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Amazon Pushes For National Internet Sales Tax
SonicSpike writes "The Governor of Tennessee struck a deal with Amazon.com to allow their operations to move to TN in exchange for Amazon.com not having to collect TN sales tax for the next 2 years. However the Governor noted in his press conference that he is working with Amazon.com to push the US federal government to impose a national Internet sales tax."
Not only that, but yet another tax to collect for the feds, thus creating an operational barrier to entry for new enterprise.
I believe the idea is that the money is turned over to the States. Within 5 years it will most likely turn into a club to beat them into compliance (like highway funds or any other funds for that matter) since monies are withheld from the State if they don't do what they're told.
Do you even lift?
These aren't the 'roids you're looking for.
The complaints of online businesses are that each state has it's own laws and it requires too much work to comply with 50 different sets of laws. It seems a simpler solution would be a national tax policy instituted at the federal level with a single set of rules. In order to not infringe on state's rights, allow states the option of using this policy or sticking with their own. If they choose this policy, online retailers will be required to charge tax as appropriate and send it to the state. Retailers won't have to deal with the hassle of tracking numerous different laws and won't have to worry about shutting down their business presence in entire states. If the state chooses not to adopt this policy, they can continue with their current system and rely on people to pay the sales tax with their annual income taxes. Seems like this would work for everyone.
It's not the rate that needs to be uniform, merely the administration and rules. It would be quite possible to have a federal sales tax, with collection outsourced to the states and rate dependant on delivery address. The issue is when every municipality has their own tax and more importantly rules for applying that tax. It's this abundance of differing rules and regulations which make doing business across territories difficult, rates on the other hand can be determined by a simple lookup table.
The other major problem lies with the states that rely on property taxes for their income rather than a sales tax. This is harder to fix but may be doable as long as you allow the rate to vary to 0.
Amazon doesn't care where the money goes, nor do they really care about the rate. A federal tax could quite easily be collected and kept by the states. The reason they want a federal pre-emption is simply the abundance of rules and regulations that must be obeyed for each different area's individual sales tax. For new enterprise, having to obey one set of rules for collection of sales tax nationwide would represent an amazing saving on accountants bills.
Which isn't really that hard unless you're a small business owner in which case you probably just pay for the service. Large companies shouldn't have any trouble keeping track of that, especially a business the size of Amazon, I can't imagine that it takes more than 1 full time employee, and I'd be surprised if it even requires that much time and energy.
Considering that many companies can figure out how much shipping should cost to various places, it shouldn't be that much harder to plug the address into another database to figure out how much tax to charge.
As someone from outside the US, why is national infrastructure paid for at a local level?
It's not a troll, I seriously don't really get the idea of a single country being run by so many independant states as the US seems to be. Here in the UK there are National Routes and Local Routes, with the local routes paid for out of Council Tax and a share of the nationally collected Income Tax, although there are arguments for getting rid of Council Tax in favour of either a Land Tax or a more direct share of Income Tax.
These comments are my personal opinions and do not necessarily reflect the opinions of the other voices in my head.
To hell with the virtual - why the frig should those of us living in states with no sales taxes in the real world (Oregon) have to pay up for everyone else's, and since when would we be forced to start paying one?
Dunno about you, but it would pretty much change buying habits for most purchases around here. Sure, some things would still be cheaper online after figuring in shipping costs and (now this proposed) sales tax, but things online would end up being far less attractive than before... including a lot of Amazon's stock.
OTOH, maybe it'd be the push needed to support local (offline) business more?
Quo usque tandem abutere, Nimbus, patientia nostra?
If you've ever looked at the patchwork of sales tax rules in this country you can quickly see this solves a major problem. There are literally 10's of thousands of sales tax jurisdictions in the US, pretty much every county at a minimum, and often each city or town inside of the county. It's not just different rates, but also different rules. Food is taxed in one place, taxed at a different rate in another, and not taxed in a third. And what is "food"? You don't really want to know the answer to that question, it's probably 10,000 pages long! Having one rate, or perhaps one national base rate and a per state "option"; but more importantly one set of classification rules would really solve a major hurdle for small online retailers, and make it practical for them to collect tax.
