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Congress Takes Up Online Sales Tax
head_dunce writes "A bill introduced Thursday by a bipartisan group of U.S. lawmakers seeks to make it easier for states to collect sales taxes stemming from online purchases. Amazon is among the e-retailers supporting the proposal, while a lobbying group representing eBay and Overstock.com stands opposed. From the article: '"Small businesses and states alike are suffering from the inability to collect due -- not new -- taxes from purchases made online," said Rep. Steve Womack, R-Ark., adding the legislation is a "bipartisan, bicameral, common-sense solution that promotes states' rights and levels the playing field for our Main Street businesses."'"
I've been noticing that Amazon has been spreading out physical presence in a lot of states in recent years, and in the process cutting deals with those states to suspend sales taxes specifically on them (though a few states wouldn't play ball). So it makes sense to me why they might actually support this. As a big employer in a lot of states, Amazon can continue to create and extend special deals to exempt themselves at the state level, while sticking competing online retailers who don't have so much local presence with a new tax burden. Plus, it also standardizes the now chaotic process a little more at the federal level.
What political party do you join when you don't like Bible-thumpers *or* hippies?
Only idiot politicians give out tax suspensions. Its happened several times with VW and Sony. As soon as the 10 year suspension was up both companies packed up and left.
Only the State obtains its revenue by coercion. - Murray Rothbard
Because local sales taxes, property taxes, state and federal income taxes, capital gains taxes, and all of the additional fees that people forget are actually just taxes isn't enough, apparently. And of course, the justification is always "well, but when you buy a video game that is shipped from another state, it has to travel over our roads -- so our state incurs an expense, even if the business you did business with is 2,000 miles away".
Of course, they conveniently ignore the fact that the companies doing the delivery of your product (UPS, FEDEX, DHL, etc) already pay taxes for doing business in that state for transporting your good. And buy gas, with included gas taxes for road usage. So, really, what individual states are demanding is additional revenue for incurring absolutely no cost or wear and tear. It's a money grab by a bunch of irresponsible pigs who can't handle what they're already given to budget with.
The big box stores go right along with it, because they're tired of the online competition. That's their only motivation. Somehow, they have this idea that if I have to pay taxes to Amazon for a product they'll deliver to my doorstep in 24-48hrs that I'll change my mind and drive a few miles to go buy the same thing for at least as much and for the same amount of sales tax in their store. Pretty shitty logic. It's less hassle to just go the online route, even with taxes. In fact, I'm more likely to do it just to spite the big box brick and mortar stores.
Anyway, it's a lost cause. It'll be taxed, because the pigs want it taxed. And it won't help anything, because the more money they get, the more they spend. It's just really depressing when you consider how much money you're handing over every April and how little will be done with it, compared to how much of an impact it could make to you. For the taxes I just paid this time around, I could have put a kid through four years of a good state college and had enough left over for them to buy a car. Or I could have helped my mother with her retirement after decades of working in a thankless and harrowing job with no real retirement opportunities or benefits. I could have covered her salary for three and a half years, making retirement a possibility for her. Instead, it'll probably go toward 20% of a drone purchase or installing two speed bumps. And that sort of waste is why people are so disgruntled with paying taxes. If they felt the work and money they are just handing over was being respected and used wisely, they'd feel that sense of "hey, it's my civic duty". When it's just being used as a free pot of money by a bunch of irresponsible pigs, you just feel like you're getting fucked.
People tend to romanticize "Mom & Pop" stores. But having worked in a Mom & Pop grocery store growing up, I'm under no such illusions. The people I worked for were just as greedy and treated their workers just as shitty as Walmart or any of the big box stores. There is nothing inherently noble or morally superior about being a small business on Main Street. It just means you're small, and also on Main Street.
What political party do you join when you don't like Bible-thumpers *or* hippies?
Are you in 3rd grade? The point is that small businesses suffer because customer will go to on-line retailers that don't charge state sales tax. The way State tax laws are written, the consumer is suppose to pay state sales tax from their state - they call it a use tax now. So even though you live in one state and purchase from an on-line retailer that resides in another state, you are still suppose to pay your state's sales tax.
We shouldn't even be looking at sales tax as a revenue source. The reason sales tax is so acceptable is that people don't notice it until it's too late. They don't realize how regressive it is. In fact, people are so oblivious to this tax that it's become the fashionable way to pay for multi-million dollar stadiums. That reason alone is why I buy things online. Because of all these projects, sales taxes in "major" metro areas are approaching 10% and exceed that for hotels, car rentals, bars and restaurants. That's money that's taxed after you've already paid income tax on it.
