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Congress Takes Up Online Sales Tax 297

Posted by samzenpus
from the pay-up dept.
head_dunce writes "A bill introduced Thursday by a bipartisan group of U.S. lawmakers seeks to make it easier for states to collect sales taxes stemming from online purchases. Amazon is among the e-retailers supporting the proposal, while a lobbying group representing eBay and Overstock.com stands opposed. From the article: '"Small businesses and states alike are suffering from the inability to collect due -- not new -- taxes from purchases made online," said Rep. Steve Womack, R-Ark., adding the legislation is a "bipartisan, bicameral, common-sense solution that promotes states' rights and levels the playing field for our Main Street businesses."'"
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Congress Takes Up Online Sales Tax

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  • Amazon's strategy (Score:5, Insightful)

    by crazyjj (2598719) * on Friday February 15, 2013 @09:47AM (#42909339)

    I've been noticing that Amazon has been spreading out physical presence in a lot of states in recent years, and in the process cutting deals [politico.com] with those states to suspend sales taxes specifically on them (though a few states wouldn't play ball). So it makes sense to me why they might actually support this. As a big employer in a lot of states, Amazon can continue to create and extend special deals to exempt themselves at the state level, while sticking competing online retailers who don't have so much local presence with a new tax burden. Plus, it also standardizes the now chaotic process a little more at the federal level.

    • by ArchieBunker (132337) on Friday February 15, 2013 @09:53AM (#42909403) Homepage

      Only idiot politicians give out tax suspensions. Its happened several times with VW and Sony. As soon as the 10 year suspension was up both companies packed up and left.

      • by Bigby (659157) on Friday February 15, 2013 @09:57AM (#42909451)

        And yet they still benefited. Several people had jobs and were paid for 10 years and they paid income taxes and spent their money mostly in local places, which was sales taxed. The area didn't benefit as much as it could have, but it still benefited.

        • by ShanghaiBill (739463) * on Friday February 15, 2013 @10:34AM (#42909861)

          And yet they still benefited.

          But on average they benefit less than if these special tax deals were not offered all. It is a version of the prisoners dilemma. You can only "win" if you defect while everyone else cooperates. But if everyone defects, we all lose.

          Personally, I think these tax breaks are unconstitutional, because they violate the equal protection clause. Why should one business get a special exemption, when others (including their competitors) do not?

          • by egamma (572162)

            And yet they still benefited.

            But on average they benefit less than if these special tax deals were not offered all. It is a version of the prisoners dilemma. You can only "win" if you defect while everyone else cooperates. But if everyone defects, we all lose.

            Personally, I think these tax breaks are unconstitutional, because they violate the equal protection clause. Why should one business get a special exemption, when others (including their competitors) do not?

            I think you're the only person on the planet who thinks that "Equal protection" should mean "equal taxes". Do you want your taxes to equal what [Teresa Heinz/Mitt Romney/other-rich-person] has to pay? Or, should their taxes be equal to yours? That would be "equal", wouldn't it?

            Now, I don't think that there should be equal taxes, and I don't think that there should be tax breaks for certain businesses. But you're going to need to find a different reason to legally prevent such tax breaks. For example, you

            • by ShanghaiBill (739463) * on Friday February 15, 2013 @11:37AM (#42910737)

              I think you're the only person on the planet who thinks that "Equal protection" should mean "equal taxes".

              "Equal protection" does not mean "equal taxes." It mean equal application of the law. If a company is given a tax break for "creating jobs", then the same tax break should be available to any company that meets the same criteria.

              • Well, that's not how the law works, you know, and I think it's unclear if it should be applied quite so strongly. For example, if I have a mill, why can I hire adults but not children, to work there and perhaps reach into operating machinery? That's discriminatory on the basis of age.

                In practice, equal protection counts way more when discrimination on the basis of certain criteria occurs (eg race, gender) and not so much when it's otherwise innocuous business regulations.

            • Re: (Score:2, Insightful)

              by Anonymous Coward

              Yes, I would like my Taxes to be equal.

              I'd like my tax bill for this year to equal Mitt Romney's 2011 rate: 14% of my total income.
              I'd like my tax bill for this year to be equal to Teresa Heinz' 2003 rate: 12% of my total income.
              I'd like my tax bill for this year to be equal to Warren Buffett's 2010 rate: 11% of my total income.

