of the fair tax system is to make sure the percentages of tax paid by the various economic strata do not undergo noticeable changes. Because if they manage that the fair tax system is no more and no LESS fair than the current system. However, it would serve to concentrate tax collection into easier to manage points of economic transfer as opposed to the current insane morass of collecting and analyzing 200+ million individual tax returns yearly in addition to all business returns. Taking the yearly nightmare of filling and analyzing individual tax returns off the plate is a VERY worthy goal. Effectively checking all the returns is all but impossible, and when individuals are confronted by the government very few posses the resources to successfully defend against an audit and are effectively at the mercy of the IRS. Limiting such processes to a business with staff dedicated to documenting its economic activity and in possession larger resources would make audit's a much fairer confrontation. Additionally if the program is implemented correctly you get to throw out the currently incomprehensible Rube Goldberg inspired tax code out the window and replace it with the simple dictum of collecting X amount of retail sales.

The Fair tax system isn't all sweetness an light as you have adequately pointed out. However that does not make it the tool of the Elite you make it out to be. I am not sure if it can be implemented in a revenue neutral manner that did not significantly shift the tax burden... or ensured any shift would be higher up the economic ladder rather than lower. But if they can solve that particular issue the plan has a great deal of merit.

Out of curiosity... do you perhaps have a tax system you favor and would like to illustrate as being a better system than either the existing or the "Fair Tax" system?

Re:Fair Tax = Screw the middle class

[ceejayoz]

And President Bushed earned his money. And just being Presidents takes it's toll on him. Look at before and after shots of former Presidents.

How did he earn his money?

As for the before-and-after shots, take any 58 year old and compare them to their 50 year old photo and you'll likely get similar results.

Re:Fair Tax = Screw the middle class

[xeno-cat]

You are a dope. I see you have your fanatical view on reality. Here is mine: we should strip you of your planetary citizen ship and fire you on rocket into deep space along with all of your idiotic cohorts.

And we could still have a tea party in Boston.

Re:Fair Tax = Screw the middle class

[The Rizz]

Do you know what happened when British started over taxing American colonist? Let me refresh your memory. The Colonist had themselves damn fine party in Boston. You really have no idea what you're talking about, do you?

The Boston Tea Party happened because of unfair taxation - not taxation in general, but the idea that they were being hit with a larger tax burden than they should be, while those making the decisions were paying less.

This is exactly what is happening now, and what "Fair Tax" would make worse: Those who can least afford the tax will bear the brunt of it. Those who have influence (the rich/powerful) will only allow change if it benefits them, and will lobby for it to happen (this is why we have a tax code of thousands of pages).

Re:Fair Tax = Screw the middle class

[kahrytan]

You really have no idea what you're talking about, do you?

The Boston Tea Party happened because of unfair taxation

  You said the right words -- UNFAIR TAXATION. And it's what we have now. Let's see you come up with a Fair tax plan that eliminates Social Security tax, Corporate taxes, inheritance taxes, income tax, and etc. Then build new one that isn't INCOME based.

- not taxation in general, but the idea that they were being hit with a larger tax burden than they should be, while those making the decisions were paying less.

This is exactly what is happening now, and what "Fair Tax" would make worse: Those who can least afford the tax will bear the brunt of it. Those who have influence (the rich/powerful) will only allow change if it benefits them, and will lobby for it to happen (this is why we have a tax code of thousands of pages).

You should read the Fair Tax plan. It's designed so the poor and middle-class don't get hit hard. I am very poor and I support the Fair Tax bill.

Re:Fair Tax = Screw the middle class

[The Rizz]

So, food, board, health, and education expenses would be entirely tax deductible, and the rest would be taxed at a flat rate. You mean tax exempt, not tax deductible (deductions are only required for income tax purposes).
I do think this would be a very big step towards making "Fair Tax" more fair, but there is one very big problem - what is a basic necessity?
Food obviously. ...but does this only cover grocery store foods, or does it include food from McDonalds? How about Denny's/Perkin's? What about a fancy restaurant? How do you even define (in a legally binding way) "fancy restaurant"? If only grocery store food is covered, do you consider $700/oz. caviar untaxed as long as it comes from the supermarket? If not, then how expensive can it get before it's taxed? Who decides that number, and will it be adjusted for inflation?
You will run into these sorts of questions in every area you described above.
Moving on, you didn't mention several other things that are considered necessities in the modern world; telephone and internet service, clothing, cars/transportation.
If you accept those as necessary (which in modern America, they really are), and therefore tax exempt, what exactly does that leave to tax? On the little that is left, just how high is the tax rate going to have to be? Do you expect these industries to actually survive if they suddenly have a ridiculously high tax rate? This would only serve to shift the tax burden in the other direction - the rich are now paying a much higher % of their income, and as an added bonus you've destroyed a couple of "luxury" industries along the way.

Re:Fair Tax = Screw the middle class

[The Rizz]

As for your argument about the middle class families spending a higher percentage? Well that is true and bully for you. But the effective tax rates for the rich are ALREADY lower than they are for the middle class. Which is a major problem in this country. Perpetuating the problem is not a good thing. Moving to a sales tax-based system will just make it so that it's impossible to do any sort of adjustment of the tax burden in the future. (Such adjustments can be done now via changing the tax brackets.)

The key issue for a successful adoption of the fair tax system is to make sure the percentages of tax paid by the various economic strata do not undergo noticeable changes. Because if they manage that the fair tax system is no more and no LESS fair than the current system. Any change as major as that will always cause a change in the effective tax rates across the board. And in reality, the Fair Tax will be less fair to the middle class, as the tax burden on the rich and poor will decrease, which leaves just one group to make up all that extra tax revenue...

Additionally if the program is implemented correctly you get to throw out the currently incomprehensible Rube Goldberg inspired tax code out the window and replace it with the simple dictum of collecting X amount of retail sales. Going to a flat tax type of system would also get rid of all the paperwork on this, replacing it with a simple method of collection. If you've ever filled out a 1040-EZ you would know just how simple taxes can get - and with a flat tax, it would be even easier than that form.

I am not sure if it can be implemented in a revenue neutral manner that did not significantly shift the tax burden... or ensured any shift would be higher up the economic ladder rather than lower. But if they can solve that particular issue the plan has a great deal of merit. That is why I have a problem with it - I don't see any reasonable way the flat tax can do anything except shift the tax burden downward.

Out of curiosity... do you perhaps have a tax system you favor and would like to illustrate as being a better system than either the existing or the "Fair Tax" system? I think the best method would be a mix of a flat income tax and flat capital gains tax, with very limited deduction types allowed (i.e. verified charities). Everything would be very simple to calculate, but it would spread the tax burden out better, while at the same time getting rid of the morass of paperwork we have in place now. Mixing in a flat sales tax to the above would work, too, but it should never become the primary tax source.

Re:Fair Tax = Screw the middle class

[tmortn]

Agreed. By all means bring on a flat tax. But my dear Netizen (ok shoot me for that) I think you will find the fair tax IS a flat tax. The difference between the two forms is merely where in the process dear old Uncle Sam (or government of choice) takes his slice.

Take the slice on the way in (flat income tax) Just means prices are lower to reflect the fact taxes have already been taken.

Take the slice on the way out then prices are higher because taxes are included.

