Skip to comments.No Tax or Duty shall be laid on Articles exported from any State.
Posted on 03/05/2011 3:40:24 AM PST by djf
Given the huge amount of controversy about California (770 miles long, 250 miles wide) vs. Amazon...
California has decided it wants to worry more about some fish than the central valley, which has been one of the highest, most prolific, profitable areas in the world for years (remember "The Grapes of Wrath" and "Chinatown"? I suspect the tax revenue California might get from a booming central valley exceeds Amazons total revenue by billions. But CA decides it would rather go after an entity in another state. Do you know what they call it when an organism manages to not produce it's own energy and instead lives off of the energy and efforts of another?
They call it a parasite.
Regardless. Let's set that aside for the moment. The guys who came up with the Constitution were not looking for a perfect government. I suspect they pretty much all would admit that humans are never perfect.
But they were looking for a far better government than what they had lived with. And they were committed to their own individual States, and familiar with the economies and benefits that each enjoyed.
The statement above, Art. 1, Sec 9, Par 5 is quite clear.
Each state would be on equal economic footing as the others, at least in that it would not loose whatever small economic advantages it had.
So a small state that produced whatever, say timber for example, would not lose that work and advantage to a large state that wanted to tax the hell out of it.
The same kind of situation now exists with those who glorify the "global economy", and rant against duties and tariffs. The founders knew very well our early limitations against Europe. They wanted to develop self sufficiency. Duties and tariffs are only a way of leveling the playing field against other countries/players that for whatever reason, can supply things (at least for the moment) cheaper.
I cannot believe how far we have strayed from these ideas.
Americans better start electing political candidates who understand and support the US Constitution....or it’s all over and it will be a slow death for the US and the states too.
Good post, djf.
I hate to admit it, but I’m a geezer. But because of that, I remember alot of arguments going on for years in the 60’s and 70’s about states trying to have sales tax on mail order.
And at that time(s), it was UNIVERSALLY agreed that no state should be able to tax something coming from another state.
What has changed?
Greed or not enough spendthrift?
The Constitution? Has the Constitution changed?
I dunno. Life is too hard. You think you can learn the rules, then live by the rules, and you would be OK. But then they just come along and change the rules whatever damn time it’s to their advantage, and you end up with yur butt in the grinder...
I believe that there is no sales tax bought in other states via the internet UNLESS the company has a presence in your state. Most companies like Amazon add the sales tax automatically based on your zip and the company you are buying from.
“So a small state that produced whatever, say timber for example, would not lose that work and advantage to a large state that wanted to tax the hell out of it.”
You can see the criminals in the states defying the commerce clause everyday. If you buy an auto in a state with a 3% sales tax and your state charges a 7% tax, you are required, under penalty of death, to pay an extra tax. The state criminals call it a “user fee.”
That is illegal.
A law was passed by Congress in the 1950’s that prohibited states from requiring companies to collect sales tax, or pay income tax on merchandise shipped into a state when the shipper has no presence in the recipient state. What the states do is impose a nearly unenforceable use tax on the purchasers.
However, states are interpreting “presence” ever more broadly. If you ship by postal service or common carrier, you don’t have a presence, but if you deliver in your own vehicle, you risk having it impounded at the state border, because most states interpret that as having a presence.
Furthermore, the states are also sliding through a loophole in the law for services, taxing services performed in another state for a client in the home state, and, some are even attempting to tax merchandise sent to a state that has no sales tax.
States are desperate for money and will be trying just about anything to get it, even if it means trying things that have already been tried and failed. But they’ll keep doing it until the courts slap injunctions on them. It’s a sorry state of affairs we have. Restoration of Constitutional order is the only answer to this because going out of bounds is what brought us down.
Back in January 2001, the financial regulatory structure amended the recourse rule in Basel I to reduce the reserve requirements for government bonds and securities purchased from the GSEs to zero, making it much cheaper for financial institutions to invest in those than many other kinds of investments that would have likely gone to the private sector instead. Of course the effects of redirecting investment money to securities from the GSEs is quite obvious, but the other is now starting to become quite clear.