              All of those would be less than what I pay now. And I'd bet that were there to be a single flat tax on all income received, to meet the same amount of revenue collected, my overa

            • by cayenne8 (626475) on Friday February 15, 2013 @12:02PM (#42911085) Homepage Journal

              Now, I don't think that there should be equal taxes, and I don't think that there should be tax breaks for certain businesses.

              I don't believe there should be tax breaks or deductions for anything.

              No one gets deductions for home mortgages, children, expenses, etc...nothing.

              Simplify the tax code...you make $x this year...you pay 7% of that in. Simple.

              I'd even go for the national sales tax in place of income tax...it would catch everything, and I believe..in the long run with either method, over all taxes would be lowered for everyone.

              And besides, the govt shouldn't be in the business of trying to alter human behavior through taxes. Taxes should be there ONLY for the funding of vital govt services.

              • by Aqualung812 (959532) on Friday February 15, 2013 @01:42PM (#42912471)

                National sales tax is a stupid idea. It makes goods bought in the USA cost more, and it does not take into account the benefit of living in the USA.

                If I made $1,000,000, I have benefited by living in the USA to the tune of $1,000,000. The amount I owe the USA is some function of that. The infrastructure of the USA allowed me to earn that money, and the armies of the USA protects it.

                However, if I only have to pay sales taxes for things I buy in the USA, I can:

                -Buy things from other countries (this already happened before with yacht sales & luxury tax)
                -Not buy as much stuff (Bad for the economy)
                -Only buy what I need to live (Unfair for those that make less, as my spend will be a fraction of my income, while theirs may be all of their income)

                However, flat-tax is great. Establish a poverty line, perhaps even a per-person allowance for caretakers. This should be the minimum amount required to live, and adjusted each year based off of the value of the dollar.
                ALL income (even capital gains) above this line is taxed at the same level. No deductions for mortgages, charity, etc. Now, we're being fair.

              • by jdastrup (1075795)
                A flat tax will NEVER happen. Sure it's a good idea, but what politician is willing to do this? Because if they did, millions of jobs would be lost instantly. The entire tax industry (H&R block, KPMG, Deloitte & Touche, etc) gone. No politician wants to be the one that voted for a 10% jump in unemployment, even if it would be the best in the long term.
              • Re: (Score:3, Insightful)

                by ehiris (214677)

                Your idea of taxing the fundamentals of capitalism is dumb. We need to promote the exchange of goods and tax it as little as possible. What needs to be taxed more is hoarding of wealth. You can't assume that someone who spends very little money yet has assets valued in the billions should be paying as much tax for protecting those assets as someone who spends and has no assets or probably just a lot of debt to the people who own the assets they spend money for to use.

                Oil companies are a perfect example. We

          • by MitchDev (2526834)

            "Personally, I think these tax breaks are unconstitutional, because they violate the equal protection clause. Why should one business get a special exemption, when others (including their competitors) do not?"

            Could not agree more. But with big business owning the politicians, not gonna change.

            Eliminate all contributions and get rid of the "optional" campaign finance box on tax returns to make everyone use the same pool (and make Bribery/Influence-trading a Treason-level offense).

        • by TheRaven64 (641858) on Friday February 15, 2013 @10:46AM (#42909995) Journal
          Did they benefit? How many other companies went out of business because they couldn't compete with a big company that had a tax exemption? How much did they actually pay per job (some tax breaks for datacentres have worked out to about $1m of tax exemption per job - even over a decade that's unlikely to be a good deal).
          • Re: (Score:3, Insightful)

            by Common Joe (2807741)

            Not only that, but there is another issue at stake in all of this also: if $BIG_COMPANY should get a tax exemption because it is good for the state, why is it not good for a $SMALL_COMPANY to get the same tax exemptions? If tax exemptions are good, then why not do away with them and just lower the taxes on everyone?

            My wife had her own small business in the U.S. for about 8 years. Why was she supposedly paying more taxes than Amazon? I have yet to hear any politician answer that question.

            • by ranton (36917)

              Not only that, but there is another issue at stake in all of this also: if $BIG_COMPANY should get a tax exemption because it is good for the state, why is it not good for a $SMALL_COMPANY to get the same tax exemptions? If tax exemptions are good, then why not do away with them and just lower the taxes on everyone?

              The most fair way to tax would be to tax companies based both on how much the community benefits the company, and what other options the community has to utilize the land and other resources the company is using.

