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End of the Internet's Tax-Free Ride?
News.com has a piece looking at renewed efforts by both state and federal lawmakers to subject Internet sales to state taxes. "Two bills are pending in Congress that would allow tax collectors to target out-of-state Internet and mail-order retailers, and their supporters are optimistic about their political prospects... Meanwhile, pro-tax states are trying their own ways to circumvent a long-standing rule saying a retailer must have physical presence before it can be forced to collect taxes. One effort came from New York state, where legislators recently approved a measure requiring Amazon and other online retailers (that lack a physical presence in the state) to collect sales tax on New Yorkers' purchases... This is not exactly a new debate... But now, with a Democratic Congress and a potentially Democratic administration next year, the arguments may gain more political traction."
More taxes... I'm sure everyone feels a lot of sympathy for them with it being tax season and everything. I'm sure it will be a lot of fun for small mom and pop retailers to deal with filing paperwork and collecting tax in 50 states just in order to sell trinkets off a small business website.
It is important to note that anytime sales tax isn't collected for you by the company you buy from you still have to pay that tax when it comes to April 15th. This is called Use Tax. The only problem is it operated on the honor system so I'm sure only a small percentage of this tax is ever collected.
It will be interesting because they probably don't have standing to collect. They would either have to collect from the customer or setup a customs system when the goods enter (are imported?) to the state.
Seriously I thought this was another joke post. Taxing out-of-state sales will likely never happen. And if it does, expect a massive increase in the number of hosted servers & PO boxes being used in Alaska, Oregon, Montana, or any of the other 0% sales tax states.
I judt got a nre Kinesis keybiartf so please excusr ant egregiou typos.
I'd rather not pay more to the man : (
Not to put ideas in their pointed little heads, but I'm surprised that the feds don't just impose a uniform federal tax on internet, mail order, and all other non-local sales of goods or services, with some small percentage earmarked for the states based on where the federal tax dollars come from.
:(
Of course, they'd never consider REDUCING SPENDING, not so long as there's any citizen's assets left untaxed at a rate lower than 100%
~REZ~ #43301. Who'd fake being me anyway?
...Internet businesses move offshore.
Have gnu, will travel.
I mean, use tax is just sales tax that hasn't been collected by anyone else. It's such a load of crock.
"Hi, my name is California. If you set foot in my state, then you must pay sal... er, 'use tax' on each and every item you used in california if you didn't already pay use... er, 'sales tax' on it in another state."
We can't seem to cut spending...indeed 6 years of Republican Legislature and a Republican President increased spending to record heights.
Now this optional war on borrowed money is weighing on our economy. Time to start paying down our debts, and maybe world confidence in out economy will grow.
Who knows, I just know I hate that our nation is so deeply in debt to some nations with scumbag human rights laws.
Blar.
You had me up until you got to that last sentence. More election year tripe. Woooo, the evil Democrats are going to tax my intarnets!!
Newsflash: If you've made a purchase on the internet, you've always been responsible for paying the appropriate taxes on that purchase.
The law is to make retailers responsible for paying the tax, on your behalf, even if the retailer doesn't have a local presence.
There never has been an "Internet Tax-Free Ride", only individuals that have decided to evade state and local taxes.
When is Slashdot going to add a -1 moderation option for people who actually RTFA?
Every economist will tell you that a recession/economic downturn is the BEST time to bring out a new tax (yes it's called sarcasm). Hey, ask Maggie Thatcher - it sure helped to put a lot of British out of work in the 80's. Recession? RAISE tax and reduce the people's disposable income even further. Joe Sixpack is struggling to pay his gas, credit cards and probably can't afford to keep/refinance his mortgage. Let's make him give the government some of his internet moneh.
Another great idea from the people you idiots keep voting for. And I'm not your guy, friend.
Seven puppies were harmed during the making of this post.
However, as I'm sure others will note, Democrats tend to support sales taxes. New York is highly Democrat, and you see 8.75% sales tax. I still don't see the purpose of this.
Tax the money once, when people earn it. Tax it well.
I've made a living developing and selling niche software products over the internet. I'm a simple one man operation (registered as an LLC).
Do these politicians honestly expect me to track the tax requirements and laws for 50 different states? Worse yet, each city/county has its own taxes and licenses too.
A whole new breed of middle-men would have to pop-up, existing solely for the purpose of figuring out who I have to collect sales taxes for.
Quite frankly, if this nightmare passes I'm calling it quits and shutting down my business. Emigration would be a serious option.
Prediction: The real iPhone killer is going to be sex robots from Japan. Think about it.
New Yorkers are already required to pay Use Tax, though most people probably don't do it. Are they going to get rid of the Use Tax when they implement this Out of State Sales Tax? I doubt it. Do they have jurisdiction to require an Out-of-State vendor to collect Sale Tax on their behalf? I doubt it. Do they have jurisdiction to demand payment from said Vendor? I doubt it.
What they are trying to do is shift the burden of collecting tax from themselves to somebody else, the vendors. They have already successfully done this for in-state Vendors via sales tax collection, and also shifted the burden of collecting income tax, Social Security and Medicare to employers. All they really have to do anymore is sit back and get paid.