Not only was the private sector starved of money and terms like “outsourcing” and “off shoring” entered into pop culture, but governemnts gobbled up the money by the truck load. And since government doesn’t produce wealth, we are all the poorer for it when it’s time to start repaying it all with interest because we took all that potentially productive capital and didn’t do productive things with it.
And the politicians have the nerve to tell us that lack of regulation caused all this. What a crock of crap.
Yet another Constitutional restriction violated.
Read through the Constitution and look at all the little things they do that would be considered violations in an earlier time. We’ve let them get away with far too much and it’s not getting better any time soon without intervention. (Can the Tea Party do it?)
But the only way to get the genie back into the bottle will be nasty, and most people won’t support the severe restrictions (e.g. limits on entitlements) that would result. So do we storm the Bastille without our valiant 20 percent?
The cost of buying products remotely has dramatically decreased and the cost of state taxes has increased so much that, for many classes of products, they have crossed. Prior to the internet, buying products from another state was a novelty, now it is commonplace. That's what has changed.
The Totalitarian left have turned all words on their heads.
The Commerce Clause meant Free-Trade and non-interference.
Thanks to bastardization by Totalitarians, it now means the exact opposite, total interference by the Central State into every economic activity.
Chinatown (movie) was about irrigation rights in Los Angeles not up in delta smelt land
I know. I’ve watched it many times. Still, it had to do with agriculture, remember when Nicholson goes out to the orange orchards?
Same kind of deal as what’s going on now.
Sorta. Well, almost.
U get my meaning.
Your reasoning is flawed, and therefore your conclusion is unpersuasive.
You make the mistake many do, of failing to understand what California, and other states, are actually proposing.
There is no “tax” on Amazon. There is no “Tax” associated with shipping things across state lines.
There is a “Sales Tax”, a tax that a state is legally allowed to apply to it’s own residents for things they purchase. There has long been sales tax in California, on items purchased by Californians — Including items that were purchased over the internet.
The issue here is whether Amazon, a company selling items to people in California, can be required to collect Sales Tax for California. Companies that have business interests within a state (a “nexus”) can be required to collect sales tax for the state as a cost of doing business.
And when they buy something from a company that has NO business in the state, they STILL have to pay sales tax — but the purchasers have to track it, and pay it directly. IT’s the law, and anybody who doesn’t pay tax on what they buy over the internet is a TAX CHEATER.
But, Amazon does have business interests in the state. Amazon has argued that those interested do not rise to the level where they should collect sales tax from their customers. California is arguing that it can.
Amazon is fighting this because Amazon like tax cheaters, and makes money by enabling people to cheat on their taxes, and thus undercutting businesses who have to collect the sale taxes.
It is surprising how many good conservatives just don’t know that they are required by state law to pay the sales tax themselves if a company doesn’t collect it for them. And then they find out, they make all these excuses about why they should be allowed to cheat on their taxes.
Nothing at all wrong with my reasoning.
Did the article we are talking about come in to this state from another state?
If the answer is “yes” then “NO TAX OR DUTY SHALL BE LAID...”
Now you can twist words to make the meaning whatever you want. You could call it a tax on breathing while you are going to the post office to pick up your package.
But the law is supposed to look at the SUBSTANCE of things, not the form or description or title.
That means the consumer is ultimately responsible to pay the tax, as everybody who collects it for the State already knows. HOWEVER, the seller within the State needs a "seller's permit," which requires that they collect the tax. Oh, but that makes it a "SALES tax," doesn't it?
Hence, for the State to claim that Amazon must do anything is to admit that it IS a sales tax. Everybody, including State officers, calls it that while legally claiming that it is something else.
They can't have it both ways. Hence, for the State to claim Amazon MUST collect it for them is to outsource collections services, for which they should pay. If Amazon doesn't want to do it, the State must figure out how to collect.
WARNING TO YOU OUT-OF-STATE PEOPLE WHO THINK THIS DOES NOT AFFECT YOU, ESPECIALLY YOU IDIOT "FAIR TAX" ADVOCATES: California is broke. They will do anything to collect this tax in order to keep spending. That means they will probably institute, with Federal collusion, electronic means to track every shipment by which to collect the money. That means they would have the software and infrastructure developed by which to control the shipment of every private transaction. "You will not be able to buy or sell" without government getting its take.