The largest problem this creates is who gets the revenue? Taxes generally pay for infrastructure (roads, bridges, fire departments, etc), so it makes sense for some of the revenue to go where the seller is located, and some where the buyer is located. In brick and mortar sales these tend to be the same place, but won't be for Internet sales. Plus, Internet sales depend on transportation. The goods are shipped by truck and rail, probably across many states in the middle. Some of the money needs to go to those states to build interstates and airports and rail yards to get the goods from seller to buyer.
There are some other small problems. For instance if the money is collected and distributed via the fed, can it be used as a stick to get the states to do other things? The tax may be regressive, depending on how it is implemented. Many localities exempt food for instance as a means of assisting the poor, squaring those rules into a national set of rules will be difficult.
Still, overall I think the country needs something like this to happen. The idea that we can collect no taxes on a significant fraction of the business activity is just crazy. Many other countries already have a VAT tax because of issues like this, so the US is really falling behind. No one likes taxes, but we all like the things taxes achieve (on some level), so let's find the simplest, least evil, and fairest way to collect them. Going from 10,000+ sets of rules and rates down to 1 would be a huge step.
...why is national infrastructure paid for at a local level?
It isn't. National infrastructure (Interstate highways, for instance) is paid for directly by federal (national) funding.
Quo usque tandem abutere, Nimbus, patientia nostra?
Amazon is NOT pushing for a national sales tax! This article is about Governor Haslam's agenda, not Amazon's. The headline is inaccurate and misleading.
"I either want less corruption, or more chance
to participate in it." -- Ashleigh Brilliant
But even if the state can't collect the sales tax automatically, they can still charge you the citizen a Use Tax. There's probably a line on your state income tax form for it. But people don't know or care about paying their use tax (maybe they're too busy demanding other people pay more taxes?) which is why states want to tax the internet sales directly.
Do you even lift?
These aren't the 'roids you're looking for.
Stores don't pay sales tax... customers do. The stores occasionaly are nice enough to collect the tax from the customer for the state. You are still responsible for paying your sales tax even if the store does not collect it. Just like if you run a cash only buisness with no paper records you are still responsible for reporting all your income to the IRS to pay your taxes. If you chose to commit tax evasion, it is your own damn fault and not the responsibility of the retailer.
Really? The IRS gives out incorrect advice on the tax code, then penalizes YOU for it. People cheat them all the time, because you can only audit a small percentage. Charlie Rangel ripped off the IRS for nearly a decade. It's corrupt and self-serving just like nearly every government organization.
Gamingmuseum.com: Give your 3D accelerator a rest.
I would argue exactly the opposite. All taxes are bad, but an income tax is perhaps the worst type as it is an outright presumption of slavery, that the government owns the fruits of our labor, and thus owns us... Allowing us to keep whatever percentage of our income. Income tax needs to end entirely.
Property tax is also wrong. It is a presumption that government owns all property (in this case, all land and homes). Once you purchase property it should be yours and yours alone. This country was founded on individual liberty, a large part of which is the right to one's own property. One should never have to fear not being able to afford to pay the tax man his $5k-$8k annually (in the state I live, for typical homes) or have the government steal his home and put him out on the streets.
Sales tax is a great way to tax. Income and property taxes should be eliminated and replaced with a sales tax on all non-necessities. This could be done at a national and state level as well as possibly a county or minicipal level. We could call this tax rate 31%. That's where I fall now with income taxes. Or call it 42% as that's my tax rate including property taxes. Or perhaps call it 50% as my tax rate is at least that including current sales tax. Or perhaps higher if you figure in all the other hidden taxes.
My point is taxes (and of course government spending) are at ludicrous levels. A simple and highly visible tax structure such as sales tax as the primary means of government revenue allows people to choose whether to support government spending, and how much to pay in taxes based on that or wahtever reasoning. That way we all are free to keep our entire income if we choose to, and there is no presumption of slavery. If you don't make much or don't want to pay taxes, don't buy new things, don't buy luxuries, buy secondhand, live a simpler life, etc. Those who can't afford those things likely don't pay much if any taxes currently. This tax structure would help the poor. It will make home ownership and rent cheaper. Cost of living would become much more affordable.
In addition to the national income tax, most states have their own state income tax. In addition to that most, have property taxes, school taxes (also paid by property owners). Counties, towns, and other localities can also levy their own property taxes and sales taxes.