The problem with requiring Out-of-State vendors to collect sales tax, is that there are approximately a half million tax districts in the United States. As a vendor, I know that there are over 15,000 in my state alone. They change constantly. I get notices in the mail every two to three days of a tax district instituting, increasing, occasionally decreasing or abolishing a sales tax rate. A brick and mortar can just plug in the tax rate for their current community into the desk calculator and they are good to go. A mom and pop internet outfit would have to spend probably 24 man-hours a day updating sales tax rates, or spend extra money to pay an outside outfit to calculate their sales tax for them.
I am sure new York just wants money without having to pursue it themselves, but the assumed unintentional side effect is that they are going to hurt small business on the internet by and large without effect on the large businesses.
If you are not allowed to question your government then the government has answered your question.
...of balancing fairness with ease of use.
If sales tax is a consumption tax (which it appears to be according to posts in the previous article re: New York State), then it is probably fair to expect to receive taxes on these purchases. However, to facilitate this, legislative bodies need to make it relatively simple for the parties involved to do so.
While it sounds relatively simple, this is a problem that has faced mankind since taxes came about (thousands of years ago), and the legislators still don't get it. If it was relatively easy to do, less people would be jumping up and down about it.
So instead of having a win/win situation with a simple, elegant system, which is inexpensive to administer and requires less tax to be paid, administrators make tax payers jump through (expensive) hoops, and spends yet more money chasing those who take issue with it.
The Mothership
In RI, we pay a "use tax". If you buy something in-state, it's covered by the "sales tax" (7.5%). I suspect it's an un-Constitutional form of inter-state commerce taxation by RI, but there you have it.
This doesn't bother me, not in the least. I can remember a day, when any use of the Internet to sell anything was abhorent. Advertising of any matter was viewed with disgust.
Now, due to the greedy bureaucratic fatcats who wish to tax the little guy to the bitter end, we might see a drop in pointless port 80 communication. (Present company excluded, of course).
I say bring it, lets clean the fat off the bone.
Hi, I Boris. Hear fix bear, yes?
Maybe if some of these states (including my own) were actually more business-friendly, they wouldn't have to worry about taxing online venues. As it is, these states seem hell-bent on chasing jobs out and have to go looking for "free money" to funnel into their pockets.
Chas - The one, the only.
THANK GOD!!!
There are ALREADY laws and taxes in place! A state does not have legal authority to impose taxes on a sale made in another state. That is, it cannot force an Oklahoma retailer to collect California sales taxes for a sale made to a Californian.
However, as far as I am aware ALL 50 STATES have "use taxes" in place, that are supposed to be paid for out-of-state purchases. In most cases the amount of use tax is identical to what the sales tax would have been if the sale had been local. The difference is that the purchaser, not the seller, is responsible for paying the tax. This is the way it MUST be... neither the individual States nor the Federal government have the Constitutional authority to force a business to collect taxes for the other 49 states. And even if they could, it would be an excessive burden... trying to keep track of tax rates for different kinds of products in 50 individual states is beyond the reasonable capabilities of most small businesses, which even today are still the backbone of our economy. Further, the Federal government also does not have the authority to collect State taxes on their behalf.
The taxes are already there. The laws are already in place. If they don't like the way that works... too bad. They just do not have the Constitutional authority to do this. And there is nothing new here, either... people have been buying by mail-order for at least a couple of centuries now, and this debate has been going on all that time. DO NOT let them try to tell you that eBay is forcing their hands. Hogwash.
Comments in the article say it all:
"...money has been unfairly left in taxpayers' pocketbooks. "
"Verenda Smith, government affairs associate for the Federation of Tax Administrators, framed the decision as a moral one of sorts: "Do you want to be a good American, or do you want to be an American who wants to cheat your government deliberately?"
It's not your money. You are cheating the government out of funds to spend on their favorite pork project.
> > >We don't need no steeekin'.....oh wait, my wife says we do.
from a nut job candidate, big deal.
The Kruger Dunning explains most post on
How would this work for out of USA sales? If I were to buy a product from a European retailer, how can my state charge taxes on that product? How can my state even be aware of my purchase?
seeing as USA is currently the most indebted nation on the planet its only prudent that someone take the reigns and start paying back whats owed, and that will be with the only tool the government have; taxes.
remember the Iraq war is costing you currently approx $43500 per household per year, where do you think thats gonna come from ?
this sales tax is only the beginning of a very long,very steep road.
> not so long as there's any citizen's assets left untaxed at a rate lower than 100% :(
Oh of course not! And why should they when they consider it their money in the first place. How else to explain the mind set that calls every tax cut 'a giveaway to the rich', refers to how much a tax cut will 'cost' the government, how much it will 'cost' the government to implement a tax cut, etc. In their evil brains it is ALL theirs and they begrudge each and every cent they are forced to 'spend' when they allow a taxpayer to have a dollar with no strings attached.
And the summary is spot on folks. Since the Internet becane bigtime either Congress of the White House has been outside the control of Democrats so the net was safe. Divided government is usually the best kind. Something the Dem leaning slashdot users might want to keep in mind come November. Congress is almost a statistical certainty to remain in Dem hands so ask yourself, Is Maverick really THAT bad?
Democrat delenda est
This is not a dem/rep issue, or a congressional issue at all. It is a supreme court ruling. Simply the Nexus issue means that a state cannot force citizens of another state to collect their sales taxes. There really isn't anything the congress can do about this.
Now there could be a federal sales tax, and that could be appropriated to the states somehow. But I don't think there is a snowball's chance this would pass. People will scream and hop around, but you are simply not going to get around this.
