Posted on 03/12/2010 11:31:04 AM PST by Kaslin
The only burden is to collect a tax as part of the transaction, and occasionally to send an electronic transfer to the state. It's not hard, Amazon already has in place the mechanism to do so for all but 2 states.
If that causes an out-of-state retailer to lose a sale to an in-state retailer, it won't cost a job, it will just transfer the job.
Tax-free interstate commerce damages the ability of states to get tax money from their citizens to pay for police, fire and rescue, road repair, and a host of other necessary government functions.
It wasn't that big a deal before the electronic age and FedEx. But we are reaching the breaking point. For sales tax to be a viable method of taxation, the congress must act to allow states to compell internet companies to collect sales tax for all states.
The only question is how to do it. The simplest proposal is to create a "national" sales tax, that is paid directly to the states, but applies the same percentage to all states. I object to this solution, for many reasons, not the least of which is it removes from the people of a state the power to set their own tax levels.
I favor allowing the state to require sales tax on internet sales, in exchange for providing a free, simple interface to provide the sale tax rate by zip code, and a single state location for delivering the money. Congress could also mandate that the tax not be higher than the in-state version, so states can't use it as a tariff.
I see this as a conservative solution, because for conservatives, a tax should be as low as necessary, applied as broadly as possible, and charged without regard to class. Sales tax does those things, and allowing states to tax goods bought and shipped into the state would apply the tax more broadly.
As it is, some citizens (those who don't like to buy over hte internet, or who like Borders.com more than Amazon.com, or who like local stores) have to pay more taxes so others can pay less. States have to raise the base tax to collect the same amount of money, driving more people to cheat the system. The tax without application to out-of-state sales distorts the economics, pushing sales to the internet companies that refuse to adopt local presence.
This is not a good thing. As we see with Amazon now -- cutting off franchises which certainly WERE economically advantageous, simply because of the distortion of not having to collect sales tax for some sales.
I've spent twelve posts explaining why it's reasonable to believe those people are NOT cheating on their taxes and why Borders or Barnes and Noble DON'T have to shut down their stores and that's your "rebuttal"? Ooooooo-Kaaaaaay, then. Your logic is incisive.
I didn't specifically say so in my first post, but I was and am aware that this has been an exception for decades, and for good reason, as I explained.
First of all, you've only made 8 posts in this thread, and mnost did not address the argument.
Second of all, you didn't explain, you asserted, and your assertions were unpersuasive.
Third, you haven't answered my rebuttal to your assertions.
I think I caused part of the confusion. A while back you mentioned the difference between sales and use taxes. I blew you off because they have no functional difference, but that might have suggested there was no difference. I apologize.
Sales tax is the tax they have companies collect when people buy things in the state. That allows them to collect taxes from people who don't live in the state -- the tax is collected on behalf of the state, but from the company.
Use tax is the correllary that most states impose on sales from out of state. Citizens of the state are required to pay that tax, usually the state law says only if sales tax wasn't collected already. You asserted that this was some sort of end-run around a constitutional issue, but in fact the court found nothing improper with it. ]
So your suggestion that a "use tax" is unconstitutional or illegal is without merit.
Here is a link to the 1992 Supreme Court case that currently governs the legal status of sales and use taxes. Quill Corp. v. North Dakota. I site excerpts:
As a corollary to its sales tax, North Dakota imposes a use tax upon property purchased for storage, use or consumption within the State. North Dakota requires every "retailer maintaining a place of business in" the State to collect the tax from the consumer and remit it to the State. N. D. Cent. Code § 57-40.2-07 (Supp. 1991). In 1987 North Dakota amended the statutory definition of the term "retailer" to include "every person who engages in regular or systematic solicitation of a consumer market in th[e] state." § 57-40.2-01(6). State regulations in turn define"regular or systematic solicitation" to mean three or more advertisements within a 12 month period. N. D. Admin. Code § 81-04.1-01-03.1 (1988). Thus, since 1987, mail order companies that engage in such solicitation have been subject to the tax even if they maintain no property or personnel in North Dakota.I will add that nowhere in the court ruling was it suggested that ND couldn't apply a "use tax"; the issue was whether they could require the out-of-state company to collect the tax.
...
