Posted on 03/13/2010 9:16:10 AM PST by CharlesWayneCT
we need Congress to "give us permission" to collect state sales tax from out-of-state vendors.
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Everywhere you look, government collects taxes: sales tax, real estate tax, the car tax, and income tax are only the most obvious. For example, my last Verizon bill had over $18 in taxes and "fees." We don't need new taxes. But the bill being considered does not impose a new tax.
Virginia has a 5 percent general sales tax. For most purchases, business collects the sales tax with the purchase. However, when a company has no state "presence," they don't have to collect the sales tax. In 1992, the U.S. Supreme Court ruled that collecting taxes from businesses in other states was "interstate commerce," and therefore under federal control.
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But we can't force out-of-state companies to collect our sales tax, because Congress hasn't passed a law permitting us to do so. So instead, the bill being considered would define "state presence" to include out-of-state businesses (like Amazon.com) which have an "affiliate" relationship to state companies. For example, some local Internet-based company might have a Web link to Amazon, and if a consumer uses that link to buy a product, the local company gets a commission on the sale.
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It is time for Congress to pass a bill allowing states to collect sales tax from out-of-state businesses. The law could require states to provide a common service for business to use to determine the tax, and for reasonable fees to the businesses for the cost of collecting the tax.
(Excerpt) Read more at 2.insidenova.com ...
Amazon has cancelled affiliate relationships in states where these bills have passed, and threatens to do the same in Virginia. So I think this is the wrong way to approach the problem.
But I firmly believe that we should work to make taxes fair, broad, and low. In this case, there is economic distortion because some companies avoid collecting sales tax, giving them a competitive advantage. Congress can fix this, and I support doing so in a way that leaves States in charge of the tax rate for it's citizens.
I think the law should not be retroactive, and should provide reasonable fees paid from the sales tax collections to keep from being a burden on companies. I also think the law should prohibit a state from making their "use tax" higher than their "sales tax" for the same items.
In my article, I used "sales tax", in order not to overly confuse the readers, but that was a mistake. I should have explained and used the term "use tax", which is the correct term for taxes collected from the purchasers of goods that cross state lines. The distinction is without difference as the tax is the same rate. But it is important legally.
I post this because the subject came up in regards to a Colorado law that tried to make Amazon.com tell it's cusomters that the customers owed taxes. Amazon responded by cancelling affiliate relationships.
Amazon enters affiliate relationships because it is good business. The current law regarding tax collection obviously distorts the market, because it forces Amazon to cancel affiliate relationships it otherwise finds economically sound, in order to game the system and keep a "competitive advantage" over companies that have to collect the tax.
I think conservatives natural inclination to oppose taxation makes some eager to fight against the taxation of goods that come across state lines. I think that is a mistake, as I believe the principle of taxes being applied across-the-board so that the tax doesn't distort the market is best served by taxing all goods purchased for use in a state in the same way regardless of where those goods are purchased or the location of the companies selling the goods.
It simply makes no sense for Borders.com to be disadvantaged over Amazon.com simply because there is a Border's bookstore within the state. And it makes no sense to tell Borders it has to shut down it's local stores in order to compete on equal footing with Amazon. Decisions about operating real shops should be based on profit to the company and economic sense, NOT based on how the sales tax laws are applied.
I'm betting that the 'fair' will be in the eyes of the beholder, you'll get the 'broad' without any trouble, and the 'low' won't happen.
I'd take a wild guess that if the average person added up all the tax he/she pays every month, it'd be well over half of his/her income. There is NO excuse, NONE, for ANY new taxes to be raised or collected.
It simply makes no sense for Borders.com to be disadvantaged over Amazon.com simply because there is a Border’s bookstore within the state.
I don’t mean this as an insult, but merely as a criticism: you are being a “useful idiot.”
I’d settle for a tax on everything if it was 10% to the feds and 5% to the states. PERIOD!
I’d wager your State has a use tax, where you are supposed to report out-of-State and Internet purchases, and send in your use tax as compensation for sales tax.
In other words, the issue isn’t that Amazon or other mail order companies are “dodging” taxes; it’s that the State’s own residents are lying and not submitting their legally required taxation.
YES we need MORE taxes!
That will solve our problems.
You need to spend a few minutes everyday listening to Rush, because he has the solution.
The solution is to work to REDUCE the taxes Borders has to pay.
Don't punish Amazon, rather, be proactive in rewarding Boarders by reducing their State punishment for success.
The sales/use tax is a tax on the citizens in the state, for the purposes of providing government services to those people.
Yes, for companies within the state, the sales tax is used, applied to the company, and could be seen as payment for being allowed to do business. Although it’s hard to see how a company in the state has any more “privilege” of selling to people in the state than an internet company.
Amazon is doing business in my state. They sell lots of things to people in the state. They don’t have a business relationship IN the state, so we can’t tax the business they do in the state.
But what is the argument that we should NOT tax the business of Amazon in the state, when we tax the business of Borders.com? Or more accurately, we ask the companies to collect the tax paid by citizens of the state.
States already tax the purchase of goods across state lines — it’s called the “use tax”, it is legal, constitutional, and an obligation of the citizens.
There is no new tax. The question is how to collect this tax that is due. Right now citizens have to collect sales receipts through the year, and then file a form with their state income taxes.
Having interenet firms collect the tax would relieve citizens of this burden, and help them to not be tax cheats.
It does amaze me that conservatives, who perfectly understand the evil of a Geithner not paying his taxes, think it’s perfectly fine for others to avoid their legal tax burdens, and want to make sure the law helps them.
We already have a sales tax. Until a few years ago, virtually all sales were taxed, because mail order and internet were a drop in the bucket.