However, just because Amazon doesn't COLLECT the sales tax, does NOT mean that it is not owed. A sales tax is less commonly, but more correctly called a USE tax. And it is supposed to be paid, even if it is not collected by the merchant. This means there could be a reporting agreement made with major retailers at least, and they could send you a bill for the tax that you are required to pay.
Best comments ever
It occurs to me that our economy may be in a bit better shape if, you know, we paid less in taxes and had that money spend on frivolous shit. I suppose either way it ends up in some fat cats pockets (via government contracts or purchase of goods, what's the diff how they get it, so long as they get it!)
No sig for you!!
What the heck is the point of a consumer sales tax anyways? Why can't the price you see the product for, plus perhaps shipping and handling charges, if they are applicable, just be what you pay?
File under 'M' for 'Manic ranting'
I live in NYC and not only does just about every place I buy online from already have a store somewhere in the state so I have to pay state tax and postage, I also have to pay a NY state "use tax"--the amount due based on my income--under the assumption that I'll buy something from another state.
Addressed to the government: GET your GREEDY PAWS OFF the INTERNET!
The US budget calls for spending the equivalent of $10,000 for every man woman and child (3 trillion / 300 million pop.). When is it enough? Isn't there some point where we can say that the people are taxed enough?
Damn, tax-hungry democrats.
"READ MY LIPS, NO NEW TAXES"
\
It is wrong for any government to tax people that have no say in how much or how they are taxed. Last time this happened in America we went to war and kicked out the Brits.
Because they have this obsessive need to balance the budget, get a surplus (government has no right to make a profit), cut services to civil services (like healthcare and welfare), raise taxes, and cut military funding. Don't take my word for it, look at Clinton's record.
\
So, in order to encourage more commerce, we're going to increase taxes on ... commerce. That's sure to get the economy going again and keep the recession short and shallow.
Oh, I forgot - the point is actually to make sure that, whatever pathetic remnant of commerce exists, all the money goes to the government so that they, not we, can decide who should get it. Makes sense, I guess, if you presuppose Communism.
Why would they? What would that accomplish?
a) It's a sales tax; it costs them nothing.
b) In most countries online sales are subject to tax and the companies have been required to collect the taxes all along, and guess what? Those countries still have plenty of locally-based companies selling online. The free-ride US shoppers have been getting is not the norm, and is in no way a precondition to having high internet sales.
c) Moving offshort wouldn't accomplish a damn thing anyways. Instead of a sales tax, your customers would now be paying duties on import, which are more of a hassle. You'd have your lunch eaten by the companies who aren't run by cretins.
"congressional issue at all. It is a supreme court ruling"
In what part of the constitution? If it is not the the federal government can pass a law to allow or forbid it.
We are already paying internet taxes.
.com and .net. That adds up to about $500,000,000 every year. And rather than going to the government where it might be used to fund schools and pave roads it goes to Verisign.
ICANN forces us to pay a tax of somewhere between $6 and $7 on every domain name registered in
ICANN also forces another tax (this one going to ICANN) of $0.20 per domain name - which amounts to about $20,000,000 in additional yearly taxation already in place.
it is used to IMPROVE the current internet connection mess that the USA is in. If they start laying down fiber everywhere with that money, I'll gladly pay. If they just spend it on something not internet related at all, then what's the point of paying them? I mean the government has to have some justification about collecting a particular tax, right? Or otherwise we'd be paying air tax, rain tax, lightning tax, dog tax, feeding the fishes tax, etc.
Expect places like amazon.com to drastically lose sales after this, unless online prices are drastically lower. When items are the same price online as they are in local stores, and you only have to pay sales tax to buy it locally, while you have to pay sales tax *and* shipping to order online...most people are going to make the obvious choice and just drive over to Best Buy or Wal-mart. Sure places like Newegg may have it a little bit better, as they stock a HUGE variety of computer components that are often hard to find locally unless you have a Fry's near you (and even then they may not have the exact motherboard you're looking for)...but regardless, overall online retailers are going to suffer horribly.
Since we haven't had a post on how unfair sales tax is in the first place, lets throw a post out there on how this issue would just go away if everything was based on income tax instead of sales tax. There, that solves that problem.
How about the fact that the republican administration and congress were starving the states for money, thinking that they will "cut down on pork", and the states, still wanting to keep most of their programs, are desperately scrambling to get every bit of cash. Even the red states are suffering. How about we end the Iraq war and balance the budget and give the states back some money?
Commence flame war...
"All great wisdom is contained in .signature files"
or how about we just end the war in iraq...im pretty sure the $2 billion/week would more than make up for lost revenue in internet sales tax.
The last thing we need is the internet to be screwed up the butt by greedy politicians. Throw the bastards out in november.
Viral software licensing is not freedom, it is in fact GNU/Socialism.
Which means we will need to fight all that much harder in the coming years, should this pass. As soon as it does the Oregon legislature will stand up and say "We're missing all that gravy! Put out a sales tax!"
I am from Oregon (no sales tax), so I am having some trouble wrapping my mind around this.
So, if I run a bookstore, and someone from Washington buys a book from me, I suddenly owe the state of Washington money now?
I can almost understand a state taxing merchants that operate within the state, but a state attempting to tax merchants in other states just for doing business with their citizens? That seems a bit much.
I get the feeling you don't run a business that collects sales tax then. PayPal may collect the sales tax, but the business is still on the hook for sending the tax into the state.
