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."

Comments

I'm not voting for him, but...

[xLittleP]

I think John McCain wants to ban internet taxes. From his website (about halfway down the page):

John McCain Will Ban Internet Taxes. John McCain has been a leader in keeping the Internet free of taxes. As President, he will seek a permanent ban on taxes that threaten this engine of economic growth and prosperity. Proceed to mod as flamebait...

Re:Fantastic

[pjl5602]

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.

Re:Tax and spend!

[ppanon]

So ask yourself, Is "Maverick" really THAT bad? He wants to continue getting blank cheques to continue a war that has a true cost for the current 5-year span estimated (once you count extra long-term healthcare costs for injured soldiers and replacement costs for equipment worn-out due to heavier war use) at 3 trillion dollars. And he's willing to continue it for up to 100 years if that's what it takes. That money's got to come from somewhere, and right now it's mainly being borrowed from the Chinese instead of being paid for by USA citizens. Even the Democrats can't waste money at anything close to that rate if they stop the war.

Seriously, most of the federal deficits of the last 30 years have been under/due to spending under Republican administrations. How long do you think your $9 trillion debt can continue to increase before the world starts treating dollars as toilet paper? You think oil is expensive now?

Yeah, he's that bad. He's less in touch with reality than Tom "Scientology" Cruise (that other "Maverick" pilot).

Re:Fantastic

[nmos]

It isn't that simple. There isn't a single "State" sales tax, at least in the states I've lived in. Often there is a base rate for the state + an additional rate for the county and another rate for each city. In addition different taxing authorities (city/state/county) have different ideas of what kinds of items are taxable and at what rates. For example, in a nearby city you wouldn't pay any tax on a hamburger patty and a bun from a supermarket but those same items purchased from a restarant are taxed, and at a much higher rate than other kinds of items. I wouldn't be at all surprised if the cost of complying with this mess ended up being more than the taxes themselves.

The only real negative effect for internet businesses is that they've been evading sales tax for years

That's just not true. Here in AZ at least, our "Sales Tax" (really a use tax) is considered a tax on the business rather than the consumer. What that means is that I already have to pay taxes to AZ on everything I sell no matter where the buyer is so in effect I'd be taxed twice if I had to pay again to the buyer's state as well. If anyone has been evading taxes it's the citizens that havn't been reporting their out of state purchases and paying the relivent taxes to their own state.

Who's doing this math?

[sudnshok]

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.