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Senators Vow To Renew Bid For State Taxes On Remote Internet Sales
jfruh writes "A bipartisan group of U.S. Senators are working hard to make it legal for U.S. states to collect sales tax on any sales made to their residents, even if the sellers live elsewhere. They tried to add an amendment making the change to an unrelated defense appropriations bill, but the attempt was defeated. They have vowed to try again."
We don't have a revenue problem, we have a spending problem.
No good deed goes unpunished.
Go after them. Here in MI we have a "Use Tax" on our State Income Tax forms for reporting your internet purchases for tax calculation. Usually cheaper to use the "based on your income" option to to add it all up and apply 6%...
Unrelated riders on politically hot button bills and earmarks on important budget issues are how the most heinous of legislation is often passed. Should be illegal, but it will never be.
Silence is a state of mime.
By forcing web sites to collect sales tax for all 50 states and the territories will create an accounting nightmare. The only companies that can afford to hire the people to do it would be the dominant players like Amazon. So, all the small start ups would be stifled right out of the gate. The end result will be a near monopoly and very few start ups bringing new ideas to market.
Having heard, with my own ears, Democrat Senators and Congressperson tell the whole country that they would never support a tax on the Internet, I am surprised that they would so quickly change their highly proclaimed position.
Of course, they promised me that I could retire with full Social Security benefits and have changed that also--now that they have raised the retirement age.
They promised that Medicare would provide for senior health-care needs and the Democrat President is set to take $1,116,000,000,000 out of Medicare.
I guess the cost of "Obama Phones" is more than expected.
Those who propose and vote for Internet taxes have lied to the USA citizens and taxpayers. They have lost their morality (assuming that they had any to begin with.).
Seems to me that the states shouldn't be trying to deal with the taxes on this, and instead congress should be doing it under the mantle of "Regulating Interstate Commerce". Pass a law that says all sellers must collect and report both federal and state income tax on sales as if the sale were occurring at the buyer's physical location, or the location to which the product is delivered. (Whichever is easier to make into an enforceable law).
Simple, clean, unambiguous, very few loopholes, and understandable to customers.
3 out of 100 is barely a group, and it's barely bipartisan with Lamar being a progressive RINO.
Can't the Pentagon buy stuff from discounttankoutlet.com?
I think it would just be easier to tax from the state that is selling instead of selling to. I wouldn't have an ideological issue with this, unlike states receiving the goods taxing companies cross state borders.
This would promote states wanting large retailers in their states for additional revenue, and companies looking for low tax states to place ware houses. If the wording isn't strict though, I could see shell warehouses in low tax states being setup and all purchases filtered through those.
Allowing the states to collect a tax isn't the same thing as imposing a tax. Not quite. Besides it's either that or the states will have to raise income and property taxes.
Tried that once. Didn't work out. http://americanhistory.about.com/od/civilwarbattles/Civil_War_Battles.htm
If the states really wanted to collect all that sales tax, all they would have to do is enforce current law (requiring residents to pay the tax themselves) and increase the penalties for evasion. Random audits would reveal massive infraction - supposedly less than 1% of taxpayers in states requiring it report any internet or other purchases where the vendor did not charge tax. But they won't do this, they're too scared of the backlash from voters. In short, they want somebody else to do the dirty work for them.
What about the interstate commerce clause in the constitution?
Anyway this sort of thing will cost jobs in this country - since companies can set up offshore and sell stuff without having to collect US state taxes - especially for non physical goods (mu7sic, videos, software, subscriptions etc.
If the States need more money, they can increase sate income tax, of have a state lottery (a tax on the mathematically challenged)
Or they could just not spend without restraint in exchange for votes. I know, that's not an obvious solution nowadays.
I guess they could promise to cut taxes without restraint in exchange for votes instead....
It's not just state sales tax that the brick-and-morter stores have to collect, it's all the sales taxes: state, county, town, and special districts like recreation, area improvement, fire, police, and so forth. It's not 50 different tax rates, it's thousands. It's not writing 50 checks, but hundreds of checks or more. One of the many prior attempts at defining a national "long arm" statute was to simplify the collection of out-of-state tax to minimize the accounting nightmare.