I suppose you would point out again that the rich don't spend all their money so they don't get taxed as hard under the outgoing method of flat taxation. But then again the Middle class won't even get that reprieve on the 10% the perhaps manage to NOT spend. Perhaps it is a meaningless victory as goods cost more when tax is included. But for myself I would at least prefer the illusion of having a choice. IE I COULD scrape by on minimal expenditure and get a lower tax rate. This is not an option when the cut is taken on income. True the rich pay a set amount... but a set flat rate is effectively limited by the highest rate you can levy on the middle class... meaning the percentage of tax on the rich will be lower than currently anyway. Ultimately the middle is screwed in just about any system.

However, down with this notion of an income tax AND sales tax. That insanity along with the nutzo code are the cornerstones of how unfair the current system is. My effective tax rate when considering I am one of the poor schleps who has to pay 90% of my income effectively raises by 4-5% once sales tax is included (higher for folks with high sin tax burdens). A fact of life for the middle class that puts their true tax bracket on par with those in the highest tax bracket on average when considered in totality. Sales tax is often overlooked in such arguments.

Some numbers.

Person A makes 100k (Top 1%)
Person B Makes 30k (somewhere in the neighborhood of the average single income)
Person C makes 10k (~ approximately minimum wage).

Now lets use 10k for the no tax max for arguments sake.

Tax Bracket System
A pays 30%
B pays 20%
C pays 0%

A pays 30k and takes home 70k
B pays 6k and takes home 24K
C pays nothing and takes home 10K

Flat Income tax of 30%.

A pays 30k (27k if only taxed above 10k)
B pays 8.4k (6k if only taxed above 10k)
C pays nothing

Tax burden ~ equal between A and B at 30% whether flat or bracketed. Though when considered in margin to live it obviously does not look very fair. The effective tax burden in a pure flat tax is and always has been regressive. The more you make the more you can pay. The less you make the less you can afford to part with Tax dollars. Simple enough maxim. And in a flat rate the burden is NEVER equal or higher on the rich. It is ALWAYS lower. Whereas in a bracket progressive system you can sometime reach burden equalities... but only rarely. An issue of perception.

Flat Sales Tax of 30%

Assuming 54% of their income is expended for A or twice as much as B to live "the good life".
90% for B to scrape by in the middle.
100% for C and needs more.
Rebates received by all on the first 10k in the amount of 3000K.

A pays 16,200, receives 3,000k for 13,200 tax burden
B pays 8,100, receives 3,000k for 5,100 tax burden
C pays 3000 , receives 3,000k for 0 tax burden

Obviously the numbers are not revenue neutral... is it possible to get there? According to the old spread sheet you can certainly get in the neighborhood. In order to get the tax rates up close to what they were for the flat income rate and bracket income system you have to jump the sales tax up to about 35.3%. Using that number and the same expenditures you get

Flat Sales Tax of 35.3%

Assuming 54% of their income is expended for A or twice as much as B to live "the good life".
90% for B to scrape by in the middle.
100% for C and needs more.
Rebates received by all on the first 10k in the amount of 4600K.

Re:Fair Tax = Screw the middle class

[tmortn]

Dought, messed up the first calculation on the bracket system example. The tax amounts would have been less in the example I have (Exemption on the first 10k). Just assume instead of 20% and 30% I used the rates that would generate the values used. It would be 30% for B and 33.3% I believe. Not the greatest for exemplifing different brackets... but still effective. Would probably necessitate a larger spending percentage assumption of the rich but not to much more... maybe 110% of B. Or adjust all the numbers to reflect 4,000 tax for B in the first example and 27,000. That would be more effective for what I was saying, but I am to lazy to set it up again. Damn the no editing.

Anyway, obviously the easy to attack point is in the spending percentage. You said 20% which I think is to low... but in those examples it would obviously present a disturbingly low rate on the rich and it would certainly be present in some of the more insane examples.

The point I mostly make about the fair tax system is it can be set up to present a zero sum game for the middle class based on where we are... and it would create an opt in system for the rich so they have less to bitch and moan about since even if they spend all of their money they pay the same percentage as the middle class even though it is a much larger sum.

The only way to not screw the middle class is to screw the upper class and that means a progressive system (tax brackets increasing with income). TANSTAAFL. And justifiable or not, it is no more fair to screw the rich than it is to screw the middle class.... just much more understandable.

Re:Is there some law? - Actually no there isn't !

[fishbowl]

>Actually there is no such law for ANY taxes in the USA!

Tax protesters never prevail.

I love that video, though. Right out of the gate, it opens with a
quote from Bush that cannot be corroborated: "The goddamned piece of paper" quote.
All sources for that will lead you to a Capitol Hill Blue piece, which was quite
vague and hardly credible. Beside the point. Tax protesters do not prevail
in court.

Re:Why pay tax at all? IRS is illegal !!

[Anonymous Coward]

Mod this guy up. All you Americans should watch this and understand that you DON'T have to pay a federal income tax.

Here's the google video version of it

http://video.google.com/videoplay?docid=-431273027 7175242198&q=Freedom%2Bto%2BFascism

Re:Is there some law? - Actually no there isn't !

[Anonymous Coward]

If you'd bothered to actually WATCH the documentary, they state that taxing an individual's personal income is illegal but that any income of a business can be taxed. I'm guessing the "100 transactions worth $5000" thing is the IRS' threshold for the definition of a business just in case things get too legal.

Wait a tic...

[verbatim]

"it could drastically reduce the profits a seller would make on these sites."

How so? Profits would remain exactly the same. For all law abiding citizens who declare all income, nothing would change at all. They go to church, pay their taxes, and help their land-lady carry out her garbage. However, for those who don't declare their income, well... yeah, I guess the tax man cometh.

Damn government

[Jesus IS the Devil]

It's funny how you can owe anybody money without fear of prison time, except Uncle Sam.

Well then, how about we audit the damn U.S. government and hold THEM criminally liable for wasting our tax dollars?

Re:Damn government

[Anonymous Coward]

It's funny how you can owe anybody money without fear of prison time, except Uncle Sam.

Try owing your ex-wife money for child support without paying and let us know how that goes. Hint: they will throw your sorry ass behind bars.

Re:Damn government

[KudyardRipling]

This may sound dour, but dour is the tone in which law speaks. In the USA, tax-exempt { 26 [ USC | CFR ] 501(c)(3) } entities are disallowed political speech (i.e. advocating candidates for public office or voicing positions on public policy issues). Why? It is the inverse of 'no taxation without representation.' USA citizens (and to a lesser extent resident aliens) are presumed to be respresented in government therefore establising the presumption of taxation. If an entity is explicitly exempt from taxation, it is presumed exempt from activities related to such representation (political speech). When such entities do exercise political speech, the IRS can either revoke their tax-exempt status or (more likely) choose to penalize them by charging an excise. What is an excise? USA citizenship and residency are franchises upon which the govenrment may lay and collect excises. The Sixteenth Amendment was merely a patch to overturn a previous USA Supreme Court decision overturning statutes passed by Congress authorizing a direct income tax without regard to the states.

              What it all boils down to is this: Nationality is rented. The laws dealing with how much to charge is complex for a reason (politics). Unlike many nations whose citizens are only taxed when they reisde within national boundaries, USA citizens are taxed by the IRS wherever they may reside unless exempted explicitly by acts of Congress.

If money is one's reason for living, then passport shopping is merely a natural consequence thereof. There's a lot that comes with that little book.

In other news...

[Brandybuck]

In other news, the IRS is encouraging strip malls to snitch on the stores leasing mall space. Sheesh.

Put an end to this crap once and for all.

[jcr]

Under the FairTax, there would be no tax due on sales of any used items.

-jcr

It depends.

[raehl]

If forced to account for the "income", can't I also offset it by the "expense"?

