Internet Sales Tax Gets a New Champion 276
Archness1 writes with an excerpt from Declan McCullagh's piece at CNET about the recently renewed push for a sales tax on Internet purchases, led by Massachusetts Representative Bill Delahunt. "At the moment, Americans who shop over the Internet from out-of-state vendors usually aren't required to pay sales taxes. Californians buying books from Amazon.com or cameras from Manhattan's B&H Photo, for example, won't be required to cough up the sales taxes that they would if shopping at a local mall." That could all change, though.
Re:I have never understood this. (Score:3, Informative)
All of that is easy to explain.
First, volume of internet purchases has grown manyfold and is expected to get bigger, so the amount of money of taxes that goes through the loopholes is increasing, so now there is more incentive to control it. Also, there were mail sales well before IT was advanced enough to allow bussiness to fill taxes in all of the states easily; now it may be still cumbersome but is certainly doable. Mind that with the new law mail orders will be taxed too. So, more income to win and easier to implement and control, it is clear why it is being raised now.
State governments hold much more power here (Score:3, Informative)
The U.S. government is built on what is called the "Federal System." The individual state governments have far more power and responsibility than they do in most countries, where the states are little more than administrative regions. As a result, they have different revenue needs, and have individually decided on different means of meeting those needs. Some states don't charge income tax at all; they choose to collect their revenue from consumers through property and/or income tax. The individual states tax, spend, and borrow according to their own plans; they have their own unique sets of criminal and civil laws. (One state, Louisiana, bases their civil code on an entirely different system of laws, and this is perfectly allowed.) Most day-to-day government services that a citizen interacts with are provided and funded by state (and by delegation, local) governments.
Re:I have never understood this. (Score:3, Informative)
Well, formally, the government of where you live has the power to decide that the transaction did occur when you received the goods so it is an event taxable there (*1). Practically it also has some meanings:
Of course, most of the protests here just mean "hey, I should get stuff for free (or cheaper) because I'm used to" with a little rationalitation ("magic doorway"? really? why not the "bunch of tubes"?) behind it, but there are reasons why the consumers are the ones being taxed. Of course, no rational exposition will affect the beliefs of that crowd.
Another issue is if the state should be getting its income from sales tax; I would like more to drop the sales tax in favor of taxes on income and wealth. The taxes on sales would be only to cover externalities (v.g. if you buy carbon a tax based in how much will be needed to clean the mines and grow trees there when they close) or to disincentivate use (v.g. tobacco).
(*1) In reality that is the criterium used in contability, so it is less arbitrary than it could seem to be.
Taxing what (Score:1, Informative)
Different states have different rates of tax, and also some goods are exempt. I live in a state where food and clothes aren't taxed, so I mostly buy them locally.
Anyway since the summary and many of the comments refer to Books, lets look at it from that angle.
Books, music, games and videos are information. You can't effectively put a tax on information content, since the 'seller' can set up offshore somewhere, and if you are downloading the files (which is how I buy books and music these days) then there is no extra cost of 'shipping' or any physical goods to be charged with import duty at the 'border'.
Re:Everyone (Score:3, Informative)
All they ever do is add; that's a key reason why taxes go up, freedoms narrow, and law-books only get heavier.
Yes, there are many unfunded mandates passed by Congress. This, in itself, it a serious problem. But it's not true that Congress only adds-- many laws repeal, modify, or simplify existing law. The Uniform Commercial Code [wikipedia.org], for instance, was a great simplification of the laws surrounding commercial transactions in the United States. The UCC is also "done right", in that the code itself is simply a list of recommended laws, that are then legislated at the state level. This allows states to retain control of commerce in their own borders while providing a strong incentive to play nice with other states.
I am OK with taxing internet commerce. Mom and pop stores have largely suffered in the era of e-commerce. They simply cannot leverage the same economies of scale that Amazon, NewEgg, WalMart, and others can take advantage of, while having the additional burden of having to pay local sales tax. Internet retailers take advantage of public services just the same as everyone else, but are exempted from contributing back? That doesn't sound like the kind of environment that would encourage good ol' American entrepeneurship.
Re:Buy local (Score:3, Informative)
Good. Buying online results in externalities which most people are simply too selfish to care about. I'm all in favor of closing this loophole.
If you live in California and routinely buy on-line, there are (quite often) no externalities. Just the tax that you end up paying. Probably the same for a lot of New Yorkers.
If the idea of wanting to avoid a sales tax (at least in the US) is "selfish", I'd suggest you try living in a state like California. To use a car analogy, we probably have the highest DMV and traffic violation fees in the nation. In return, our roads and freeways are among the worst.
Missing Keyword: Unconstitional (Score:2, Informative)
Oops, there's that little piece of paper interfering with again : P
AFAIK, interstate sales taxes are unconstitutional.
Because of the nature of the US (Score:3, Informative)
The name gives a clue: The United States. The US is a federal republic of independent states. Each state has a great degree of autonomy in many things. As such, each state has its own budget to deal with.
Also, there's the fact that the federal government has a long history of using money as a way to brow beat states in to doing something. As an example, take the US's 21 year old drinking age. If you read the laws, you'll discover that this isn't federal. The federal government has no authority to make such a law. When then do all the states do it? Highway money. The federal government said since drunk driving is a concern to highway funds, they can withhold them if a state refuses to pass a 21 law. So all states did, because they need that money.
Well, this could be taken to a much greater extreme if the federal government controlled even more of the state's funds. They could force the state to do things that they actually have no authority over by just saying "We won't give you your sales tax money if you don't do as we say."
Of course there's also concerns about if it would be handled fairly. What happens if the federal government decides that California needs more money, because their budget situation is a disaster, even though it is a disaster of their own making? They ten take money away from other states and hand it over.
The states have good reason to want control over their own money. That doesn't mean it is 100% that way, as I noted there are things like federal highway funds. However given how many strings are attached to federal dollars already, the states are in no hurry to give the feds even more control.
Re:That may well not be legal (Score:4, Informative)
You'll note there's never been a real push to enforce it and that is probalby because the state AGs are smart enough to know if it went to the federal courts, they'd likely get slapped down.
I'm sorry but your facts are wrong. The Use Tax has seen a Supreme Court ruling, and it was in its favor: Henneford v. Silas Mason Co. (300 US 577, 1937), approves provided the tax "is not so measured or conditioned as to hamper the transactions of interstate commerce or discriminate against them" (read as: as long as Use Tax isn't larger than the Sales Tax).