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US Internet Tax Committee Squabbles
There's increasing reports coming about the state of US Government's Internet Tax Committee. The committee, which stopped meeting about six months because of squabbling is back talking again about a way to acheive "tax-neutrality", meaning that all those nice tax free sales may be gone in the next few years.
Well, obviously it's usually state/local. The only thing the federal government can tax is interstate commerce (and whatever they pass a constitutional amendment for), and they're not doing much of that by ignoring the Internet and mailorder.
b enefits-the-taxee theory, so any examples that try to fit that theory that I come up with are going to be lame. I shouldn't have tried to play that game.
But, as I've said elsewhere, I don't agree with the every-taxation-must-have-a-purpose-that-directly-
>I mean what sense does it make that the exact same transaction in taxed if you do it
>in person, as opposed to through the mail or over the internet.Suppose I live in CA and buy from NY over the 'net. I have no voice in the NY state gov't affairs. Why should they tax me?Also, how do 'net purchases differ taxwise from phone orders, mail orders? Why should they? Why are new laws needed? As it is, sales tax is collected if the company resides or has operations in my home state. Otherwise, no tax is collected. Of course I'm still supposed to pay sales tax to my local state on out of state purchases, it's just that that some other state has no authority to collect taxes on bahalf of another state in which it has no business. No one pays this tax, hence the urban legend that mail orders (now extended to the net) from out of state are 'tax free'. They never were. It's just that no one can enforce the rules.
That is a very good point - often it is difficult or impossible to track exactly where your taxes go. I certainly don't think that we should only pay taxes for exactly the roads, colleges, etc. that we use - obviously most people should pay taxes into a common pool at the state and federal levels, and this entire pool of money will be divided between roads, schools, and so on. I have no argument with this.
However, I do have a problem with contributing to a tax pool which is specifically excludes me from benefiting from it - local taxes in another state, in this particular issue. If I buy something online, it will likely be from a store in CA, and I don't live in that state so let's use that as an example. Local sales tax in CA is specifically earmarked for the use of the town and possibly the state government. None of that benefit will return to me back in my state.
So yes, the government sells services as a package, but under our federal system there are several quasi-self-contained service pools. Tax money directed into one of those areas (like the state of CA, for example) won't provide any benefit to those who aren't a part of the CA benefit pool - people and companies who exist or visit CA. I have no problems paying a federal tax and the benefit going to another state, because all states are in the federal benefits pool. But any taxes I pay to CA won't benefit me at all if I never live in that state and never visit it.
Your right to not believe: Americans United for Separation of Church and
1. They may not be entirely about being fair, but they at least try. If they were just about collecting money, there wouldn't be as many tax credits around.
2. I know. I thought I mentioned earlier (I may not have) that this should be the federal government, not the state. Of course, everyone has their own opinions on whether or not this is justified too.
3. But you can look at it from the other side too. Any moron with a few bucks can open up a store and compete with WalMart (poorly, though). It takes some brains and knowhow(not much, I'll admit!) to compete with Amazon and buy.com. The problem is that not only can the little guy sell directly, but the big corporation can do that too. Bye-bye boutiques. Bye-bye independent bookstores.
And I really think mailorder should be taxed too (subject to previous disclaimer!)
License plates are state/county. That doesn't pay for the interstate highway system. But nevermind
In case anyone is still reading this and is about ready to flame me, let me clarify. Taxes are not my friend. I would rather not have a higher tax rate. That's not what I meant. My point was that there needs to be some parity between brick-and-mortar and online retailers with regards to tax. If that can somehow be magically accomplished by eliminating all taxes, that would be better, but that isn't going to happen. Personally, I think we would all be better off if they taxed them all at the same rate. Some people don't agree with that. It seems that should be the point of disagreement, not whether taxes are in and of themselves evil.
There's two things the government hasn't figured out, apparently. Let me summarize for them then:
1. Tracking things on the internet can be a pain in the arse. Just ask the NSA - even echelon can't keep up (and that's only searching for *very* specific things).
2. The US cannot dictate international law. The internet is a *global communications network*. Almost a billion people world-wide have access to it. Unless you can convince every country that uses the internet to follow your law, you're leaving a gaping-huge-i-can-drive-a-mac-truck-through-this hole in any legislation on the subject.
3. Two words: Tax Evasion.
4.
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I've made more than my fair share of Internet purchases, and I don't live in California, so I don't have to pay sales tax on any of it. Despite this, we really do need to tax Internet transactions.
A lot of people say "But you have to pay shipping! That makes it even!" and they'll probably say it now, so I'll dispell that right now. It's not the same thing. Suppose there were no taxes on anything. In this case, online shopping would not have this advantage. Then say a government comes along and decides they want to tax stuff. A brand new tax. Should they not tax online and mailorder retailers because they have to pay shipping? No, that would be stupid, because you'd essentially be subsidizing retailers who ship out of state and hurting brick-and-mortar stores. Shipping represents a real cost--the amount of effort and resources that go into producing and procuring whatever thingie you bought from buy.com is higher because they have to ship it. That's not true of the sales tax you pay at WalMart. That's an external cost. But I expect we'll see lots of this argument anyway.