Did you claim that laptop as a business deduction when you bought it? If you did, then you'll have to claim the money from the sale as income. If not, you've already paid your income tax on the money you spent on the laptop, so getting some of it back selling it later isn't taxed.

Re:It depends.

[Antony-Kyre]

What if someone spent X amount of dollars growing or building something, then sold it years later for Y amount of dollars?

Would income be equal to $Y - $X ?

Re:It depends.

[raehl]

That depends on what, exactly, you spend $X on, and what, exactly, you got $Y for, and when you got it.

If you were planning this out, you'd try and make sure it came out as a capital gain instead of income, but it's taxable either way.

Re:It depends.

[Antony-Kyre]

Let me make this a bit easier.

Hypothetically, someone spends $1000 on materials making something. Then that person sells that something for $1000 on eBay (ignore the issue of sales tax for now). How much is considered income?

capital gain or sales tax?

[Anonymous Coward]

If I sale an item at a loss, and it's over 10 years after I bought the item. If I don't have a receipt, do I have to pay this as a cap gain on the total of the item, or do I have to pay sales tax on it. Most of the things being sold on Ebay and such are small items that the individuals no longer have receipts for. I wonder if the IRS allows the persons estimate of what they paid for it to stand, or if full sales price taxes are in order.

What about pawn shops, garage sales, etc.?

[necro2607]

Okay, so if they're going to require this of eBay and other auction sites, does that mean they're going to "crack down" on pawn shops and second-hand stores? What about thrift stores? What about street-side garage sales? What if you sell your old 200mhz computer to your little brother because he doesn't have his own computer? Is that taxable? These things are effectively the same - with eBay you're just looking online for your used goods, instead of looking in a shop or on someone's driveway or whatever.

Re:What about pawn shops, garage sales, etc.?

[Anonymous Coward]

What if you sell your old 200mhz computer to your little brother because he doesn't have his own computer? Is that taxable?

If you do that 100 times a year then yes - you are doing it to make a profit and are, in all intents and purposes, running a business.

Re:What about pawn shops, garage sales, etc.?

[Anonymous Coward]

It's not really a profit if you (as a business) count the cost you paid for the items originally ... in this case, it's a net LOSS unless you already depreciated the purchased items as business expenses.

Re:Is there some law? - Actually no there isn't !

[Cadallin]

You may not be kidding, but you are a moron. The 16th amendment to the constitution specifically gives congress the power to lay and collect taxes on incomes (regardless of source, which is specified in the amendment).

Not that there aren't government practices that are illegal, but I think income taxes are pretty hard to argue with.

I would argue that the Federal Reserve System, as it currently operates, is unconstitutional, on the basis that takes the Constitutionally granted power of Congress to mint and coin currency, and places it under the control of privately owned banks with minimal congressional oversight.

You don't *Quite* understand

[encoderer]

Follow me, here:

1. Government meddling into business and private affairs usually costs businesses and people $. (e.g. disposing of toxic waste by dumping into a lake is far cheaper than disposing properly)
2. The American Elite (eg the GOP) wish to maximize personal wealth by limiting such government meddling
3. The GOP in such efforts have taken control of Government. In reality, the elite have controlled every government in the history of mankind
4. Now the issue is maximizing wealth. Question: Could government help with such a thing?
5. Yes it Can! Use the federal military to protect commercial interests. Use economic policy to create a modern class of 'indentured servants'
6. Create an effective marketing machine and throw the bottom class enough bones to keep it from revolting.
7. Repeat 5 & 6 ad infinitum

Illegal drug sales are taxable income...

[Foerstner]

I've mentioned this before, recently, but....technically, income from illegal activity, including sales of illicit drugs, is taxable income and must be reported to the IRS, along with payment for taxes due. The feds don't distinguish between legal and illegal income.

And (before someone else says it) a tax return declaring income from illegal activities can't be used against you to prove your participation in criminal activities. Failure to declare and pay your taxes, however, is probably as likely to land you in jail as the actual crimes. But that probably doesn't occur to most criminals, so your point probably stands.

Re:Illegal drug sales are taxable income...

[b0s0z0ku]

Failure to declare and pay your taxes, however, is probably as likely to land you in jail as the actual crimes.

Or they use it as a way to jail for for _something_ even if they can't prove other crimes. That's what happened to Al Capone in the 30s, anyway.

-b.

i sold ~$350,000 on ebay last year

[reflector]

a few years back i lost my sysadmin job and started building and selling computers to pay the rent.

before i knew it, i had a full-fledge electronics reselling business, and between craigslist and ebay i probably did over half a million in sales last year.

problem is, i never really had a background in business, and was never financially organized, i only just recently got quickbooks and decided to try to learn to use it.

at this point my business is still pretty much all in my head, i don't have records or many receipts, i'm a bit worried the irs is going to come a knockin', thinking that all my ebay sales are pure profit, and i won't really have the records to say otherwise.

i have an appointment with an accountant this week, basically to see if there's any hope for me, or if i should just flee the country while i can.

Re:i sold ~$350,000 on ebay last year

[Anonymous Coward]

your fucked if you didn't pay taxes

Why would we care?

[Per Abrahamsen]

I already have to pay our *local* 20% sales tax for anything I import from the US (plus a substantial "service fee" for having them opening my mail without my permission), so you really think I would care about your puny state taxes?

Easy Fix

[Quzak]

Leave the US and its draconian tax laws.

In the UK and several other countries...

[advocate_one]

the Taxman has a search spider that they use to flag up people who should be investigated for failing to report income. It's called xenon and Slashdot reported on it back in January of this year... why on earth the IRS don't take advantage of it is beyond me, but I suspect the IRs love lording it about over US based corporations and want to make eBay do the donkey work for them...

I like taxes !

[fantomas]

I like taxes. Not everything has to be taxed but I am happy to pay some. I like working with computers in a university job and having a bit of time to myself. I'm really happy not to have to be a part time police officer, fireman, social worker, sewage worker, nurse, builder of roads, and all those other jobs that I really appreciate getting done around me and make my life better as a result. I pick the voluntary work I want to do (community gardening). Happy to pay a percentage of my income so those other jobs get done.

As another poster noted, it all comes down to political theory and your preference for how society is set up. My preference is public servants carrying out the shared societal tasks, well paid enough that they don't have to take bribes to feed their families. I'm happy to financially contribute to that system.

Re:I like taxes !

[JesseMcDonald]

I like taxes. . . . I'm happy to financially contribute to that system.

The question isn't whether you want to pay taxes. You're obviously free to pay whatever "taxes" you want. (Though they wouldn't really be taxes if you choose to pay them -- they'd be donations instead.) No, the question is whether you have the right to make the rest of us pay those taxes to benefit you.

I'm really happy not to have to be a part time police officer, fireman, social worker, sewage worker, nurse, builder of roads, and all those other jobs that I really appreciate getting done around me and make my life better as a result.

I wouldn't expect you to. That's why we have the social division of labor and trade. That has nothing to do with government or taxation, though -- just basic economics.

Re:I like taxes !

[reflector]

well, that being the case, you should like state taxes but dislike federal taxes (IRS).

state and local taxes provided for useful things like firemen, libraries, policemen (sometimes useful), etc.

federal taxes pay for things like blowing stuff up overseas due to faulty intelligence about WMDs, corporate handouts, propping up of despotic pro-US regimes like pinochet, etc.

Re:I like taxes !

