Senator Wants to Tax Internet Shopping

tripleevenfall writes "A Democratic senator is preparing to introduce legislation that aims to end the golden era of tax-free Internet shopping. The proposal — expected to be made public soon after Tax Day — would rewrite the ground rules for Internet and mail order sales by eliminating the ability of Americans to shop at Web sites like Amazon.com and Overstock.com without paying state sales taxes."

Comments

Bipartisan

[geekoid]

A possible co-sponsor is Sen. Mike Enzi, a Wyoming Republican who backed a similar proposal before and did not respond to a request for comment.

then:
Update 10:30 a.m. PT: I've heard back from Sen. Mike Enzi's office. It sent me e-mail this morning saying: "Senator Enzi plans to co-sponsor the Main Street Fairness bill with Senator Durbin. As far as a timeline or drafts, you'll have to check with Senator Durbin's office."

So it's bipartisan.

Don't even think it's only Democrats that raise taxes, or you will be school in tax history.

Re:It needs to be a simple tax.

[segfaultcoredump]

There is, but it involves geocoding every single address. And then updating it every time any one of the 60,000 tax districts change their boundaries or rates.

Here is the problem, you can have two houses on opposite sides of the street be in two different tax districts. So a simple 'if zip == xxxxx, then tax = Y' type of lookup table will not work.

You then have the issue of the corporation needing to potentially apply for a sales tax license in jurisdiction before they can collect the tax.

Then you have the issue of having to possibly send the check to 3 or 4 different groups on different schedules for each customer in a different.

And finally there is the question of what gets taxed. In some states, some items are not taxed (usually basic food). So if I order a 10lb tub of powdered gatorade from amazon.com it may get taxed in one state but not another, both of which have a sales tax.

To call it a mess is an understatement. This is the main reason why the courts tossed out the states requirement to collect the tax: the burden was simply too much. If memory serves me correctly, that same court decision left the door open to enact a simplified sales tax scheme (if shipping to NY, then charge X% and send it to Y address and be done with it).

Re:Surprised?

[Low Ranked Craig]

I read that twice. I don't think it says what you imply that it says. There are numerous contradictions within the article itself. There is also a lot of correlation but no proved causation. For example, this little nugget: "We’re not quibbling with most of that. A Treasury Department analysis found that the tax cuts prompted the creation of jobs and increased the gross domestic product". So there is no dispute that lower taxes do in fact increase the GDP. The question is do they increase the GDP enough to offset the decrease in tax revenue to see a net increase in tax revenue? In this specific case, yes.

Federal revenue normally increases every year. In fact, revenues have declined in only five years since 1962. The 35 percent growth between 2003 and 2006 is significant – the last major growth in revenue was between 1997 and 2000, when the economy was booming and federal receipts rose 28.2 percent. But the recent three-year period also comes after three years of decreases, a drop Viard attributes to the 2001 tax cuts and the start of a recession that same year.

The economy does not turn quickly. A huge recession started after the dot com bubble popped, then the tax cuts came in 2001. It takes time for that kind of change to see an economic impact. In the short term there will be none, in fact in the short term you will simply see a reduction in revenue. in the mid term, a year or two later you sill see the increase.

Three years after the tax cuts, the tax revenue returned to the 40 year average of 18.4% of GDP, with the lower rates So, no, lowering taxes will not immediately raise revenue, but it will increase GDP and help lower unemployment, which is what you need in a recession. The fact that they lowered the rates but are still collecting the same percentage of an increased GDP tells me that lowering taxes did in fact increase revenue, because historically the feds collect about 18% of GDP as taxes.

Summary: They lowered the tax rate, GDP grew and they still got their 18%. Sounds good to me.