Does that sound at all familiar?
Legally, it is a use tax, not a "sales tax." Your reasoning is flawed, and therefore your conclusion is unpersuasive.
That is a flaw in word usage, not reasoning. Just trying to keep it simpler; the use tax is, for every state I’ve studied, defined with the sales tax, and implemented congruently. The distinction is meaningless to the argument, and therefore your objection is not meaningful; I do however thank you for clarifying the term, as I could have mentioned it.
It isn’t a tax or duty laid on items coming into the state. It is a tax on the people who PURCHASE items, regardless of where they come.
When you are attempting to advance constitutioanl arguments, and I assume that you, like me, are not a lawyer, it is helpful to think about whether those who are actually trained in the law advance your argument.
There is no argument put forward against interstate sales tax related to the constitutional issue you raise, because it simply does not apply.
I imagine there are few things you purchase that didn’t come into your state from another state — if your argument had any merit, it would apply to the sale tax you are paying on those goods that are shipped into your state.
Meanwhile, you will notice that nobody is questioning the constitutionality of Barnes and Noble collecting sales tax from you for purchases you make from their online site, which are fulfilled by shipments from another state.
The argument Amazon is making does not invoke the Duty and Excise tax clause, because it simply does not apply to sales tax collected on items used by residents of a state.
If a state tried to tax items that were brought into the state from other states exclusively of a tax on all goods, you’d have an argument.
IF what you are saying is correct, then the issue is totally between the state and the citizens of that state. And Amazon could rightly tell the state to go pound salt.
But as I said above, the law is supposed to look at the SUBSTANCE of what is going on, no matter how cutesy people try to phrase, label, or characterize it.
The law is not concerned with trifles.
And the quoted phrase doesn’t say “No tax or duty (well, we mean except for....)....”
It says what it says.
Amazon regularly tells states to pound sand. However, courts have ruled that states have the right to force companies to collect sales taxes for them; Amazon says they aren’t in the state, and if the state defines something they do as being “in” the state, Amazon threatens to remove that.
Meanwhile, if Amazon doesn’t collect the taxes, we who buy from them have to keep track of all that we buy, and file a form at the end of the year, or monthly, or quarterly (depending on your state). It’s a pain, but if we want to be good, law-abiding citizens, it’s what we do. Much easier when the tax is collected at the point of purchase — also much more transparent, because we see exactly what we owe at the time we owe it.
By hiding the tax, Amazon makes it’s customers think they are getting a better deal, because things “cost less”; only later do they find out they still owe the tax, or worse, they decide to break the law, cheat on their taxes, and then they have to live with that.
Amazon is a direct marketer itself, whether or not it utilizes print media to reach it's sales audience. They have sound legal basis for their declining to collect sales tax for states with which nexus cannot be plausibly claimed.
As an example, in Texas they run a distribution plant. They claim it is a subsidiary which itself doesn’t deal with the customer directly, and therefore the facility doesn’t count as “Amazon”. However, when Texas threatened to make them collect sales tax, Amazon announced that they were “not” going to expand that business.
Which implies that Amazon was in control of that business, which means it was a business Amazon had within the boundaries of the state.
Amazon makes those threats because they are scared of what a court would rule. Especially since the last Supreme Court case partly hinged on the “difficulty” of tracking sales tax for all the different states and counties, something that is no longer a factor as it is all easily done by computer, and handled every day by many companies.
It’s time for the congress to legislate this. The internet has changed the landscape; sales taxes are still the method preferred by most people to finance government, and that means collecting sales tax on sales over the internet.
Forcing an entity over which a state has no legal jurisdiction to collect a tax and submit it to that state is a very dangerous proposition and a horrible precedent, a precedent that establishes intrastate jurisdiction for purposes of taxation.
Do you realize the nightmare that even regular citizens experience with the state of New York, let alone high profile, high income individuals? Do you own a second home in another state? Want to pay state income tax to them? That’s the door that will be opened by allowing this.
Sorry, interstate not intrastate.