It is only in the past decade that there has been a significant shift, where some privileged citizens are being enabled to escape their legal tax burdens, while other citizens, who wish to associate with companies that happen to have some business in the state, bear more and more of the tax burden so that others can skirt theirs.
If you knew you were the only person on your street paying property taxes, and that therefore your tax was 5 times as high has it should be, I’m thinking you would be pretty upset that your neighbors were getting a free ride.
That’s what is happening here. More of the sales tax burden is falling on fewer people, as the young and technically savvy go to the internet, and in many cases look for the cheapest price, which means finding a company that doesn’t collect taxes that are due.
I’ve heard people say “well, if they don’t like it, they should buy from the other companies”. I have two arguments against that position. First, that position acknowledges that tax law is distorting the market, driving people to associate differently than they would otherwise choose simply because of inconsistantly applied tax law.
We conservatives generally understand that tax law that tries to force people into certain activity, and away from other activity, is a wrong application of taxes. The lack of collected tax on certain internet sales is an example of that, driving business to Amazon, even for those who would otehrwise choose to use Borders for example.
Second, if everybody took the action suggested, the state would collect no sales taxes. Since the state DOES have legitimate purposes for money, and does provide legitimate, essential services like police and fire protection, road building and maintenance, and regulation of private contracts, as well as a criminal justice system for example, the state will have to find a different source of tax revenue.
Which is fine, if you believe the sales tax is a bad way to collect tax. But if so, let’s argue about the sale tax, not play this game of subterfuge over taxing internet sales. And if you think sales tax is a good way to collect some taxes (I do, because it is controlled somewhat by the payer, and is only collected from people who actually have money and choose to spend it) then the current situation undermines a fair tax method, and we should fix it.
I realize that this is a rather large response to your simple statement — your statement got me thinking, and I thank you for it.
Let’s consider Amazon. They already collect taxes. There is a line on every order you make, which indicates how much your estimated sales tax is. Usually it says zero.
However, if you buy a product from Amazon and you live in Washington, they will collect sales tax. If you buy a product from Amazon that originates with Target, you will pay a sales tax in 48 out of the 50 states. Amazon therefore knows how to calculate that tax for all those states.
The tax rules aren’t that complex — and we have computers. But still, I think the new law should ensure that states provide a simple interface to determine the sales tax due on an item, and that companies be reimbursed for collecting the tax. I think the law can limit the complexity of the problem. Maybe companies below a certain sales number would also be exempt, to protect a basement operation with few customers from spending too-high a percentage of their income.
I also think all sales should include a statement to the customer that the customer might owe sales tax. Amazon’s interface in contrast suggests to customers that Amazon has actually THOUGHT about their tax burden, and determined that they owe no taxes. Many people are surprised to find out that they DO owe state use tax on what they bought. But look at their receipt — it says “Sales Tax: $0.00”, which implies they didn’t owe tax at all.
The internet ahas no location, but the sales have an end point, and that end point has a constitutional right to tax the people in the state for the purchase (”use tax”).
The issue is whether, in the 21st century, it makes sense to come up with an easier method of collecting that tax, that doesn’t burden individuals, and that prevents tax fraud.
Not more taxes, a more efficient method of collecting those taxes without fraud.
As I said in another comment, up until recently, all the goods and services were having sales tax collected, except a few mail order purchases, which were in the noise.
It is only recently that the loss of previously collected taxes has become significant, and that the loss has significantly shifted the tax burden so it unfairly lies on the backs of a smaller subset of the citizenry.
As people who use the internet, we are benefiting from this shift, at the expense of our neighbors who still shop locally. If nobody shopped locally, it would destroy our economy. But the tax code encourages that destruction, and instead it should be neutral on that point.
Collecting tax on internet sales would neutralize the bias toward out-of-state companies that the tax code currently imposes. As conservatives, we should insist that taxes be applied in a way that does not distort the market. But here we clearly argue that it DOES distort the market, and it seems we like it because the distortion is in our favor.
Much like Prius Owners were quite happy to get tax breaks for buying a new car that the rest of you were denied.
A sales tax of 5% is not going to break Borders. A purchase from Borders does not involve shipping cost and allows the purchaser to see/touch the purchase before deciding to purchase.
Borders has to pay for their brick and mortar buildings but then Amazon has to pay for huge warehousing operations.
The website drugstore.com have prices that are 25%-30% higher than our local pharmacies.
So overall your argument does not hold water. The only advantage that e-commerce holds over brick and mortar businesses is that it saves trips to the stores and saves parking, gas, babysitting, etc. for such trips. It is convenience based, the ability to relax and browse from home.
The only place I find where there are true bargains are from the local Craigs List website. But this is more like a garage sale listing than retail sales.
I see this as tax grabbers in panic because the economic downturn has caused a fall off in sales tax revenues, so they are thrashing about looking for a life saver to grab on to.
To such tax grabbers, usually state employees working in tax collection offices, I say get your resume updated and start checking the want ads. When your government lords figure out how to get out of the way of business leaders, then maybe you can get your old job back.
And furthermore to government tax grabbers, about that fat pension you are dreaming of tapping into? Join the tens of millions of other Americans that have been wiped out.
Hmm. Double my sales tax? No thanks!
Government services to whom, did you say?
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Many of those services are already funded through local property taxes.
Nope. Not until after the guns are hauled out. And even then it will just be a re-set.
Amazon is doing business in my state. They sell lots of things to people in the state.
Will that bill also include elimination of Income tax, FICA, Medicare/Medicade and SS? If not, then you can kiss my a$$.
They say there are no stupid questions. There are however, stupid ideas.
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