[cyber-vandal]

Quite a few of those jobs would not get done (or the cost of the labour would be out of the reach of many) if government didn't provide them. Tell me something. If big government is so disastrous how come the 20th century saw huge and unparallelled economic growth in North America, Western Europe and Australia despite much bigger governments than before?

Re:I like taxes !

[tcc3]

I would also like to point out that Federal taxes also help pay for awesome stuff like

Interstate highways
Space programs
NSF Grants
Higher Education loans
Public Broadcasting
Disaster relief (Katrina mismanagement debacle notwithstanding)

The war funding may be an unfortunate outcome, but the other side of that coin is billions of dollars per year in foreign aid.

Re:I like taxes !

[JesseMcDonald]

Quite a few of those jobs would not get done (or the cost of the labour would be out of the reach of many) if government didn't provide them.

The thing is, the government doesn't provide those services -- we do. We pay for them through taxes and inflation, and we provide them by staffing those organizations and producing the materials they use. The only part the government plays is in forcing everyone to go through them for services which any given taxpayer may never need or want, in the process eliminating any possiblity of competitive, cost-effective private production of those services for those who do want them.

If big government is so disastrous how come the 20th century saw huge and unparallelled economic growth in North America, Western Europe and Australia despite much bigger governments than before?

Correlation != causality. Alternate reasoning: Government interference in everyday affairs increased in response to private improvements in economics (quality-of-living) and technology. In particular, improvements in the speed and reach of communications enabled a vast increase in the territory that could be ruled by a single government.

Answer me this: Which started first, economic growth or larger governments? I believe you'll find that economic improvements had a sizeable lead, one which the government has fortunately not proven capable of completely suppressing -- though they do try. Private advancement hold the potential to seriously weaken their grip.

Re:I like taxes !

[reflector]

yes i would agree with all of those except disaster relief - the govt shouldn't be in the insurance business.

that aside, compare how much of the federal budget is spent on useful things vs how much is spent on harmful or useless things.

Re:I like taxes !

[Anonymous Coward]

it all comes down to political theory and your preference for how society is set up

Right, and if you don't believe in taxes (like me), then you get the short end of the stick every time. No chance of that changing -- no government in the history of organized coercion has ever significantly and permanently reduced its power or revenue through the process of democracy. History talks -- I don't have a chance in hell of ever seeing my "preference for society" come to be, because my preference doesn't involve coercion (i.e. government) at all.

Now go ahead and mod me "troll" for speaking my beliefs -- I'm quite used to being kicked into the gutter.

Re:I like taxes !

[cyber-vandal]

First of all a large amount of the services that government oversees would never in a million years be provided by the private sector or only in a form that wouldn't be available to everyone.
You're missing the point on economic growth. Yes it did start earlier but it had very little impact on the majority of people until the tiny minority who were benefitting immensely from it were made to share those gains more equally.
Do you really think that company owners started giving their workers a living wage and sensible working hours because they thought it would benefit them? You might want to read up on industrial relations in the 20th century to see how few of them wanted to do that - Henry Ford being a notable exception.

You're Missing A Very Important Point Here

[Stanislav_J]

What kills small-time eBay sellers isn't income tax -- it's Self-Employment Tax.

I'm a perfect example. I am a caretaker for my elderly mother. While she doesn't require constant 24/7 care, for a variety of reasons, I can't spend more than a few hours at a time away from her. Holding down a legit job under this situation is impractical. So, we live primarily off her Social Security and a modest pension from her old job. Just enough to pay rent and utilities and keep us from living on the street.

I scrape together a little extra money selling on eBay. My net profits for this amount to just a few thou a year -- if I clear $5000, that's a good year for me. With the standard deduction and exemption, I owe nothing, zero in income taxes. BUT, I am still obligated to pay 15.3% in SE tax. So, on that $5000 amount, that's a $750 bite. If I earned that same amount working a p/t "job," I would be home-free.

I don't care what your source of income is -- anyone earning so little shouldn't owe a dime in taxes. If I had a home business that cleared $100K a year, I would gladly fork over $15K of that to the government -- I have no expensive tastes, and could still live like a prince on what's left. But when every dollar is critical, and I can barely cover my own food and transportation and other expenses, that 15% looms large.

Re:You're Missing A Very Important Point Here

[amyhughes]

If you had a part-time job you'd still owe 7.65%, so the self-employment bite is only 7.65%. It's the employer's half of SS and Medicare. You have to pay the employee half even if you are serving french fries.

Re:You're Missing A Very Important Point Here

[Anonymous Coward]

If you had a home-based business pulling in $100k a year, you won't be just paying $15k in taxes. Think more like $50k.

Re:You're Missing A Very Important Point Here

[sadr]

If you're only making $5000 a year, you should qualify for the Earned Income Tax Credit, which will offset most of the social security taxes.

Re:You're Missing A Very Important Point Here

[Fezmid]

Not sure how this worked, but when I worked part time for the University of Minnesota (as a student), as long as we worked less than 20 hours in a week, we were exempt from paying social security of medicare tax. I'm not sure if the University picked up 100% of it, or if the school had a deal with the government, but it made getting a campus job instead of an off campus job a no-brainer.

Re:You're Missing A Very Important Point Here

[mcsuper5]

Well, $5000 (Earned Income) - $375 (1/2 of Self Employment) = $4625 which if $354 for EIC. This is off course assuming that he lived in the US for more than 6 months, and is 25-65 years old. You can't claim a parent for EIC, even if they are disabled.

Consent of the governed (don't *Quite* understand)

[Anonymous Coward]

Is #6 (social control) still working the way it should?

Almost anyone can create an 'effective marketing machine'

In the United States, we had a revolution over points 1, 2 (Change American Elite and Government to British)

Still set up a government with aspects of 3 (change party name as needed), 4, and 5.

But point 6 (throw the 'bottom class' enough bones) isn't working as well as it used to, thus setting up conditions where that 'consent of the governed' isn't as easily available.

And the second amendment helps out here, even if the fourth is temporarily MIA.

Re:Pound of Flesh

[GoMMiX]

In my locale, it is estimated that over 30% of the population is undocumented immigrants (SEE: ILLEGAL IMMIGRANTS).

It's very difficult for me, personally, to support a tax system powering a government that refuses to enforce the laws that are there to protect citizens from illegal immigrants and the effects they have on our local and national economy. Furthermore, a great deal of my tax dollars go to local, state, and federal programs to assist low income families - all heavily exploited by illegal immigrants.

Last Sunday, an illegal immigrant ran over and killed a four year old little gear - then drove off. The local newspaper reported the driver as being WHITE, for fear of a backlash from the hispanic community. Moreover, police were unable to locate the driver of the vehicle until Thursday, when a local pizza store offered a reward. Low and behold, once the reward was offered it was mere hours before someone turned the murderer in.

I'll pay my taxes, and I'll even be honest about it (painfully so), but like HELL I'll be happy about it.


More on topic to the article; I think the IRS might find itself a nasty little mess if it gets its way. An example would be the rampant buyout fraud on eBay and other auction sites, like when my car sold three times before it actually sold. (Nice way for eBay to rack up on fees, btw.) If eBay reports the value of four vehicle sales to the IRS, and I report only one -- smells like an audit nightmare. They may get what they want, but personally I think the responsibility should rest with financial institutions rather than private auction sites.

I personally am somewhat ill of the IRS simply imposing itself on whomever they feel, with no restitution. So, they get this -- then what? What's next? We end up carrying around consumer cards with our tax-id on them so they can track our spending, too? I know, sounds stupid - but there has to be a line - the IRS already has too much power -- and controls the population of this country with fear.

