The Online Nightmare Sales Tax Bill

[u-Bob]

by senator Jim DeMint

http://online.wsj.com/article/SB1000...267708728.html

The Marketplace Fairness Act recently introduced in the Senate would require online retailers to collect and pay sales taxes to states where they have no physical presence or democratic recourse. Overstock.com, eBay and the like could have to pay sales taxes to any state from which an Internet user placed an order, even if the company's headquarters, warehouses and sales staff are located entirely in other states.

Such online sales tax proposals are taxation without representation. The proposed federal law tells businesses that there is no escape from the clutches of tax-hungry politicians. That concept is antithetical to our federalist system, which promotes competition among our states for the best economic policies...

The Supreme Court ruled (in Quill Corp. v. North Dakota, 1992) that retailers can be required to collect sales taxes only in states where they have a physical presence. The proposal before Congress, however, would give a federal blessing for states to chase revenues far outside their borders.

Consider the absurdity of such a law. When a customer buys a product in a store, does the cashier ask for the customer's home address? Of course not. The store simply charges the state and local sales taxes applicable for its physical location, no questions asked.

The proposed law would hold online sellers to an entirely different standard. Websites would have to add taxes to a sale based on the shipping destination of the product, which may be a state in which neither the seller nor the buyer resides. We would never ask mom-and-pop store owners to do such a thing.

Politicians want this bill passed to raise new tax revenue for broken state governments facing budget shortfalls. But legislators in state capitals don't want to make the hard decisions to cut spending or raise taxes on their constituents?they fear the voter backlash. So they'd like their allies in Washington to make it legal for them to tax people who can't vote against them.

At its core, this is a nationally mandated Internet sales tax on businesses. Once a single state demands these sales tax collections under the new law, businesses in every other state would be forced to comply with that state's tax laws. Dozens of states are eagerly waiting to raise those taxes, as soon as Washington opens the floodgates.

The burden on Internet entrepreneurs could be staggering. There are already nearly 10,000 state, local and municipal tax jurisdictions to navigate nationwide.

Just complying with a single state's tax laws costs small businesses disproportionately more than larger firms that can afford accounting and technology teams to help them work through these arcane laws. A 2006 PricewaterhouseCoopers study found that tax-compliance costs for small businesses (those having $1 million to $10 million in annual sales) are nearly 2.5 times greater than those of larger firms. For businesses under $1 million in sales, those costs explode to 16 cents on every dollar of revenue.

And woe to online sellers if they have a dispute with one of the many states that will be unleashed to tax them. A small business owner in South Carolina could face simultaneous audits from California, New Jersey and Hawaii, with no political recourse.

Who would want to do business in this environment? That's a problem that the Senate bill's authors implicitly acknowledge, since they included an exemption for companies with less than $500,000 in annual sales. But that is a very low threshold to cross. Businesses will be discouraged from growing, encouraged to locate overseas, or even regulated out of business.

Nor would these new Internet taxes satisfy tax-hungry politicians. Already Maryland Gov. Martin O'Malley, a Democrat, has called for a 6% tax on all downloads?music, movies, e-books and more?from vendors like iTunes. It probably wouldn't be long before the burdens of complying with myriad state sales tax laws led to talk of a streamlined national sales tax to replace it, with Washington taking a cut and destroying our nation's healthy tradition of state tax competition.

[jigg]

read somewhere compliance with this potential law, or just generally collecting out of state sales taxes costs around $700k

[sperbonzo]

Unfortunately, no one will pay attention to all this out of control taxation until it is too late. All the politicians have to do is the dangle class warfare distractions out there and people will willingly allow them to take whatever they want and spend it however they wish..... I swear it seems like Atlas Shrugged might actually happen.



It's so sad that I try not to think about it sometimes.....





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[BIGTYMER]

Just what we need.

More taxes.

[Freaky_Akula]

"Steve DelBianco, executive director at NetChoice, spoke in opposition to the MFA. He argued that these new costs will affect small businesses much more drastically than they will affect larger ones, pointing out that the bill's tax exemption - for companies with less than $500,000 in total remote sales - hardly qualifies most mom-and-pop shops in the U.S. DelBianco compared the tax implementation as "free like a puppy is free." The bill is simple to read. Its long-term maintenance is not."

[BlackCrayon]

"Consider the absurdity of such a law. When a customer buys a product in a store, does the cashier ask for the customer's home address? Of course not. The store simply charges the state and local sales taxes applicable for its physical location, no questions asked.
"

so based on that shouldn't online retailers charge taxes based on whatever state they are operating out of?