The national income tax goes directly to the federal government (which they then use to bribe the states into passing laws they can't pass nationally), everything else is local to the state and/or municipalities.
When you add everything up, I'm not sure it is so certain that our taxes are lower than anywhere else, but I have not looked at the numbers closely.
Amazon would collect and remit the payment to State B. Sales tax is collected against where the customer is at. This has be the law of the land for decades. It was settled when the Amazon was a Sears and Roebucks catalog.
I know it's crazy to so much of the leftward-leaning slashdot crowd, but is it so crazy to ask WHY a tax would be justified before implementing ANOTHER method of the government intruding into the otherwise-private transactions between people?
(And please note: our elected representatives being too stupid for several decades to balance a checkbook and spend less than they have available ISN'T ipso facto a valid reason to take more money from the public.)
To lay it out clearly:
- in terms of hard infrastructure, everything has already been paid for. There's no 'state-provided' street or sidewalk on which this business is taking place, nor a state-built thoroughfare upon which a consumer has to travel to visit a store. Yes, the US gov't invented the internet, but for at least the last dozen years every iota of bandwith on which our (consumer's) signals travel is paid for commercially, and the costs passed down to either we the consumers (through our ISPs) or the businesses (through their providers)
- whatever actual physical location a business has somewhere, the services that they consume (fire, police, etc.) from the government are already paid for in their property taxes. Self-evidently there's no need for police services for the sorts of store loss-prevention actions (shoplifters, etc) for internet stores.
- I don't see the government providing any specific security for internet transactions; there's no government-security function backing https, nor any other transaction security system with an official imprimatur. I'm fine with this, by the way, I'm just saying that one of the legitimate reasons we pay taxes is the security and stable society under which the transaction is able to occur. This isn't present, as far as I can tell, on the internet.
- sure there are some internet investigations going on but I see these as other issues - I don't see a lot of prosecutions for internet fraud (could just be my ignorance), certainly nothing to justify the massive amount of cash that would be garnered from a broadly-asserted internet sales tax.
In short, simply because the government needs money, and can take it, doesn't mean we need to tolerate it blithely like sheep.
-Styopa
> But how's it going to be allocated back to the states?
Easy: national sales tax goes to fund the FBI and ATF, and every state gets the privilege to have federal agents coming down to burn alive members of religious cults suspected to also be gun runners.
Every state would benefit from a better funded federal government. More money would fund more illegal wiretaps of civil rights leaders. Or it could simply be put in a savings account for the next war or bailout that the federal government creates to please its strongest supporters.
lucm, indeed.
Except there are states that don't. We like our "no sales tax" in Oregon. Screw you, Tennessee.
It's not a troll, I seriously don't really get the idea of a single country being run by so many independant states as the US seems to be.
Umm... Aren't you guys a member of the EU? You're just now seeing the beginning of how Federal and state powers and responsibilities manifested in US history. Shortly after the unpleasantness with the your Crown, the thirteen states banded together in something very like the EU under the Articles of Confederation. It became clear after a time that the Articles were insufficient to bound the states together, much as it is becoming clear that something more substantial may be needed in Europe (at the least many member states are concerned about how much everyone's economic policy diverges). So we upgraded the capabilities of the Federal government in the Constitution. Over the next two hundred years the States and the Fed (and the locals and the states) have maneuvered, pushed, and pulled (and in part fought a war) into the current system. The Federal Government's power have increased substantially over that time, but the states rather jealously guard what they have left.
The answer to your more immediate question of why local governments are building national infrastructure, the answer is they don't. States do. States are not local governments. Even ignoring the history above, remember that the US is relatively huge vs. the UK. England (indeed, the entire island including Scotland and Wales) would fit into some of our larger states. A certain level of mid tier government between "national" and "local" makes sense. Typically states maintain the larger roads (sometimes with mostly their own funding, called "state roads"; sometime with additional federal money called "federal roads" or "Interstates"), and local governments maintain the smaller local roads. State and local governments get a lot of their funding from sales tax (like your VAT, but collected at the local and state level). So the issues here are:
1) It's hard for states and localities to collect sales on interstate mail order purchases (as throughout the Internet). They are pushing to legally require this on any business which operates inside their borders. This is becoming a larger and larger issue as online ordering becomes a larger part of the retail profile of many people.
