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The End of Tax-Free Internet Shopping?
Mordok-DestroyerOfWo writes "If a little-known but influential alliance of state politicians, large retailers, and tax collectors have their way, the days of
tax-free Internet shopping may be nearly over. A bill expected to be introduced in the US Congress as early as Monday would rewrite the ground rules for mail order and Internet sales by eliminating what its supporters view as a 'loophole' that, in many cases, allows Americans to shop over the Internet without paying sales taxes."
How will this mesh with the Sears decision by SCOTUS? My understanding (I'm not a lawyer) is that taxing interstate commerce is prohibited by the constitution (the root of all US law).
Any law geeks out there want to pick this one up?
DISCLAIMER: This post was not checked for speling and grammar- if you complain- you're a whiner
9 times out of 10, shopping online will STILL be cheaper than retail.
If big box retailers think this will save their ass, they're in for a nasty suprise.
And I agree with the FP, sounds like this is going to be a mass of red tape. Think of the fights over who gets the sales tax from amazon...
Sounds DOA to me.
I really don't have a problem with paying sales tax, or taxes in general. Of course, I may not be thrilled with how my tax money is spent, but that's another matter. Taxes still play a major role in implementing civilization. And I ,for one, prefer civilization to the freedom-only-for-the-rich promoted by libertarians.
Caveat Utilitor
From the FA:
"California residents, for instance, are now burdened with a sales and use tax of at least 8.25 percent. State law is strict: if Californians travel to a state with a 5 percent tax and shop there, the law requires them to cough up the 3.25 percent difference when they return. Online purchases are taxed as well."
This kind of thing really bothers me. It's as if all our money, wherever we spend it, belongs to our home state. I'm sure not many people actually "cough up" the difference, but just the principle of it really burns me up.
You raise an interesting issue. Let's say you download some music, software, movies, etc from teh pirate bay. Today, that's not a crime (uploading -- distribution -- is). But tomorrow, you may be charged with tax evasion or conspiracy to commit tax evasion.
Do you even lift?
These aren't the 'roids you're looking for.
State law is strict: if Californians travel to a state with a 5 percent tax and shop there, the law requires them to cough up the 3.25 percent difference when they return. Online purchases are taxed as well.
But compliance is spotty at best. California's Board of Equalization estimates the state lost $1.34 billion in 2003 because residents aren't paying use taxes--and attributes $208 million of that to online purchases.
This reminds me of the RIAA's definition of "lost revenue". The state didn't lose anything... with a law as badly thought out as this, any money they did collect should be treated as a windfall. When you create a law where the only possibility of any compliance at all is people's innate honesty, just be glad that so many people are basically honest and bank what you can.
Not exactly. You have to pay tax if the seller is operating (or has operations) in your province. Otherwise it's free!
Not exactly.
Obviously, in Alberta and the territories where there is no provincial sales tax, you don't pay the tax.
In the HST provinces, you generally pay no matter where in Canada the seller is, because he has to collect GST and, that usually means collecting HST if he's selling to and HST province.
In the individual pst provinces, BC, SK, MB, ON, QC, PE the out of province seller isn't obligated to collect it... but you are still legally obligated to pay it. That means you are supposed to self assess the PST you owe and send it in yourself. In practice, nobody does this, except businesses (who get audited regularly to make sure they are self assessing pst on imports and consumed goods).
Individuals get nailed much more infrequently, unless its an item where they have to register the transaction. (For example, if you sell a car privately in BC for example you wouldn't normally collect PST from the buyer, but the buyer gets nailed for it anyway when he registers the car for insurance.)
I work for an online retailer here in the state of Washington. Recently, our state passed a law forcing all state business to collect sales tax based off local jurisdiction, instead of our home jurisdiction. They then allowed only two companies to actually handle all that info, with whom you are required to deal with in order to collect the proper amounts. Needless to say, the complexity involved was not fun. Not to mention the thousands of dollars it costs to deal with the "government approved" sales tax info vendors.
Having this kind of thing go nationwide makes me quake with fear.
Wrong. The deficit is not from undertaxation, it is from overspending. There is a big difference.
Americans in general are not unwilling to pay for government... they just want less of it.
Don't apply logic to law, you'll only hurt yourself.
The Goal: A long simple life filled with many complex toys.
I think a lot of Americans just got grateful for our low state taxes. We pay 4% state and another 4% city/county.
I'll bite.
The deficit is a result of us overspending, not us being undertaxed.
