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Internet Tax Imminent?
jhigh writes "Proposals to tax the Internet are gaining steam as state legislators see a giant pot of money just waiting to be dipped into. "At the moment, states and municipalities are frequently barred by federal law from collecting both access and sales taxes. But they're hoping that their new lobbying effort, coordinated by groups including the National Governors Association, will pay off by permitting them to collect billions of dollars in new revenue by next year.""
I already pay PST/GST on my net connection, and I pay taxes [or duties] on packages bought online. They want to tax on top of the tax I already pay?
How the hell do you tax email? What if you run your own server?
Step 1. Understand technology
Step 2. Legislate it
Step 3. Represent your constituents.
Tom
Someday, I'll have a real sig.
You know what puts local businesses at a disadvantage when it comes to attracting me? Lack of selection. For example, if I want to watch a film, I add it to my Netflix queue. Too many times I go to Ballbuster or Hollywood Video and they don't have the films I want to watch. Same with books, music, beer brewing supplies, cooking accesories, etc. I live in a city of 50,000 but do a good portion of my shopping online --- and it isn't to dodge the sales tax. Screw the local businesses. They dont cater to me.
Lots of crazy implications here by taxing online sales.
Watch the pendulum swing back toward brick-and-mortar stores. Previously I would go to the showroom or store to physically see/touch/learn about a product, then go back home and order it online (because it would invariably be cheaper). Taxing the product online makes me less inclined to take that additional step if I decide to make the purchase. YMMV.
This is going to hurt the online-only shops, as the taxes will dip into profits. Some small shops (and startups) are only in business because a physical shop (either buying, building or leasing) was simply not feasible, and taxation is not going to help.
How is this going to work if the collecting of funds and the supply-chain fulfillment happens outside of the taxing authority's jurisdiction? If I'm a US business setting up shop in the Bahamas and decide to sell goods made and warehoused in China, and drop-shipping from there back to US customers, what authority would anyone on US soil have to force me to pony up the taxes back to the States? (BTW, I'm just asking... I don't own or operate any business as of this writing.)
How would any government (State and/or Federal) plan to enforce any legislation it plans, with regard to online taxation? Seems I may not have a lot to worry about, given it's track record in reducing and regulating spam. (I don't know about you all, but last week's arrest of Robert Soloway didn't do much to unclog any of my Inboxes).
If successful, all this may do is make the small shops run away. Who will this help, anyway?
Did anyone think about the implications beyond "oooohhh... free money!"...?!
The problem with socialism is that they always run out of other people's money. - Margaret Thatcher
I come from North Carolina. We invented NASCAR raceing because we got bored from bootlegging. Outwitting revenuers has been a sport here for a century. If we get not just a sales tax on the connection, but a "connection tax," will my open AP "WardriversWelcome" become a bootlegging operation?
The government, here and elsewhere, has shown a great willingness to try and control access to and content on the internet. However, direct control will equal censorship, and will always be declared unconstitutional. But if the internet can be licensed and taxed, the states can effectively control who can get connections. Imagine taxing internet connections at the same level as alcohol, somewhere between 25-62% in NC. Just imagine how many people that could price out of the market, and how onerous the effect would be on the rest of us. Imagine a bandwith tax sold to curtail piracy, but effectively cutting off Linux distributions.
Maybe bootlegging will come back into fashion again. Instead of stills we'll have WAPs, but we'll still have the revenuers with the machine guns, dynamite, and axes.
I agree. Making sales taxes apply to internet purchases makes sales taxes slightly less regressive than they already are. That is, if you spend 50% of your income on purchases subject to sales tax (as the poor are likley to do since things like food is a larger part of your budget) you pay a greater percentage of your income in sales tax than people who are more affluent. The wealthy spend a smaller percentage of their income on things subject to sales tax and are thus taxed at a lower rate.
For example:
Person X: $2000/month take home pay of which $400 is spent on things subject to a 5% sales tax. He pays $20/month in sales tax - or 1%.
Person Y: $8000/month take home pay of which $1000 is spent on things subject to sales tax. He pays $50/month in sales tax - or 0.6%.
So sales tax is inherently regressive. When sales tax doesn't apply to internet purchases, that means that those with internet access (the more affluent) pay less sales tax than the poor. So taxing internet purchases makes those who are more affluent (and more likely to purchase things from the internet) pay even less in taxes.
