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Democrats The Almighty Buck Politics

Senator Wants to Tax Internet Shopping 705

tripleevenfall writes "A Democratic senator is preparing to introduce legislation that aims to end the golden era of tax-free Internet shopping. The proposal — expected to be made public soon after Tax Day — would rewrite the ground rules for Internet and mail order sales by eliminating the ability of Americans to shop at Web sites like Amazon.com and Overstock.com without paying state sales taxes."
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Senator Wants to Tax Internet Shopping

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  • Surprised? (Score:2, Insightful)

    A Democrat in favor of increased taxes - is there a person on the planet who's actually surprised by this?
    • Re: (Score:2, Insightful)

      by Black Parrot ( 19622 )

      A Democrat in favor of increased taxes - is there a person on the planet who's actually surprised by this?

      Nope. We've got tax-and-spend Democrats, and don't-tax-and-spend-more Republicans.

    • It's not a new tax. It's not a tax increase. It's a new attempt at the enforcement of an existing rule.

      I predict that we'll have just as much compliance under the new enforcement as we do under the current honor system. As long as "zero" is a valid input for taxes owed on any form, people will put it in.

    • by ackthpt ( 218170 )

      A Democrat in favor of increased taxes - is there a person on the planet who's actually surprised by this?

      I'm still getting over a Republican party which actually wants to cut spending.

      It has been pointed out that a small percent, like 1% or 1.5% would generate a lot of revenue - at some point they have to find a way to offset the fat tax cut the GOP fought hard for for the rich. Cutting spending is one thing, but cutting revenue before you cut spending is cutting your wrists.

      • Well, you're right of course. But let's analyze that scenario, shall we ?

        Not cutting revenue before cutting spending boils down to putting a large pile of money in front of ex-lawyers, and expecting them not to touch it.

        So I'm not sure there's much of a choice there.

      • Clinton v. Bush II (Score:4, Interesting)

        by wytcld ( 179112 ) on Tuesday April 12, 2011 @05:41PM (#35800698) Homepage

        Clinton raised taxes, leading to full employment, an economic boom that for the first time in decades raised incomes from top to bottom rather than just at the top, and a budget surplus. Bush cut taxes, leading to a fall in employment, economic stagnation aside from the real estate bubble which was aided by Bush failures of regulation, incomes falling in all brackets except the top, and record budget deficits.

        Sufficient taxes to support government programs lead to a healthy economy all around. The average economic performance is way better under Democratic presidents than under Republican. The notion that we can have a health country without sufficient taxation is like the notion that you can have a healthy body without sufficient food. History proves the Republican position that taxes must always be lowered, and lowered again, just doesn't lead to the Promised Land. It's a lie invented to serve the ultra-rich, who, having most of the money, have the most to lose from taxes. Average people, and the economy as a whole, prosper when taxes are higher.

      • Re:Surprised? (Score:5, Insightful)

        by TigerTime ( 626140 ) on Tuesday April 12, 2011 @05:50PM (#35800820)

        That's essentially what the whole Tea Party movement was about initially. It was a "what the fuck are you doing GOP party?" movement. Many Republicans value a fiscally conservative government above all else. Other value a socially conservative government above all else. The 1996 elections brought both sides of the Republican party together because they promised to reign in spending and be socially conservative at the same time. They won big. Over the next 12 years, the Neo-Republican Party that was in office went AWOL and started spending as if there wasn't a limit. They completely left the roots of their party's political motto.

        That's part of the reasoning behind the huge 2006 and 2008 election loses for the Republicans. The fiscally responsible ones became disillusioned with the whole bunch and didn't want to vote for them. They were just as angry about the deficit growing from $4T to $8T.

        As a fiscally conservative republican/libertarian, i don't give a shit if it's a republican, democrat, or the Pope himself. This spending spree in Washington has got to stop. And the tax code needs to be completely restructured. There are too many damn loopholes for the super rich and corporations to get around, all while the middle class gets raped because they make enough money to get by, but can't afford these big name tax consultants.

        Now, I'm no fan of a lot of what the Tea Party has become. There are a lot of rednecks involved in it, and a lot of the socially conservative Republicans are trying to take credit for it and take it over. But if you really want to know what is at it's core and the root of it, you'd have to read Ron Paul's book The Revolution.

    • Yeah, lately here I have to admit I am. They couldn't even muster the votes to kill the utterly irresponsible Bush tax cuts.

      But why is a Federal law needed here? Don't some states already require online retailers to collect sales tax? Shouldn't other states do that if they want the revenue?

    • A politician in favor of increased taxes - is there a person on the planet who's actually surprised by this?