In this country you are innocent until proven guilty on everything but taxes. When it comes to taxes you are presumed guilty until you can prove your innocence, and the amount of tools and powers the IRS has to destroy your life without a trial by jury and conviction is just insane. And the system is so complicated, to be fair and efficient most people need an accountant (See: A degree and professional experience, with constant re-education) to do so.

If anything, the IRS needs a severe reduction in it's powers and tracking abilities. Funny how they'll go full-on trying to collect on every cent the workin' man makes - but no one seems to give a flip about the billions of dollars lost to the tax system as a result of illegal immigrants - dollars which I might add are getting mailed off to another country, increasing it's impact on our economy even moreso.

A lot of people argue that illegal immigrants don't pay taxes - and greatly they are right. They don't pay taxes, but you bet your sweet rear they file taxes. Most illegal immigrants make under $20k/year, and have MANY dependents. You bet they file. They file and they receive a VERY large refund, even though they NEVER pay a cent in to begin with. Think about that for a second, because that return they are getting is YOUR money. It's the honest working middle-class Americans who are paying for these illegal immigrants. Corporations get to pay them crap wages, putting them in a bracket to get earned income credit (SEE: Thousands of dollars while paying NO MONEY in), and the me and you's of this country are the ones paying for it. The US Government gives a very modest estimate of 10 million illegal immigrants, Mexico itself estimates over THIRTY MILLION. Next time you look at the taxes withheld from your paycheck, take a step back and think about that. Think about where YOUR money is going -- how much of that goes to things the citizens of this country want and care for.

Re:Consent of the governed (don't *Quite* understa

[encoderer]

Very good observation.

The problem as i see it is that since 1980, the elite have just gotten too greedy. These are off the top of my head, but here goes: in 1980 the average CEO earned 20x more than his average employee. Today it's 400x more. in 1980 the top one percent owned 30% of the nations wealth, today it's 55%.

Business profits have doubled up a number of times since then but they still act like there's a pinch on the American business.

And you're right about party affiliation. In many ways democratic leaders have been unwilling or unable to stop or even slow this machine. FDR did the most good and it took a depression and world war to make those changes possible. And who knows what his motivations really were. He was absurdly rich. Perhaps he was just making up for the bones not thrown over the previous decade. After all, great depression conditions for too long == the missing number 7 on the list (revolution!).

state taxes too.

[bl8n8r]

IIRC some states require sales tax to be paid on out of state purchases where sales tax was not collected at the time of sale. Seems to me this includes ebay and newegg et al.

I think they're lying

[tkrotchko]

Are there really that many powersellers on ebay that they expect to get $2B from this small amount? I doubt it.

If we look at this article http://sfgate.com/cgi-bin/article.cgi?file=/c/a/20 07/02/24/MNGMPOAK5C1.DTL it says the total amount of goods sold on ebay last year was $25.2 billion.

They're assuming then that they can raking in 10% of this amount as taxes. That would be amazing, particular if we assume a cost basis of 50%, particularly since the bulk of ebay-ers probably come under the $5,000 amount and if anything, probably sell for a "loss".

Do the math people, this doesn't add up. One of two things will happen: Either they're going to go after every eBay transaction, of they're going to get probably 1/20th of the amount they claim. They may be counting on the fact that when you sell a Stereo you bought in 1978 for $400, you won't keep the original receipt making you liable for the entire $400 amount.

Really, this will add up to a tax bill for everybody who uses ebay, and the only people who will truly benefit will be accountants and TurboTax.

$25 billon easy, just go after tax dodgers

[Proudrooster]

Yes that's right. You can dodge taxes in the US and often times NOTHING happens. In fact, 30% of federal employees aren't bothering to pay their federal taxes, Corporations owe $18 Billion and now only make up 7.4% of those who pay federal taxes., So now, the IRS has time to go after EBAY? Geez, why not go for the low hanging fruit and get the people and companies who truly OWE THE MONEY to the tune of $20 billion or better? What a bunch of #$%^&*.

What do you think about wars

[Colin Smith]

Are they one of those shared societal tasks which just need to get done?

How about paying for agribusiness to produce goods which nobody wants?

How about reducing oil companies taxes to below the levels of other businesses?

Classical liberals (not the bastardized version you have in the US) and libertarians generally believe that governmental influence is a bad thing rather than a good one. Most advocate minimising government rather than complete anarchy.

Low Minimum Number of Sales

[Draconnery]

I don't think most of us are that worked up about the IRS's desire to get income taxes out of the real eBay stores and super duper Power Sellers who really are making a substantial percentage of their income through eBay sales. It sounds like this community is concerned, and legitimately so, because of the recommended minimums the IRS is considering (according to the summary).

To repeat someone else's point - don't people sell up to 100 items at garage sales?

If somebody is cleaning out his garage, and comes up with 150 things to sell, does it make sense that he should be hounded for the taxes on the "income" generated?

And then again, we are Slashdotters. A number of us probably own some expensive electronic shit. If somebody sells 15 or 20 thousand dollars worth of electronics for a little over $5000 because he upgraded, should he pay taxes on that? Only because he threw away the receipt 2 years after he bought the stuff, you say? Silly.

The general idea is fair, but they're gonna need to tweak those numbers. People who run eBay businesses are all gonna clock in with thousands of sales, with their $5 margins on bluetooth headsets and shit. Anyone whose income is really coming from eBay is going to make, one would assume, way more than $5000; let's make it, say, $20,000 before the IRS hassles you, and even at numbers that high, you get a chance to prove that you were just selling your shit (say, used cars that you paid more for), not running a business.

So if you made the numbers 1500 sales, and $20,000, I think it'd be a lot harder to argue with.

Cool

[FatSean]

eBay has really taken a dump over the last few years. I quit using it back in 2003 I think. Too much sniping, and losers over-paying. I suppose if you want a rarity, eBay is still good...but as a tool to save money over buying from a more traditional retail outfit online...I'm not seeing the value anymore.

And now they got this! If I owned eBay stock, I'd be thinking about selling.

Re:Cool

[kryptkpr]

Myself and my friends all heavily use eBay up here in Canada, because the markups on certain items (cellphone accessories, car audio, jewelry) are often 200-500% locally, even from traditional retail outfits. For example, they actually charge $30 for a leather cell phone case here. $20 if you go to one of those shady asian-import places. These items have no value on ebay, and often sell for $0.01 plus $6 - $9 shipping..

Plus, if I buy locally I'm paying 14% tax.. if I buy from eBay, I've got a good chance of avoiding taxes entirely (depends on the cost of the item.. under $10 nobody bothers, and if the seller is nice enough to ship as a 'Gift' then it's totally tax-free for me).

In summary, eBay is still cheaper (in many cases) for those of us north of the border.

Fear the IRS.

[TheLink]

Whoa... You really really better get good advice ASAP.

If the IRS comes by and says you owe them say 80K, and you don't have cash, receipts and stuff to cover your butt, you're in big trouble.

You probably should have posted anonymously through tor :).

When the Gov can't pin anything on someone they don't like (or want to jail), they get the IRS to do the dirty work. And the IRS have quite a LOT of power.

I've heard a Slashdotter complain that one time he made a mistake and sent his state tax cheques to the Feds, and the Fed tax cheques to the state. The state told him nicely that they couldn't cash the cheque. But somehow the Feds managed to cash the cheque!

When he asked the Bank how they could allow that to happen, he was told the Bank isn't going to argue with the IRS, they can cash whatever cheque they want... Seems the feds got one of those big red rubber stamps, stamped over the cheque and pwn3d!