The reason that the buyer-based tax was levied on the brick-and-morter stores in the first place was that the tax applied to where the store was, and therefore where the transaction took place. That meant the store only had to pick up 10-15 taxes, which were usually remitted to a single taxing authority with one page of paperwork so that the money could be distributed to the taxing districts appropriately.
Mail order and Internet shopping broke this model, because the "point of transaction" is the ether, or the United States Postal Service. The original proposed fix, to have the seller collect local tax, was struck down by the Supreme Court. So the alternative was to collect tax based on the buyer's location...which means the seller has the nightmare. The patch was to apply "use tax", so that the buyer's taxing districts would receive the money from the buyer directly, which means that scofflaws are not going to be paying and there isn't all that much the taxing districts can do to enforce the collection, for how do you find out that use tax is owed and isn't being paid?
The right thing would be to go with a new business model...but that's not going to happen either.
And when I buy more expensive items, I'll have them shipped to a friend in Sweeden, who will then ship it to me.
Easy tax dodge. If billionaire assholes can do it with their bank accounts, I can do it with this.
They need to impose an interstate commerce tax. This tax will be made up of three components. One is 33.3% of the tax rate of the ship to state, and the other is 33.3% of the tax rate of the shipped from state and the third is the federal tax, which is set at 3%. All states will have a single number (none of these city extra sales taxes). This interstate tax will mean each state gets tax coming and going. Sales within the state are taxed in the normal state way. The feds will collect this tax and remit each states share quarterly for most and monthly for high volume sellers.
States that have no sales taxes, will not get $$ in this plan.
States will then get money on all sales into and out of their state. Currently they get only what is sold in the state by in-state vendors, and nothing externally, and they get little for items sold into the state - except for things like cars which get registered.
So it will give money to each state and the feds and will acts as a leveling agent, which is needed.
In the European Union VAT is different in each state. If you're buying as a personal customer, ie. you don't have or don't use the VAT ID, you pay the VAT and other taxes valid on the seller's country, except for alcool and tobacco. If you're buying as a professional customer, using the VAT id, the regulations are different due the compensations but the same basic rule applies most of the times except on some cases.
But when they reach 0 tax rate, they have to stop.
OOhh... wait. unless you do an Earned Income Tax Credit, a negative tax rate, in other words...spending.
We have a fucking SPENDING problem.
When Fascism comes to America, it will call itself Anti-Fascism, and tell you to give up your guns.
I like anyone else hate taxes on levied upon me, but I also understand taxes are necessary. The United States is a very large country with many governments: local, state, and federal. While I'm sick to death of our tax dollars being wasted by our leadership, I also believe that if our tax dollars weren't wasted people tax rates would be much smaller and this would be a non-issue.
If I pick up the phone and call a company and purchase a product from that business in another state other than the one I live in, I'm expected to pay their sales taxes, which may include local and state taxes. So why would this tax assessment be any different for a product I purchased via the internet? It should not be different. If by using the web to make my purchase, I am not taxed, the is discrimination against those who make phone transactions. Now, the State from which I reside is not entitled to tax me for the product I purchased. The product was not bought in my state. If this is where this proposed bill is going then it's wrong and I oppose it at it's very core.
If this is an issue that cannot be resolved without double-taxing the consumer then this would provide support for a different tax system. I've heard of the flat-tax system, and I am not horribly opposed to this, as long as everyone pays the same % of tax and all loopholes are gone. But someone else has mentioned to me a straight up Consumer Tax plan. No more income taxes, but taxes exist on any and everything we consume. That plan has some merit to it's structure also, but I think this would be more likely because people will always find away to avoid taxes.
This of course it only one person's opinion, and with limited facts. I'm sure with more facts I'd have a different opinion.
Life takes interesting turns, but the most interest is when you're off the beaten path.