Would anyone here take a 10% cut in pay? Yet we gladly pass sales taxes that do the same thing.
The U.S. should go back to its roots and use tariffs as the only source of revenue.
Small businesses will suffer because the expense of keeping track of the sales tax they need to collect from every municipality around the country will add one more cost of doing business. For Amazon, that cost is minimal. For a company that is run out of someone's basement by that single individual, it will likely be the difference between being profitable and a waste of time. Small retailers who think that this will make it easier for them to compete with Amazon are dreaming. It will mean that they will never be able to afford to open a website to sell their goods directly to consumers at a distance.
The truth is that all men having power ought to be mistrusted. James Madison
Here's a new video card for $0.01 - shipping is $200.
The problem isn't that "state taxes are too big for Amazon to figure out." They've got plenty of legal and tax representation.
The real issue is for SMALL sellers on the internet. Say, people who sell via etsy, or bands that sell albums direct to fans.
Now, suddenly, THOSE people need to understand and properly understand taxes for all 50 states, collect those taxes, and remit them to the proper time to the proper authorities. Oh, with all the necessary paperwork.
Rep. Steve Womack, R-Ark., (said) the legislation is a "bipartisan, bicameral, common-sense solution that promotes states' rights and levels the playing field for our Main Street businesses."
This, folks, is a politician.
When he sees that local businesses are being heavily taxed, and some other business model comes into existence that evades that tax, his efforts are to ensure that other business is ALSO heavily taxed. Make sure the misery is spread equally, instead of (perhaps) asking if there's anything that can be done to reduce the misery generally.
Specialization increases efficiency in a system, generally.
If products can be viewed electronically (remotely), and delivered by mail/courier, the 'public services' being used are minimal. The distribution center already pays property and relevant taxes. The carriers are paying taxes for gasoline and vehicles (which is already subsumed in their prices) which compensate for the public ways/facilities used. The homeowner is already paying property taxes for local law enforcement, etc. (Or the property owner, if it's a rental unit.) I and the retailer are both already further paying for the infrastructure allowing us to communicate.
The fact is that modern technology has made many goods more efficiently sold through remote-purchase and postal distribution. This is simply a (faster) recap of the paradigm-shift in commerce when traveling merchant caravans no longer bought everything on speculation to (hopefully) sell later down the trail. Likewise, big-box retailers kicked the crap out of local small retail/grocery stores generally (albeit that process isn't quite complete yet). Nobody today mourns the loss of the merchant caravan; and already the younger generations have no maudlin feelings about the local small general store.
-Styopa
You worked for the wrong people then. Most of my relatives are from small towns, and several owned stores and one family a restaurant. On my mom's side, the whole town believed in doing what is best for your neighbor, and if you couldn't afford something you needed, say, at the hardware store, the owner would help you out or cut the price to something you could afford. Probably has something to do with them being Mennonite, but I grew up with that mentality - do something good for your neighbor, and they will do something good for you. Note this is not on the commune - these were former communal Mennonites, but they still got together to build each other's barns and stuff.
The difference is that most local retail stores bring in their goods by truck - frequently their own trucking system like Walmart. They get economies of scale for their delivery charges. If I purchase something on line, depending on the retailer, I may have a very large shipping and handling charge to transport each single item.
They shouldn't get to play the "It's unfair competition on prices. Because you don't pay sales tax we're dying," card.
If the government wants to enforce an extremely regressive form of taxation like the sales tax, that's another debate. But no whining about a tiny percentage of the cost for sales tax causing suffering when most stores - with the exception of Amazon - sometimes - charge outrageous S&H charges - and still beat on price by much more than the sales tax percentage.
The small stores should open up their own web front if they want to compete. Then they'll be whining "Don't make us figure out the complexities of every localities on-line sales tax rules!"
So at the end of the year you don't pay a use tax? Hopefully your state doesn't have one. Otherwise congratulations, You've just become a tax evader!
The people I worked for were just as greedy and treated their workers just as shitty as Walmart or any of the big box stores. There is nothing inherently noble or morally superior about being a small business on Main Street.
This is a terrible collision of logic and statistics that presents a view which is technically correct but misleading in almost every meaningful way when seen in the context of history. You're saying that because small businesses (referring to them as Mom and Pop stores is definitely over-romanticizing) are made of the same greedy people as big businesses and because they are businesses, they will treat their workers just as poorly. To reduce: A is always true and B is always true, therefore C is possible possible, therefore we should assume that C is always true.