Don't panic yet. Get good financial/legal advice first. Ask for "off the record" advice too.

Re:Fear the IRS.

[reflector]

yup, i thought about posting anonymously, but i haven't really done anything wrong, besides have poor recordkeeping.

i have a date with a good accountant thursday, we'll see how it goes.

nice story about the irs cashing the state check, wouldn't surprise me.

wars are stupid

[fantomas]

>Are they one of those shared societal tasks which just need to get done?

ahhh... nice and complex. I'd say I'm not sure of what you're asking. But wars should be avoided where possible. Wars are stupid and expensive.

>How about paying for agribusiness to produce goods which nobody wants?

No.

>How about reducing oil companies taxes to below the levels of other businesses?

No.

>Classical liberals (not the bastardized version you have in the US)

I'm from the UK.

>...and libertarians generally believe that governmental influence is a bad thing rather than a good one.

I'm aware of this. As a layman (not an expert political scientist) I prefer social democracy models. That's my bias. The strong will always look after themselves, I think we should judge a society on how well it looks after the weak.

>Most advocate minimising government rather than complete anarchy.

Indeed I am aware of this. Most seem pretty happy with external bodies to their communities providing roads, complex industrial production, nuclear weapons systems, coca-cola, etc. ;-)

Ebay is already doing this

[rs79]

This happened two weeks ago to a friend of mine, Jim, who called me in outrage and explained:

He geows and collects orchids and has phytosanitary (ie, the proper) permits to import
flasks of seedlings into Canada from the US.

Now, most sellers won't/can't ship to Canada, but that's alright, we both know a guy
that lives in Buffalo, Dick, that receves these shipments then they're collected by Jim from Buffalo
and he walks them through customs with the proper forms and the flasks are imported legally and properly.

Last time he did this he got won some auctions for plants, as well as flasks of
seedlings - the plants were a gift for the guy in Buffalo for his trouble.

Last week he had a guy from the Ministry of the Environment that explained to him when he showed up
at Jim's house than Jime has a permit to import flasks but not plants and he bought some plants and
they know this because they saw it on ebay. The catch is ebay had had to have
given the MoE this Jim's contact data as there is nobody else who has it and no
other way to get it.

So apparantly ebay cooperating with the IRS might be news but ebay cooperating
with any gov official that walks in and asks for data is already happening.

(My friends simply had to show the plants in question were delivered to the US
and stayed there which was easy)

Obligation is NOT law!

[JAB Creations]

There are laws and there are "social laws". No one is legally committed to paying income tax as taxable income is only defined by the Supreme Court as profits (AKA Corporate America pays "income tax"). The Federal Reserve isn't even a government building or branch but a private bank who's owners are unknown to the public. Maybe Slashdot should report this unless 1 trillion a year in stolen money isn't important news? Anyone also notice how these seemingly harmless midnight bills getting passed would make it difficult for the American to rebel against their government and take back control of America?

Re:More War Funds

[b0s0z0ku]

The "tea party" was about tax collected in the colonies going to an offshore king, tax is nothing new to either the US or the colonies that preceded it.

And how is the fact that our tax money is going down an offshore black hole called Iraq helping any Americans? Wasting it on adventures outside the US (with no benefit to Americans) is just as bad as giving it to the King of England's treasury! Actually, worse: England put some of those funds back into the American Colonies.

-b.

this isn't for YOU

[chrwei]

it's for those who are trying to make money on eBay. Most of these people already are a business and already pay the taxes, the ones that the IRS are after here are like retired Aunt Flo who found out that she could sell her own line of knitted scarfs and hats and actually make a wage doing it.

I don't think there is as much money here as the IRS thinks there is.

Self-employment tax

[b0s0z0ku]

BUT, I am still obligated to pay 15.3% in SE tax. So, on that $5000 amount, that's a $750 bite. If I earned that same amount working a p/t "job," I would be home-free.

Um, no, you'd still have to pay half of that amount in social security taxes. The other half would be paid by your employer. Self-employment tax is just your and your employer's (yours again) half of the social security taxes. With a "normal" job, it still needs to be paid - you just don't see half of it.

-b.

How to cause the demise of the IRS, easily.

[Anonymous Coward]

Enter an off-shore eBay clone...

Who will take the business and money and jobs off of American shores and away from the IRS greedy bullshit; the people enjoy a free market and will adjust to *KEEP* that free market. Now how is this serving the good of the people again? For every tyranical and/or greedy grab by a major entity, there will be an equal and opposite circumvention of the oppression of the people's will/freedom/choice; see Black Markets or the 18th/21st Amendments to the Constitution. Just like offshore banks will start to pop-up that will never cooperate with any US Government entity and allow people to gamble like normal again...or avert invading eyes for other reasons. Way to make life better!

Sick and tired of the IRS? Get even 49% of Americans to not pay ANY Federal taxes (Such as adjusting a W2) and continue to refuse to pay those Federal taxes. Think any locale has the resources to attempt to go after 49% of all Americans who will refuse to pay unfair and unreasonable taxes, especially after this happening years in a row? Think momentum would not grow as the glaring weakness becomes more apparent, begging to be exploited? They cannot even handle the workload of the people/businesses *paying* taxes. They simply do not now nor ever have the money and people to handle ANY sort of economic revolution, think about it. We as Americans sit on a weakening dollar, a massive record setting and growing deficit, a widening trade gap and a slew of other major economic problems at the Federal fiscal level. Even with the sheep blindly following the herd and allowing their hard work to be stolen from their paychecks, balancing a budget is nearly impossible and already requires the trimming and cutting of services as deep into the infrastructure as education; imagine the chaos and bankruptcy if that already overextended budget had just 10% or 15% of the money just simply...gone. What then as they have no money to pay people and for programs, spend more money to start a long nasty fight to try and get that money...when they have none to begin with? All it takes is cooperation and coordination for a non-violent revolution on the same scale as that of our wise Founding Fathers.

There does not need to be bloated inefficient Government programs that are a black hole to money (See Iraq reconstruction), and that means there is not any valid or decent reason that on top of having you work from January to June just to pay taxes they have to start prying into the last truly free market left on the globe to take even more from you so they can squander it. The illusion is, brer government rabbit *creates* the briar taxation patches he begs not to be thrown into.

To question your Government is brave, to revolt against it is American and Patriotic.

we already do

[chrwei]

You want fair, easy, and simple? Have the IRS tax be "X% of income over $Y minimum", with deductions only for those truly altruistic reasons, such as recognized non-profit charities.

most of us already do pay a flat rate. That magic number is about 40%. We have to jump through a lot of hoops and write a lot of checks to get there, but there it is.

I'd even take it one further: Pay the tax to your county via the real estate and property tax system that's already setup, who then pay the state, who pay the IRS. Cities would be free to still get in their little jabs via sales tax and other use taxes, which if you don't like you can move just like now (this is one of the reasons I like to live outside city limits).

Re:we already do

[The Rizz]

Pay the tax to your county via the real estate and property tax system that's already setup, who then pay the state, who pay the IRS. This is a very bad idea for two reasons. (1) It adds more middlemen to the IRS process, which just means more government waste - whatever tax is in place should go collector -> IRS. (2) Property taxes are high as is. If you make property tax the only tax, it will just guarantee that nobody can afford a house, and we all live in apartments. Family-owned farms will instantly become non-existent. All real estate in the country will be owned by businesses/the rich, since they're the only ones who can afford the taxes. Businesses are in business to make money - this means they will pass that tax, plus a little extra, right onto the renter in the form of higher rents. In the end, this only serves to pass a higher % of taxes on to those who are poorer.