If I were running PayPal I'd set up a service that collected and paid the state the required sales tax. It'd be a lot easier for PayPal to negotiate deals with all the tax collecting states than for the states to try and manage collections on their own. They could setup an automated process that collects and forwards tax payments; sellers would probably need to setup state tax ID's in each state they do business in but that ID could be electronically submitted with each payment to ensure it is credited properly. PayPal could even get the tax ID's since they already have much of the merchant information anyway. They could also allow buyers to identify that they are a sales tax exempt organization, and either ask for a tax exemot number or the state could get records of purchase amounts and addresses to audit if they want.
What's on it for the seller - no need to deal with all the various tax laws and rates and associated record keeping. This is especially true if local jurisdictions also want their sales tax as well; I'd hate to try to ensure I collected the right tax for each of Georgia's 159 counties and the City of Atlanta.
What's in it for states - easier, less costly collection of taxes.
What's in it for PayPal - the chance to get more merchant locking by providing a valuable service, driving more business to them. The float on the additional sales tax money they collect; plus the fee the states pay merchants to collect the tax. They could offer the service for no additional charge and still make money of of it.
I'm a consultant - I convert gibberish into cash-flow.
it's a 10% flat rate tax on all goods and services with a few exceptions like fresh fruit,veg,milk and bread (essentials) as well as preventative medical supplies like condoms. it's applied across all states the same and once every 3 months you fill out a single page form and bpay your payment. it used to take me about 1 hour including the time organizing the receipts.
i'm not familar with the USA's tax system but it sounds like it's different sales tax rates per state? so why isn't tax reform more of an election issue?
If you mod me down, I will become more powerful than you can imagine....
Someone needs to put an end to this sales tax crap. I live in a state (washington) that has no state income tax (it's against the state constitution), so our sales tax is particularly high. While food is generally exempt, there are times when this can work against the poor. A large block of fancy gourmet cheese is tax free, but toilet paper isn't. The amount of effort and work it would take to properly ease the burden of sales taxes on the poor would be self-defeating. Sales taxes are essentially a flat tax, even somewhat regressive, since a poor person is generally going to spend all their money at retail, while a rich person generally will not.
As much as the Democrats like the champion their support of the poor, they don't seem to have much trouble making them poorer.
--The universe will not be altered by forum threads, even those which are very wry. --Tycho Brahe (Penny Arcade)
...is the same sound of the Party of Reagan(and its policies) fading into irrelevance.
Twitter supports and protects racists - by smearing their critics with the "Hate Speech" label.
Yeah, thanks for paying for our bridge, pal.
Now, about the other 99.9% of the money...
I am a fiscal Conservative in the true sense of the word. Neither political party is remotely fiscally conservative. Your complaint about the debt we are continuing to incur is spot on, and shines a glaring light on how current Republicans don't understand how to administer finances conservatively.
Cutting taxes = economic growth = more money brought in to the gov't. Unfortunately, to make this work you have to REDUCE SPENDING concurrently.
Nobody in Washington is remotely interested in reducing the pork-barrel crap crammed into every bill - these kickbacks keep them elected.
I'm posting this so hopefully you realize that lowering/removing taxes is not the problem - it is lowering taxes and then, perversely, INCREASING spending that creates situations like our current one. It can be done right, but nobody wants to do so.
I agree, that is why they are doing it; however, their greed does not automatically give them the authority to do it.
If we had a more fair taxation system, this might not be a problem. But then, if we had a relatively fair tax system, our government would be only a fraction of its current size.
The very first thought that entered my mind upon reading this, is to move the business off-shore.
If U.S. based e-tailers get taxed and it hurts their bottom line, they will find a nation that doesn't tax them and move all their headquarters over there. They'll probably move a lot of jobs overseas too.
Government is the one thing people don't shop around, and that's precisely why everything is so fucked up today. When the landlord hikes the rent too high, you move out into someplace cheaper. When the grocery store hikes its prices on everything in response to high immigration in the downtown core, you drive an extra mile to the cheaper one in the university district.
With everything else, you vote with your money, you control your quality of life with your money. With government, you get whatever they throw at you, and they take however much they fancy. Why the hell do we allow these things to happen ? Why would anyone pay money to the government for a non-service ? Why should you pay for politicians' problematic spending habits ? How do they return the favor ?
They don't, and you shouldn't. Fight this bill, because it is an insult and a direct attack against the very tenets that have made the internet flourish over the past decade.
-Billco, Fnarg.com
Even Congress does not have the power to force someone living in one state to conform to the STATE laws of a different state. It doesn't work that way. So they can't force a Californian to pay Oklahoma state taxes and vice versa.
It might theoretically be possible for the Federal government to levy a tax on commerce between states, but what a godawful precedent that would set! The states would be apoplectic; they certainly don't want anything like that! It would have to be a uniform tax, and it would be unregulatable by the states, and -- probably -- the states would only receive a fraction of the proceeds.
No, what they really want to do is enforce sales taxes across state borders, and there really is no Constitutional way to do that.
At least two states (as I have learned) have no use tax. Washington has no income tax.
And the Business and Occupations Tax in Washington is a strange beast indeed. It taxes businesses based on their gross revenue, not net profit. As such, many believe that it is a cruel and unusual tax.
Yes, Washington has a use tax, and it is equal to the State sales tax. But some items are subject to sales tax and some are not. Imagine a business having to keep track of all those variations for 48 or so states...