As far as personal income taxes go, rates are low. However, I also pay FICA into a system which I hold little hope of seeing money come out of. My employer has to "match" this tax -- basic economics indicates a large percentage of this ultimately comes from my pay. I then pay taxes to my state. I then pay taxes locally. I pay property taxes. Occasionally I get a one-time assessment. I pay tax on gasoline. I then pay sales tax. Every item I buy has a hidden tax in it as I pay for all of these employment and sales taxes that are bundled into the price of the goods. I have to pay a tax to get a driver's license or renew my plates. I have to pay to get my car emissions tested. My internet and telephone have various taxes added onto them. On certain roads you have to pay for the privilege of driving on them. I am sure there are a half-dozen more taxes I pay that I am not thinking of or am unaware of.
And what we get back for what we pay for is ludicrous. Welfare for banks and other financial institutions, welfare for folks who don't want to work. And the ability to invade other countries.
At least in Europe you get a half-way decent health system. Here, after paying all of these taxes, we are stuck paying for our own. And generally, your pension systems are funded. Here, they are underfunded.
So please don't tell me I am undertaxed.
See my journal for slashdot ID's by year. Mine created in 2005. http://slashdot.org/journal/289875/slashdot-ids-by-year
Insightful? I would have to disagree. The issue isn't a lack of tax revenue, it is one of unchecked Congressional spending. My 11 year old son understands basic budgeting. Don't spend more than you make. If you don't make enough, go out and earn more. Unfortunately, Congress doesn't feel compelled to earn as they can just take. If you sincerely feel that our level of taxation is unfair, why not simply pay more? You can, in fact, do so. Overpay your taxes and never file for a refund. Put your money where your mouth is.
President Obama does not control state sales tax.
President Obama's plan does not introduce legislation to allow collecting state sales tax on internet purchases.
So within the realm of what President Obama can control and what he has proposed, he has completely fulfilled his pledge.
If this were a bill being passed by the Congress in the state of Michigan, you'd be correct. Unfortunately, this is a bill proposed by the United States Congress. The President has veto power over that bill. This is within his control.
There is no "I disagree" mod for a reason. Flamebait, Troll, and Overrated are not substitutes.
Yes, that's the argument... but isn't it odd you don't need to pay to use things you buy in state? Hmm... I really hate the judges that buy these garbage arguments. Use tax should never have flown.
So, you can't fight a rising deficit by cutting spending? Like we've done every other time we've come close to lowering the deficit? Don't ignore inconvenient truths, right?
A company such as BestBuy, Borders, and so on already collects sales tax for the states where they have a presence.
A company such as Amazon does enough volume of commerce that they can afford the accounting to figure whose tax is owed to whom.
But a small company may have only a few cents to collect for a given state over a day, week, month or even year. Counting the beans costs more than the beans are worth.
Most likely, "Sales Tax Clearinghouse" companies will crop up, which will offer to file your forms with each state and distribute... for another fee.
When we ran an online store (selling Children's Books), most of our customers were out of state, but we did collect for our home state... which amounted to less than $50 per year most years, especially as many in-state customers were schools and churches (which do not pay sales tax). Multiply that by, what, 48 states that collect sales tax? The paperwork is horrendous.
Design for Use, not Construction!
Americans in general are not unwilling to pay for government... they just want less of it.
Unfortunately, I think it's more like Americans in general are not unwilling to have government... they just want someone else to pay for it.
Space game using normal deck of cards: http://BattleCards.org
These taxes already exist. People are evading them since it's currently infeasible to audit citizen's online purchasing history, but those taxes are already owed.
This isn't akin to a new tax; rather, it's as if stricter auditing were leading people to have to pay taxes they could previously dodge.
I'm a lawyer, but not yours. I wouldn't represent someone who thinks taking legal advice from Slashdot is a good idea.
If you are currently paying $0 in taxes because you've found a way to dodge an audit, and the IRS figures out a way to force you to pay taxes you already owe, did they just "raise your taxes?"
If you think they did, your definition of "raise your taxes" is stupid.
I'm a lawyer, but not yours. I wouldn't represent someone who thinks taking legal advice from Slashdot is a good idea.
1. They make the implicit assumption that everyone has a sales or use tax, and that people are avoiding it. That may be true in many cases, but not mine, since my state has neither. I don't
2. Similarly, it's unfair for businesses operating here. For a business located purely in my state, it's not a fair burden for them to have to calculate and collect use tax for any of the hundred (cities, counties, states, and various other revenue districts) that someone might be in when they click their mouse to order. I don't mind the "nexus" argument for sales tax (hey, the company chose to set up shop in a state? Then you can learn the tax rules and when to collect them), but extending it to use tax isn't fair. If a state really feels they need a use tax, it should be their responsibility to figure out how to collect it, and not involve companies that don't even have nexus in their state.