Re:we already do

[chrwei]

how does taking the income tax you already pay and moving it to the property tax bill cause you to pay more tax? the final number would be the same, you'd just pay it in one check. This would cause the IRS to become smaller, and the county departments to become larger by about the same amount. You wouldn't pay MORE tax just because you owned more land, and it wouldn't affect renters either. The tax here is on people that have jobs, and that would not change. No single person, or business, would pay MORE tax, and if anything they would all pay less since the tax collection process would have less overhead in facilities and paperwork. IRS has offices all over the place, they would close them (and the employees would then go work at the County offices) so there would be less overhead right off the top. If you don't own land, you don't pay the property tax portion. Renters would still pay income tax to the county collector, and the landlord would pay only the property tax for the properties rented.

it's not complicated to separate the taxes and still only write one check, Missouri already does this with their real estate and "personal property" taxes, the same office collects both and you can write one check but they are calculated and billed separately. (for those not familiar, "personal property" in MO is on motor vehicles including cars, trucks, and trailers and is paid separately from the licensing fee.)

Nice timing

[syylk]

Just in time.

You need cash for yet another war, and *poof!*, two convenient billion dollars to pay your buddies at the weaponry industries.

How fortunate! Quick, crank out those bombs and tanks!

A viola is a musical instrument

[Anonymous Coward]

You're looking for the other word.

Re:A viola is a musical instrument

[reflector]

no, actually i was thinking about a particular item i sold on ebay last week, which happened to be a viola.

What about yard sales?

[HycoWhit]

If eBay sales are taxable, does this mean yard sales are taxable as well? How many times does the government get tax items? Seems I paid income taxes on the money used buy the item and paid sales tax at the point of sale. What kind of tax is due after an item is sold on ebay? Or instead should everything sold be tracked for loss? i.e. the original purchase price minus the yard sale price.

You didn't read the parent post carefully

[ElBeano]

Before suggesting the parent "clearly doesn't understand" the tax code, read the post again. He/she is talking about selling items they purchased for their own use. Income tax on the money used to purchase said items was already paid. No tax is due in such a case, provided cost basis can be demonstrated. Indeed, if the IRS wants to charge income tax on the sale income, cost basis will normally demonstrate an actual loss. I think the $2 bil is overstating things a bit on the IRSs part, but who knows for sure.

Re:You didn't read the parent post carefully

[baptiste]

He's still confusing the two. If I buy something and pay sales tax on it, then sell it and make a profit - that's income. It doesn't matter if it's a business or individual. If sales tax was paid on the item when I bought it - it increases the cost basis - but when it's sold - any 'gain' is and should be counted as income. Just because he's an individual and not a business is irrelevant. And as the TFA notes, they are only looking for people with 100+ transactions with value in excess of $5000. Anyone fitting that criteria is a business.

Great

[crossmr]

Shipping via usps ground for that USB thumbdrive just shot from $60 to $120.

Long Term Capital Loss

[Anonymous Coward]

If you buy an item for your personal use, keep it for more than a year, then sell it for less than what you paid - it's a capital loss. It's not income. You don't have to pay taxes on it. You can NOT deduct the loss, though! That's only if you are running a business, and list all the buy/sell prices for everything.

Excuse me, but who is asking...

[Nom du Keyboard]

Excuse me, but are Tax Experts asking the IRS to require this reporting, or is the IRS trying to do it itself while shifting the blame to others. Most "Tax Experts" don't worry much about what the IRS doesn't know about itself. This is like the RIAA claiming that their extortion victims are calling for their ISPs to report on them without the need to go to court first because the RIAA is promising lower settlement amounts in these cases. Neither of these two stories wash well with me.

this was bound to happen

[MEForeman]

Selling something on ebay gives rise to income, I'm shocked the IRS hasn't made ebay do this before...

False premise

[Anonymous Coward]

Your argument is based on the false premise that you rightfully "own" what you legally own. Without society you couldn't own what you do because (a) society introduces the concept of ownership and (b) you are a result of society. Therefore it's acceptable that society takes money from you in the form of taxes. (Society decides collectively on these sorts of things by democratic methods.)

Society gives you income and then takes part of it away. You complain when it gets taken away.

Not a business...

[Chmcginn]

You're not paying taxes as a business, you're paying taxes for extra income as an individual. The reason that they don't want to let you claim more is then any hobby would be considered a tax deduction...

Spent seven hundred dollars on DVD's last year, and sold one? Oh, okay, so you can deduct 690 from your taxes.

Spent two thousand dollars on food, and sold five bucks worth? Oh, okay, another 1995 dollars deducted.

And so on... basically, only certain personal expenses are considered tax deductions for individuals. For a business, any expense is a tax deduction. And with certain kinds of business, tax deductions can be rolled over into personal taxes.

Re:Not a business...

[The Rizz]

For a business, any expense is a tax deduction. And with certain kinds of business, tax deductions can be rolled over into personal taxes. My point exactly. If they don't want me to deduct my personal purchases from my taxes, don't make me pay taxes when I later sell those items off at a loss.
If they're going to require me to treat my personal life a business when I sell some of it off, they should let me consider it a business when I figure out my deductions.

Re:This requirement will not reduce sellers' profi

[swimmar132]

wtf, how does that not reduce sellers' profits?

Thank a "Fiscal Conservative"!

[Anonymous Coward]

The government is looking to collect more taxes? Thank a "Fiscal Conservative"!!

"Fiscal Conservatives" were the ones since 2000, triumphantly proclaiming "Deficits Don't Matter". "Fiscal Conservative" were the ones spending hundred$ of billion$ of dollar$ on illegal wars of choice, on scared-of-their-own-shadows phantom menaces, on bridges to nowhere, on legal fees protecting "Fiscal Conservatives" from going to prison for their criminal activities, for war crimes, for treason.

Love being taxed? Thank a "Fiscal Conservative"!

Re:More War Funds

[TapeCutter]

I could be wrong but can't you vote the current "king" out of office?

Re:Pound of Flesh

[Kelson]

A lot of people argue that illegal immigrants don't pay taxes - and greatly they are right. They don't pay taxes, but you bet your sweet rear they file taxes. Most illegal immigrants make under $20k/year, and have MANY dependents. You bet they file. They file and they receive a VERY large refund, even though they NEVER pay a cent in to begin with. Think about that for a second, because that return they are getting is YOUR money.

How exactly does this work? The refund is the amount left over from what you have already paid (such as through withholding on your paycheck). Presumably if they're going to get a refund, they have to supply the IRS with a W2 or equivalent form indicating that they have already paid -- and the IRS ought to have files to back that up. If that balance starts at zero, there's nothing to refund in the first place.

Or are you saying that the IRS doesn't track the money that's given to it?

A little more in depth...

[The Rizz]

No. 1 Sorry the stock market doesn't create companies. The stock market is little more than a way to get companies that have already proven them selves successful more money. I was talking about the formation of super-huge companies - companies that go public in order to expand to national/international levels.

It takes money, Lots of money, right off the bat to get a business going. That depends on the business. I got my current company set up for under $5,000. I'm working on a second one that will be about a $10,000 start up - neither amount what I would consider "lots of money".

This comes from rich people in the form of capital investors. Or several middle-class people being capital investors. It doesn't all have to come from one source.

Perhaps you didn't know that according to Fortune Magazine 80% of the millionaires in the US are new money. I don't consider millionaires to be rich. I consider that upper middle-class.

