US Senate Passes National Internet Sales Tax Mandate 297
SonicSpike writes with the news that the U.S. Senate yesterday "passed a nonbinding proposal to allow states to collect sales tax on Internet sellers that have no presence within their borders. The proposal was an amendment to a 2014 budget bill that the Senate debated Friday. It was pushed by Senators Mike Enzi, a Wyoming Republican, and Dick Durbin, an Illinois Democrat, and was designed to give backers a sense of whether they had enough votes to push forward with final legislation to impose an Internet sales tax. The vote showed they have plenty of backing to overcome any filibuster seeking to block a final sales tax bill."
First! (State) (Score:2, Informative)
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Same in Oregon for pretty much anything that isn't tobacco or gasoline, and only one of those are practical for purchasing online.
OTOH, I am curious as to whether or not some neighboring state (*cough* California *cough*) would decide to charge me their sales tax rate for anything that an online retailer would sell to me if it comes out of a warehouse that is sitting within their borders...
It'll change a few dynamics, to say the least.
I do recall only one site online charging any sales tax - DAZ Productions [daz3d.com]
Re:First! (State) (Score:5, Interesting)
As an Oregon online retailer, I can say that this will be big pain in the ass, because I'll go from collecting tax for zero states to collecting tax for 46 states, and having to calculate all the various kinds of taxes levied by cities and municipalities. It's going to be a fucking nightmare, which is why the supreme court stopped it in the first place.
At least Ron Wyden is doing his damn job by fighting it.
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Reducing tax complexity (Score:2)
Re:First! (State) (Score:5, Interesting)
Instead of requiring retailers to PAY the sales tax, they should only be required to remit sales logs and let the state collect the use tax from whoever purchased the goods. But, that makes too much sense and would again put the responsibility on the state to collect the money when all they really want is a ride on the internet sales gravy train.
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I don't see how this is going to work for anything but the largest online retailers and I'm still not convinced that this doesn't violate interstate commerce.
The same retail giants who sell enormous quantities of goods across state lines and who have immense regional distribution centers in many?
That sure looks like interstate commerce to me.
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The poster almost certainly meant they aren't convinced it doesn't violate the Interstate Commerce Clause, which prevents individual States from creating barriers (i.e. taxes) to imports from other States.
Those retail giants collect taxes from transactions where both origination and destination of the sale are in the same State.
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"As an Oregon online retailer, I can say that this will be big pain in the ass, because I'll go from collecting tax for zero states to collecting tax for 46 states, and having to calculate all the various kinds of taxes levied by cities and municipalities. It's going to be a fucking nightmare, which is why the supreme court stopped it in the first place."
I would go further, and ask where the Constitution gives Congress any authority to allow one state to tax a transaction that takes place in another state.
Please don't cite me the Supreme Court... I know about their prior decision. But that doesn't make it Constitutional. Hell, SCOTUS had done A LOT that's unconstitutional.
Even the widest interpretation of "regulating interstate trade" does not cover taxation. It simply isn't legal for one state to tax a transaction in another state this way. And a sal
Re:First! (State) (Score:5, Insightful)
You're not considering the other issues such as having to go through multiple state audits when they want to challenge if you're sending them enough of the revenue that you're collecting for them. Finding out that oops, this country in this state raised their tax rate and you didn't know but now they're taking you to court for not paying the right fees is not how you want to run a business.
In the end, the big chains that can afford it (Amazon) will have distribution centers in each state and completely dodge the issue, while all the added burden will go to their smaller competitors.
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"Makes sense, but you can only tax someone in your jurisdiction so this would be a receipts/excise tax on the seller rather than a sales tax on the buyer."
That's the whole problem here. No, it wouldn't be a receipts/excise tax, it would be a sales tax. And the Supreme Court, in their BS prior decision on this, failed to explain how a state can charge a tax on a transaction that happens in another state.
It's been against the law for over 200 years. The Constitution gives the Federal government no power to collect State taxes, nor does it give any state the power to tax something going on in another state.