              A local restaurant or retail store is completely dependent on the community. It requires enough shoppers with enough disposable income to be in a certain location. They owe quite a lot to the community, and should pay higher taxes accordingly.

              A huge warehouse or datacenter does not require shopper

              • by ganjadude (952775)
                And I could make the opposite argument.

                The local restaurant does depend on the community, this is true. but the local restaurant also serves the direct community more than a warehouse or a data center. The data center could be taking up a large portion of land, which could be used for other things that directly affect the community more.
        • And some other area that didn't bid as highly didn't benefit.

          Tax subsidies are a stupid political game. The only winners are the companies.

          • by rnturn (11092)

            ``Tax subsidies are a stupid political game. The only winners are the companies.''

            Agreed. And, yet, politicians still play it with the idea that they won't be suckers. This time.

      • Re: (Score:3, Insightful)

        by Farmer Pete (1350093)
        If your choice is Amazon builds a warehouse and hires 500 people but you don't get sales tax on Amazon sales or Amazon doesn't come to your state and you don't get sales tax...The choice is pretty easy.
        • Re: (Score:3, Insightful)

          by wisnoskij (1206448)

          So say you go with the deal. Now 6 months down the line Amazon has driven 50 more small businesses who employed 5000 people out of a job.

          Pretty easy choice.

          • Not sure how opening a Warehouse is going to stop sales to local businesses. If people didn't want to buy from said local businesses, it would happen regardless of where the warehouse was located.
            • by jkflying (2190798)

              It's because they have a 5/6/7% discount when competing against everybody else because everybody else still pays sales tax.

            • Amazon has been given unnatural advantage/monopoly in the marketplace of that State. This will drive the market out of equilibrium and when it settles down Amazon will have come out ahead and the rest of the market will have lost. This will mean jobs lost, jobs that would have been never being, and lower revenue for everyone else.

        • Re: (Score:3, Insightful)

          by Mr. Slippery (47854)

          The choice is pretty easy.

          It sure is. Say "fuck you" to Amazon and other large corporations that push for a race to the bottom, and make policy that supports the growth of local small businesses that keep the wealth they created in the community rather than drain it away to far-off absentee owners ("stockholders").

          The "let's kowtow to big business" strategy has failed so completely and so consistently that the choice would be easy...in a well-informed and non-corrupt political system.

      • So all politicians give out tax suspensions?

        Zing!

      • by hackula (2596247)
        Yep we had the same thing with Boeing in my area. We basically gave them a billion dollars and promised our workers would be subservient and love them long time.
    • by darjen (879890) on Friday February 15, 2013 @10:12AM (#42909631)

      Even if Amazon doesn't get special tax deals, it will still hurt smaller online retailers more. Due to their large size, Amazon is better situated to handle the extra overhead and cost these taxes will bring. Amazon has essentially been handed a blank check by investors to get by with extremely low profit margins, as evidenced with their stock price. This could be just the extra bump Amazon needs to put their competition out of business.

      • by CastrTroy (595695)
        And as a consumer, I almost have to say "good riddance". My local book store (and by local I mean megachain with retail outlets, Chapters to be specific). Took a week after release to get copies of a brand new release, now New York Times best seller (so not like it was unpopular) on their shelfs. I ended up buying the eBook instead, even though I really wanted a hard copy, because I wanted to have it the day it came out. Since Amazon and other large online chains have come out, I now have access to more
    • Re:Amazon's strategy (Score:4, Informative)

      by pollarda (632730) on Friday February 15, 2013 @10:18AM (#42909695)

      You are close ... Amazon's strategy is much more simple. When Amazon was just an online retailer with distribution centers in several states, it fought for no sales tax as it would (obviously) help Amazon's sales. The only places where Amazon had problems was in the few states where it had its distribution centers. Amazon's strategy NOW is to go beyond being a simple online sales organization to your daily sales store. Amazon is currently in the process of setting up local _same_ _day_ delivery. You will be able to place your order on Amazon for everything from books to groceries and in a great many cases, Amazon will deliver to your doorstep that same day. Amazon's already been doing this to a limited degree in Seattle and a few other locations. In order for Amazon to do this, they will have to have distribution centers in or near every major city which would in most cases require them to have to collect sales tax. Amazon doesn't want to be in a position where they have to collect sales tax and the other online retailers would not be collecting sales tax putting Amazon at a disadvantage. To even the playing field, Amazon is now not fighting _against_ online sales taxes but is now fighting _for_ online sales taxes.