[sperbonzo]

Originally Posted by BlackCrayon

"Consider the absurdity of such a law. When a customer buys a product in a store, does the cashier ask for the customer's home address? Of course not. The store simply charges the state and local sales taxes applicable for its physical location, no questions asked.
"

so based on that shouldn't online retailers charge taxes based on whatever state they are operating out of?

What.... So now as a customer in Florida, I have to pay California tax? That doesn't make sense either. How can I be taxed in a state where I am not represented and have no voice?


.

[BaldBishop]

Amazon is one of those behind this bill. Mostly because they have found a way to make money off of it. They will be charging their sellers 2.9% on the tax collected. So the small internet business that uses Amazon to sell their goods, has to shell out even more on top of the taxes they will need to start collecting.

[BlackCrayon]

Originally Posted by sperbonzo

What.... So now as a customer in Florida, I have to pay California tax? That doesn't make sense either. How can I be taxed in a state where I am not represented and have no voice?


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if you are passing through or visiting california and buy stuff you are going to pay taxes there, so there really a huge difference? i am not for it...just discussing.

[Barefootsies]

Why is it all this government (regardless of party) can do nothing except think of more taxed versus the thought of cutting spending or consolidation??? For example, eliminating FBI, CIA, DEA, customs, etc. and make ONE homeland security. Or the thought to at MINIMUM lower our defense spending to be on par with the combined military spending of our 12 closest competitors.

I am all for fair tax, but this is getting ridiculous.

[sandman!]

[Penny24Seven]

they already tax paypal, I went through hell this year with the form paypal sent for me to pay taxes on. It would have been 25K if I just paid it without taking the time which almost didn't seem worth it anyway

[sperbonzo]

Originally Posted by BlackCrayon

if you are passing through or visiting california and buy stuff you are going to pay taxes there, so there really a huge difference? i am not for it...just discussing.

Yes. There is a difference. At the time you are passing through California you can choose to do business while you are there or not do business there. Like the article states, (most important point of the article, in my opinion) "That concept is antithetical to our federalist system, which promotes competition among our states for the best economic policies..."


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[tony286]

Originally Posted by sperbonzo

Unfortunately, no one will pay attention to all this out of control taxation until it is too late. All the politicians have to do is the dangle class warfare distractions out there and people will willingly allow them to take whatever they want and spend it however they wish..... I swear it seems like Atlas Shrugged might actually happen.



It's so sad that I try not to think about it sometimes.....





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We dont have crazy taxation, talk to our friends in Europe. We also have the lowest spending under Obama as a percentage.
http://articles.marketwatch.com/2012...drunken-sailor
If I buy something from bestbuy online im billed my states sale tax not the state best buys corp office is in.

[Sunny Day]

If you buy in a store, you pay the sales tax at the store's location. However, when you buy a big ticket item such as a car you pay the sales tax for where you live when you register the car or at the dealer if it's a local purchase. Some places, such as Kansas City, which is in 2 states know you might buy a car across state lines, so the 2 states have an agreement to require the dealer collect the correct sales tax and forward to the proper agency. When you buy an item by mail, companies like Amazon will collect the proper tax for your mailing address. Many companies don't collect the tax and you are liable for Use Tax.

Usually mom & pops can get away with not collecting out of state Use Tax (out of state sales tax). Amazon is so big, that tax agencies go after companies like Amazon. Every state that collects sales tax has an audit team that regularly audits big companies for sales & use tax compliance.

As I've posted before, there is no one sales/use tax rate. A few states like New Jersey & West Virginia have a state-wide rate. A couple of states like Delaware have zero sales tax. After that it gets complicated in a hurry. Alaska has no sales tax, but cities and boroughs (counties) have sales tax. And even crazier, many of the Alaska sales taxes are only during tourist season of March to September.
Louisiana has a state sales tax, but you also have to remit to the parish a sales tax. Alabama is even worse. there's the state rate and there may also be a county and city rate. Alabama allows for counties and cities to hire private companies to collect their tax.

In Texas you can stand on a street corner and each corner has a different rate. That's because Texas allows for special sales taxes for library, school, fire or hospital districts.

Oh yeah, I forgot to mention many groups, such as churches are exempt from sales tax. Some states even exempt veterans from sales tax. Then there's what's taxable in that state. Many have long lists of items specifically exempt from sales tax.

So to accurately collect sales tax, you have to know the exact address of the buyer. Takes the GIS files from that state and a huge database of sales tax areas. There are about 50,000 different sales tax areas in the US and the rates are constantly changing.