So I think this is EXTRA good!
Ron Paul is against taxation of the internet. If you don't want to pay extra internet taxes, vote for Ron Paul - first in the republican primary, then in the presidential election next year.
Sam has one liberty, which he sacrifices for one security. Can you tell me what Sam has now?
You'll vote them out of office. You'll write a letter. You'll run for office. But than again you realize you are too lazy to do all that. It's hard. You've failed, again.
Sure you work hard, and then bury yourself in work so you wont have to think about it. You, American voters, would even allow them to tax your income without a fight. Once, long ago, you had a spine and got upset about a 3% increase in the tax of tea, based on how the money was going to be used. Now you allow yourselves to be taxed at an insane level that nullifies the concept of liberty almost completely, seeing as you are a slave for almost half a year to taxes. Liberty or death? That's a good deal of both.
Please wake up all you smart computer people. Why is it the collective forces of the internet can create amazing projects such as software, operating systems, and the odd Groklaw, but has yet to create a great project for "hacking", tweaking, and tuning government via an organized effort of lobbying, letter writing, and education?
Come on. You sit there and allow someone to take almost six months of your life per year with only the smallest whimper? If that's the case almost nothing will gain your outrage.
Once again your bluff is being called. What are you going to do about it?
-- Prepared at the direction of, or to be sent to Legal Counsel, in anticipation of litigation. Attorney Client Pri
Whenever this subject comes up I always marvel at the stupidity of suggesting a tax on e-mail. Not only is it unjustifiable, it's unenforceable.
E-mail removes revenue from the post office, but who cares? The USPS can hire fewer mail carriers as their volume decreases. E-mail runs mostly (if not entirely) over private infrastructure. There is no justification for an e-mail tax, because the government is not providing any significant e-mail related services. Even if you like the idea of Internet access taxes and Internet sales taxes, a tax on e-mail is simply unjust.
And how would we implement an e-mail tax? Even if we decided that it made sense for some reason - if we thought it would make spam uneconomical, for example - it's all over private infrastructure. How could we force SMTP servers to fairly account for the number of SMTP transactions they perform? E-mail server providers like Microsoft and Novell can be forced to build immutable, proprietary reporting into Exchange and Groupwise and other products, but the most common SMTP server is open source. If you are charged a cent per 100 messages you could easily recompile the SMTP daemon to be more generous. And what's to stop people from setting up new servers for unlimited e-mail? A tax on e-mail is unenforceable. I'd be surprised anyone is talking about it, if I didn't know as much about Congress as I do.
The current situation where brick and mortar stores must pay state taxes and on-line stores do not is clearly wrong and must be remedied. Tax loopholes like this create unintended public policy pressure. I just bought a bike from performance Bike shop. If I had bought it a week earlier I would not have had to pay sales tax. But that week the e-tailer opened a brick mortar store 200 mines away from me in my state. Suddenly I can't shop on-line from that company just because they have a store in the state that's too far from me to be practical. Liewise for apple products. These are unintended artifacts of this botched internet tax free zone law.
All internet retailers should have to pay the appropriate state taxes. Even this will not be perfect, since given differences in how states tax it's not clear how to tax an e-tailer that operates out of a property tax driven state when they sell to a customer in a sales tax driven state. But this is a much lesser evil to remedy than the current situation.
Now let's turn to the peril. Right now we have an easy to apply rule. No taxes on internet sales unless there is a brick and mortar presence in the state. Once we get rid of that then legislators may covet levying all sorts of other taxes on internet sales. Sort of like how our phone and other telecom bills get larded up with hard to spot taxes and "fees". Some states might adopt protectionist provisions to protect local stores from national ones. That's not neccessarily bad in it self--it's a state's prerogative to do so short on interfering with interstate commerce. But that tort of meddling is likely to leave open all sorts of tax abuse opportunities.
Thus the parent poster is totally wrong that more taxes are bad. Indeed the more ways to tax people the more possible it is to work out fair tax structures than minimize artifactual consequences. But the parent poster's paranoia is justified. given more ways to tax states sometimes will tax more. The solution to the latter problem is quite simple. have the state set a maximum tax revenue figure that is the combination of all sources. then the state is left to argue over how to distribute that figure over the sources of taxes rather than rasing the final sum.
Some drink at the fountain of knowledge. Others just gargle.