Why do you assume that taxes are limited to a maximum of 100%?
They've exceeded that in the past, and they way
things are going will need to in the future...
they have to find ways to stop globalization
A lot of those nations are small enough to easily take over. Some nations would even thank us for finding some of their cheats in their territories.
Others would just need the right strings pulled, and you'd be 1) going back or 2) wanting to go back, possibly with a large RICO/terrorism charge.
Or you could be honest for once in ~30 years.
Yes, I take offense at this bill. However, tax evasion(by any means including offshoring) is never warranted.
Twitter supports and protects racists - by smearing their critics with the "Hate Speech" label.
There's no thief like a government... and they don't like competition...
The part that I find highly amusing is the way that they NEVER whined about all the thousands of mail-order companies that pre-dated the internet, and likely did comparatively well as e-tailers do today. Adding taxes to many e-tailer will just put them right out of business, as shipping costs tend to be high, then add in tax -> the only way it'd be cheaper is if you have crap b&m retailers locally, e.g. circuit shitty, worst buy, wally mart, etc. Even now, the only decent way to save anything on Amazon is to save up a good sized order to place all at once, and/or possibly hope for some "free" slow shipping promotions.
Just having done my taxes today, I know Virginia already has an Internet tax. It is called the consumer tax and it applies to any purchases not paid sales tax on (but only if you spent more than $100 in such purchases a year). It's 5% (compared to a 4.5% sales tax) on purchases except for food which is only 2.5%.
The problem as I see it is that it is not very enforceable; it is up to the consumer to claim purchases and I don't think it shows up on the basic VA tax form, which most people use. I am not sure how many people even realize it exists, I only noticed it because a tax program asked me for any major non-sales taxed purchases.
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Just your ordinary BOFH
http://killertux.org
I live in Idaho and I already have to pay sale tax on any Internet purchase. The way this works is I keep track of my internet purchases, and then at the end of the year I add the up the amount and add 6% of the amount of total purchases to my Idaho 'income' tax. It's a pain and usually takes more time than the rest of my income tax (especially when Idaho does something annoying like change the amount of sales tax in the middle of the year). http://tax.idaho.gov/answers_Sales_tax.htm#11
It's about time that we end the Amazon subsidy. They're the Wal-Mart of the internet, and they are able to undercut brick and mortar stores by another 5-10% by not charging the sales tax.
It's not that it's too hard to collect, they do it for Target.com after all.
And smaller retailers will just outsource their shopping cart, or at least the tax calculation and dispersal.
The internet is a growth industry. It's one of the few sectors of the American economy that is growing well right now (along with exports), and low-and-behold, the Democrats want to tax it.
It blows my mind that anyone can get away with talk about raising taxes with a recession looming. The correct response to recession is tax cuts, not tax increases. Raise taxes when growth is high, as way to counter inflation. Not to counter recession.
Fucking idiots.
WhiteWolf666 an exBush supporter. All you new-school,compassionate,save the children Republicans can rot in hell
Here is what I think should be done:
1. Create a national database of taxing districts associated with their address.
2. Permit small businesses to remit tax revenue annually, instead of monthly or quarterly. This should help simplify the process.
3. Allow small businesses to deduct up to a certain amount per year from the tax they collect. (Like deducting $500 or 10%, whichever is less, from tax collected. E.g. if $5002 is collected in tax revenue, then $4502 need be remitted.)
4. Exempt small businesses from collecting out-of-state sales tax, if and only if, their gross annual sales (in and out) yield less than a certain amount per year. Perhaps if their gross annual sales is less than $50,000 per year. (So eBay salers and whatnot would be in the safe zone probably.)
5. If no nexus exists at the buyer's shipping destination, then perhaps use the state's highest sales tax rate to determine the tax rate. (So, if the highest tax rate is like 9% in a given state, in which no nexus exists for the business to ship to, then the business collects a 9% sales tax on the item, and remits it to the state, and the state will figure out a way to properly distribute it to their localities so the seller doesn't have to figure out the taxing rates or localities.)
I posted this on CNET, but I might as well post it here as well:
Is there anything better than sensational bogus statistics? Some politicians claim states would lose half a trillion dollars in tax by 2011? Do they think most Americans didn't make it past 2nd grade math? Let's examine that claim with real math and logic:
Here are the e-commerce retail sales for the last 9 years:
2007 $136B
2006 $108B
2005 $86B
2004 $69B
2003 $57B
2002 $44
2001 $34
2000 $29
1999 $15
Source: http://www.census.gov/eos/www/archives.html
That's a total of $578 billion in revenue for 99-07.
Now, if we assume an average of 7% sales tax, and we assume that ALL items are taxable (which in most states they are not, like food and clothing), you would need $7.14 trillion in revenue to accumulate sales tax of $500 billion (which is the claimed lost tax by 2011).
That would mean that e-commerce would have to magically jump from $136B in revenue to an average of $1.6 trillion each year for 08-11. I mean, seriously, their figures are not even in the same ballpark as reality.
People who say "money does not buy happiness" are just people without money trying to make themselves feel better.
In order for sales taxes to be Constitutional, the taxing system that imposes the sales tax cannot violate the
Dormant Commerce Clause. Therefore, the tax must be structured so as to minimize unfair competition between
sales made instate and those made out-of-state. By adding the use tax to the sales tax system the tax effect of buying
within or without the state is minimized.