I don't know how the hell they think they will do
What would be nice... (Score:5, Interesting)
If they do demand this, they should provide some online framework. Buyers address and total gets sent in a standardized format to respective state ran sales tax servers, and the server spits out the correct amount. If the state gets the tax wrong, the seller should never be responsible for the mistake.
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Re:First! (State) (Score:5, Insightful)
Use a tax service. They tell you what the tax rates are, and some of them deal with the liability issue. If you didn't collect taxes correctly because of their data, they'll cover it. It's insane, actually. Taxes change on an almost daily basis somewhere in the U.S. Between legitimate tax rate changes at any level from city, county, to state, to tax holidays, etc. nobody can keep track of this shit unless they're in the business of keeping track of it... which is why tax services are so helpful. My customers all use them. When your core business is selling widgets, you can't keep track of thousands of tax jurisdictions.
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That's why small and medium sized businesses will use subscription services to track sales tax!
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How many times have you done this before? I'm curious as to where your authority comes from to claim that it isn't difficult. The logistics may not be difficult but I'd be surprised if dealing with the various States and local municipalities is easy. But, do go on. It's obvious you've done this many times, that you're an authoritative source, and that you know what is and isn't difficult for someone.
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Comment removed (Score:5, Informative)
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By today's definition you're rich. Pay up bitch!
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At this point, I'm really looking for every edge on keeping my dollar that I can. I paid more in taxes for 2012 than my parents earned . . . combined . . . in 2011 and 2012. . . combined. And it's not like I'm wealthy. I live in in a sub $200k house in a blue-collar neighborhood, drive a seven year old car, and keep to a budget.
You're precisely the kind of person they're looking to soak. People on handouts don't have enough money to tax, and the really rich can afford accountants.
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Until you get charged sales tax by the state in which the internet retailer exists.
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Shouldn't change life in Delaware much. We don't have sales tax, period.
Shouldn't change life anywhere. This is a non-binding resolution that has no force of law, even if it passed both chambers (and it hasn't). The only thing this means is that if congress actually decides to take up this issue in the future, it probably has the votes to pass. Which seems reasonable: I don't like paying taxes, but taxes should be fair. People are already required to pay these taxes, but evade them by buying from out of state merchants. If the merchants are required to collect the tax, th
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Where else should it be placed?
Up until this point, they've had a competitive advantage over stores with an in state presence that do have to charge the sales tax, people self reporting makes no sense as it's entirely unfair to expect people to keep track of that many small purchases. And the shops already have accountants and billing software that handles that sort of thing.
The point of use tax is that it makes it harder to evade sales tax by charging taxes on all your purchases. Just because a purchase co
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Up until this point, they've had a competitive advantage over stores with an in state presence that do have to charge the sales tax, people self reporting makes no sense as it's entirely unfair to expect people to keep track of that many small purchases.
Often not... because goods in state could be purchased in person, without the additional cost of shipping added to the regular price of goods.
Strangely, the cost of shipping is often similar to or greater than the tax rate. So if you had to pay both a t
Re:First! (State) (Score:4, Informative)
That's a fair point, but there's more to it than that. A lot of these mail order and online places are located in places where rent and labor is cheap or receive subsidies for being located there. What's more, by only having a couple of warehouses, they save a ton of money.
Which is why the total cost is often times the same or less. And some businesses like BestBuy will charge the same amount of money whether you buy in store or they ship it to you, part of that is because shelf space is quite expensive compared with warehouse space.
As far as in state infrastructure goes, that's infrastructure that the buyer uses, not the retailer, it's called a use tax for a reason, it's use that the buyer gets out of the infrastructure. And no, it's perfectly fair, the buyer uses it regardless of where he or she buys from.
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Why should it be any different legally if I order an item from a retailer across the state line and if I were to drive to the retailer and purchase it in person?
My state shouldn't be owed taxes in either scenario. It is only sane if the retailer's home state is the one collecting taxes for the sale.
If a law is written such that the purchaser's state/county/city gets the taxes, you can kiss most smaller online retailers goodbye, because the tax codes across every town in the US are far more complex than peo
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I mean, what resource is being consumed by your external purchase?