      Personally, I'm against online sales taxes. When you buy something online, you are already paying a "tax" of sorts and that is your _time_. That is a tax or cost to online purchases as it takes up to five days for your products to arrive. If you want your products that same day, you pay an extra (and real) tax by buying local.

      What the politicians forget is that the online sales is a wash. If I don't pay sales taxes by buying from something from _their_ state, someone else is not paying sales taxes by buying from _my_ state. Meanwhile, in _both_ states, it creates increased sales and hence jobs which are filled by people who pay sales taxes, income taxes, property taxes, gas taxes, excise taxes (over half of what you pay for insurance is excise taxes btw), etc. etc. etc. It is to the states long term advantage to not charge sales taxes and create jobs. The online sales taxes is a short term solution where states will fill their coffers quickly but, it will reduce the number of jobs and hence taxpayers in the long term.

      So, when online sales taxes get put in place and you are paying an extra 6-8% for your online orders, just remember to thank Amazon

    • by Orne (144925)

      Disclosure: My wife is a 3rd party merchant through Amazon's Fulfillment By Amazon [amazonservices.com] (FBA) program. I guess I'm her "CIO".

      The online retail space has been evolving over the past couple of years, as we all can tell. Since 1992, when the US Supreme Court ruled that sales tax could not be collected [wikipedia.org] from a state where there was no physical business presence, online retail has operated in an essentially un-taxed environment. You were always supposed to track online sales made to customers in your own state, bu

      • by nabsltd (1313397)

        Amazon looks at this and says, if I'm going to be taxes as if I have a physical presence, then I might as well have a physical presence, and they have begun building "micro warehouses [huffingtonpost.com]" in major cities across the country. Now, you will be able to order online, get the vastly superior inventory storage options that a warehouse provides, and get same-day shipping to the customer, so the customer can have the item in hand by the end of the business day.

        Best Buy could have had the best of both worlds by setting up something like "BestBuyOnline.com" as a completely separate company, with no point of presence anywhere but states with no sales tax (Alaska, Delaware, Montana, New Hampshire, and Oregon), and then have some sort of deal where the physical Best Buy stores act like Amazon's Locker [amazon.com] so that you can still order online and pick up in store. Instead, they have chosen to keep doing business as usual with 20-50% higher prices on many items and hope that

  • by Anonymous Coward on Friday February 15, 2013 @10:20AM (#42909717)

    We shouldn't even be looking at sales tax as a revenue source. The reason sales tax is so acceptable is that people don't notice it until it's too late. They don't realize how regressive it is. In fact, people are so oblivious to this tax that it's become the fashionable way to pay for multi-million dollar stadiums. That reason alone is why I buy things online. Because of all these projects, sales taxes in "major" metro areas are approaching 10% and exceed that for hotels, car rentals, bars and restaurants. That's money that's taxed after you've already paid income tax on it.

    Would anyone here take a 10% cut in pay? Yet we gladly pass sales taxes that do the same thing.

    The U.S. should go back to its roots and use tariffs as the only source of revenue.

    • How does using tariffs help STATES? Unless you want your products imported from California to have tariffs on them.
    • by SirGarlon (845873)

      Would anyone here take a 10% cut in pay? Yet we gladly pass sales taxes that do the same thing.

      There is no sales tax on the things I spend the bulk of my income on: rent/real estate, investments, groceries, utilities, medical bills. I'd be surprised if more than 1% of my net income goes to sales tax. If sales tax is significantly affecting you, then you're spending a lot more money than you probably have to.

      The U.S. should go back to its roots and use tariffs as the only source of revenue.

      Yeah, let's go b

    • by jkflying (2190798)

      How about no tax *except* sales tax? That way you get taxed based on how extravagant a lifestyle you lead. Oh, and Wall St. transactions can have the same tax rate as everything else...