2) Sales tax rates vary extremely from state to state and locality to locality. I live in Massachusetts, we have like a 7% sales tax. It's higher in Boston which collects a local tax on top of the state tax. An hour north of me is New Hampshire which has no sales tax at all. Amazon and some other online retailers claim that this makes sales tax collection unduly complicated for them, so they want a national sales tax.
3) The difficulty presented by the OP is a real one. If the Feds start to collect a national sales tax on online orders as a proxy for states and localities how can you fairly divide up the proceeds. Should every state just get a percentage based on population? How's that work when many more people in say California or Massachusetts are much more likely to shop online than people in Mississippi? How do you handle getting local governments their share? Should people in states like New Hampshire, that have no state sales tax, have to pay? Should those states get any of the proceeds?
I don't need a million points of light, just two points of multi-mode fiber and a 10 Gig-E router.
As someone who lives in one of the two states with no sales tax, this idea can go screw itself.
As someone who believes sales taxes are regressive and unfair, I can say that my fondest hope is that the internet finally forces the rest of the states to eliminate their unfair sales taxes and I welcome Amazon to move to my state and just tell everyone demanding sales taxes to fornicate themselves with an iron stick.
set softtabstop=4 shiftwidth=4 expandtab nocp worlddomination
I guess the next question then is, why does Sales Tax matter so much?
Afaict the issue with sales tax and internet purchases in the US is not just the actual tax loss but also the fact that it gives retailers who sell to the whole US but only have a buisness presense in the odd state (preferablly states without sales tax) a massive unfair advantage over traditional retailers that have a buisness presense in most states. In theory people are supposed to pay an equivilent "use tax" to make up for the sales tax they didn't pay but afaict they rarely actually did so and some states even gave up and allowed people to pay an "estimated use tax" instead.
States cannot force out of state retailers to collect sales tax for their residence due to a supreme court descision that it would be an unreasonable burden on them (US sales tax is very complex with taxes being charged by many levels of govenment not just states).
Recently some states have been trying to put pressure on amazon to pay by widening the definition of "in-state" to include retailers with affiliates in the state. Amazon has been responding by dumping affiliates in those states (which hurts the affiliates in question far more than it hurts amazon).
One soloution for the states would be to do away with sales tax entirely (some states already don't have it) but to do that they would have to either reduce services or raise other taxes. In general those responsible for taxing people like to spread the pain so it's less obvious just how much of ones income is ending up in taxes.
I find this a slightly strange move by amazon. Maybe they think a level playing field wouldn't be so bad after all compared to the model theese states are pushing where online retailers that allow affilliates are disadvantaged relative to those that don't.
I know Income Tax is lower in the US than the UK
Afaict that depends on where in the US you live/work. The US federal income tax is lower than the UK income tax but many parts of the US also have income tax at lower levels (state, county, etc).
note: i'm known as plugwash most places but i screwd up registering that here somehow in the past and now can't register
And we like our "no income tax" in Tennessee. Screw you, Oregon.
One way or the other you're going to pay the piper, and having one national standard will make things much easier for all concerned.
Amazon would collect and remit the payment to State B. Sales tax is collected against where the customer is at.
Apparently, you didn't read the post you replied to, in which there is some question as to "where the customer is at".
If you pay Amazon with a credit card that has a billing address in New Jersey, but have the order shipped to a verified address in Texas, where is "the customer"? If they are in Texas at the time the order is made, then Texas (state "C" in the OP) has a strong case for the customer being there.
Likewise, I pay for purchases from Newegg using PayPal, so Newegg has no clue where I "am". All they know is that they are shipping to an address that PayPal has verified I have some kind of control over. Newegg doesn't know if that's my legal state of residence, nor do they know if it has anything to do with my credit card billing address. In this case, Newegg could not send money to state "B", because they don't know anything about state "B"...they only have information about state "A" (where Newegg is) and state "C" (where the order is being shipped).
The reason this becomes important is that states with more permanent residents (and thus more likely to have credit card billing addresses associated with them) might argue as you do (that state "B" should get the money), while states with more transient residents would argue for the shipping address controlling the payment.