Entirely irrelevant question. The question is, what resources are being consumed by the residents of the state? Take a look at your state's entire budget for the answer. The next question is, how do you pay for all of that? Only a few of those items are directly and entirely supported by specific use taxes, the rest must be paid for out of general funds, using whatever variety of taxation methods they have decided to use in that state, in whatever proportions they've agreed upon using their representati
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No, you just tax the rest of the states by making your business laws so lax that companies incorporate in Delaware where they are immune to things like bankruptcy laws...if you can call those laws you have "bankruptcy laws". Your bankruptcy courts make it easy for scum like SCO and their fellow travelers to make out like bandits after screwing their customers and anyone else they could throw a sueball at.
Delaware is a disgusting state that should be disbarred from the Union.
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Yeah, one part of the article talks about collecting existing State sales taxes, but then another part mentions establishing an "Internet Sales tax". So we're gonna get "double-dipped", paying both state and local taxes AND a federal Internet Sales Tax if all this crap passes?
Won't get anywhere in the House (Score:2)
Non-binding Proposal is not a "Mandate" (Score:2)
Not to worry (Score:5, Informative)
They've been trying to pass legislation like this for the last seven Congressional terms, this makes it eight.
http://www.netchoice.org/library/sales-tax-collection-myth-vs-reality/ [netchoice.org] ...legislation has been proposed in each of the past seven Congresses that would reverse decades of history and legal precedent preventing out–of-state sales tax collection, and another bill is being circulated for cosponsors by Senator Mike Enzi (R-WY). It would impose on all states and all retailers the provisions of the now voluntary Streamlined Sales Tax Agreement (SSTA). SSTA proponents have touted this measure as a simplified, streamlined method for collecting sales tax. Unfortunately, the reality is far different – the SSTA promises to increase significantly the complexity and compliance burdens for interstate sellers.
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Enforceable? (Score:2)
I'm a little ticked off (Score:4, Insightful)
No taxation without representation? (Score:5, Informative)
This will be struck down. You can't tax a person or business not in your jurisdiction. You could try to make your citizens pay the tax but you can't require an out of state business be a collection agency.
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Given the way things are going in the courts I doubt this will be struck down.
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The flaw in your statement is that it assumes adherence to the constitution, which we have dismissed at every opportunity over the last fifteen years. In a world where privacy, due-process, and protection of citizenship mean nothing, a little interstate commerce and taxation is trivial. Further, just as we have plenty of people in our population that say things like "we have too much free speech and the government should regulate the news" and "we should give up some of our privacy to be more secure against
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This has been law of the land for a very long time. The Federal government can most certainly enforce the right of the states to tax their own citizens. What would be unconstitutional would be differing tax rates for in and out of state retailers. In all cases I know of, the sales and use taxes are the same, what this legislation would do would enforce the retailers to collect, remit and report the taxes that are already owed by the citizens of the state.
And, the Federal government doing the forcing, is cer
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More specifically, this new law would favor brick and mortar stores by allowing those stores to collect tax from OUT OF STATE people ... and at the WRONG RATE. Sure, we have been allowing stores to do just that all along. The meaning here is that the stores ARE doing this as a tax based on the STORE location, rather than the BUYER location. To be fair, the exact same thing needs to be applied to internet stores. Further, there is no tracking required of mortar stores. But some proposals for internet st
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This will be struck down.
There are two things to note here. First, this is a rare legitimate application of the Commerce Clause. Second, the Supreme Court has upheld unconstitutional law before (such as the recent Obamacare ruling).
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In most states, the sales tax is not paid by the company. The state is taxing YOU. It just mandates that companies that want to sell to you have to collect the tax and submit it.
I'm actually kind of surprised the states haven't started issuing subpoena to the large online retailers, to get names and addresses of people that have ordered over a certain amount. and then go after them. (In pretty much every state with sales tax, you are required by law to include those purchase totals on your taxes, but no
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I'm actually kind of surprised the states haven't started issuing subpoena to the large online retailers, to get names and addresses of people that have ordered over a certain amount. and then go after them.
