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New York to Implement an 'Amazon Tax'
theodp writes "NY Governor David Paterson is expected to sign a bill requiring online retailers to collect sales taxes on purchases shipped to the state, even if they have no operations or employees working there. The so-called 'Amazon tax', which applies to Internet retailers who derive sales through affiliate programs, would end what for many New Yorkers had been tax-free shopping and generate an estimated $50M in revenue this fiscal year. Experts predict that other states could follow suit with similar provisions."
It's not Constitutional.
http://lkml.org/lkml/2005/8/20/95
This sounds like some kind of serious hogwash to me. The laws applying to Internet sales should be no different than those which apply to catalog sales. If you order something out of a catalog and you have it shipped to the same state where the catalog company is, then you pay the sales tax in that state just as if you had gone to a store in that state and bought the item. But if the catalog company is in Maine and you are in Florida, then you don't pay Jack Schitt for taxes. An internet site that sells stuff is nothing more than an electronic version of a page in a catalog. Amazon is nothing more than a vast catalog of products, as are most other electronic retailing sites. So if you're in the same state where Amazon is, it makes sense that the sales tax should be added to the price, but if you are in any other state, there should be NO tax of any kind on the purchase. Amazing and incredible that every time politicians are faced with a spending problem, they just invent more taxes, instead of reducing all the unnecessary spending. Or as Mark Twain said, "Suppose you're an idiot. And suppose you're a member of Congress. But I repeat myself."
McCain/Palin '08. Now THAT's hope and change!
This is an eventuality, and a needed leveling of the playing field. Why should a multi-billion dollar company get a competitive advantage over local businesses? Hate taxes all you want, but hate them fairly, not just those on your local small businesses. If e-commerce continues to grow, and is not taxed equitably with other businesses, this becomes a tax break for the big internet based merchants, and they need it the least. Consider this another play on the idea of a fair tax - one that levels the playing field for all businesses
Hope is the worst of evils, for it prolongs the torment of man. -- Friedrich Nietzsche
The tax is supposed to be collected where the purchase is made. So, if you are in NY and order something online, you are supposed to pay the NY tax on it. However, if the retailer does not have an actual presence in the state they are not obliged to collect the tax in behalf of the state, and in that case the consumer has to declare it when filing for state taxes. I guess they have noticed that not many people declare their purchases to pay tax on them...
Violence is the last refuge of the incompetent. Polar Scope Align for iOS
but i know in Ohio, we're supposed to report any out of state purchases that arrive in Ohio (like all the computer stuff i get from newegg) on our 1040s. i say supposed to because i haven't reported any of my purchases any year. god i hope no one from the ohio tax office is reading this...
...shopping in PA malls just over the border, and sent them notices that they had to pay NY sales tax. NY also is trying to force Seneca store owners on sovereign indian land to collect NY sales tax.
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Courts have determined that when you buy something through the mail, the sale takes place at the seller's location not the buyer's location. Hence, when a NY resident buys something from Amazon, the sale takes place where Amazon is based--in WA. The exception is if the seller has a "substantial business presence" in the buyer's state, in which case the sale is considered to have taken place there.
It's not even a question of the seller not being obliged to collect the tax. In the example, NY has no authority to tax sales completed in WA.
To get around this, many states have so-called use taxes that are typically equal to their sales tax rates. Use tax is collected when a resident brings a good bought out of state back into their state of residence. The rationale is that the use of the item is being taxed, not the sale of the item. In practice, states only routinely collect use taxes on cars, because it's typically part of the process of registering and titling a car in a new state.
Personally, I can't see how NY is going to be able to enforce this law. They can't compel businesses outside of their jurisdiction to collect and remit these taxes without some sort of federal law.Those are called Use Taxes. IMO, they should also be ruled unconstitutional in some cases:
/might/ be okay, provided the vehicles have a tax burden associated with them. And, vehicles do, though the burden probably ought not to be measured by the sales tax inside the state, but rather whatever vehicle-specific surcharges the state has.
INIAL, and I may be woefully incorrect about all of this, but, IIRC, the supreme court has ruled in the past that an interstate commerce tax is unconstitutional if it fails to violate either of the following:
1) must be compensating for an identifiable a tax burden. Decreased revenues due to 'lost sales' in other states do not count - clearly the NY interstate book tax would fail here.