  • The moment I have to pay sales tax on {stuff I get from Amazon} is the moment I stop being an Amazon customer - over 90% of my online purchases are with Amazon, and its not just the usual stuff that people buy online - I buy the sort of stuff that people would buy at walmart (soap, deodorant, batteries and other household goods at Amazon so I don't have to pay sales tax

    • by DogDude (805747)
      You're not a customer that anybody wants. No business person in their right mind would lose any sleep over customers that have zero loyalty, and are just looking for the best price. That's Business 101, and it's absolutely true.
      • You're not a customer that anybody wants. No business person in their right mind would lose any sleep over customers that have zero loyalty, and are just looking for the best price. That's Business 101, and it's absolutely true.

        I think I'm going to disagree. I don't see any large business that grooms customer loyalty. I'm not talking about loyalty cards... I'm talking real loyalty. On top of that: because so few people have loyalty to businesses (they are hunting for the lowest cost bargain), most businesses want these kinds of customers. We've been using the phrase "race to the bottom" on Slashdot and I think that aptly describes the situation of loyalty between customer and business.

        I'm sure someone can find a few examples w

        • by DogDude (805747)
          I wouldn't say that no large businesses do that. I'd say that the successful ones do.

          The cheapest price is always a losing game. If that's all you have, then the second you are undercut by somebody for whatever reason, you're pretty much finished. It's a simple idea, but it's proven to be largely true time after time.
    • Re:Amazon are crazy (Score:4, Informative)

      by Xphile101361 (1017774) on Friday February 15, 2013 @11:05AM (#42910267)
      So at the end of the year you don't pay a use tax? Hopefully your state doesn't have one. Otherwise congratulations, You've just become a tax evader!
    • by Fnord666 (889225)

      The moment I have to pay sales tax on {stuff I get from Amazon} is the moment I stop being an Amazon customer - over 90% of my online purchases are with Amazon, and its not just the usual stuff that people buy online - I buy the sort of stuff that people would buy at walmart (soap, deodorant, batteries and other household goods at Amazon so I don't have to pay sales tax

      So this is your confession that you are committing tax fraud? Or do you actually pay the associated "use" tax that your state charges and you are just playing word games.

    • Re: (Score:2, Troll)

      by sdnoob (917382)

      at Amazon so I don't have to pay sales tax

      you, and people like you, ARE the problem.

      yes, you don't have to pay "sales tax" on online purchases made from out of state merchants... but you DO have to pay a USE TAX [wikipedia.org]. afaik, every state with a sales tax on local purchases also has a corresponding use tax to collect the equivalent amount in use tax on untaxed (or under-taxed) out of state purchases.

      use tax may be difficult for states to enforce because there are no reporting requirements (one of the things amaz

    • I buy the sort of stuff that people would buy at walmart (soap, deodorant, batteries and other household goods at Amazon so I don't have to pay sales tax

      Then you are probably already not following the law. Most states require that you report any goods you buy where sales tax is due, but where the retailer did not collect sales taxes.

      I'm going to assume you aren't reporting those purchases at the end of the year (I believe the statistics show most people don't) but that does not mean that it's not a requirement. This legislation is about making it possible for states to collect taxes that are already due in a manner that traditional brick-and-mortar alrea

  • So is this tax a federal sales tax, or is it going to allow the states to collect sales tax? From the article (which was vague) it makes it sound like it's going to allow states to collect and is to benefit states / local economies. That sounds great (not really), but...

    ...how long until I'm paying taxes to two (or more!) states for a purchase online? (Tax to my state and tax to the state where the merchant is)

    I can't find the bills online (spent 5 minutes on senate.gov), so I can't see if the bill
  • by amoeba1911 (978485) on Friday February 15, 2013 @10:27AM (#42909797) Homepage
    Here's a new video card for $0.01 - shipping is $200.
  • Wrong focus (Score:3, Informative)

    by Anonymous Coward on Friday February 15, 2013 @10:30AM (#42909821)

    The problem isn't that "state taxes are too big for Amazon to figure out." They've got plenty of legal and tax representation.

    The real issue is for SMALL sellers on the internet. Say, people who sell via etsy, or bands that sell albums direct to fans.

    Now, suddenly, THOSE people need to understand and properly understand taxes for all 50 states, collect those taxes, and remit them to the proper time to the proper authorities. Oh, with all the necessary paperwork.

    • The problem isn't that "state taxes are too big for Amazon to figure out." They've got plenty of legal and tax representation.

      The real issue is for SMALL sellers on the internet. Say, people who sell via etsy, or bands that sell albums direct to fans.

      Now, suddenly, THOSE people need to understand and properly understand taxes for all 50 states, collect those taxes, and remit them to the proper time to the proper authorities. Oh, with all the necessary paperwork.