And Amazon can't make money off sales tax, except the float while holding the money. Many states require a company to remit all sales tax collected, even if they accidentally collected too much or they rounded up.

AND you guys are right. Taxes are theft we don't need any taxes. Don't need any police or fire protection don't need roads or schools. Missouri has 5 cents a gallon less tax on gasoline and you can sure tell it by Missouri's crappy roads and when it snows, Missouri has no snowplows while Kansas roads are clean.

Speaking of my grammar post, I see several faults here. Sorry, taxes not grammar is my specialty.

[Socks]

You guys have it good, but every republican needs to do the sky is falling routine as their song and dance to dramatize every tax issue.

http://www.photius.com/rankings/tax_...anks_2009.html

[Socks]

You can see clearly how they've tried to increase your tax burden though:

[Tom_PM]

Watch any infomercial on the ordering screen and it'll tell you "residence of NY, NJ must add sales tax" and words to that effect. So honestly this is not a new concept with the internet.

Some states already forced the closing of affiliate marketing for some online retailers because the state government considers an affiliates home the "physical presence" required to demand collection of sales taxes and rather than mire their whole affiliate system, they just ban affiliates from those states.

[GetSCORECash]

The Tea Party was the culmination of a resistance movement throughout British America against the Tea Act, which had been passed by the British Parliament in 1773. Colonists objected to the Tea Act for a variety of reasons, especially because they believed that it violated their right to be taxed only by their own elected representatives. Protesters had successfully prevented the unloading of taxed tea in three other colonies, but in Boston, embattled Royal Governor Thomas Hutchinson refused to allow the tea to be returned to Britain. He apparently did not expect that the protestors would choose to destroy the tea rather than concede the authority of a legislature in which they were not directly represented.

The Boston Tea Party was a key event in the growth of the American Revolution.

[L-Pink]

Jeeze ... Are we all upset about states trying to collect sales and use taxes again? The same taxes that you are supposed to already be paying?

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[sperbonzo]

Originally Posted by L-Pink

Jeeze ... Are we all upset about states trying to collect sales and use taxes again? The same taxes that you are supposed to already be paying?

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I'm guessing you didn't read the article or look at the proposed bill, huh....



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[L-Pink]

Originally Posted by sperbonzo

I'm guessing you didn't read the article or look at the proposed bill, huh....


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Yes I did. They are talking about collecting tax from you if you place an order on the internet right? The percentage to be determined by the state the package is sent to right?

This is a direct response to the fact almost no one currently pays their states use tax.

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[nation-x]

Noone seems to have mentioned that this is a Republican bill

Sponsor: Senator Michael Enzi R-WY

http://www.opencongress.org/bill/112-s1832/show

Check the list of Republican Governors supporting the bill

http://www.rinolist.org/2012/07/list...-fairness-act/

[sperbonzo]

Originally Posted by nation-x

Noone seems to have mentioned that this is a Republican bill

Sponsor: Senator Michael Enzi R-WY

http://www.opencongress.org/bill/112-s1832/show

Check the list of Republican Governors supporting the bill

http://www.rinolist.org/2012/07/list...-fairness-act/

Who gives a crap what party it's from? The Republicans are just as much about growing government as the Democrats. This is why I"m not with either, I'm a Libertarian.


Meanwhile, rather than address the issue, people squabble about which party is doing bad things, (and growing the government WAY beyond the powers given to the Fed's by the consttitution.... ) when the answer is, BOTH OF THEM ARE!!!



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[IllTestYourGirls]

I don't see the problem. Raising taxes is good. /sarcasm.

[u-Bob]

Originally Posted by Socks

You guys have it good, but every republican needs to do the sky is falling routine as their song and dance to dramatize every tax issue.

Why make this a Rep vs Dem issue? It's not. In fact a Republican came up with the idea and then a Democrat backed it.

[halfpint]

Come to the UK and they tax you just to walk on the pavements.. They were about to bring out a tax on heated food so if you purchased a cold saugage roll you wouldent be taxed on it but if it was popped into the microwave then you would be charged a tax on it, They decided not to go ahead with it in the end lol

[Barry-xlovecam]

Yadda, Yadda,Yadda ...
You pay the use tax to the state ...

You save $200 and get a full blown audit over the $200?
An audit may cost you $1000's -- that is just plain stupid.

Taxes are not going away ...

BTW, DeMint is a hypocrite. opps, I mean conservative Republican ...

[u-Bob]

Originally Posted by Barry-xlovecam

You save $200 and get a full blown audit over the $200?
An audit may cost you $1000's -- that is just plain stupid.

That's how bureaucracies work. It's Parkinson's law.