Washington State Encourages Internet Sales Tax

prostoalex writes "Washington state Governor signed a tax bill encouraging out of state businesses to collect sales taxes on purchases made by Washington state residents. It should be noted, though, that Washington state does not collect personal income tax, and hence relies on state sales tax for 53.1% of its revenues." As the article notes, "People who purchase items from out-of-state Internet or catalog companies are currently supposed to pay the sales tax, but rarely do." Looks like Washington-staters won't be able to fib on their tax returns about internet purchases, starting in 2008.

Comments

Not that it matters but ...

[slughead]

I don't think this is legal under the constitution. The sales are made outside WA and therefore cannot be taxed by the WA government. A lot of governors have tried this crap, I don't think any have succeeded though.

It's stupid anyway. Sales taxes in Seattle are up to 9.1% which is pretty damn ridiculous. If I were living in WA and this went through, I'd move. Internet purchases help make WA living more affordable.

Re:Not that it matters but ...

[The Warlock]

Florida got around this little obstacle by taxing "use" instead of "sale", where the "use" tax was waived if you paid a sales tax. The end result, of course, was that out-of-state purchases were taxed as much as in-state purchases. A clever bit of legal work, I must say.

City tax rate is the problem

[topham]

The fact you have individual City tax rates is the biggest problem.

While the current situation in Canada is similar to the U.S., out of province purchase isn't subject to sales tax unless the company has a local presence, or you live in Quebec. (They are always the exception).

Implementing tax collection based on destination in Canada is simple, a table containing the province, tax rate, expiry date, and gl code are probably sufficient.

In the U.S. you would need a complete database of Zipcodes, and, or addresses to resolve the tax rate. Ugh! Now you have to maintain that, and that is probably on a monthly basis, not even yearly.

Re:City tax rate is the problem

[thewils]

it'll be built into all of the major shopping cart software inside of a week

Already is, there's a thriving industry in the US providing sales/use taxes by City, County and State because they change so frequently making it impossible to keep up on your own. Here's a quick google of same

The fun starts when you get ZipCodes that span City, County or State boundaries...and also when you start having to apply taxes historically because of crediting returns, etc.

Re:Avoid the tax

[Anonymous Coward]

Six dollars? Hah. Yeah, right.

Where I live right now, sales tax is 8.5%.
In the bay area, sales tax is something like 9%, I believe. That is on top of about 9.3% state tax. That's more than 18% tax, not counting federal tax!

Also, shipping is very cheap. For example, with Amazon I pay $2 per item for overnight shipping. I pay nothing for two-day shipping.

And, finally, I'd rather pay $10 to UPS for shipping an item than $10 to the government for the sales tax, on top of property tax and state income tax and federal income tax.

Frankly, less government. Smaller government. Leave me the fuck alone. I come from a state without a sales tax. I'll tell you what a sales tax encourages me to do... spend less. Which means no sales tax for the state anyway. I have no interest in throwing away 10% of my money so the government can buy expensive cheese for fat chicks with ten kids.

Where's the value?

[way2trivial]

what exactly, did the state of the purchaser do, or provide to deserve 'their share'
seriously.. I pay property taxes to my community, which benefit my community..
if I don't like them, I can move- and pay taxes (or not) elsewhere...

I can see a state requiring businesses to pay sales tax based on their location- you sell from delaware, you have no other locations, you charge no taxes..
benefit to deleware? lotsa companys move to delaware for real.. and increase the states revenue in other ways (new UPS center, new fedex center, new airports, new train hubs)

you sell fron NYC, you pay NYC taxes, all the way down to the city level......

but, if I sell from delaware, and sell to WA, how is the states infrastructure involved that they deserve anything?
if I am a bad merchant, which states attorney general/BBB is going to be contacted?
(hint, the seller's state)

it should be evolutionary taxation, 50 little economic centers- stodgy states can charge the high/heavy taxes and just have funds from heavy handedness and spend it on tax collection/enforcement, enlightened states can charge no sales tax, and enjoy increased revenues from having more citizens, employed in more jobs....

Let me know how that works out for ya...

[pla]

"Washington state Governor signed a tax bill encouraging out of state businesses to collect sales taxes
...
Looks like Washington-staters won't be able to fib on their tax returns about internet purchases, starting in 2008.