      It's not just 50 states, its 50 states and each taxing jurisdiction in those states. City, county, local, and special taxing jurisdictions make sales and use tax incredibly complicated.

      • by alcourt (198386)

        You forgot the other issue. Different products may be subject to different tax levels. For example, in one state, tea has sales tax. In another, tea has no sales tax. So you have to hold in your database not only all the varying rates, but the lists of what items are subject to what tax levels, and keep that database updated on probably a daily basis.

        And yes, my tea vendor says Massachusetts has a tax on tea.

  • by argStyopa (232550) on Friday February 15, 2013 @10:38AM (#42909907) Journal

    Rep. Steve Womack, R-Ark., (said) the legislation is a "bipartisan, bicameral, common-sense solution that promotes states' rights and levels the playing field for our Main Street businesses."

    This, folks, is a politician.
    When he sees that local businesses are being heavily taxed, and some other business model comes into existence that evades that tax, his efforts are to ensure that other business is ALSO heavily taxed. Make sure the misery is spread equally, instead of (perhaps) asking if there's anything that can be done to reduce the misery generally.

    Specialization increases efficiency in a system, generally.
    If products can be viewed electronically (remotely), and delivered by mail/courier, the 'public services' being used are minimal. The distribution center already pays property and relevant taxes. The carriers are paying taxes for gasoline and vehicles (which is already subsumed in their prices) which compensate for the public ways/facilities used. The homeowner is already paying property taxes for local law enforcement, etc. (Or the property owner, if it's a rental unit.) I and the retailer are both already further paying for the infrastructure allowing us to communicate.

    The fact is that modern technology has made many goods more efficiently sold through remote-purchase and postal distribution. This is simply a (faster) recap of the paradigm-shift in commerce when traveling merchant caravans no longer bought everything on speculation to (hopefully) sell later down the trail. Likewise, big-box retailers kicked the crap out of local small retail/grocery stores generally (albeit that process isn't quite complete yet). Nobody today mourns the loss of the merchant caravan; and already the younger generations have no maudlin feelings about the local small general store.

    • by nabsltd (1313397)

      Rep. Steve Womack, R-Ark., (said) the legislation is a "bipartisan, bicameral, common-sense solution that promotes states' rights and levels the playing field for our Main Street businesses."

      This, folks, is a politician. When he sees that local businesses are being heavily taxed, and some other business model comes into existence that evades that tax, his efforts are to ensure that other business is ALSO heavily taxed. Make sure the misery is spread equally, instead of (perhaps) asking if there's anything that can be done to reduce the misery generally.

      And, he's one that is gonna be really surprised when people still buy at Amazon instead of the "Main Street" business, because Amazon will have same-day delivery to most people not long after this law is in effect. When Amazon has cheaper prices, better service, easier shopping, and the item in your hands just as quickly (and maybe even faster if you have to deal with traffic, crowds, etc.), who would buy at a "Main Street" store?

      I seriously need to buy a lot of Amazon stock before this goes into law.

  • by judoguy (534886) on Friday February 15, 2013 @11:09AM (#42910321) Homepage
    All the talk here about "fairness" and companies needing to "Pay their share" completely misses the point.

    The real problem is voracious government entities that will NEVER be satisfied with how much they take from you. NEVER.

    You want fairness? Get rid of the sales tax on the brick and mortar stores. What? We can’t do that need that money! For the children! To buy civilization!

    We are WAY past “buying civilization”. The only question discussed by any parasitic government entity is how quickly to kill the host.

    And yes, the host is dying. The U.S. is over 100 trillion in the crapper with admitted debt and unfunded government liabilities according to the Dallas Federal Reserve president. We can’t grow our way out of a 100 trillion (and rapidly growing because of massive spending) problem. The U.S. at least, is screwed.

  • Enforcement (Score:3, Interesting)

    by sexybomber (740588) <[boccilino] [at] [gmail.com]> on Friday February 15, 2013 @11:10AM (#42910329)

    How will this shiny new tax be collected and enforced?