It doesn't work like that. You only have to do a little research to see what hideous working conditions big businesses create. Walmart is a poster child for this, but take a look at Amazon's shipping facilities or Nike's assembly lines. The razor thin profit margin, the distance between the decision makers and the workers, the relentless need to please the shareholders: these are all terrifyingly dehumanizing elements of big business, and it shows. Small business has some of these pressures too, but at least your boss has to look you in the face when he's an asshole; that's a powerful motivator.
I'll bring my anecdotal evidence in last because it's probably the least significant, but yes, I've had a dozen or so jobs for both local businesses and national enterprises. I can say with absolute certainty: It's not even just a slight difference in management style, flexibility, pay, work environment, and good old-fashioned giving-a-shit: It's bloody night and day! When the owner of the company you work for sees you every day, collaborates with you in person, buys drinks, plays D&D, etc, I guarantee that you are treated better than any employee at WalMart.
Item X costs $10. Mom & Pop R Us needs to collect sales tax by law. You pay 10$ + tax, ~11$ Online mega merchant doesn't. You pay $10. Therefore, you go online cause it's cheaper. Mom & Pop suffer.
You missed the part where mega merchant charges you $3 for shipping.
I really shouldn't have used someone else's email address for this account.
The real problem is voracious government entities that will NEVER be satisfied with how much they take from you. NEVER.
You want fairness? Get rid of the sales tax on the brick and mortar stores. What? We can’t do that need that money! For the children! To buy civilization!
We are WAY past “buying civilization”. The only question discussed by any parasitic government entity is how quickly to kill the host.
And yes, the host is dying. The U.S. is over 100 trillion in the crapper with admitted debt and unfunded government liabilities according to the Dallas Federal Reserve president. We can’t grow our way out of a 100 trillion (and rapidly growing because of massive spending) problem. The U.S. at least, is screwed.
Peace is easy to achieve, just surrender. Liberty is much harder get/keep.
How will this shiny new tax be collected and enforced?
One option is to put the onus on the retailers to maintain a database of all the different sales tax rates in the country, so they can collect the appropriate amount on the purchase. At least in New York, sales taxes vary by county -- the State takes 4% and the county takes anywhere from 3-5%. That's 62 lines on the spreadsheet, just for New York. I think NYC adds a point or two as well. This would have to be correlated with a ZIP code table, so the retailer would know which ZIPs are in which jurisdictions. It's tedious, but not impossible. Perhaps the IRS could spend some of our money to draw up the tables and maintain them.
Another avenue is to put the onus on the buyer to calculate and remit the appropriate taxes to the authorities. If I were a sociopath, I'd like this method better. It doesn't burden the retailers and it provides a delicious means of social control, not to mention a wealth of interesting information on what people are buying. Let's take a non-Amazon company as an example, since Amazon has bought exemptions from State sales taxes:
NewEgg is contacted by the NY Department of Taxation and Finance and ordered to turn over their NY sales records. No warrant is required, since the request is for tax compliance purposes. DTF runs the records through their computer system and looks up the tax records of each NewEgg customer. If the customer didn't report the sale, they're in big trouble. If it's a significant amount that they didn't report, or there's a pattern of non-compliance, off to private prison with you!
Cue the naysayers saying I'm a paranoiac and Our Glorious Overlords would never do something so fiendish...
A. It's called a cost of doing business. B. There's this stuff called "software" that is really good at tracking numbers automatically.
So, how much is it going to cost me to get that software? Who is going to update it every time one of those many municipalities changes their tax laws? How much will that cost me? Do you have a clue how complicated it is to keep track of the sales tax laws all throughout the U.S., with different municipalities charging sales tax on different things? Not everything is taxable in every municipality and what is taxable, or not taxable varies from location to location. In addition, How do I keep track of what tax jurisdiction a customer is in (hint, zip codes won't do the trick)?
Sure, you can say, "That's a cost of doing business," of course when you say that what you are saying is "I don't mind stacking the deck in favor of big business."
The truth is that all men having power ought to be mistrusted. James Madison
You're not a customer that anybody wants. No business person in their right mind would lose any sleep over customers that have zero loyalty, and are just looking for the best price. That's Business 101, and it's absolutely true.
I think I'm going to disagree. I don't see any large business that grooms customer loyalty. I'm not talking about loyalty cards... I'm talking real loyalty. On top of that: because so few people have loyalty to businesses (they are hunting for the lowest cost bargain), most businesses want these kinds of customers. We've been using the phrase "race to the bottom" on Slashdot and I think that aptly describes the situation of loyalty between customer and business.
I'm sure someone can find a few examples where this is not true, but overall I think I'm right. At least that's my opinion for the moment.
Surprise! The Congressman representing (3rd District, encompassing Bentonville, where Wal-Mart's HQ is located) the largest brick-and-mortar retailer in the world is pushing for sales tax on sales made by their main competitors.