Why? Washington state has NO power to do anything more than "encourage" out-of-state companies to comply. Not only can't they practically enforce this, trying to do so would violate Article I, Section 8, Clause 3 of the US constitution.



States can pass all the stupid laws they want regarding what you have to pay for "use" tax and the like. But at the end of the day (at least, at the end of April 15th), cash still lets you make untraceable (and untaxable after-the-fact) purchases.

I will really never understand why we accept "death and taxes" as somehow magically inevitable. The governments of the world have demonstrated themselves completely incapable of responsibly allocating the resources of the citizenry for the common good. Why do we still let them?

We should view tax evasion as one of the most noble of "crimes", depriving aggressive social parasites of their sole form of food.

Washington State residents don't file returns

[symbolset]

Looks like Washington-staters won't be able to fib on their tax returns about internet purchases, starting in 2008.

The state has no income tax so for the most part state residents don't file returns. There is a form(PDF) people fill out if they bought things online or out of state but if you were going to lie on that form you wouldn't fill it out at all. Far fewer than 1% of Washington residents fill out this form.

Back when car tabs on a big RV cost more than $5,000/yr it was quite common to go to a neighboring state to buy the thing, which cost the state a great deal of money in lost sales tax. To recover this lost tax an enforcement program was begun, and several people were prosecuted and fined up to the full value of the vehicle. This raised public awareness of the tax to the point where a series of initiatives was passed to make the registration tabs on all vehicles a flat $30. A series of (IIRC) three initiatives was required because each initiative that was overwhelmingly passed was immediately opposed by the government, the courts, and the attorney general's office. It was turning into a parody of democratic principles. They even did a hatchet job on reputation of the citizen who started and pushed the $30 car tab movement, Tim Eyman. Eventually though they got the idea that the people weren't going to tolerate this tax any more and even though the AG had the initiatives that passed declared unconstitutional the legislature reduced the tax to $30 anyway.

Immediately after this Seattle and some other jurisdictions passed new add-on taxes for vehicles but called them by a new name. At present the taxes on vehicle registrations are still much more reasonable even in the worst case. The struggle on this issue in Washington continues and likely will not end.

There is currently a movement to install a personal income tax in Washington in the name of fairness. It is likely to get a lot of press, but no traction. The only way this would get popular support was if it was promised to lower other taxes also and the people of Washington know that would be a flat lie. Besides, several of the wealthiest business people in the world live in Washington and they can afford to have a state income tax quietly killed.

FTA:

The main sticking point revolved around a change the law makes on where sales tax goes when it is collected. Under current law, the jurisdiction where a product originates receives the sales tax. That doesn't help the state, if the product originates with an out-of-state Internet company.

Under the measure, the jurisdiction where the product is delivered would get the tax.

The change benefits some cities and towns, but hurts others. To solve this problem, the measure calls for mitigation, in which jurisdictions that lose money would receive payments from the state.

This "mitigation" sounds like a way for some bureaucrat to increase the "fairness" to his friends and family. That's going to end well.

Re:Washington State residents don't file returns

[Aexia]

Sorry, but when tax revenues by and large get exported from Seattle to the rest of the state, you're hardly getting "ignored"; You're getting subsidized at Seattle's expense.

Karma of local purchases

[symbolset]

Is the man who sweeps the warehouse in the MidWest not my Brother also? Is the UPS driver not my neighbor? Is there a way I can choose products where I know all the people involved got a living wage, and not break the benefit of the commerce by making it impossible for me to afford? Does the clerk at your local store make more than the ones at mine? Mine are poor. Do your neigbors not invest their retirement funds in large companies that make these transactions? Is it not a benefit to encourage businesses to compete in the field of supply chain efficiency?

My understanding of hard drives far exceeds the level of maintenance a reasonable person would consider worthwhile. If you require guidance in this area, I can appreciate your willingness to pay a premium for it.

And this "hard drive" you speak of... is it not made in Asia by robots and packaged by enslaved children? When you're done with it, will you ship this toxic component to your local landfill or will you "recycle" it by having it shipped back to asia, where it will be dismantled and strewn across farmers fields for the lead to leach into the groundwater?

I don't see the karma here.