3. They talk about simplifying it, but there's already enough cases that I can this not working correctly (person in state A buys a gift from vendor in state B for shipment (from state C) to the recipient in State D).
I say get rid of the sales tax. They aren't necessary, we've got several states (including my own) that get along just fine without them.
You got it. Our debt is so large that nothing seems excessive in comparison. If I had $1000 of credit card debt, an additional $100 charge seems like a lot. But if I had $100K in credit card debt, $100 seems like a drop in the bucket and hardly worth a second thought.
I don't know how we get out of this. Raising taxes will not reverse the spending habits. If anything, our gov will just spend even more.
Also the purchase may travel through several other states. And what happens when I am physically in Alabama (while travelling), order an item to be sent to Montana, use a company credit card based in Delaware and have a home address in California with the item shipped from Colorado manufactured by a company in Ohio, via a website located in Washington.
I'd much rather see sales taxes abolished since they complicate retail and hurt the poorest people the most (they have to spend most of their income to live and hence proportionally pay way more sales tax).
But it's not a tax on commerce. It's a tax on use. "Use" and "Commerce" look nothing alike. They aren't pronounced the same at all. "Use" taxation is on the basis that you use that thing you brought across state lines. And how do we valuate that property that you're using? Hmm... maybe, what it sells for. A percentage of the sales price in the state you brought it in from. And since you bought it there, you even have the receipt that tells you what the basis of taxation will be!
Yes, the reasoning is specious, fatuous, and bogus. But the shallowest of rationalizations seem to work out just fine in matters of taxation, as long as the government is the one doing the rationalizing.
I wonder what happens if you buy a thing in one state and never use it in your state of residence. Will they charge non-use tax?
I think the decision-making went something like this:
"We want a sales tax that we can impose on interstate commerce."
"But you can't do that, the Constitution forbids it!"
"Well then, we will call it a 'use tax' instead of calling it a 'sales tax' and that will make it okay! It's the exact same thing called by a different name, but it's somehow completely different and not illegal or illegitimate in the slightest! By the way, I don't understand why the people don't respect us?"
It's just a blatant attempt to circumvent the Constitution, only the average person is too stupid or too apathetic to recognize the threat that this represents if it remains unchecked. If you can ignore or get around one part of the Constitution with impunity, you can do the same with the rest of it.
It is a miracle that curiosity survives formal education. - Einstein
"We do in fact need higher taxes in order to pay off the monstrous debt we're accumulating."
NO!!!! What we need to do is stop accumulating debt by getting renegade government spending under control!
"Only anti-Americans would still be wanting lower taxes given the huge crisis we're facing."
What happens when an anti-American comes into contact with a regular American? The so called "crisis" was manufactured by the Washington DC power brokers and their politically well connected friends. If we had the limited Federal government that The Constitution mandates, there would be no "crisis". The Federal government sucks the lifeblood out of the economy by taxing the honest hard working citizens. Then they turn around and use the money to fund imperialistic military crusades, line the pockets of the wealthy elites (bailouts, subsidies, no bid contracts, etc.) take a cut of the profits to pay the salaries and benefits of bureaucrats, and if we're lucky, maybe spend 20 cents on the dollar in actual services to the people who pay the bills.
Social Security and Medicare are supposed to be separate from the general fund. Take that off the table, and then tell me where the government is spending your tax dollars.
Foreign Wars
General military spending
Bailouts
Interest on the national debt
Welfare programs (non SS or Medicare)
Things like education, infrastructure spending, science and research funding, etc. barely make a dent.
If you feel like paying more taxes to fund U.S. imperialism, enrich the financial elites and well connected corporations and pay for welfare programs, the government is accepting donations.
Probably about as often as tax cheat Republicans paid their tax on internet purchases.
But probably far less often than moral conservatives get high on pain pills after railing against "druggies."
So, you can't fight a rising deficit by cutting spending?
To an extent, you can. But what do you cut? "Social programs"? Those social programs are going to prevent a lot of hard-working, skilled Americans and their families from starving or going homeless over the next year or two. Will *you* be the one to tell the family of four who have weathered three layoffs in two years and already seen the last of their six-month emergency fund that we're cutting their food stamps from $338 a month to $288? Or dropping the program altogether? And once you do, you've got, what, 2% of the deficit paid off? What's next? "Social programs" account for a tiny percentage of the federal budget.