    One option is to put the onus on the retailers to maintain a database of all the different sales tax rates in the country, so they can collect the appropriate amount on the purchase. At least in New York, sales taxes vary by county -- the State takes 4% and the county takes anywhere from 3-5%. That's 62 lines on the spreadsheet, just for New York. I think NYC adds a point or two as well. This would have to be correlated with a ZIP code table, so the retailer would know which ZIPs are in which jurisdictions. It's tedious, but not impossible. Perhaps the IRS could spend some of our money to draw up the tables and maintain them.

    Another avenue is to put the onus on the buyer to calculate and remit the appropriate taxes to the authorities. If I were a sociopath, I'd like this method better. It doesn't burden the retailers and it provides a delicious means of social control, not to mention a wealth of interesting information on what people are buying. Let's take a non-Amazon company as an example, since Amazon has bought exemptions from State sales taxes:

    NewEgg is contacted by the NY Department of Taxation and Finance and ordered to turn over their NY sales records. No warrant is required, since the request is for tax compliance purposes. DTF runs the records through their computer system and looks up the tax records of each NewEgg customer. If the customer didn't report the sale, they're in big trouble. If it's a significant amount that they didn't report, or there's a pattern of non-compliance, off to private prison with you!

    Cue the naysayers saying I'm a paranoiac and Our Glorious Overlords would never do something so fiendish...

  • So what percentage of tax will I need to charge customers who pay anonymously for online services and download products where I don't even know what country they are in?

  • R-Arkansas (Score:3, Insightful)

    by MattGWU (86623) on Friday February 15, 2013 @11:38AM (#42910761)

    Surprise! The Congressman representing (3rd District, encompassing Bentonville, where Wal-Mart's HQ is located) the largest brick-and-mortar retailer in the world is pushing for sales tax on sales made by their main competitors.

    • by Jetra (2622687)
      Just like the Music Industry, it seems that brick and mortar stores wish to stick to the old ways of how things are done. Can't we just have a nice balance of both on and offline retail? Apparently not seeing as how most Americans see in Black and White instead of All Grey like I do. Sales tax won't kill the economy, but it's certainly not going to help it from sieving money.
  • Would you expect your grocery store to suddenly stop charging you tax? Because that's what's happening with Amazon's groceries. Shipping doesn't make up for it, that goes to fedex and ups. It's been a loophole for a while now, and a lot of people have taken advantage, while brick and mortar stores have suffered. The latter may not be the worst thing, customer service at Best Buy is a lot better now, but I can buy a surfband modem on amazon for $80, and at bestbuy for $120, after tax in my area that come

  • by Jane Q. Public (1010737) on Friday February 15, 2013 @04:31PM (#42915181)
    TFA is wrong. The reason the Supreme Court said States can only tax transactions made with companies that "have a physical presence" in that state, is because (follow along now):

    (A) States have no legal authority to tax transactions that take place in other States, and

    (B) an Internet transaction is deemed to have taken place at the seller's place of business, and

    (C) the Federal government has no legal authority to collect taxes on behalf of the States.

    Item (B) came about because of the rise of mail-order businesses, well over 100 years ago. The internet brings NOTHING new to the table... it just means a bit more business is being done remotely. (In case you hadn't noticed, the rise of the Internet has created a corresponding fall in traditional mail order business. It has not made as big an impact on sales taxes as many people would have you believe.)

    If a mail-order (or Internet) business has a "physical presence" in your State, then it is not unreasonable to conclude that the business transaction took place in your State. Thus, sales tax is applicable. But if it doesn't, then the sale took place in the seller's state and your state can't charge sales tax.

    And the reason (B) says that the transaction takes place in the seller's state, is because doing it the other way around is not practically possible; EVERY business would have to keep track of all Federal, State, and local tax laws, everywhere in the United States. Even today, there is no practical way to overcome this. Small businesses simply could not operate.

    There is NOTHING that Congress has legal authority to do to change this situation, except amend the Constitution. They simply cannot give States additional taxation power, and they cannot give themselves power to tax on behalf of the States, without amending the Constitution.

    This is not mere theory. These are past SCOTUS rulings and the stated reasoning behind them.

    (NOTE: most if not all States have a separate tax, called a "Use Tax", that taxes the use of an item that is purchased out-of-state. But that is a separate issue. A Use Tax is not a Sales Tax... the transaction is not being taxed, the use of the item is. So it is legal. The problem is that States have no way to know what purchases you have made out-of-state, unless you tell them. Which makes it an enforcement nightmare. In my experience, many people do not even know that Use Taxes exist... unless they buy a car in a different state.)

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