      FTFY.

    • Bipartisan (Score:5, Informative)

      by geekoid ( 135745 ) <dadinportland.yahoo@com> on Tuesday April 12, 2011 @05:14PM (#35800298) Homepage Journal

      A possible co-sponsor is Sen. Mike Enzi, a Wyoming Republican who backed a similar proposal before and did not respond to a request for comment.

      then:
      Update 10:30 a.m. PT: I've heard back from Sen. Mike Enzi's office. It sent me e-mail this morning saying: "Senator Enzi plans to co-sponsor the Main Street Fairness bill with Senator Durbin. As far as a timeline or drafts, you'll have to check with Senator Durbin's office."

      So it's bipartisan.

      Don't even think it's only Democrats that raise taxes, or you will be school in tax history.

  • by wsxyz ( 543068 ) on Tuesday April 12, 2011 @04:52PM (#35799944)
    Seems like Sen. Durbin didn't like the way Amazon treated his state. Now we'lll all get to pay tax on everything. Thanks a lot Amazon.
    • Seems like Sen. Durbin didn't like the way Amazon treated his state. Now we'lll all get to pay tax on everything. Thanks a lot Amazon.

      Not just taxes, but higher prices. Setting up these tax tables is not an easy task. Some states tax specific items (such as clothing) while others don't. Some counties - and even some cities - add a % to the 'local' sales tax. Some states tax delivery fees. I could go on and on ...

      These costs will be passed on to the consumers. And let's not forget that the sellers will be required to supply some sort of tax information to the consumers just in case the consumer needs to prove they paid the sales tax on

    • by Dan667 ( 564390 )
      durbin trying to screw Amazon and them not taking it is Amazon's Fault? They are only going after Amazon because Illinois has mismanaged their finances so badly.
  • Level playing field (Score:5, Interesting)

    by Endophage ( 1685212 ) on Tuesday April 12, 2011 @04:52PM (#35799948) Homepage
    I actually think this is a very fair move. While I'm not going to enjoy paying the CA sales tax it will at least narrow the gap that makes it so hard for brick and mortar shops to compete with online giants like Amazon. Many people buy produce at farmers markets to support local business, why shouldn't the same apply to buying electronics, books and everything else.
    • Re: (Score:3, Informative)

      by eqisow ( 877574 )

      Because Best Buy charges $40 for a cable that's $4.99 with free shipping at new egg. Brick and mortar stores have resorted to extorting consumers on certain smaller items for which they can count on people not wanting to wait for a delivery.

      Plus, large scale online outfits are probably more "green" that brick and mortar stores anyway. They only operate some offices and warehouses and any delivery fuel usage is mostly offset by deliveries to a brick and mortar store plus the consumer driving to and from th

      • by Archangel Michael ( 180766 ) on Tuesday April 12, 2011 @05:17PM (#35800318) Journal

        Brick and mortar stores have resorted to extorting consumers on certain smaller items for which they can count on people not wanting to wait for a delivery

        First, it is call convenience.

        Second, it is because people price shop the last 45 cents off a $1500 TV, but don't think twice about paying $35 more for a cable. A long time ago, I used to work in sales, selling printers that cost $450 that people would shop around on, and drive 90 miles to the next big city to save $5 ($445). I'd either toss in the 50 cent cable or sell them the printer at cost and the cable for $14.95. Yes, I made more on the cable than I did the printer.

        Pretty soon, brick n mortar stores will die off and you'll never be able to see an item before you order it, and/or you'll be complaining about the walmartization of cities that destroy local mom n pop stores. I know way to many people who complain about $4.50 cables costing $40 at brick n mortar and buying online, and then complain about lack of good jobs locally. Funny how that works.

        • by h4rr4r ( 612664 ) on Tuesday April 12, 2011 @05:23PM (#35800400)

          So there could be no good jobs if they charged $10 for the cable?
          Somehow amazon can sell cables at a fair price, I bet they have some good jobs to offer as well. Their printers seem reasonably priced as well. I am sick of this buggywhip manufacturer cursing at automobiles bullshit.

          Is working at bestbuy your idea of a good job?

        • Second, it is because people price shop the last 45 cents off a $1500 TV, but don't think twice about paying $35 more for a cable. A long time ago, I used to work in sales, selling printers that cost $450 that people would shop around on, and drive 90 miles to the next big city to save $5 ($445).