The alternative is to abandon the sales tax, since as it is the sales tax is becoming an unfairly applied tax, hitting people who shop at local stores that employ people in the state, while those who shop online are getting help cheating on their taxes.
To me, the far greater danger is the disincentive for stores to operate within communities, by providing a false advantage to pulling up stakes and becoming a non-physical entity. It's already harder for local stores to operate against the economies of scale of a major mail-order shop (the shipping costs are about the only "disincentive" of mail-order, and as more people ship the per-unit costs are dropping; the brick-and-mortar stores do have some shipping costs to stock their shelves, and have local storage and operating costs).
Imagine if there were no more local stores, and everything was purchased from one of two or three "amazon" type stores. There'd be employment for shipping companies, but no place for people to find jobs in their own communities. Guess what -- I'm a "conservative" in every sense of the word, and part of that means I don't like the idea of radical change all at once; I'm sure given time we would cope with the shift, but not in the short term.
I happen to like sales tax, because it is a tax that you control to some degree by deciding whether to buy things, and it is a fair tax, in that I don't get taxed more than the hippie who lives off government welfare.
Let me put it another way -- Logically, how would you "justify" a system where Barnes and Noble online is required to collect sales tax for virtually every state in the union, while Amazon, selling exactly the same product to exactly the same people, does not? I understand the REASON -- but how is that logical, when you consider that B&N could get the same treatment as Amazon, if they simply shut down all their stores and fired most of their employees.
It just doesn't make sense to me to operate a tax code that encourages bad behavior. I think the tax code shouldn't encourage ANY behavior; it should be neutral. Right now, Amazon specifically avoids certain practices that might actually be better for it's business, simply to avoid tripping over the "nexus" line and having to collect sales taxes. I want a sales tax that applies equally to everybody in the state who buys the same item, regardless of where they buy it.
You’re thinking symbolically and not legally. I’d encourage you to try an exercise in purely visualizing the legal ramifications and those alone.
Legally, it’s a bottomless pit that you and I both will live to regret. Legalized taxation with extrajurisdictional reach can be nothing but an authoritarian nightmare, and a rather arbitrary one at that.
Above and beyond these points, I do not disagree with you.
Partially true, but not entirely true. First, merely because you purchase something over the internet from a business that has not contacts with your state of residence - and thus cannot be forced to collect your state’s sales or use tax from you - does not, ipso facto, make you a tax cheat.
As a general matter, if you bring something into the state on which state sales tax has not been paid, then you owe the compensating use tax. So far, so good.
However, it is difficult to track all of those purchases, particularly for people who live near populated border areas. Thus, e.g., states like NY have come up with a simple solution - you either report, and pay use tax, on your actual untaxes purchases, or else you pay a proxy “use” tax computed as a percentage of your income.
That proxy may, or may not, be a reasonably accurate measure of what your actual use tax liability would be; however, once paid, you are, ipso facto, not a tax cheat, regardless of whether or not you actually paid use tax on your actual purchases. Of course, that creates an interesting market distortion because it incentivizes middle and lower income folks to buy as much as possible over the internet from companies that have no presence in NYS because their effective sales tax costs will be substantially lower than if they had purchased from companies with a presence in NYS.
I did not know this. By GSEs, do you mean Fannie and Freddie?
LA stole water from the Owens Valley (Bishop area) instead of the San Joaquin Valley for the Chinatown scandal. But drive south from Sacramento along I-5 and you can see the canal bringing Delta water down south to the Grapevine, where it is pumped over the mountain and into Pyramid Lake just north of Castaic.
It was a bite coming back from Sean Hannity’s water rally in Huron and seeing our water flowing right past those dusty, unfarmed fields.
The libs have a stranglehold on mining, timber, fishing, farming and drilling, all means of solving this economic “crisis” if we had the nerve to do what needs to be done.
Residents are asked to pay the equivalent in use tax on an out of state purchase that they would have paid in sales tax had the same purchase been made in CA.
“I did not know this. By GSEs, do you mean Fannie and Freddie?”
Yep. They used caplital reserve ratio “control” to pump both the government debt and housing bubbles. It was one of the easter eggs the Clinton admin left for Bush. The rule went into effect Jan 20, 2001.