This could be a very simple process - the business would charge whatever the sales tax rate is for where it is headquartered (i.e., Walmart online customers would pay Bentonville, AR sales tax). This would work, for the most part, and be fairly easy for the vast majority of online retailers to implement.
Of course, this is the "lowest approval rating ever" Congress we're talking about. The same guys who claim to be able to fix the current fiscal mess (they created), but can't give us any details.
Expecting them to do the smart thing and follow Occam's Razor is like expecting a tree to grow wings and fly - not gonna happen.
An enigma, wrapped in a riddle, shrouded in bacon and cheese
We don't need another fucking tax.....we got plenty.
Light travels faster than sound. This is why some people appear bright until you hear them speak.........
Every internet business would buy server space in NH or AK with no sales tax and declare that their headquarters if it was by seller. I think it has to be on the ship-to state. A program for calculating sales tax based on street address would not be very difficult.
Or they could just start enforcing the USE part of the Sales & Use Tax that most states already have.
Do what thou wilt shall be the whole of the Law - Aleister Crowley
Why so? If the problem is on the spending side (which appears almost beyond reasonable doubt), then raising taxe rates does nothing to fix the problem, instead just impoverishing the nation and, if we're on the right side of the Laffer curve (also almost beyond reasonable doubt), actually reducing the revenue generated by taxation. So where is the problem with Norquist, exactly?
-- Two men say they're Jesus. One of them must be wrong. - Dire Straits
And yet small companies do deal with it if they are brick-and-mortars (for there own state tax codes). Multiplying the complexity by 50 for the chance to access a market that is (on average) 50 times larger than your own state is a small price to pay. Since long before the internet, Canadian mail-order companies have had to deal with collecting both federal and provincial (state) sales taxes with a similar range of provincial tax rates and exemptions from coast to coast. Like dealing with shipping and credit card companies, it's just part of the logistics of doing business.
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They want to raise taxes on the "rich" by 1.6 trillion over 10 years. That's about 180 billion a year.
The deficit is well over a trillion a year, but let's just say it's only $1 trillion. That leaves $820 billion left to make up with cuts.
This whole argument over taxing the rich is a waste of time and a distraction. I say let the raise it to where they want and then insist that Obama cuts $840 billion a year.
If he doesn't then, we are just rearranging the deck chairs on that well known ship.
When Fascism comes to America, it will call itself Anti-Fascism, and tell you to give up your guns.
You are under the illusion still that the Constitution is a limiting factor on the desires of our would-be overlords? How cute!
-- Two men say they're Jesus. One of them must be wrong. - Dire Straits
Well one thing is certain: you know nothing about Texas.
-- Two men say they're Jesus. One of them must be wrong. - Dire Straits
The legislation in question requires states to create a simple sales tax compact. This means all the merchant needs to know is the state to ship to. They don't have to worry about city, county, special tax zones and all the other stuff that brick and mortar operations have to comply with.
Second, the legislation only applies to companies with large sales volumes online. It's not going to apply to some guy selling stuff on ebay.
Finally, I don't see the accounting nightmare. Most shopping carts are designed to accept a sales tax table. Run a couple reports, cut some checks. If you're big enough for this law to apply, you're big enough to have a staff accountant.
So let me get this straight...
If I was a financier trading millions and billions, and under the current de-regulated playfield that is Wall Street, I wouldn't have to pay one red cent to trade worldwide all those mortgages, hedge funds, CIDS, etc., but should some mook in a garage try to sell his old junk ONLINE well FRELL HIM.
Capitalism my arse.
Let's face it. Somehow they're going to get a tax passed for internet purchases. At least purchases made from companies based/shipped from the US.
Rather than deal with it at a state level why not do a flat tax regardless of the buyer location? I'd say 2% is reasonable. Of course changes to this tax would require a supermajority in both houses over two separate sessions separated by an election. (I can dream on that part).
This bypasses the entire situation of county-level tax tables and if any state doesn't want the revenue it can go towards the VA or some other non-pork and essential project.