          This is an interesting claim. All the economics textbooks, some psychology textbooks, and watching newspaper articles, all say exactly the opposite: people, when asked if they'd drive across town to pay $25 less on a $100 item, say they would, but when asked if they'd drive across town to pay $25 less on a $1500 item, say they wouldn't. It's probably the classical example of human irrational behavior in economics. Now, it's possible that this is a testing artifact, and that they don't *actually* behave t

      • by samkass ( 174571 ) on Tuesday April 12, 2011 @07:21PM (#35801944) Homepage Journal

        Because Best Buy charges $40 for a cable that's $4.99 with free shipping at new egg. Brick and mortar stores have resorted to extorting consumers on certain smaller items for which they can count on people not wanting to wait for a delivery.

        Plus, large scale online outfits are probably more "green" that brick and mortar stores anyway. They only operate some offices and warehouses and any delivery fuel usage is mostly offset by deliveries to a brick and mortar store plus the consumer driving to and from the store.

        All that is fine and good. If they are more efficient and/or provide better value then they should win in the marketplace. But it should be a fair win, and the sales tax system shouldn't favor buying from out-of-state merchants.

    • OK, so lets say that this happens and all prices online go up by 6.5% (sorry, I forgot at first each state is different, but that's the sales tax rate in my state). Guess what - online is STILL cheaper. Why? Because their costs to operate are lower (fewer employees, less real estate to pay tax on, lower energy bills due to fewer buildings, etc). Seriously, look online - even before you factor in taxes (since sales tax in the US is added on at checkout) the prices online are usually a good 30% lower. So

    • Yeah, those family owned businesses like Walmart that are lobbying for this bill really need our support! How about the Democrats get their buddies at GE to start paying taxes first before they expand regressive taxation that literally takes food out of the mouths of the peasantry?
  • I didn't realize there was Federal Sales Tax. They have the constitutional power to regulate interstate commerce, but the Constitution prohibits its tax:

    Art I, Sec 9. "No Preference shall be given by any Regulation of Commerce or Revenue to the Ports of one State over those of another; nor shall Vessels bound to, or from, one State, be obliged to enter, clear, or pay Duties in another."
    • Re:Which state? (Score:4, Insightful)

      by ackthpt ( 218170 ) on Tuesday April 12, 2011 @05:00PM (#35800064) Homepage Journal

      I didn't realize there was Federal Sales Tax. They have the constitutional power to regulate interstate commerce, but the Constitution prohibits its tax:

      Art I, Sec 9. "No Preference shall be given by any Regulation of Commerce or Revenue to the Ports of one State over those of another; nor shall Vessels bound to, or from, one State, be obliged to enter, clear, or pay Duties in another."

      I don't think that clause says what you think it says. 'Preference' being the key word, this means the feds, if they created a tax it would be even from state to state, not taxing one more than others.

    • That relates to "commerce", not "consumers". This would force consumers to pay sales tax (or in this case use tax) in their state for out-of-state purchases. The reason the feds like this is so the states get more 'local tax revenue' and the feds can give them fewer federal dollars ;-)
    • Did you miss the last 100+ years of Congress collectively making the "jerk off/roll eyes" gesture whenever the issue of Constitutionality is raised?

  • Those who believe so are simply uninformed.

    http://en.wikipedia.org/wiki/Use_tax [wikipedia.org]

    • As a Brit, I find your tax system very strange. Also it seems rather complex for a country that decided Bush was a good idea (I jest). Why do things differ so much from State to State?
      • Think of our states like countries in the EU. That's how our system was originally set up.
      • Because one of the big ideas floating around when the government was founded (though it was not a unanimous sentiment) was that power should be decentralized where possible. More and more, our government is moving away from that idea, but some things still carry that influence.
  • As someone living in KY I *already* have to pay sales tax on Amazon purchases -- they have several warehouses here. If you're for the elimination of all sales tax, ok, that's a consistent POV. But I don't think there's any reason to treat internet sales any differently than in-store.
    • by jfengel ( 409917 )

      But I don't think there's any reason to treat internet sales any differently than in-store.

      There is a reason, in that applying sales tax rules is very hard. Sales taxes vary from place to place even within a state. A brick-and-mortar store has an advantage in figuring it out.

      That still doesn't seem sufficient reason to put those brick-and-mortar stores at a disadvantage to internet retailers, and there are many potential ways to deal with it.

      • There is a reason, in that applying sales tax rules is very hard. Sales taxes vary from place to place even within a state.

        NY is a mess. It's different from county to county (and some cities even add a little bit for themselves).

      • by Jeremi ( 14640 )

        There is a reason, in that applying sales tax rules is very hard

        Hmm, if only there were some sort of device that could be employed in order to do perform this difficult calculation.