Should we raid Social Security (again)? Drop infrastructure spending (again)? Cut education (again)? We're going to need that SS cushion, or people won't retire, and jobs will continue to be scarce. Our infrastructure is already suffering badly, and it costs more to clean up after a disaster than to prevent one (Katrina anyone?). Education is essential to remaining competitive in the global economy; as it is, we're having to import large numbers of health-care workers from the Philippines and other countries with better schooling available, and even the less-skilled pink/white collar jobs are shifting overseas at the speed of a telecom connection. Will our deficit situation improve if, in 10 years, we have even *fewer* literate and numerate 18-year-olds? Will their parents be able to "take up the slack" if they're working three part-time jobs to make up for the food stamps we took away, or to cover the emergency room bill since they can't afford to go to the doctor regularly?
And again, those things are a relatively small percentage of the budget. We could completely redirect education spending, and it wouldn't make much of a dent in the deficit. Maybe we could sell the Brooklyn Bridge?
Defense is really the only place where we spend enough money for cutting to make a big difference. Care to raffle off a B-2 bomber?
Yes, we have to watch our money... but there's such a thing as penny-wise and pound-foolish. Many of our spending cuts have *cost* us money in the long run. The suggestion that we should be able to pay off the deficit simply by "cutting spending" is to suggest that we are living beyond our means by maintaining a first-world existence.
We do need to increase revenue. Our taxation brackets are based on much smaller amounts in real dollars; we need to start ratcheting things up slower, so that on the bottom end (the five-figure households) you're paying the same or less, but at the top end (your seven-figure-a-year earners) you're paying more. YES it's wealth redistribution. I don't understand the argument against it; we're all in this together, and no one is going to pull down a million a year unless there's infrastructure and a quality labor force to build on. Try posting a CEO resume in Zaire, really... see how many bites you get.
I also think that, in this day and age, the IRS needs to change the "bracketing system" to something more intuitive. We look at the "top bracket," see the figure "35%", and FREAK THE FUCK OUT... how dare they take over a THIRD of my hard-earned money? But that's soooo not what is happening, is it? A family with $400,000 taxable income is actually paying 28% in taxes, and you better believe that at those numbers, they've got $100k or more in deductions; they'll be tracking their sales tax, deducting property taxes on homes assessed at seven figures, paying mortgage interest, contributing to Roth IRAs, and so on. Now they're actually only paying 22% in taxes on their gross income. (The plural of anecdote is not data, but my mother's experience, when she married a millionaire and retired from teaching public school, was that they paid a tax figure that came to 12% of their gross income; the numeric value of their taxes the first year was LESS than what she'd paid the prior year on her teacher's salary.)
It i
Don't you wish your girlfriend was a geek like me?
We do in fact need higher taxes in order to pay off the monstrous debt we're accumulating.
Oh my god! you're right. I deserve a raise because I have a huge mortgage I could never afford, 3 car payments, and $60k in credit card debt.
ktappe in 2012
Welfare for people who don't want to work? I'm sorry, but with unemployment as high as it is, there are a lot of people who want to work and can't find it out there. I am lucky and have a nice career, but others not so much
Sorry, I am not referring to anyone who is out of work. I am referring to folks who professionally game the system. Folks who haven't worked a day in their life and get a check. I lived next door to a house full of folks getting subsidized housing and monthly checks for various "disabilities". Apparently attention deficit means you cannot work and get $700/month (that is what the 21 year old kid bragged about). His mom got money for taking care of him and reduced rent. They had other family members with other "problems". Didn't stop them from playing basketball in the street at 1:00am, getting girls pregnant and making themselves a nuisance.
Now contrast this to a friend of mine. Profoundly retarded. He has a case manager and also get subsidized rent. he however works about 25-30 hours per week. The work he does could be handled by a five year old and I am sure the employer is subsidized to make work for him. Yet I don't have a problem with this at all. He has the dignity of contributing to society. He has legitimate problems, yet still has a desire to "pull his own weight". I have no problem with society helping him pull that load.
See my journal for slashdot ID's by year. Mine created in 2005. http://slashdot.org/journal/289875/slashdot-ids-by-year
You're right. All we have to do is cut military spending, from a trillion dollars per year in 2008 to something more reasonable, like 500 or 400 billion.
It's funny, that never seems to be an option for the ideological right.
Yes, ideally, folks should save for their own retirement. However, practically, most people except the most hardcore libertarians are against deciding you should starve to death because you ended up with insufficient cash when it came time to retire. What do you do for folks that lose their money through theft? They get to starve because they were unlucky?