That's not to say it's easy to have a tax or that we should have one right now. There is still some truth to the argument that it's a fledgling industry and might need protection till it gets on its feet (though this sort of protection tends to go on way longer than it's usually needed). Also, it would be pretty difficult to implement this kind of tax. It's only interstate commerce that we're concerned with, so Congress could do it, but that's a really big deal. It would take time. What rate do you charge? What counts as a taxable product? (the distinction between product and service is very fuzzy on the Internet).
Ok, just my musings. Feel free to shoot me down.
As long as mail and phone order sales are not taxed then internet order sales should not be taxed either. As of this year only states only lose about $200M in revenue on internet sales, as opposed to about $4B through phone orders. That is because many items sold over the web, like transportation tickets, are not subject to tax. Other sales, like Dell sales to businesses, are also subject to sales tax.
First let them collect sales taxes from LL Bean phone orders, and then I will gladly pay sales taxes on Amazon.
Marjo Wycam, Master of the Programming Arts
In the perfect parallel universe, hundreds of billions of light years away from us, a parallel United States Government is being heartily encouraged to institute an Internet Sales Tax on all U.S. to U.S. tcp/ip-based transactions, since they PROMISE to use every last penny collected to build a completely free public network with a direct digital line to every home, garden and rectal cavity across the nation.
But in the version we live in, sadly, this Tax is frowned upon because it would inevitably be used to fund more great things like a War on Everything, programs to support One-Legged Women With Attention-Deficit-Disorder Who Fear Elevators and therefore cannot ever be expected to work, etc etc.
Bottom line: broken, grossly bloated governments will never convince reasonable people to accept a new tax voluntarily regardless of its potential.
So far no one on this panel has given any justification for why these taxes are needed, or what they will be used for.
Here's a breakdown of what taxes are used for currently in the US:
Sales taxes - supplying motorists with roads, parking lots, and ambulance service so they can get to The Mall.
Property taxes - supplying homeowners with police and fire protection, so no one will steal the cars that people need to get to The Mall.
Income taxes - paying for a huge army to keep gas cheap so people can get to The Mall
Internet taxes - ?
As far as I can tell from reading articles on this panel, the main impetus seems to be to raise taxes so that internet shopping will not be cheaper than going to The Mall.
---- "If we have to go on with these damned quantum jumps, then I'm sorry that I ever got involved" - Erwin Schrodinger
I'll agree with you - normally taxes serve a useful purpose by funding services that the community needs. I think what confuses people in the debate over sales tax on Internet purchases is that there isn't a specific service that would be funded by the tax that isn't already funded by another tax. If you look at the components of a purchase over the Internet, amazon.com pays local taxes and UPS pays local taxes as well as transport taxes (gas tax, weight penalties, etc). Your connection to amazon.com is paid for in the Internet connection fees that you and amazon.com pay. These fees are loosely related to the amount of traffic the two of you generate. If any of these components don't generate enough revenue to pay for what they use ('net backbone, local law enforcement, interstate highways) then those taxes should be increased, or the level of service lowered.
If I actually went to the amazon.com warehouse (wherever it is) to get my book I would expect roads, law enforcement, and emergency 911 services over the course of my trip. Theoretically that's what local sales tax pays for, right? So far I haven't read a better explanation. If I'm buying over the Internet, I don't need these services, so charging me a separate local sales tax doesn't make sense. Increasing the taxes on the components of my online purchase (warehousing, shipping, and 'net connection) does make sense, because even an online purchase does use resources and must be paid for. I think more people here would support the idea if it were explained that way. As it is, it seems like states are trying to replace the exact amount of money they are losing in local sales, rather than looking more closely at what happens during an online purchase.
Your right to not believe: Americans United for Separation of Church and
It's not really the exact same transaction, though, because you didn't actually visit amazon.com (or wherever). If you had been there in person, you would have expected roads, law enforcement, etc. and you would have paid local sales tax for them. But if you aren't there, you don't need those things. So why should you pay for them?
On the other hand, you did use more bandwidth than you would have if you had gone in person. So you can eventually expect to pay more for your 'net connection, as can your online retailer. There's also shipping costs and amazon.com's local costs, which are taxed and may increase the sale price of your book. But if the 'net is the only infrastructure that you personally are using, then that is the only thing you should be taxed for.
There are costs to a transaction either way, but it would be better to slightly increase existing taxes which already pay for services, than create a new tax which isn't directly linked to a service provided to the community.
Your right to not believe: Americans United for Separation of Church and
Exactly how does one make the distinction? I have made numerous purchases involving the Internet, but in most case, the actual transaction involves the telephone or snail-mail.
Examples:
In each of these cases, the sale certainly involves the Internet, if only to make me aware of the existence of the company I'm doing business with. But in each case, the distinction becomes blurred as to whether it was really an "Internet sale", or merely standard mail order that took advantage of the net as an advertising medium.
Unless .gov is willing to tax all interstate transactions - period - there are simply too many exceptions and borderline cases to make this a sensible law.