  • by Archangel Michael ( 180766 ) on Tuesday April 12, 2011 @04:55PM (#35799982) Journal

    If I were Amazon, I'd start thinking of moving operations to Mexico or Canada. Free trade that!

    • by geekoid ( 135745 )

      And how exactly would that permit you to violate your states law to pay tax on good that you purchase out of state when you bring said goods into the state?

      If you drove to mexico, bought something and brought it back to your state, you are still legally obligated to pay your state tax.

      this assume that you have a state tax. If you don't then this won't impact you.

  • I think there's a constitutional issue that forbids it.

    • by geekoid ( 135745 )

      Oh? I have a copy of the constitution right here, please tell me where it says states can't tax good sold in there state?

      Her is a hint: You are already supposed to be doing that. Have a state tax? every buy anything and not report it on your income tax return? You violated the law. The legislation only enforces a tax you are suppose to be paying.

  • Do I pay my state's taxes? The seller's state's taxes? Do I pay the taxes of the state that the company is headquartered in? What if the company is headquartered/claims tax statues from another country? Do I pay the taxes for that country? All of them? If a company can't be competitive from all forms of competition, the government should not be artificially keeping them afloat.
    • It's pretty simple - you pay your state's sales tax (or in this case it's called 'use tax'). If your state doesn't have a sales or use tax then you don't pay anything extra.
    • by geekoid ( 135745 )

      Your states tax requirements.

      Really, you bring up a bunch of questions that only show you did't read anything.

      People aren't paying the tax they are required to themselves, so now we need a law to make retailers take care of it.

  • I don't mind (too much) paying normal sales tax, but they need to simplify the system. The ship-to address is in state X, municipality Y, the retailer can charge X's and Y's sales tax and send it to X and Y at the end of the year. This will average out in the long run, so not more of this fighting over where is the seller and where is the buyer. Will a few people have something sent to a friend who lives in the nearby low tax county? Sure. Is it worth 10K pages of legislative if-then-else? Hell no.

  • been that way forever in some states. this is nothing new for some people.
  • I'm not sure of the system in the US.
    Here, they usually collect federal tax on delivery (of intl items), but you are obliged to remit uh... state tax. (if you buy in country, VAT would be applied at the sellers end - so it's irrelevant) A lot of folks don't, but if you have massive out of state purchases I suppose you could get audited. Is the situation the same in the US? If so, then this is only closing a loophole, you are already supposed to pay.

    Or do you actually not have to pay on out of state purchase

  • If you live in a state with a sales tax, then shopping on the internet isn't any more tax-free than shopping block and mortar. Shops without a physical presence in-state aren't obligated and generally don't collect sales tax.

    But that doesn't mean tax isn't owed. Granted I've only live in four states during my tax return-completing years, but forms for those states all had a line for unpaid sales or excise taxes.

    I'm surprised states haven't started trying to get at credit card statements to find unpaid sal

  • by Maxo-Texas ( 864189 ) on Tuesday April 12, 2011 @05:01PM (#35800072)

    Taxes out there vary literally at a county level.

    However, if the tax on Amazon was set at a simple value "4%" it could work.

    I get how Amazon is undercutting merchants. OTH, it's paying road taxes via gasoline taxes and lowering costs to citizens.

    • by Noren ( 605012 )
      Taxes often vary on a smaller level than that, many cities have their own sales tax, at least here in Washington State.

      While I would welcome your proposed decrease in the sales tax I pay when purchasing products from Amazon from the current 9% or so to 4%, why would the Federal Government interfere in Washington State law in that way?
    • by darkwing_bmf ( 178021 ) on Tuesday April 12, 2011 @05:09PM (#35800212)

      If only there were a machine capable of storing all of that tax data.

      • by segfaultcoredump ( 226031 ) on Tuesday April 12, 2011 @05:36PM (#35800622)

        There is, but it involves geocoding every single address. And then updating it every time any one of the 60,000 tax districts change their boundaries or rates.

        Here is the problem, you can have two houses on opposite sides of the street be in two different tax districts. So a simple 'if zip == xxxxx, then tax = Y' type of lookup table will not work.

        You then have the issue of the corporation needing to potentially apply for a sales tax license in jurisdiction before they can collect the tax.

        Then you have the issue of having to possibly send the check to 3 or 4 different groups on different schedules for each customer in a different.

        And finally there is the question of what gets taxed. In some states, some items are not taxed (usually basic food). So if I order a 10lb tub of powdered gatorade from amazon.com it may get taxed in one state but not another, both of which have a sales tax.