Many of the "problems" with Social Security come when people think of it as a govt. mandated retirement fund. Yes, when looked at in that light, the costs are high and the returns poor (although the requirement to invest only in T-Bills was a stroke of genius; if the trust fund were in private investments I can only imagine the pork-barreled SNAFU that would be.)
However, Social Security was not conceived as a retirement program, it was conceived as an anti-poverty program for the elderly and unable to work. Looked at in that light, it makes a lot more sense: we (the citizens of the U.S.) achieve a jointly decided on societal goal of trying to keep penniless elderly and disabled fellow citizens from literally starving to death due to hunger.
There are real problems with Social Security as it currently exists, but its very existence is not one of them.
SirWired
Idiots! We are in what is being described as the biggest economic calamity
since the Great Depression and these idiots want to discourage people from
engaging in consumer spending.
Brilliant.
A Pirate and a Puritan look the same on a balance sheet.
There is already taxes collected on *anything* that ships.
:)
Unless it is a download only item (software for example) taxes or other fees are paid on *at least* all of the following:
- Sales and excise tax on fuel for the truck moving the product
- IFTA fees
- Apportioned vehicle resigistration fees
- Property taxes paid by warehouse facilities of shipping company
- Income taxes paid by shipping company
This is what came to mind off the top of my head. These are specifically taxes associated with *shipping* the product. You're now paying on top of that as well if they enact interstate sales taxes. I realize that any product purchased in a retail location paid many of these same taxes (via shipping costs) as well, but the point still stands - folks are already paying on this.
Plus the single most important part of all this - everyone who lives in a sales tax state pays Use Taxes (FL), right?
Illiterate? Write for free help!
If was I assured that the government was using my tax money efficiently and productively, I wouldn't have an issue paying them. However, the government uses our money neither wisely nor efficiently.
Here's a small example of how wasteful my city is. My city has a budged deficit like virtually ever level of our inept government all over the country. During a radio interview during the winter he said we were one snowfall away from declaring bankruptcy. It's the same song and dance year after year. Somehow they never set aside enough money to cover snow removal.
But here's the good bit, after he made that statement we had a fairly minor snow storm, amounting to maybe a couple of inches. And yet I distinctly recall plows running up and down the streets of my neighborhood to clear the small bit of snow lying at the edges of the street. The street itself was mostly clear of snow. This nonsense went on for two days.
In addition to that these idiots in the snowplows did their plows into the pavement. Every time one of the trucks goes by the rumbling is intense from these plows and sparks are flying. So what's the end result? Sometime this summer crews will start patching all the potholes. And the stretches where the streets are really torn up they'll end up repaving everything, and some of these streets have been paved within the last 10 years.
But then they complain that they have no money. And they can't cut spending even if they wanted because every last department and union refuses to make cuts. The head of the board of education, who earns nearly $200,000 a year for not doing much of anything refused to forgo a raise because she needed it to cover cost of living increases.
And god forbid anyone propose cutting taxes in certain areas, like education. Nevermind that my city spends, on average, significantly more per child than any other country on Earth and I'd say that the quality of education is crap in comparison to what I've seen overseas. There are some good people out there, but money is squandered carelessly and apparently a lot of this money goes to the fat cats running the system.
So what's the solution? Like a bad welfare case or a drug addict the government resorts to squeezing a little more money out of people. Property tax is already ridiculously high in my city and we're looking at it going even higher this summer.
With utilities or any company I have the ability to dispute charges. I can moderate usage, or if I'm unhappy with a provider I can cut service. What the hell can I do with the government. Nothing. The buck stops there. I don't pay and I go to jail. And good luck trying to dispute anything.
What's really bothering me is this blind faith I see in the government nowadays. Like anyone who questions the government is doing something wrong; just look at the media's response to those tax rallies yesterday. And then there's the frustrating nonsense about how we need to punish the wealthy. More like punishing success.
And I love how tax rebates are portrayed as gifts from the government. It's my money, first of all. And secondly, this is simply a nice way to guarantee that these "tax cuts" are temporary. And third, this way they can give handouts to people who haven't even had to pay taxes, but do already enjoy the benefits of our welfare system. I'm all for putting money towards educating people out of poverty and ignorance, but I am completely opposed to handouts. Time and time again it's proven to be a failure, remember those FEMA debit cards?
And the problem isn't only the obvious taxation on income. It's all the other fees the government slips in there to screw us out of our hard-earned money. Like this damn internet taxation. It's a nice way of spreading out our tax burden so that we don't notice how bad it actually is. Sometimes I wonder if what we pay to the government doesn't already rival what Europeans pay.