Probably because subpoenas are supposed to require probable cause before being issued. Fishing expeditions like you describe are specifically prohibited. Unless the company has a presence in the state in question, it could also simply ignore the subpoena since I don't believe they have any force in other states. (insert oblig. IANAL here)
Have the last 4 years taught you nothing? (Score:2)
Domestic wiretaps and killing Americans without trial are proceeding full steam ahead. It's so normal it isn't even a talking point any more.
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If that were even remotely true you would know what you, as a US citizen, were then required to do.
How's that working out for you so far?
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Another cash grab (Score:2)
The states already get plenty of tax on out-of-state internet sales. Those packages don't appear by magic. They're moved (usually by ground) from origin to destination, paying taxes all along the way. Fuel and mileage taxes and registration for vehicles, income tax from the employees, property tax from the depots and warehouses in the origin and destination states, corporate taxes from the shipping companies, etc.
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Umm, you do realize that businesses generally get to write off a lot of the, right? And these are businesses that don't have a presence in the state anyways so there's nothing to write off. So, it means precisely zip to us here in WA that a company has a warehouse in CA or TX, as those places don't remit any of it to our government to pay to run the state.
If you're going to comment, could you at least do some research?
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You realize I'm talking about the shipper's warehouses, right? Track your next cross-country shipment. Unless you live right on the border next to a big city in another state, it's going to land at a warehouse in your state where people are employed to move that package. Those employees pay income tax. The shipper pays property tax. They pay taxes on the fuel they put in their vehicles. There's also probably a mileage tax on those vehicles.
?Comprende?
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And those taxes are a tiny fraction of what the state is eligible to collect on those transactions. In extreme cases you're talking about as much as 30% of the purchase price and most of that being written off by the businesses. In most cases the shipping total comes out to a small fraction of the cost of the total purchase.
So yeah, the amount the state is getting from that is negligible.
Little guys are gonna get screwed (Score:4, Insightful)
I have a hosting customer (who is also a friend) who is a very small manufacturing business - they hand make jewelry and sell it on their web site.
They are a mom-and-pop operation and have no hope of being able to track 50 states worth of sales tax obligations and file 50 states worth of forms... never-mind that others have mentioned elsewhere that there are some 10,000 distinct sales tax jurisdictions in the US.
If they're actually required to track even just 50 states worth and file those forms, they're not going to be able to comply. Their business is close enough on margins that this could quite seriously push them over the edge and make them close up shop should it be too onerous.
If the fed wanted to jsut say "5% sales tax on all Internet sales apportioned to the states by share of gdp" that would be one thing, but keepint track of that many moving targets would be too much for mom and pop shops.... big retailers have accounting firms or departments to handle it - one more way the little guy is getting destroyed.
Re:Little guys are gonna get screwed (Score:5, Insightful)
It would seem to me that whatever solution Congress adopts there will be a variety of services made available for these sorts of businesses. Hopefully there will also be a threshold below say some million dollars per year where this sort of stuff isn't required. Of course given the stupidity of Congress one can't count on this being part of the legislation.
I don't have to file tax returns myself; I just buy a copy a tax software package once a year, put in my financial info and shazzam! the returns are uploaded. Shouldn't be a big deal to actually pay the tax.
The real onerous part of this process would be where states start wanting an audit. Now THAT would have serious potential to destroy a small business.
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If they're actually required to track even just 50 states worth and file those forms, they're not going to be able to comply. Their business is close enough on margins that this could quite seriously push them over the edge and make them close up shop should it be too onerous.
From the article
The budget amendment is an initial step toward allowing state and local governments to collect sales taxes from out-of-state retailers who sell more than US$1 million worth of products in a year over the Internet
Unless your friend does a heck of a business they probably would not be affected at this point.
Nighmare (Score:5, Insightful)
Dealing with all the localities is a paperwork and regulatory nightmare. They should not be making the states be able to do remote sales. If they want the money they should simply have a federal sales tax and then the government can divvy the money up to the states just like they do with so many other funding things. Instead they are creating more of a burden for small businesses. Once again, Big Corp has the advantage since they have the systems in place for this and can spread the overhead over many products. Big Gov loves Big Corp.