"These people look deep within my soul and assign me a number based on the order in which I joined" --Homer re:
Lots of Americans seem to equate paying taxes with flushing money in the toilet
From where many of us are standing, there isn't much difference to us personally.
Libertarian utopia where you never paid taxes you'd wish the current system was back.
Libertarians are not anarchists. We acknowledge that some government is necessary and proper and that government requires taxes to pay for it. That being said, we most definitely prefer a smaller government that does fewer things and therefore costs less money, but whether the government is large or small every American ought to be angry when taxes are wasted.
Know those roads you drive in that hopefully don't have giant potholes in them? Your taxes paid for that.
Out here in California the roads are chock full of potholes because the Democrats who run this state have diverted the gas tax money to everything but repair and maintenance of the roads. Potholes my ass.
Got kids? Well, if you use public schools, your money went to help educate your kids and your neighbor's kids.
Out here in California the public schools are ranked between 48-50th in the nation. They suck despite receiving over 50% of the state budget every year. Yes, that's right. California is a large state that takes in vast amounts of tax revenue every year, at least 50% of which goes to schools, and yet our public K-12 education system is among the worst in the nation. Yes indeed, we sure are getting a good value for our tax money here. I'd rather have the money in my pocket and send my kids to private school, thanks.
Of course I'd like for government to be less wasteful. Who wouldn't? Preferring Obama to the only viable alternative doesn't mean one wants the government to spend money to little effect.
Also, the idea of Obama's having a "spell" is something you, or someone who influences your thinking, invented out of laziness.
and get the tax rules based on zipcode.
FAIL. Zip codes do not follow municipal boundaries. If you use zip code to determine what tax rate to apply, you will get it wrong a significant percentage of the time. Just because someone has a particular city zip code does not mean that where they live is subject to the tax rate of that city.
The truth is that all men having power ought to be mistrusted. James Madison
TFA is wrong. The reason the Supreme Court said States can only tax transactions made with companies that "have a physical presence" in that state, is because (follow along now):
(A) States have no legal authority to tax transactions that take place in other States, and
(B) an Internet transaction is deemed to have taken place at the seller's place of business, and
(C) the Federal government has no legal authority to collect taxes on behalf of the States.
Item (B) came about because of the rise of mail-order businesses, well over 100 years ago. The internet brings NOTHING new to the table... it just means a bit more business is being done remotely. (In case you hadn't noticed, the rise of the Internet has created a corresponding fall in traditional mail order business. It has not made as big an impact on sales taxes as many people would have you believe.)
If a mail-order (or Internet) business has a "physical presence" in your State, then it is not unreasonable to conclude that the business transaction took place in your State. Thus, sales tax is applicable. But if it doesn't, then the sale took place in the seller's state and your state can't charge sales tax.
And the reason (B) says that the transaction takes place in the seller's state, is because doing it the other way around is not practically possible; EVERY business would have to keep track of all Federal, State, and local tax laws, everywhere in the United States. Even today, there is no practical way to overcome this. Small businesses simply could not operate.
There is NOTHING that Congress has legal authority to do to change this situation, except amend the Constitution. They simply cannot give States additional taxation power, and they cannot give themselves power to tax on behalf of the States, without amending the Constitution.
This is not mere theory. These are past SCOTUS rulings and the stated reasoning behind them.
(NOTE: most if not all States have a separate tax, called a "Use Tax", that taxes the use of an item that is purchased out-of-state. But that is a separate issue. A Use Tax is not a Sales Tax... the transaction is not being taxed, the use of the item is. So it is legal. The problem is that States have no way to know what purchases you have made out-of-state, unless you tell them. Which makes it an enforcement nightmare. In my experience, many people do not even know that Use Taxes exist... unless they buy a car in a different state.)
How about instead:
Item X costs $10.
Mom and Pop store doesn't have item, but can get it in a week; Trip #1 wasted
When it eventually shows up, you pay $10 + tax ~ $11
Online megastore sells item X for $5
Online megastore has item in stock
Online megastore has 50 closely similar items in stock in case you don't exactly need item X
Online megastore will ship overnight for a small charge, or two days for free if you buy $25 total on your order
Online megastore lets you order at 2AM instead of rushing to Mom and Pop after work before they close
Result: -> Online megastore haters complain that sales tax prevents Mom and Pop from competing fairly
Moral of the story: Amazon's customer experience is far superior. Local stores cannot simply add online shopping and hope to provide a better experience. Sales tax is a red herring. If Mom and Pop have sales tax issues tying their hands, it's a problem caused by their local taxing authorities.