Complete Auto Transit Inc. v Brady, 430 U.S. 274
Use taxes are the companions of sales taxes and are Constitutionally required if sales taxes are to exist. Use tax
is a substitute for sales tax. The tax rate is the same for both sales and use taxes. A use tax is due whenever a consumer possesses or uses an item in a taxing jurisdiction if (a) the item would have been subject to sales tax if sold in the taxing jurisdiction and (b) no such sales tax was paid. If a sales tax was paid but to another jurisdiction, a credit for that tax paid would be applied to the use tax. This is similar to the income tax credit received on the Federal level for foreign income taxed paid.
However, despite the Constitutional requirement of legislating a use tax, the use tax is (not to mince words) generally regarded as a joke.
Since when have politicians resided in reality? Certainly not in recent memory. The point is: they don't have to. People are all to willing to eat up they're bullshit, and to eat it up again when the politicians start pointing fingers around when things didn't work out like they promised.
Everyone will take it sitting down. It's really sad, though. Why does everyone just sit back and let these crooks do anything they want? The Internet might not carry the most weight as an invention but it is certainly the most important. Any wonder why so many companies and organizations want to kill it so they can hide the truth from everyone? Personally, if there was ever a group organized to counter ALL government fiddling with the Internet I'd join it. Lock stock and smoking barrel.
I like how this article is now tagged democrats when the iTax grumblings are coming from everywhere. A previous article which is an actual democratic attempt to address the recent voting shortcomings is, of course, not.
They have been saying exactly this same thing for over 135 years!!!! There is NOTHING new here. Have you ever heard of Montgomery Ward? Sears? They have been selling mail-order from their catalogs for much more than a century, and they were hardly the "first" mail-order firms in existence, they were just the first big players. Do you have any idea what kind of PERCENTAGE of interstate commerce they used to control 100 years ago? Far more than eBay today, that is certain.
Anybody who is telling you there is anything new on the table today because of the internet is FULL OF SHIT, and does not know their history.
Further, you obviously did not read the other post I wrote about how the Federal government really does not have the authority to do that, unless they made it a Federal -- not State -- deal, and the States do NOT want that.
This is nothing more than an over-100-years-old continuation of the attempt to collect state taxes across borders. NOTHING more. Anybody who tells you otherwise has not been reading their history... or listening closely to the people who are trying to do it.
People will rather pay a higher cost of shipping than pay taxes to a governmental authority. Businesses in Canada & Mexico will benefit hugely as consumers start purchasing the same goods from foreign countries, thereby futher devaluing the almighty dollar.
(oh my, NAFTA might have more unintended consequences!)
worry = wasted creativity
Being outside the state, Amazon can safely ignore that law - it is unenforceable, which is legal speak for bullshit.
Excuse me, but please get off my Pennisetum Clandestinum, eh!
Then its the end of the 'commercial' internet.
If the prices are about the same as the corner store where you can actually go see what you are buying, you can say good bye to many on-line retailers. ( used sellers will survive, but not retail )
---- Booth was a patriot ----
I love the Democrats, and yes most Republicans as of late. The only change they want is your change in their pockets so they can buy votes from you. And to think we went to war with England for a 0.5% tax on tea.
There is a simple way the Feds can get involved. We just need an information reporting form (say 1099-INT) that any online retailer is required to issue to the Federal Government, and the state of the buyer. Just like when a contracter gets 1099'd. The burden of collecting sales tax for 50 states would be VERY high, but sending out a 1099 at the end of the year wouldn't be as bad. This would give the states a way to actually verify you are paying their use tax, if they have one. People don't pay the use tax because they know that the State government has no idea what they've bought online, or through catalogs. They will start paying the use tax if they know the state knows about the purchases.
This also avoids the problem of enforcing one state's laws on a business in another. Collection/payment of the tax is still the onus of the person in the state.
Clovis
^ Clovis, look! It's that guy you are!
Sorry "Wrong", you're not completely correct. Sales taxes do pay for police and fire in some parts of the US. And the cost to maintain roads/streets does not always come from fuel taxes (which would be nice in some cases), but from local sales tax.
Full disclosure; I work for a local county government which has the ability to levy a sales tax up to a certain percent to pay for these costs.
They don't NEED more taxes NOR do they deserve them.
"They" referencing the Government.
At this point they have proved themselves to be so incapable of managing money that they should take a page from business.
Lay off government employees, cut salaries, and most importantly cut the damn salaries of State and Federal Officials.
Legislators in our wonderful state of NY (sarcasm intended) make a starting Salary of about $80K...
I bet if more middle class and lower class Americans knew that... There would be a huge stink...
They don't deserve more taxes. I don't mind paying taxes but this is ridiculous.
~GO
If you are providing digital/downloadable items, do not have that kind of "sales" income. We are now a digital wharehouse that "rents" space on our hard drive to hold your digital information. It's rental income, at a much lower tax rate, with no sales tax at all.
Cogito Ergo Sum
Why the hell should I pay more taxes when I'm not getting my money's worth out of the taxes I already pay?
I write sci-fi for metalheads
The US government needs to choose it's tax laws carefully, less it incite a revolution. If the federal government levies a sales tax on transactions, the US citizens need to then realize that we're being taxed twice on money earned. We unjustly pay a federal income tax on our labor, which is specifically prohibited in the constitution. Now, we're going to be asked to pay a tax for spending the money we've already paid tax's one. It's one thing to stay it's a state tax, but it's quite another to pass something of that magnitude in Congress.