Charlie, “Fight Dirty”
The first time I met you, I tried to forget you
You showed me the worst of your sides
But all that I’d seen was that town full of dreams
Where people are living out lies
Now I’ve been back and seen the other side of you
And from where I stand, well, I must say I like the view
Surrender ... I surrender
Back here on earth I’m dreaming of sunshine, good times
For whatever it’s worth, I’m coming back
So hold on, it’s not too late, I said
Hold on, I can’t wait
California ... California
Your place of extremes where there’s no inbetweens
Oh, you can be one living hell
You’ve still got your dreamers, your liars and your schemers
But you can be heaven as well
‘Cause now I’ve learnt there’s more to you than meets the eye
You’ve got me hooked, I’m coming back and that’s no lie
I’ll be there ... I will be there
I just can’t wait ‘til I can be with you right through
They call you the Golden State, so I’ll
Hold on, they’re not wrong, I said
Hold on, can’t wait too long
California ... California
Now don’t get me wrong, I have lived here so long
And my home it always will be
‘Cause when I’m away I can’t wait for the day
To get back to my sanity
But knowing you is like some crazy love affair
So if I leave don’t ever think that I don’t care
About you ... care about you
I’m six thousand miles away from those bright lights, warm nights
Could take me some time, but I’ll be there
So hold on, it’s not too late, I said
Hold on, I can’t wait
California ... California
I was aware of this thread but couldn't call up the mental faculties at the time to focus on it but it is truly an interesting problem and discussion. Looks like one of the few areas where the federales actually have some bona fide Constitutional power under the "commerce clause". The court cases cited tend to follow the letter of the Constitution by NOT allowing interstate tariffs/duties/taxes, etc., although from my perch there looks to be occasional workarounds by various States in one way or another. Imagine that.
As a practical matter I don't see any solution to the issue aside from some sort of feral government intervention. If history is any lesson, we can probably conclude THAT would not work out well. Maybe the States should just get over it and concede the point but especially in the current economic environment, what are the odds?
~~pinging~~ for more input.
About twenty years ago, I was schooled in just how far-reaching CA sales tax is. We had sold product to the City of Los Angeles and charged them sales tax, as required. LA did not pay stating they were tax exempt.
Long and short of it, we got fined for not collecting the sales tax that LA would not pay and a whole lot of paperwork got dumped in my lap. The next time LA ordered product, I had to call the City Comptroller and inform them that I could not ship them any product until they made their account current. Since it was filtration product for their water system, they had no choice but to comply.
does this mean states can’t collect internet taxes because it would inhibit commerce of smaller states?
If I had to guess, I'd say today's politicians are more ignorant of the Constitution, the public is certainly more ignorant of their Constitutional rights, and the politicians are probably in worse money straits now than they were then. I doubt today's politicians are any more greedy than those were. Politicians are politicians are politicians.
But you make exactly the right analogy, that to mail order sales. So many people talk about the shift to internet commerce, much of which is interstate, and jump from there to the assumption that the states are LOSING money and that there is some sort of "loophole" if you don't have to pay on interstate transactions. They probably are losing in absolute terms, but so what? They were probably getting too much anyway (when was the last time they complained when some paradigm shift increased revenue). Anyway, the RELEVANT datum is the comparison with what taxes they used to get out of interstate transactions, or what they should have been getting, which is none.
Incorrect. They try to tell you that, or actually they tacitly admit they lack the authority to apply sales tax to those goods when they try to hide what it is behind the deceptive name "use tax". But it's exactly the same amount applied to the same goods and only when sales tax is not applied. It is a sales tax, but it's unConstitutional. If it weren't, they wouldn't even go to the effort of trying to fool you with the pretense.
You're not "bursting his bubble", you're agreeing with him. He says California has in everything but name unConstitutionally imposed taxes on interstate commerce, is attempting to compound their abuse of our rights under color of authority, and that's the same thing you said. Interstate commerce is not subject to state taxation. Period.
You covered it well.
It doesn’t say “SOME tax or duty...” or “A TEENSY WEENSY tax or duty...” or the ever popular “A USE tax or duty...”
It says “NO TAX OR DUTY...”