Another interesting fact from that same article, 60% of the fortune 500 are also new money. That is over half of the 500 richest people in the world have gone for that caret and got it. And just under half of them did nothing more extraordinary to get on that list than be born. That list should be more like 95% new money - people who actually have vision should be on that list, not some guy who just paid some other guy to invest daddy's money.

There is no way out of a million people you are going to have the same number of people working hard enough to help support the people sitting on their ass if they are not going to get anything out of it. You are misunderstanding my meaning. If someone chooses to "sit on his ass all day" (whether actually sitting, or bumming around the mall/bar/beach/ski slope/wherever), I see no reason to give them any sort of reward. Fuck 'em. Let them work for a living.

To clarify where I am coming from:
My problem is that sales tax is more of a burden the poorer you are. All taxes are, really, but sales tax more so than income tax, for the following reasons:
Income tax is based on wealth. If you earn more, you pay more.
Sales tax is based on spending habits. Depending on what you spend your money on, where, and how, you can make more than someone else but pay far less in taxes.
The poorer you are, the higher the percentage of your earnings that will go towards basic living requirements (food, clothing, transportation, etc.). As you get richer, the portion of your income that goes towards taxable necessities (and even luxuries) goes down. This means that the rich pay proportionately less taxes than the poor do (i.e. A higher percentage of the poor's income goes to taxes than the rich's.)

Additionally, the argument based around the idea that letting the rich get more money than the poor will cause more investment to business, which will make the poor get more money than they otherwise would just doesn't work. The economy will generally get just as much regardless of which end of the financial spectrum you tax (either through greater capital investment from the rich, or greater income from the poor being able to purchase more).
This idea all comes back to supply-side economics (which George H.W. Bush aptly dubbed "voodoo economics" in 1980), which simply does not work. The results of this were seen over the 1980s - while the economy did become more prosperous in the beginning, its effects were starting to collapse by the end of the decade, becoming a recession under George Bush I's presidency. It also left us with an unbelievably large national debt. Attempting to fix some of this damage is arguably what cost Bush his re-election in 1992.

Re:A little more in depth...

[ArsonSmith]

Another interesting fact from that same article, 60% of the fortune 500 are also new money. That is over half of the 500 richest people in the world have gone for that caret and got it.

And just under half of them did nothing more extraordinary to get on that list than be born. That list should be more like 95% new money - people who actually have vision should be on that list, not some guy who just paid some other guy to invest daddy's money./i?

By new money that is they did not inherit money. They actually built it up from near nothing.

Re:Pound of Flesh

[GoMMiX]

I'm not an accountant, but basically what happens is they fill their W4 out with their employer as being tax exempt or having no tax liability (assuming their employer does this for them at all) for the previous year. They work through the year, then when tax time comes they file (I'm not sure the specifics of how - as I understand it they can simply request a tax-id and file using that) - and claim a crapload of dependants. Whether or not the dependants are real is beyond me - I would presume so - probably all anchorbabies. When you make $12k a year and have 5 dependants that means you get a $5,000.00 tax credit.

50 working weeks in the year at $6/hr = $12k. Enter $12k into an income tax estimate site with 5 dependants filing as head of household and you'll receive the same result. If that doesn't piss-off every tax paying American, I don't know what would.

Entrepreneurs and inventors

[The Rizz]

We should find a solution that encourages people to earn money and grow the economy, not to discourage income. For a healthy economy, we need to be encouraging more people to be producers, inventors, business creators, etc. And yet, these are the most taxed individuals when we tax the wealthy, their investments, and their income.

This is not true at all. The vast majority of inventors, creators, etc. either work for someone else, or are forced to sell their inventions to some company if they ever want to see it produced. Look at who makes the most money in most companies. It's the executives, who have nothing to do with any innovation or design work (the Gates/Jobs types are the exception, not the rule). Generally speaking, the people who do the real work, and make the real advancements, are pretty solidly middle class.

When consumers pay the tax, we encourage more efficient behavior.

No, we don't. Look at spending habits in states with 6% tax rates vs. states with 0% tax rates - there will be virtually no difference. What difference there is can often be explained by people "venue shopping" - i.e. those from higher-tax areas going to lower-tax areas to make purchases. I have seen this first-hand, having lived at a border.

Your philosophy that we should adopt a tax based on what impacts the rich the most stems from lumping three groups of people into one.

That is not my philosophy at all. My philosophy is that the tax should be fairly applied based on how much the person has. Sales taxes exclude far, far too many types of the purchases made by the wealthy to ever be fair to those on lower incomes. All it does is cause the poor to pay a proportionately larger percentage of their income in taxes than the rich do. This leads to a "rich-get-richer, poor-get-poorer" situation (more so than income taxes do, anyway).

I am not advocating some sort of "eat the rich" mentality. If you make more money, you make more money. I'm fine with that. I just think that if a tax system is going to be unfair (and I've never seen one that's not), it should err on the side of those who would be more harmed by it. Income tax is considered unfair because those who pay more taxes do not get a proportionately larger benefit. Sales tax is considered unfair because those who can least afford it pay as much as those who easily can. While each of these methods is unfair from various points of view, the unfairness towards the rich is much less of a hardship upon them than the unfairness towards the poor. (If you're barely making ends meet, a loss of 10% of your income is crippling. If you're making more money than you know what to do with, 10% of that is barely going to put a dent in your lifestyle.)

The wealth of this world is divided among the kleptocrats, heirs, and entrepreneurs. I think we all agree that the former should be eliminated. Messing with the second is up for debate, but I'm personally against it. And messing with the third group is unhealthy for your nation.

Except that the vast majority of entrepreneurs are middle class (many of whom are forced to give up a large portion of their company to venture capitalists - the "heirs" you refer to). The rich are more easily able to make successful entrepreneurs only because if things get tough (as it almost always will for the first few years of a new business), they are less likely to have to close down the business and get a "normal" job in order to pay the bills. It doesn't matter if the business is gaining steam and will be profitable next year if you can't afford to live through this year. Additionally, the rich are more likely to actually become entrepreneurs because they have the money to fall back on in the case of a failure, and as such are more likely to take the risk involved with starting a new business. However, no matter how rich you are, you can only start up so many businesses at a time. If some more of that money were held by the middle class (that part of

Re:This requirement will not reduce sellers' profi

[mr_matticus]

It doesn't reduce gross profits, but it does reduce net profit. Sellers aren't making less money; they're just not keeping all of it.

Re:More War Funds

[b0s0z0ku]

I could be wrong but can't you vote the current "king" out of office?

Certainly. But we're stuck with him for another 2 years before the next election. Personally, I'd prefer if there was a constitutional provision for popular recall (or vote of no-confidence) of a president, but, sadly, without a Congressional impeachment, there's no way to get the guy out NOW, rather than letting him do more damage over the next two years.

-b.

So if the IRS wants seller's income reports

[AnalogDiehard]

...then I would expect the IRS to be collecting ebay's income reports from auction fees, which if you do the math add to to a significant amount.

...and the same for Paypal fees, as they are affiliated with ebay.

I mean if they're gonna tax the seller, then they should tax the auction house.

Re:Is there some law? - Actually no there isn't !

[fishbowl]

>If you'd bothered to actually WATCH the documentary

I watched it until it vectored an unsupported item as fact, and then stopped.
You have to do better than that to be worth my time, sorry.

Three Letters For You

[Slashdot Parent]

V.A.T.

Now quit 'yer bitching about US sales taxes.