So to our government, I say this: Pick One! Which would you rather have? Tax my income, or tax my spending? To tax both is too much.
Maybe we need to water the tree of liberty with the blood of tyrants. And maybe the government should keep in mind how this country was founded, and why our fore fathers started a revolution against Britain in the first place. I for one will be writing my congressman in the strongest language appropriate, urging him to oppose this.
http://www.accelerateglobalwarming.com
Before I begin, I'd like to address the following editorializing:
Can you say "flamebait"? I knew you could. It's highly likely that Republicans would implement this tax as well, as it doesn't affect their core constituency (the uber-rich) one bit. Sales tax are arguably a regressive tax, and the Republicans have never had a problem with those, so let's not single out the Democrats for doing what any politician would do.
Now, the problem I see with states requiring businesses to collect sales tax for each state is the interstate commerce clause (not that the ICC has never been ignored or abused before). In my opinion, businesses should have been doing the logical thing from the beginning: charge sales tax for the state they are incorporated or operating in. Think about it: if you go to another state, do you not pay sales tax just because you are a non-resident? If you are from USA and you go to Europe, do you not pay VAT? Buying things on the Internet is like going somewhere and buying something, only a lot faster. Most people buy things on the Internet because it is cheaper or the product isn't available locally, and people have been doing that for a long time before the Internet existed, by going to a different locale.
It also makes sense from a scaling burden to the business POV: any business that has a store in different states charges different sales tax rates based on which store it was bought at. If the business is big enough that it has storefronts in different states, it can probably afford to manage different tax rates and is a small price to pay for the added benefit of a larger market. Setting up a store on the Internet, however, is trivially easy, and implies no large company with an accounting division that could easily handle multiple tax rates because they already have storefronts in multiple states. Why should small businesses be shut out? If anything, reduced competition is a bad thing.
Nathan's blog
McCain said we may have a military presence there for 100 years. You have spun that into having a war for another 100 years.
We still have a military presence in Germany and Japan after WWII. I don't see that breaking our bank.
What WILL break our bank is Hillary or Obama putting in socialized health care.
There is no way this will work without a unified sales tax system. State taxing is ridiculously complex and there is no easy way to automate it.
First off, Internet businesses are not avoiding sales tax; they are exempt from collecting it in states they don't operate in because every state has a different law on how much to collect and when it needs to be paid, therefore it is left to the consumer to pay this tax.
I'd say 90% of the people I know could currently be thrown in jail for tax evasion for failure to pay Use Tax (mentioned in TFA).
This is non-trivial, and NOT solvable by changing a program on PayPal. Why? Take Minnesota, with a 6.5% Use Tax, but a threshold of $770 payable yearly on Tax Day (April 15). Until $770 is spent, purchasers don't need to pay tax on catalog or Internet sales - how does PayPal know when $770 is spent? It doesn't - it only knows what is spent on PayPal. Furthermore, this tax is paid separately using a different form (as it is in every state that has it, I believe), so prepaying and rebating it is giving the government a free loan on a purchaser's money (I certainly would take it to court on those grounds).
Then there are the punishments for late payment - say you live in Vermont (due monthly on the 20th) and your PayPal account doesn't have enough cash on the 20th of the month. Suddenly you owe $50 more, 5% additional penalty per month + interest. Do you assess that on each purchased item, once for each purchase, or just once for the entire thing? The law isn't clear.
What we need is uniform sale and use tax laws like the mentioned Streamlined Sales and Use Tax proposal, but some states don't want to concede because if the tax is, say, set at 5%, you piss off brick-and-mortar retailers in states where tax is greater than 5%. To be fair to all states you need to set the tax at the maximum tax used in any state, which is currently Tennessee's 9.4%. I have serious doubts states with no sales tax will agree to a 9.4% tax.
I've covered a fraction of the states - now lets toss in counties, boroughs, and municipalities. Alaska, for instance, has no state sales tax, but 95% of boroughs issue one, so to be fair to retailers, you would also need to collect for the borough.
So there you have it, all the issues involved (at least that I can think of) - got an easy solution? I certainly can't think of one.
Tax Freedom Day, the day where our tax obligations would be met if the taxes were collected 100% until met is April 23rd of this year.
It is hard to beleive that since the inception of the Union, that the income tax rate has gone from 1% (with only 1 in 10 claiming any income) to everyone paying around 30% (Prior to 1913 taxing income was questionable.) What went from a measure enacted in 1913 to tax the rich has turned into a measure that taxes the poor better than it does the rich.
Slashdot's rate-of-post filter: Preventing you from posting too many great ideas at once.
What, you all don't claim that stuff on your taxes? That's tax evasion! You have to list all sales you did not pay state tax on and then pony up!!
I buy on line just to avoid taxes. With that incentive gone, the prices will almost be as much as local so I will probably stop that practice.
I think many online businesses will be hurt by this move.
Coming to the USA to buy cheap electronics tax free off of Amazon was the only thing left in the USA that made it enjoyable to come over for work!!! This sucks balls. All that's left now is the paranoid and painful antics of airport security and passport control. Well, at least even with tax, the USA's electronics will only be 2/3rds the cost of the UK (at worst).
What does this have to do with Democrats? Stop repeating the silly Democrats raise taxes, Republicans lower them memes. Even Bush raised some taxes while in office.
