Posted on 03/10/2010 4:21:52 AM PST by BulletBobCo
The move by online retailer Amazon to drop its Colorado affiliates was a predictable result of the legislature's recent efforts to revoke tax exemptions.
We were convinced from the outset that House Bill 1193 was problematic, particularly in light of U.S. Supreme Court decisions that are unfavorable to states seeking to compel out-of-state retailers to collect sales taxes.
The Amazon situation only reinforces our belief that the issue of online sales tax collection ought to be addressed at the federal level.
The Colorado law requires online retailers to tell their customers how much Colorado sales tax they owe when those customers buy items by clicking through marketing affiliates based in this state. Those retailers are supposed to pass that information along to the state so the government can ensure the taxes are paid.
It's not surprising Amazon decided to just cut Colorado-based marketing affiliates rather than get involved in any aspect of sales tax collection. That's what online retailers have done to thwart so-called "Amazon laws" in other states, such as Rhode Island and North Carolina.
The situation eventually will have to be taken up by federal lawmakers.
It is unfair for retailers who have a bricks-and-mortar presence in a state to be at an economic disadvantage as they try to compete with online retailers, especially as online sales have flourished in recent years. As online sales continue to grow, states will lose out on a significant source of revenue as they struggle to pay for services that citizens demand.
Besides Colorado, 15 other states have contemplated or enacted legislation that targets e-commerce sales. As cash-strapped states search for revenue, more are sure to follow.
If and when federal lawmakers take on the issue, it will not be as simple as merely requiring online retailers to collect state sales taxes.
Sales taxes are levied based on where a customer lives and can vary within a state. Online retailers would be compelled to keep track of some 8,000 sales tax rates, according to a recently completed report by the Tax Foundation.
The report also cited the efforts of several dozen states, which have come together to create the Streamlined Sales Tax Project.
If project members could agree on a simplified sales tax structure for online retailers, such a development could undercut the main defense that online retailers have in fighting sales tax collection — that it's too complex a task.
We do not condone the actions of Amazon in kicking Colorado marketing affiliates to the curb as a result of the tax collection dispute, but we understand why it would do so.
The ability to conduct business without having to charge customers sales taxes is an enormous advantage, and one that online retailers are unlikely to give up very easily.
Congress needs to take up the matter and write legislation that allows for fair tax collection in the Internet age.
Posted by savedbygrace in a related thread.
Art I Sec 9:
No Tax or Duty shall be laid on Articles exported from any State.
Art I Sec 10:
No State shall, without the Consent of the Congress, lay any Imposts or Duties on Imports or Exports, except what may be absolutely necessary for executing it’s inspection Laws; and the net Produce of all Duties and Imposts, laid by any State on Imports or Exports, shall be for the Use of the Treasury of the United States; and all such Laws shall be subject to the Revision and Controul of the Congress.
What about use taxes? Those are apparently constitutional, because many states get away with them. With a use tax, I’m required to pay the use tax (equal to sales tax) when I buy something tax-free online.
“It is unfair for retailers who have a bricks-and-mortar presence in a state to be at an economic disadvantage as they try to compete with online retailers”
It is unfair to require online retailers to share in the burden of taxes that go to police and fire services for which they have no presence.
Whether they like it or not the “ground” economy is going away. One of my retired friends was challenged in a Walmart parking lot by someone wanting to know why he was flashing gang signs. My friend is in great shape and 6’4” tall; the punk was 5’10” if that. The end result was predictable.
Lawrence [Massachusetts] Mayor's Office Gets $10K Face Lift
The city of Lawrence is in trouble. It's in the process of getting a $35 million loan, with state approval, just to stay afloat.While that process is ongoing, the Valley Patriot – a monthly paper – is reporting the mayor is spending $10,000 to spruce up his office.
[Massachusetts] Governor Deval Patrick hires chief of staff for his wife, gives her office
The state has hired a $72,000-a-year chief of staff whose sole job will be to schedule Diane Patrick's public appearances and media availabilities, The Sentinel & Enterprise has learned.Diane Patrick also gets a slice of office space in the governor's third-floor suite.
But what is the purpose behind the levy of sales taxes by the state- to provide services that are required by the presence of commercial infrastructure and employees in a state.
A retailer with no physical presence in the state requires no services from the state, so what would be the rational for imposing taxes ? Other than just straight-out, insatiable, government greed , I mean ?
We are working on the same bill in Virginia, and Amazon has threatened the same action.
Eventually, they’ll be out of all 50 states I guess, and we can stop worrying about them.
There is no rational reason why a person buying a book online from Amazon should get the book tax-free, while the person buying the same book online from Borders books has to pay the sales tax.
Amazon could easily collect sales tax for all 50 states. Borders does it. Barnes and Noble does it. Every national chain that has real stores in states does it. This is the 21st century, computers can easily assign the correct values.
Most states require their citizens to pay sales tax when companies fail to collect it. Virginia is one of those states. Because Amazon doesn’t have to collect the sales tax, I have to keep all my Amazon sales slips, add them up, and if they come to more than $100, I have to fill out a tax form and pay the sales tax myself on my yearly tax bill.
Or I could be a tax cheat, and not pay. In 2008, only 285 people in Virginia actually paid their sales taxes on out-of-state purchases, mostly people who bought furniture from North Carolina, where Virginia has a deal the the furniture companies send the information to the state.
This isn’t about whether sales should be taxed or not. That is a valid state question, and each state should decide if it’s citizens should pay sales tax or not.
But in order to have out-of-state companies selling things to people in-state collect the sales tax, Congress has to pass a bill allowing it, or else only those companies who do business in the state have to collect it.
Amazon has outlets in multiple states, people living in those states who sell Amazon products through their own web sites, and who get a cut of the money, just like a brick-and-mortar shop. But those affiliates don’t collect money, Amazon does, and Amazon doesn’t do the sales tax because they insist they don’t have a presense, even in states where their warehouses are located (warehouses which not owned by Amazon, but that Amazon contracts to exclusively to deliver their products, again to avoid sales tax).
Many online retailers already do this successfully. Target.com, Walmart.com, Borders.com, BarnesAndNoble.com, REI.com, SportsAuthority.com, Sears.com -- any online company that started as a brick-and-mortar company is collecting state sales tax for every state they have a single store in, even for online sales. As I said, it's the 21st century, computers are everywhere, and the idea that it is "too hard" to take the mailing address of an order and use it to search a database for the correct tax rate is stupid. What could be done though is to require states who want to collect the tax to set up an online database of tax rates that meet a common network interface (so a computer program can go to the state through a standard call with an address and get the tax rate), and a common state collection drop for the sales tax, with the state being responsible for distributing the tax collected to localities as needed. The idea that Amazon.com would find it impossible to figure out the correct tax rate is absurd. They HAVE the ability to collect sales tax, because they do so for at least one state. The only reason they fight this is because not charging sales tax gives them an unfair competitive edge over the companies that have to collect the sales tax.
No, the purpose of sales tax is to raise revenue for the operation of the government. Infrastructure to support business and employers is just a small part of that.
Even if you wanted to try to draw a connection between activity and government support, the government needs to support all the CONSUMERS in the state as well, which is why the tax is on the CONSUMERS, not on the businesses. Nobody is taxing Amazon.com; they are being asked to collect sales tax on top of the purchase price, taxes paid by the resident of the state, and given to the state government for services provided to the resident of the state.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.