What motivated me to post this really wasn’t Amazon, even though it seems to be the tax-de-jour.
I am a smoker (I know, bad, bad, BAD) and I never could figure out how tobacco could get taxed so much. I mean for the states that grow tobacco, they are heavily dependent on that for their economy.
But you often see these things in court cases where they manage to just skirt around the issue at hand by giving something a different name or flavor and managing to “lawyer up” the issue.
I confess, I've been a smoker for the better part of 50 years. During my time in the service in the late 60's I thought I'd died and gone to heaven with the overseas price of Marlboros being $1.00 a carton. Returning stateside in 1970 and re-encountering real world prices around 40 cents/pack I thought WTH, is ALL this taxes??? Turns out it wasn't but, close enough. I remember telling myself if they ever hit 50 cents/pack I'd quit before paying that much! The justification for continuing to smoke after 50 cents a pack was by the carton they were STILL under 50 cents a pack at ~$4.50. Once Marlboros went over $5/carton I said oh what the hell. BTW, remember when cigarette machines were everywhere???
Anyhow, the government's actions towards taxing SOUTHERN tobacco is nothing short of despicable BUT I've been more or less a proponent of using taxes to encourage or discourage certain behaviors, incentives for home ownership for example, so I really can't squeal too loudly about ciggie taxes. On the other hand, why don't we have greater tax incentives for personal savings in this country??? There's probably a story there somewhere...
Anyway, smoking is a NASTY habit(addiction?) to be sure and I didn't need a surgeon general telling me it probably wouldn't do me any good in the long run. I can't get out to my mail box and back without becoming winded. We make our choices and suffer any consequences; such is life...
Still, seems to me there should be no way to LEGITIMATELY get around something as plain as “NO TAX OR DUTY...”
At least not with a straight face.
What’s to stop Virginia from striking back and say they are imposing a “use tax” on oranges?
I generally agree regarding fees on products "imported" from other states by end users. Also, products "imported" for resale aren't generally taxed AFAIK. At point of sale by a retailer to an end user within the state is the only place it SHOULD be applied. A sore spot with me, in Texas at least, is a recurring tax on personal property each time it's sold/purchased; vehicles, boats and the like. Anyway, the federales present a whole 'nother problem, er, issue however.
I’m not sure what your definition of “unconstitutional” is. It clearly is not interpreted as unconstitutional, as most states have such a tax, and nobody has successfully challenged those laws. And given how people feel about paying taxes, if there was a chance that it could be unconstitutional, some lawyer would have done a class action suit long ago.
The biggest court case on this matter found that a state has no right to require a company that has no interests in a state to collect the sales tax for the state. The court did NOT say that the state couldn’t require those taxes to be paid, something that would have been germaine to the case if it had any merit.
I’m also not sure what “pretense” you are refering to. A “sales tax” is a tax collected when an item is sold. a “use tax” is a tax paid for the value of an item used. You pay “use tax” for items that are purchased for use by a resident within the state. It is specifically to capture the same tax as the sales tax; every example I’ve found is set to the same value, the taxes are described together in every state that I’ve checked. There is no deception about the relationship between the two taxes.
Catfish fishing bump! ;o) My granddaddy used to hit them on the head with a hammer to get them to...uh...to the point where they could be fileted, breaded and put in the fryer. lol
As of now, sales taxes aren’t levied on internet sites. However, I believe that IL’s recently passed tax increases allowed for that tax, and Amazon pulled out of the state.
If I’m incorrect, I hope someone will clear that up for me.
LOL! What am I saying? Of course, if I’m wrong, someone will clear that up for me! ;o)
“As of now, sales taxes arent levied on internet sites.”
I do the dirty deed, and clear that up, myself.
In Oregon, whenever I shop in the internet, there are no sales taxes levied because we don’t have a sales tax.
But, I bet sales taxes are levied on states who have them.
As near as I can recall from what little shopping I've done online from Texas, there has been no sales/use taxes/duties/tariffs applied. BUT in all honesty, I haven't really paid that much attention so I wouldn't say that's definitive. Texas DOES have a sales tax but I gather they haven't figured out a way yet to
stiff tax online shoppers.
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