It sure would be nice to know which congresscritters are introducing these provisions and trying to attach them to unrelated legislation so they go under the radar. A nice letter writing campaign could persuade them to stop that kind of crap.
If live in Colorado and order an item from Illinois, where has the sale been made, Colorado or Illinois? I'm sure each state will argue their state is the location of the sale.
What about hosted sales sites? Let's say, I live in Idaho and order an item from a company registered in Maine, but all their internet presence is hosted in Texas. Now which state gets the taxes?
First I'm against an "internet sales tax." The only way I can see this working is for the federal government to create a single "internet sales tax" and divide it evenly among the states involved in the transaction.
Well, thank you for informing me that Texas is all about attracting online businesses, has no NASA facilities, would never even CONSIDER secession in the modern era, and has passed so many laws supporting gays and immigration. You've sure changed my views! Texas is truly a progressive, modern state and not a backwards, redneck shithole at all!
What political party do you join when you don't like Bible-thumpers *or* hippies?
Well, first, voting to remove a federal barrier to state taxes isn't raising a tax (it might let other people raise a tax, but that's up to those other people.) Second, quite possibly not. The influence of Norquist's idiotic pledge is declining even among Republicans in Congress, because even while the Republican Party continues to become increasingly radicalized, many of its members in office realize that the idea that you can never raise the tax rate on anyone is stupidity that is both substantively bad and, in times when there are real tough decisions to make, a lead weight around their political necks.
Enforcement on the use side is uneconomical, because (unlike the sales side) you have too big of a pool of targets, and no smaller group to mandate information collection from (its essentially equivalent to trying to the problem that the IRS would face with income tax if you got rid of mandatory reporting by employers, interest-paying banks, etc.) -- and the obvious reporters are protected by the same dormant commerce clause barrier from being subjected to mandatory reporting that prevents them from being hit up directly for sales taxes. Of course, the thing about a a dormant commerce clause barrier is that it goes away when Congress listens to the states and waives the barrier. Since the use part is identical in effect, but for enforcement logistics, to the sales part, its obviously more efficient and better for everyone for Congress to act and enable states to collect a sales tax than it is for states to enforce a use tax.
Its not a tax increase, its a change in the locus of taxation from the use side to the sales side for the same transactions, which makes the existing tax on the transaction easier to enforce, and negates a de facto tax subsidy to online business retail resulting from the difficulty of enforcing use taxes. This de facto subsidy turns the purpose of the dormant Commerce Clause barrier that creates it in the absence of specific Congressional action on its head; the reservation of interstate commerce powers to the federal government is supposed to prevent states from discriminating between in-state and out-of-state commerce, but the effect of the barrire is to discriminate against in-state transactions.
but tax breaks that actually help US Citizens? Nope, must crush those under the government boot, because those people have families and don't spend enough on lobbyists.
"The problem" isn't on either the taxing or the spending side, because there isn't one simple problem. The biggest problem on both the tax and spending sides isn't the total rate of taxation of the volume of spending, its the distribution of taxes and the distribution of spending. Among the distribution problems at the state level on the tax side is that, in the absence of Congressional action, the reservation of interstate commerce powers to the federal government under the Commerce Clause -- intended to create an efficient competitive market by preventing states from unfairly discriminating between in-state and out-of-state transactions by favoring the former causes sales taxes (even when combined with use taxes for transactions not subject to the sales tax, because of logistical differences in enforcement between sales and use taxes) to discriminate in favor of out-of-state transactions when, as is the case with the internet, it is possible to conduct those with no significant nexus in the state.
This proposal fixes that problem.
$1.6 trillion over 10 years is $160 billion a year, not $180 billion, but that's not the real problem with your argument. The real problem is that the whole thing is a red herring.
Relevant to this proposal, "they" don't want to tax the rich at all. This is about a bill which permits states to impose sales taxes (which are paid directly by the retailer) on certain transactions which currently are usually taxed, at the same rate as sales tax, via use taxes paid by the purchaser (which are more difficult to collect), because the Commerce Clause limits states ability to tax interstate transactions in the absence of Congressional action by way of the "dormant Commerce Clause". Its not about taxing the rich, its about not creating a de facto tax subsidy to online retailers through the increased difficulty of collecting use taxes vs. sales taxes.