        To call it a mess is an understatement. This is the main reason why the courts tossed out the states requirement to collect the tax: the burden was simply too much. If memory serves me correctly, that same court decision left the door open to enact a simplified sales tax scheme (if shipping to NY, then charge X% and send it to Y address and be done with it).

    • by sqlrob ( 173498 )

      County level? It's not that coarse. It varies by city / town as well in many places, even with in the same county.

  • or American break there tax code every HOUR of every day. SO yeah, it's not unexpected. In fact, I welcome it.

    I

  • This will be a very good thing due to its elimination of the use tax scenario. Compared to the dollars involved, it is incredibly burdensome for me to keep track of which purchases I make online that are taxed or are not, and if they are not, whether I owe use tax to the state or not. So I suspect a lot of folks don't even make an effort to figure it out or pay it. This is a win for consumers who want to remain legally above-board and minimize audit risk.

    On the business side, while it will be challenging

  • by Fuzzums ( 250400 ) on Tuesday April 12, 2011 @05:11PM (#35800234) Homepage

    As far as I remember, there is a reason to pay taxes.
    Of course that is unless you want to pay every time you use a public road, pay the fire brigade right before they extinguish your house, pay the police to keep your neighbourhood safe.
    Actually we pay for those things. It's called taxes. Pay them. And vote for people who spend them wisely.

    Unless you live in California. Then the whole state goes bankrupt because the people don't want to pay taxes.

    • I gladly pay taxes on all sorts of local or federal things and am fine with it.

      I am not happy to pay sales tax on good purchased out of state because there is no sense in it. Sales taxes are to help pay the state for overall services related to businesses in the community or state. But the state has provided zero services to the online merchant I purchased from. The only thing that makes a slight bit of sense is the use of roads to deliver packages but that is baked into taxes the shipping company pays a

  • by sycomonkey ( 666153 ) on Tuesday April 12, 2011 @05:12PM (#35800272) Homepage
    This is a terrible idea. If they want to make it consistent, they should make it so that NO online purchases are taxed, regardless of state. Sales tax is a horrible system and should not be encouraged. What should be encouraged is online purchases. It is so much cheaper and more efficient than traditional storefronts, but if people are forced to pay sales tax on purchases that have no business being taxed, then that is going to lower the economic incentive to purchase online. As it is I don't think there's any constitutional leeway here one way or the other. Trying to enforce state tax laws at a federal level is a gross overreach of federal jurisdiction.
    • It is so much cheaper and more efficient than traditional storefronts

      Arguable. A local store gets a relatively large shipment of merchandise to sell, so the cost (in terms of money, environmental damage, traffic, etc.) of shipping is spread over the entire lot. A customer may make several purchases (including from neighboring shops) on a single trip, which spreads the cost of driving over the number of items. Some customers might even walk or bike to the local store, or stop by on the way home, further mini

  • The Economist once wrote that levying taxes is like plucking feathers from a goose. You want to get the maximum of feathers, with the minimal of fuss.

    So I am surprised that any Senator would dare to pick a fight with a rather large crowd of folks who buy stuff off the Internet. Start plucking that goose, and you will hear some loud squawks.

  • Rare! (Score:5, Insightful)

    by nilbog ( 732352 ) on Tuesday April 12, 2011 @05:55PM (#35800910) Homepage Journal

    This is truly a rare thing to see - congress discussing laws that they are actually given permission to enact in the constitution. Interstate commerce.

  • by Dan667 ( 564390 ) on Tuesday April 12, 2011 @06:05PM (#35801040)
    if they want more revenue how about they go after real corporations like GE, Exxon, and Bank of America that cook their books to pay no taxes. They have profits so where is the tax revenue.
  • by upuv ( 1201447 ) on Tuesday April 12, 2011 @07:28PM (#35802002) Journal

    Sorry but ever single time someone tries to put this stupid law up I see another politician who has no grasp of current economic forces.

    The Internet has essentially removed geographical boundaries that enabled things like local sales tax. Sales tax can only exist if you are able to regulate ALL product sales in a confined geographical area. So you must either tax at point of sale or at point of entry into the geographical area.

    Point of sale is simply impossible. As most markets on the web operate completely outside the jurisdiction of US law makers.
    So this leaves you with essentially a manual customs inspection of every box coming into an area. And then processing each item and attributing tax and billing an appropriate party. This method would be prohibitive in expense and time. Effectively hand cuffing the local economy.
    Lets not even start on digital goods which require no physical transfer at all.

    There will always be massive holes in any system that tries to implement a sales tax on the web. The honest people will only be priced out of existence. Kill this law before it wastes any more time and money.

    Sorry but the days of arbitrary taxation systems are gone.

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