2) The inter-and-intrastate taxes must be approximately equal. (You can't jack up the taxes for interstate commerce beyond what you demand of your own intrastate commerce. NY is probably okay here.)
The Use Taxes on vehicles
Then we'll see a bunch of businesses pop up in New Jersey and Connecticut which will forward packages to New York. They're not the buyer or the seller, so they'd have no obligation to tell New York what they shipped to whom and when.
-jcr
The only title of honor that a tyrant can grant is "Enemy of the State."
Most states have Sales and Use tax. The use tax is for goods purchased for use within the state. So, the GP is correct: in most states you're supposed to pay taxes on goods purchased over the Internet or through catalogs or if you purchased it from a state with no sales tax.
If you look at most state personal income tax forms you'll generally see an area for calculating tax on goods purchased from other states or over the internet. I know off the top of my head that Wisconsin, Illinois, Colorado, Ohio and Utah all have some type of line for calculating Use tax on their personal income tax forms.
Why does NY want this new tax if they already have use tax? For two reasons:
Quite frankly, don't be surprised if new taxes like these appear all over the place. The plummeting economy and rapid devaluation of the dollar means that even states have to collect money where they can.
I fully expected this to eventually come about. There's a huge chunk of commerce in the US done through the Internet which drains a lot of possible Tax Revenue from the states when before people would just go to the local electronics store.
I don't believe it's right to tax us this way however, nor do I think it's truly enforceable at this time since tax rates in various states are so complicated and if this actually passes it will be a big precedent for other states and local governments the follow suit, further complicating the situation.
It will be interesting to watch this play out. Sadly, the American people are gonna have to start paying taxes from somewhere. We have a huge debt and a lot of immediate things the government simply needs to take care of.
The insurance companies in Florida got a pretty nice 12-year run of luck after Andrew where they weren't paying out substantial claims but were still collecting inflated premiums,. There was a lot of whining from insurers about "we need increases so we can replenish our reserves", but absolutely nothing mentioned about the billions that were collected between 1992 and 2004 that went straight into shareholders' pockets, the billions collected in the 70's and 80's prior to Andrew, or the billions in profit they've seen since 2004. They're insurance companies, they're paid to assume risk, so pardon me for not feeling their pain when they have to pay out the claims they agreed to. The fact that one of them is getting their knuckles rapped because they're willfully refusing to provide documents subpoenaed by the state isn't helping their relationship with the state either .
I'm looking forward to the unimaginable degree of whining we're going to hear from this industry once the San Andreas Fault has its next big slip.
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Typically Federal is funded by Income, Medicare, Social Security, Capital Gaines, Fed Fuel tax, import/export tarrif, drug seisures.
State is typically funded by a State Income taxes (not all states have income tax), State sales tax (3-9%), State fuel tax, fees (license & permit). State funds typcially tend to pay for local infrastructure (roads, water, power, bridges), education, health care, arts, wild life reserves, etc. It's hard to say that the only ones that pay for those things because there is so much overlap from the cities and federal government.
County/Parish/City is typically funded by property tax (usually just land/house, though things like cars, boats, aircraft can be taxed as property), permit fees/licenses (building, business, etc), services fees (water, sewer, fire dept)
While I personally love no sales tax on the internet, it does bleed the State budgets of money, which of course creates new opportunities for the Federal Gov't to come in and pay the bills. Congress is never shy about using that money to blackmail the States in to doing what they want, by threating to withhold the funds. Federal highway funds have been used for years to push varies issues such as polution regs and drinking age limits.
Most people forget that the US is actually 50 different countries bound together by the Constitution. Each State in turn has its own Constitution which all are similar, but there are some differences. There has been a constant fight between State & Federal government over who is in control of what, generally who is in charge of the money. The Federal Government has been slowly creeping into what traditionally is State territory, sales tax just being the latest. Basically the only thing the Feds are supposed to do is protect the borders, raise a national army, print money, and regulate commerce nationally & internationally, and treaties.