Taxing like this crosses a line into state ownership of the citizen and must not be allowed.
E Proelio Veritas.
By forcing web sites to collect sales tax for all 50 states and the territories will create an accounting nightmare.
Wrong. Accounting and bookkeeping is done on computers. Tax payments are automatically calculated and paid, in most cases. This kind of functionality comes with every commercial accounting/bookeeping/ecommerce package available today.
I don't respond to AC's.
Even taking this article of faith seriously, that's not argument against replacing more-expensive-to-collect use taxes with less-expensive-to-collect sales taxes on internet retail transactions.
The cultural hostility towards this move puzzles me. Here, in Canada, if I make a purchase from Amazon.ca I pay provincial and federal sales taxes. It's always been that way and no one bats an eye because it seems, well, reasonable. If I don't want to pay tax I can buy the item used or stolen (or both) for cash on Craigslist.
Hmmm. Your mention of the automatic reporting by employers/banks makes me think... a lot of the pain for a widespread online company is in the tracking of tax rates. If instead they are allowed to simply report the transaction to the state revenue service (based on billing address, probably) then the state can go to the effort of making sure that the rate is correct for the area. And the company has less regional info to try to keep up to date. (And another chunk of per-user data if they are so kind as to send an email with the total at the end of the year to the purchaser.)
The downside for the consumer is that instead of having the taxes for a transaction show up with the transaction, in small amounts, they have an end-of-year payment of (probably) unexpected size...
Perhaps, rather than blathering about what you do not know, you should look into it. First, Texas has a huge technology sector, including quite a bit of online presence. Second, yes, Texas has a huge NASA facility in Houston. As does California in Pasadena: what of it? Third, Texas is probably the most completely integrated state in the US between Anglos and Latinos; in many ways Texas culture is a blend of the best parts of American and Mexican cultures. (Perhaps you were thinking of Arizona's laws, or California's ghettoization of immigrants?) Fourth, I really don't know of any anti-gay laws in Texas that are recent, though Texas did, IIRC, vote down gay marriage rather decisively about a decade ago, along with a lot of other states. Fifth, while Texas does have some rednecks, it's actually a pretty cosmopolitan place. But not progressive in the least, which is a rather a compliment to Texas than a criticism.
-- Two men say they're Jesus. One of them must be wrong. - Dire Straits
Sure, but I was asking about Grover Norquist, which is a different issue.
Also, I would note that the problem of discrimination against in-state retailers could also be solved by eliminating sales taxes on most goods (those easily bought out of state) and instead using property or other tax rates to fund state/local government. TMTOWTDI.
-- Two men say they're Jesus. One of them must be wrong. - Dire Straits
While, as an anarcho-capitalist, I've come to the expect the state to completely and utterly ignore their own laws when they become inconvenient, I believe the void for vagueness doctrine applies here :
It is a basic principle of due process that an enactment is void for vagueness if its prohibitions are not clearly defined. Vague laws offend several important values. First, because we assume that man is free to steer between lawful and unlawful conduct, we insist that laws give the person of ordinary intelligence a reasonable opportunity to know what is prohibited, so that he may act accordingly - Grayned v. City of Rockford, 408 US 104 - Supreme Court 1972
Not paying "taxes" is prohibited. The average person is not capable of understanding the tax code of their state and the feds, much less that of fifty states. Under the state's own law, the entire tax code should be stricken as being void for vagueness.
Thought of a refinement later. Collect the state percentage; that's 50 pieces of information to remember, and (usually) the vast majority of the tax involved. The city/county part is smaller, and the state can take care of verifying that the use tax paid is suitable for the city/county of the filer.
The federal government has the power to regulate and tax interstate commerce and can direct businesses to pay state taxes.
Hey, I'm trying to push the whole discussion off topic here.
Yer not helping.
