Online sales tax to be added to defense authorization bill [Goodbye Internet Sales]

A proposed online sales tax has been offered as an amendment to the National Defense Authorization Act, much to the ire of opponents.

The Computer and Communications Industry Association, a group that opposes this move, says that an online sales tax will burden small businesses, “some of the most promising candidates for future economic growth.”

“This proposal, and other online sales tax collection proposals like it, would allow states to penalize the innovative e-commerce business model by targeting small online businesses as convenient sources (and collectors) of revenue,” said CCIA President and CEO Ed Black.

The Marketplace Fairness Act, and its House counterpart the Marketplace Equity Act, seek to clarify, and arguably overturn, a 1992 Supreme Court ruling that requires retailers to have a physical presence in a state in order to collect sales tax on goods.

“Severing the relationship between taxation and physical presence would be a fundamental transformation in how we consider taxes,” Black continued. “Such a significant step deserves more extensive consideration than attachment to the unrelated Defense Authorization bill.”

Still, a recent poll indicates that the majority of Americans support the idea, describing an online sales tax as “common sense”. They also feel that a tax for online purchases would encourage people to buy local and keep tax dollars in their community.

“Local retailers invest in their communities and play a significant role in the overall quality of life in the places we call home,” said Betsy Laird, senior vice president of global public policy for the International Council of Shopping Centers.

Collecting the tax across state lines however poses as a challenge for small businesses that sell their goods in multiple states.

“It is not the job of small businesses to collect taxes to provide tax revenue relief for state and local governments outside their jurisdiction,” Black said, suggesting that an online tax would protect existing businesses at the expense of consumers and growth.

Some Republicans are on board, with Wyoming Sen. Mike Enzi as “the most overlooked tax loophole.”

“We are optimistic that once the Marketplace Fairness Act is brought for a vote, it will have enough support to pass,” said Illinois Democratic Sen. Richard Durbin’s spokeswoman, Christina Mulka.

Both Sens. Durbin and Enzi have offered the bill as an amendment to the National Defense Authorization Act.

“Sen. Durbin is focused on working with his colleagues to try to get a vote on the bill before the end of this year, whether as a stand-alone bill or part of a larger piece of legislation,” Mulka said. “They are keeping all options on the table at this point.”

Read more: http://dailycaller.com/2012/12/04/online-sales-tax-to-be-added-to-defense-authorization-bill/#ixzz2EIfvANTs

Just a few points.

I don’t think it is unreasonable for a state to allow out-of-state stores to keep a percentage of collection as the cost of doing business. But that would be written into the federal law. If the state didn’t like it, the state should be able to NOT PARTICIPATE in the federal law. The state can continue to try to collect use tax directly.

I happen to think states would pay, because it would be like hiring a collection agency, they’d at least get some money where now they get no money.

I don’t think if this type of law as “forcing” a store in one state to abide by the laws of another state — although this actually happens now, as a store in one state that wants to sell certain products into another state have to abide by the laws of that state for sales. But I don’t think that is what we are talking about here.

There would be a federal law, not state law. The federal law would proscribe what any store in any state was required to do when shipping a product across state lines. I have no doubt the feds can write this law badly. But if they wrote the law correctly, there would be a single location where any store could get the correct sales tax info, much like federal instant background check for gun sales.

Each state which wants to participate would have to set up online methods for supporting the tax, which would feed through the single service. So when processing an online sale, the store would take the shipping address, send it through this service, and would get back the tax rate and state collection address, which should include electronic means of collection.

As to the more general question of whether they should be subject to laws, if the didn’t want to be subject to the sales tax of texas, why couldnt’ they simply refuse to ship items to texas? They still have the control — just like they could choose not to set up a shop in a state, they could refuse to ship to a state.

Or, they can choose to ship to the state, and collect the tax due in the state.

There is an alternative, which lessens the burden on the stores, but which I imagine people wouldn’t like as much.

Instead of requiring companies to collect sales tax, require them to provide the purchase information to the state government where the product was shipped to. This would be like the tax forms companies currently have to submit.

Then, it would fall on the state to decide what to do with the information. The state could use it to cross-check their residents tax submittals, to make sure they are properly reporting their purchases, as required by state law.

But that is a horrible intrusion into your privacy, having your state know of each purchase (btw, there was some federal law that required all purchases of something over $600 to be reported, I don’t remember if it was Obamacare or something else). I guess you could just have the value reported, but then how would the state know if the item was taxable or not?

Anyway, I am not an advocate for the bill. But I have no problem with the idea of the bill should it pass, and I can and do argue that it is a good thing.

I do agree with the various problems that people point out. It isn’t often that you can find a way to get government involved where there aren’t significant downsides.

In the end, it could be that sales tax is just not a good way to collect money for government. However, from a conservative perspective, it’s one of the few taxes that is not skewed toward rich people (in principle — in fact, state governments often find ways to minimize tax on things poor people by more of, and vice versa).

It is hard for the state to raise sales taxes, because EVERY VOTER feels the pain.

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.