What's funny these days the Fed's are a little on the broke side so many States are looking to go there own way again. Internet sales tax, education reform, polution, fire arm regulation (the federal government has very little actual say in this, though you wouldn't think so by what you see in the news), and drinking age being the hot topics of the day.
So that should make it clear as mud for you. If you did understand it all then there are many very high paying jobs waiting for you in the US.
It is precisely because rich people are utilizing loopholes to avoid taxation like purchasing land and such.
No, it is precisely because the government spends way too much money. If our government spent less, there would be less need for taxes.
As a practical matter, it is always going to be difficult as a matter of practicality to tax the rich, or the corporations for their "fair share", as the more you raise taxes, the more profitable using offshore tax havens, etc. become.
Corporations, for example, must be able to deduct business expenses. If you don't, any business with razor-thin profit margins (a good thing, competition) would be bankrupt. A 5% flat tax would be wonderful for my software company with 95%+ margins, but "unfair" (and lethal) to someone making 1-5% doing manufacturing. They would have to raise their rates, making it difficult to compete with imports, requiring more taxation on imported goods to maintain a "level" playing field.
So, it's relatively easy for modern businesses to structure relationships with other companies (not in the US) by licensing technology (for a hefty fee), borrowing money, etc. Payments can go into trust funds, foundations, etc. outside US jurisdiction. To stop these kinds of games, you would need to ban:
- owning, managing, and receiving payments from foreign corporations
- banking by private citizens using banks located outside the United States
- ownership of US corporations by foreign corporations and vice-versa
- prior approval by the US government for all business transactions between US companies and foreign companies, in order to ensure that all contracts are "fair", and not allowing money to be funneled outside the US
- use of foreign-based prepaid debit cards/gift cards, and purchase of us-based cards by foreign nationals and corporations
Even if all this did happen, unscrupulous people would simply conspire with those outside the United States to act fronts. Long story short - the more you attempt to raise taxes on these people, the more profitable it is to be a "tax cheat", and the less revenue you actually bring in.
Besides, I don't know about you, but I'd rather not live in a world like that. On the other hand, reducing spending by the government would go a long way towards fixing budget problems. How about starting with the illegal/unconstitutional ones?
That being said, the simpler and easier the tax code is, the harder it is to dodge taxes. The problem isn't the rich, it's the insane inefficiency and incredible waste of government. A simple straightforward sales tax applied to imports and domestic sales (with a prebate to avoid screwing over the poor) would eliminate most loopholes, practically eliminate the need for the IRS (saving a decent amount of money), and save so much time and effort it's scary.
No "tax day", as your taxes are always paid. No itemization, no deductions, no worrying about whether this is an acceptable business expense.
Actually, you have no clue about this. In the colonial days, British law essentially prohibited significant industry from forming in the colonies. So if you wanted to order a manufactured good, including cloth, you had to order it from England.
Mail ordering has continued since then. In the late 1800's, many people ordered kit houses from the Sears catalog. Until the 1940's, if you didn't live in a city, you basically had to mail order many products.
Conformity is the jailer of freedom and enemy of growth. -JFK
The terms "import" and "export" clearly refer to imports and exports into the state, regardless of where from. Court precedents are not always Constitutionally correct -- to assume otherwise is naive and logically inconsistent (as they often contradict other court cases). At the time the Constitution was ratified, the states clearly would have considered imports into the state to be imports. The states are each sovereign and independent states -- at the time of the signing of the Constitution this was obvious and commonly understand -- see, for example, the Treaty of Paris 1883. For further proof, see Article I Section 9, clause 4: "No Tax or Duty shall be laid on Articles exported from any State." Thus the word "export" (and hence) "import" do apply to the states (even though this prohibition in particular is on Congress).
I really don't understand this idea in the US of every state doing everything individually in their own little wa
It's really best to think of the US Constitution as a treaty between the states that allows for the creation of a strong federal government but with limited powers. Thus, the commerce clause argument that both left and right wingers always have.
The only reason that the USA wound up with a strong federal government was because the previous "federal" government, the Articles of Confederation, was an abject failure and almost doomed the USA to perpetual inter-state bickering. The US Constitution changed all that, and eventually, the EU will most likely evolved into something like it.
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