What does happen? Is Walmart smart enough to bill you at the Florida tax rate? There's no reason any internet company couldn't do that.
You are correct that the states have long decided to live with the fact that purchases by their own residents made in other states were taxed by those other states. Although the 'use tax' rules clearly require the resident to make up for any difference in the tax rate. I think the states figure that it is a wash, as each state loses taxes to the other states, but also gains taxes from residents of those states coming to their stores.
The issue is when there are stores you don't have to go to, and which collect sales tax for no state. Going after just internet companies doesn't completely fix the problem; but I hardly think those objecting would like it if we "fixed" that problem in the bill, by including requirements for stores to do the same job when people walk in to purchase things.
But if that was the insistence, at least I could support that as being consistent with the principle that the taxes be applied in a standard fashion to all purchases.
I would say that there is a reasonable assumption that a company selling over the internet has some ability to use computers, and to track purchases and payments electronically. It is not going to always be the case for a brick-and-mortar store. But if they have online access in the store, they could easily ask for the address of the person buying a product, and go online to calculate the sales tax. It's just that you are at a point-of-sale at that point, and dealing with cheap hired labor who are not trained for the task, and training every cashier in a state for the half-dozen occurrences would not seem to be cost-effective.
It imposes an ADDITIONAL burden on small businesses to collect sales tax for every state in the nation. That is not required of other businesses in the same state, so it is placing an extra burden and extra cost on them.
The burden is based on a decision by a company to sell things to a state. And the burden would be shared by every company who makes that decision. Yes, you are correct as I said before, that the burden does not extend to a business where the "out-of-state" purchaser is actually IN the state and at the shop, but that is a rational distinction. IN one sense, if the guy is standing at your cash register, he is IN YOUR STATE, and it isn't your job to find out if that person is going to use the product in the state, or take the product to some other state to use it (which is what triggers a "use tax" liability).
If a person orders a product and asks for it to be shipped to another state, then you could tax based on the state. That is what the internet companies are going to be asked to do -- apply taxes to the place where the purchase is made (the buyer's computer), or to the place where the purchase is finalized (the location where the product is delivered).
In one sense, an online business exists in every state, because it exists as a web page on the computer in the person's home.
That isn't far-fetched. Think about another law -- the law against child pornography. If a person pulls up a web page, and that page has child pornography, and they are caught, who is getting arrested? The person looking at the pornography, because it is considered that the porn is IN HIS HOUSE.
So by the same token, the online business is "in my house" when I am telling MY computer that I want to buy something, and MY computer is collecting my information, and the product is delivered to MY door. Yes, the supreme court ruled that the business was not located here simply by having a web page, but as a conceptual matter, it isn't a farfetched idea.
I wish there was a better way to do this. Every way has issues. For example, rather than having business collect the information, we COULD have business simply provide to each state a report of every address that purchased items, with the date and price of the total purchase.
Then the state could collect all these reports, generate an audit list, and pick the biggest value targets. They could go after the individuals, and ask them to show why those purchases didn't require a "use tax". It would be like the W-2, 1099, and other forms that businesses are required to submit in order to help enforce tax law.
This has the benefit that the out-of-state business doesn't have to know anything about a state's sales tax, doesn't have to handle money, and doesn't have to transfer money to 50 states.
The argument I've seen against this is the very idea of letting the government know that you are making purchases out-of-state. This opens up privacy concerns -- especially if you go a bit further and include the actual invoices so the state would know WHAT you bought, rather than just how much you spent.
This already happens on some limited basis though. For example, Virginia had some deal with North Carolina where the big furniture suppliers would report purchases (this was the really big sales-tax issue decades ago), and then the state would go to those buyers and make them pay their sales tax.
I will say that if you did this, people would then know they could get caught, and be fined or have to pay penalties. That knowledge would be enough to get a significant number of people to stop ignoring their tax liability, and would largely solve the problem.
What do you think? Would you find such a solution worse than the "make business collect taxes"?
I think the best solution is the honor system. People should report their own purchases and pay their own taxes to their own state.
That means there will be no need for this new law. That is already the requirement.
That is already the case with any independent earnings I manage, so if it’s good enough for earnings, then it’s good enough for sales.