I can just see it now (Score:2)
In the state tax office in the capitol city, someone blurts out "WTF is bitcoin ?"
Impractical (Score:2)
Now all that's needed... (Score:2)
Is a way around that pesky Constitution that forbids interstate sales taxes.
Technical problems with this bill (Score:2)
Section (a)(2)(D)(ii) says "Provide -- ... (ii) software free of charge for remote sellers that calculates sales and use taxes due on each transaction at the time the transaction is completed, that files sames and use tax returns, and that is updated to reflect rate changes as described in subparagrah (H); ..."
There appears to be no requirement that software be:
Uncertain consequences (Score:2)
Why stop there? Go for the local level (Score:2)
Chicago has a LOCAL 10.5% sales tax.
This is literally nothing. (Score:2)
nonbinding proposal
nonbinding
Nothing to see here folks, except trying to look like they're doing something for the brick-and-mortars. Nonbinding resolutions pass all the time and they are nothing but lip service. They are not laws.
--
BMO
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Wrong. If they have a presence they already have to collect and remit sales tax as part of current State laws. This will just mean the States can collect tax on all sales. Right now most online sales go untaxed.
Re:Define "presence" (Score:4, Informative)
And why should they be taxed if they don't have a physical presence in the state?
Sigh. They proposal isn't to tax Amazon. It's to tax *you*. That's how consumption taxes work. So if you live in California and you order something from Amazon you'll pay CA sales tax, in the same way you would if you walked into Fry's.
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Sigh. They proposal isn't to tax Amazon. It's to tax *you*. That's how consumption taxes work. So if you live in California and you order something from Amazon you'll pay CA sales tax, in the same way you would if you walked into Fry's.
Which is all well and good, but who is going to collect those taxes? Oregon does not have a state sales tax. If the vendor I purchase from is doing business in Oregon then I do not owe Oregon any sales tax. I did not make a purchase in California, so I do not owe them any sales tax either. This would be no different than if I went to Oregon and made the purchase in person. I could even have the purchase shipped to my home in California directly from the store and still not owe any sales tax. Many stat
Re:Define "presence" (Score:5, Insightful)
I do not see use taxes as legitimate. They are an end run around the Interstate Commerce Clause.
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Those roads are paid by taxing the gross weight of commercial trailers (the people transporting shipped packages) and by gas taxes (also paid by the people transporting shipped packages). The shipping cost pays for the taxes that fund roads.
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Why would they do that? Sales tax is *already* collected on internet retailers with a presence in a given state. This bill would allow states to collect sales taxes even if the internet retailer does not have a presence, but that doesn't mean that establishing a presence would exclude them.
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Aren't there import fees for imported goods?
Re:So now the US is forcing foreign online purchas (Score:4, Insightful)
It is not a National tax. It will just allow the States, not the Feds, to collect existing sales taxes on online sales.
The knee jerk reactions around here are amazing sometimes.
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no, but someone in oregon who crosses into washington does pay sales tax.
likewise if you live in oregon and buy online they COULD have colelcted sales tax on the sale. however, right now, states by and large DONT in these situations.
its a bit of a legal tangle currently, and this is the first step being taken in answering the so-far-unanswered legal questsions involved, and normalizing it to be the same as physical sales. its not a money grab, no asslicking.
you are however woefully ignorant, and apparently
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and to top it off, this isnt even an actual law yet.
if you (SUemas) had RTFA, its merely a nonbinding proposal. not even a resolution, definitely not a law. merely a proposal, to gauge reactions, open debate, and get dialogue started for the purposes of answering those not yet answered questions.
(further illustrating just how ignorant you are)
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Not true, if you're an Oregonian that passes into Washington, you show your ID and they're not supposed to charge you any sales tax.