When Fascism comes to America, it will call itself Anti-Fascism, and tell you to give up your guns.
I'd be fine with this, with two conditions:
IOW, if a state wants merchants to collect taxes for it, they have to take responsibility for telling merchants how much to collect and for actually collecting it. They don't get to fob the hard work off on the merchants.
Allowing the states to collect a tax isn't the same thing as imposing a tax. Not quite. Besides it's either that or the states will have to raise income and property taxes.
Then they should raise income or property taxes. Sales tax is about the worst tax there is -- it's regressive, so it hurts poor people disproportionally, and it depresses retail sales and services. If states really want their businesses to compete with amazon, they should abolish sales tax so that purchasing locally becomes more attractive.
I'm going to assume none of these senators have taken the Norquist pledge?
Norquist says it's okay because sales tax hurts the poor disproportionately more than the rich.
How much do you think states are spending on the Middle East situation?
Canadians will be perfectly happy to keep track of tax legislation in all fifty states as well as every other state in every other country in the world. We would need a supercomputer to sell bubble gum!
Sales taxes are a great tax. They encourage people not to spend. Staple items should not be taxed and everything else should be. Income taxes are dumb idea, it encourages people not work. The USA needs a 15% federal VAT and massive income tax cuts.
Consumer's Use Tax: Did you purchase merchandise by Internet, telephone, or mail, or did you purchase any merchandise outside Virginia and pay no sales tax? If so, you may be required to pay Consumer's Use Tax. Be sure to report the applicable tax on Schedule ADJ.
The difference: this tax is paid yearly by the consumer rather than automatically collected by the vendor at point-of-sale.
Despite the fact that I'm not a business, it took me less than a minute to figure this out. I googled "sales tax by zipcode" and got www.geotax.com, a free service from Pitney Bowes. I entered your zipcode, address (it was happy with "1234 Union Center Maine Highway" which was the first one I tried), and the dollar amount (I used $50, not sure if these are designer jeans or no-names). It returned the following:
Matched Address
1234 Union Center Maine Hwy
Endicott, NY 13760-2046
Jurisdiction Information
State: NY
County: Broome
Municipality: Unincorporated
Other: None
Total Combined Tax Rates
Sales Tax: 8% - total due: $4.00
Use Tax: 8% - total due: $4.00
It doesn't offer any additional information based on the type of purchase, but I'm sure if there was a demand for that information it could easily be added.
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So where is the problem with Norquist, exactly?
Forcing elected officials to be at his (Grover's) behest as opposed to said congressman's constituents is problem #1 with Mr. Norquist. Do you have a reasonable response to that?
I understood and agreed with argument to keep the 'net tax free......... back in 1999. There is no real reason why retail transactions shouldn't be taxed. But, spending by governments should be reined in as well.
Congress is NOT adding a new tax. They are giving the states the ability to collect sales taxes on goods shipped into their states.
It's up to your state legislature whether your particular state actually decides to do this or not, not Congress.
This just puts a state's domestic retailers on equal footing with foreign retailers.
paintball
You're already required to pay tax on stuff bought from out of state, it's just that it's hard to enforce, so most people have been dodging it. This would merely make it harder to dodge.
[Sales tax is] regressive, so it hurts poor people disproportionally
The way to deal with that is to exclude some categories of goods and services from the tax (or equivalently to set its rate at zero for those goods) where those goods and services are things which virtually everyone needs to purchase. An example of a reasonable candidate for being untaxed is food not intended for immediate consumption (i.e., groceries). With such a tax regime, you lessen the regressiveness (but don't eliminate it entirely) to the point where it does not act to prevent people from being able to survive.
"Little does he know, but there is no 'I' in 'Idiot'!"
Actually it isn't within states rights to do this without a constitutional amendment (doesn't mean they won't try though).
A use tax is certainly within their rights, because it doesn't tax the commerce, it taxes use (hence the name). Jurisdiction-wise, it wouldn't be within their rights to tax the seller, but there's no problem taxing the buyer.
It's still a duty placed on the transaction regardless of who keeps track of it.