Bellas Hess followed the latter approach and created a safe harbor for vendors "whose only connection with customers in the [taxing] State is by common carrier or the United States mail." Under Bellas Hess, such vendors are free from state imposed duties to collect sales and use taxes. [n.8]Like other bright line tests, the Bellas Hess rule appears artificial at its edges: whether or not a State may compel a vendor to collect a sales or use tax may turn on the presence in the taxing State of a small sales force, plant, or office.
...
This aspect of our decision is made easier by the fact that the underlying issue is not only one that Congress may be better qualified to resolve, [n.10] but also one that Congress has the ultimate power to resolve. No matter how we evaluate the burdens that use taxes impose on interstate commerce, Congress remains free to disagree with our conclusions.
...
[Congress's]decision not to take action in this direction may, of course, have been dictated by respect for our holding in Bellas Hess that the Due Process Clause prohibits States from imposing such taxes, but today we have put that problem to rest. Accordingly, Congress is now free to decide whether, when, and to what extent the States may burden interstate mail order concerns with a duty to collect use taxes.
...
Note: Many States have enacted use taxes. See App. 3 to Brief for Direct Marketing Association as Amicus Curiae. An overruling of Bellas Hess might raise thorny questions concerning the retroactive application of those taxes and might trigger substantial unanticipated liability for mail order houses. The precise allocation of such burdens is better resolved by Congress rather than this Court.
There is nothing in court jurispudence to support your assertion that a state is not allowed to charge it's citizens a "use tax". Since the "use tax" is legal, a taxpayer who fails to pay the tax is, by definition a "tax cheat".
In Virginia, there is a law requiring the payment of the "use tax", a form to use to do so, and penalties if you don't. The tax is not enforced, except at the margins, likely because it isn't cost-effective to do so. Virginia does have arrangements with North Carolina that cause reporting of large-cost purchases of furniture to be reported to the state.
I asked if Borders had to shut down their stores so they could compete on equal footing with Amazon -- your response that you've explained why they don't have to do so in order to not pay the tax is incomprehensible. Not only is the "use tax" legal, but in the case of Borders.com, the courts have consistantly ruled that a state can legally require collection of the "use tax" for purchases made across state lines if the company has a nexus in the state. So it is absolutely true that, under current law, Borders.com would have to shut down all their stores in a state in order to compete on equal footing with Amazon.
As I pointed out in bold in the court case above, the Court explicitly stated that Congress has a right to change the law and force out-of-state companies to collect the "use tax". Apparently prior rulings implied otherwise, but they cleared that up in their ruling.
So again I conclude, and I haven't yet seen you answer this with facts that show otherwise, that the current situation applies taxes unfairly, that the rise of the internet has made this a major problem (catalog sales were in the noise), that businesses who operate brick and mortar are being materially harmed by the ability of other stores sell without having to collect, or inform their customers of their legal obligation to pay, a sales tax.
The correct conservative answer is to level the playing field, so that all sales of a similar nature are taxed equally, so that some cannot game the system at the expense of others.
Nothing you have said in all of your 8 posts refutes any of my conclusions. I await to see if you have any facts to back up your claims.
And again, I apologize for not acknowledging the distinction between "use" and "sales" taxes. You were correct that they are different, and my insistance that there was no difference may have led to confusion.
That way, more people can tell me I'm wrong.
In that column, I make the same mistake I made here, using "sales tax" for all taxes, ignoring the "use tax" terminology. Collecting Sales Tax the Right Way
Where to start!
First of all, the twelve posts thing was just hyperbole. I didn’t mean it literally and I certainly had no idea you were going to go back and count. ;-)
Second, no, you certainly did not contribute to the confusion by conflating use and sales taxes. That was essentially MY point, that they were the same thing, and the state shouldn’t be able to interfere with interstate trade by using a different word.
So you are correct that I think the states are doing an end run around a constitutionality issue. And no, I don’t have specific cites to show that it was always viewed this way (my bad, sorry). I was just raised for decades viewing that as accepted fact. Now your 1992 case seems suspiciously recent to me, and I suspect that older cases viewed the case more as I do, so perhaps the 1992 case is just the result of activism on the part of justices interested in empowering the state at our expense.
Regardless, you’ve motivated me to research the original rulings on the matter, which is something I should have done long ago. Thank you!
The amazon shoppers aren't stopping them from shopping there. They value the physical store experience or like web shopping with that specific seller, enough to pay the premium, or for that transaction, shipping costs would outweigh the sales tax.
They did this in Maine and the consequences were tragic.
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