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If I return back to Washington with those groceries, should the Oregon grocery store be forced to report the spending and pay the sales tax to Oregon for the money I spent,
You raise a good point. In my state, Colorado, use tax is required to be paid for the difference (unless it's negative, in which case you get/pay nothing to Colorado).
So just like online sales, people shopping outside of their tax district is a problem. To make it fair, every physical retailer should be required to ask for the shoppers address, so they can remit the sales tax to the correct district.
But that would be outrageous, right?
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Well, there you go. Are you saving for your move? Of course, the Bahamas don't really have the need for taxes, given that it's a monarchist preserve, nestled in the bosom of the socialist USA. Also, they have this little inconvenience currently with the descendents of the slaves that actually built the place, but the legacy of slavery shouldn't bother a rugged, up-from-his-bootstraps individualist like
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Oh, no need to be sorry. You didn't upset me at all. You seemed upset so I explained in tiny words what this actually means. I'm sorry if that upset your...well whatever you do in your mother's basement...time :)
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Hopefully companies like eBay and paypal will make paying this tax easy. The average Internet user cannot afford a tax Id for the small stuff sold
Actually makes me wonder about us foreigners who order things online from the US and have it shipped internationally, or order things on things like Steam and so on.
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I don't know if you're in the US or not, but if you are, buying from outside the country won't help you, because you'll still have to deal with US Customs fees/taxes/levies/whatever.
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That would be true of physical goods, but what about sales of digital goods, (Music, movies, books, software etc) US customs can't charge excise duty on that, and neither can the Sates
Anyway I thought tax legislation had to pass the House, which isn't likely with the Replicans there.
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I've never had a Customs fee charged on a foreign purchase, though I've never spent more than a few hundred on one.
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I bet alibaba.com will be happy as hell to see such a tax pass.
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I don't even understand why he voted nay though -- There's no sales tax in oregon to be charged!
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Principles are still important to some people...
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Maybe he doesn't want Oregon businesses burdened with the problem of collecting taxes for *Other* states?
For Oregon, this proposition is nothing but deadweight loss - all drawbacks, not s single benefit.
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[Max] Baucus, (D-MT), Nay
Also, we don't impose a sales tax, and the state generally works within its actual budget (I know, right? But they do.)
So I'd like to invite any business that would prefer not to get involved in taxing its sales to move here. Land, homes and COL are relatively inexpensive, we could definitely use the work.
Thanks.
And there is the crux of it. (Score:2)
1) REQUIRE a sales tax on all shipped items, including those that import into here.
2) offer the option of a flat 10% rate that is sent to the federal IRS who then doles it out.
3) offer the option of having shipping companies collect the sales tax and pay it to the feds. IOW, the sender would include the sales tax right in the payment. With this approach, the companies does not deal with ANY future tax issues/liabilities, unless they decla
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I disagree. Congress has the sole right to pass laws regarding interstate commerce. The Constitution does not narrow what laws Congress may pass in this regard. This law Congress is working on is an authorization under their authority.
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Congress has the sole right to pass laws regarding interstate commerce. The Constitution does not narrow what laws Congress may pass in this regard.
Right, so the founders intended that Congress could pass any law they wanted so long as they put 'in interstate commerce' at the end. That makes total sense.
The interstate commerce clause has been massively abused for purposes it was never intended for.
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I'm not so sure that Interstate Commerce Clause lets Congress pass laws allowing individual States to pass laws affecting Interstate Commerce, which is what this essentially is.
Should be an interesting legal question for the Supremes one of these years.
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As a non-USAian, can someone explain to me how this compares with mail order? Surely any issues concerning out-of-state sales taxes must have been resolved decades ago for mail-order companies? Does using a web site instead of a printed catalogue raise any new issues of law?
These are not new issues, they just were not pressing issues when the vast majority of commerce was still being done at your local stores and very little was actually purchased by mail order from catalogs, so the issues were not really resolved, just left hanging. The difference now is not due to the technology but due to the scale. When you could mail orders books from anywhere, but everyone still went to the local bookstore anyway, it didn't matter. Now that the local bookstores have all gone out of bu
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Yeah, I'm sure they want to extradite you, Anonymous Coward.