They're looking at this because the country is going into a recession and governments have not been getting the funds they need to continue running. Money is not as cheap to borrow so they're looking for new revenue streams.
Whether we get Republicans or Democrats in November we're going to see higher taxes. It's just simple economics.
Does it work differently in the USA than in Canada? If I buy online from a Canadian vendor that operates in the province where I live, then I get charged provincial tax. Federal tax for any vendor in Canada. For example, amazon.ca charges me tax.
Is it not this way in the USA?
The end of the internet tax subsidy is long overdue. Why should local businesses be at a disadvantage to mail-order companies that have zero commitment in the local community? These local businesses (most of them small businesses) provide the vast majority of jobs in a particular region. Exempting mail-order houses from certain responsibilities essentially encourages outsourcing of jobs.
It's not true that the mail order industry pays for what it uses through fuel taxes and other fees. Sales taxes are an important resource for local units of government. Roads get built with them. Transit gets built and operated. Services get provided.
Taxes are the way we invest in our community and our common future. Why should some companies be exempted from their civic responsibility?
From the abstract, a Democratic administration AND a Democratic Congress would have the cumulative effect of *increasing* or *adding* new taxes? I thought these were the people that said we were spending too much and needed to lower them.
Sure it can. It is currently not possible for one state to tell another's states citizens what to do. Like collect their taxes. At least this is what the supreme court says. However, if you have nexus, then you are one of those state's citizens and can be forced to do so.
A federal regulation, is not going to be able to compel one state to tell the citizens of another state what to do. It could create a federal sales tax and distribute it. But they are not going to be able to do, specifically, what is referred to in this story.
its income that was "stolen" from their local businesses.
Picking on New York state (since they're one of the first to try this Amazon tax thing) -- they've shown they are quite happy to trade away tax income from out-of-state businesses in order to prop up in-state busineses as when they prohibited direct shipping sales by out-of-state wineries while simultaneously permitting direct shipping sales by in-state wineries. New York state didn't back down from that until they lost several rounds of court appeals.
Instead of lowering taxes they want to raise them.
This just shows that it's NOT your money. It's theirs!
If they could only pay you with government coupons, they would.
Higher Social Security pensions and more taxes.
How is "Democrats looking for better ways to raise taxes" news? Did the people that put them in power not realize what Democrats stand for?
Prevent linux based DDOS's!
http://linux.denialofservice.org/
By the time ANYONE gets taxes in place for Internet purchases, most internet purchases will not be happening anyways.
Huh?
Look at the rise in fuel costs for shipping. When shipping far outweighs the cost of the item purchased, e-sales are going to tank. And trust me, they will. As is, several airlines have already stated that current fuel costs ALREADY outstrip income from shipping/passenger service. The trucking industry is next.
Since it is a "sales" tax, let the tax be paid by the seller, in the state they are in, then they can decide how to make up this revenue (most likely passing this along to consumers).
The main brewhaha stems from the long habit of stores passing on the sales tax as a buyer responsibility and us buyers just accepting that...
If the focus was put back on the "sales" part of sales tax, this would solve all of the confusion.
The only downside to a global economy is that people might not decide to buy from you depending on how much you now have to charge (because it is higher do to your state's tax rules) but instead buy from people who can sell it 8-15% cheaper because of no local state sales tax (e.g. oregon).
It's not tax evasion if it's a valid corporate strategy to "increase shareholder value"
-Billco, Fnarg.com
As I said before, road maintenance is supposed to come from fuel taxes. If you're taking it from sales tax, you're doing something wrong. Don't blame the internet retailers for your stupidity in allocating money from tax revenue. If you need more money for the roads, raise the fuel taxes.
Same goes for police and fire. These should be paid from property taxes. That's why we have property taxes, after all. People without property don't need fire protection. If you're not getting enough for police and fire, then raise your property taxes, and hopefully make it proportionate to use: make apartment complexes pay higher property taxes, since they generally have more problems needing police and fire services for instance. They can increase their rent to make up for it. Make businesses pay more, and they can pass it on to customers. Heck, raise the taxes in blighted areas too, since they need so much police service. Don't tax the internet retailers, who don't use fire or police protection whatsoever. (They get their fire protection in their own locality, from their property taxes, and they only really need police protection at the federal level because of fraud, and that's paid by entirely different taxes).
Using 'absolute' is just setting yourself up for me to mop you up. Hardly anything is absolute.
We are not replacing stores with warehouses and the internet anytime soon. Maybe you buy shoes online and return them a bunch of times but I prefer going to a shoe store.
Naturally everything in a store comes packed in multiple boxes with lots of foam in addition to packing they are made in. Ever hear of mass transit, ride a bike, or walk-- paper or plastic?
Forget it-- lets go full free trade and just buy online from china and all work for FedEx for a living.
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When I used to sell items out of state, I got purchase orders marked "title passes at buyer's dock," which means damage in transit is my problem. It also means that the sale takes place at their location, subject to their taxes or lack thereof.
;-)
Other POs were marked "title passes at shipper's dock" (LANL mainly), and they paid local sales tax at my end, and had their own insurance. If Internet sales took place at the shipper's dock, sales tax would be collected by the vendor's state. And many would start shipping from NH and other states without tax, I bet.
We are in a recession and nimrods in NY want to tax the internet to a halt. Thank Spitzer for introducing this.
Anything that slows down commerce SLOWS DOWN COMMERCE AND THE ECONOMY. Add this tax during good times, not bad.
HELLO???