Let me see if I’ve got this straight, you are of the opinion that because people don’t pay their “use” taxes to their states, small businesses who have a small internet presence should be required to calculate and remit sales taxes to thousands of different jurisdictions?
What about someone like my SIL who’s shop in Delaware does some online sales........Delaware has no sales tax, so they are not set up to deal with collecting/remitting sales tax - but it’s OK with you they would have to incur a huge expense to do this or just shut don their online presence?
You see this as a good thing?
I know that whatever the bill is they pass, it will exempt businesses below a certain sales level, so the question is moot.
But I love answering moot questions, because the exercise is a useful one. It is fun to try to apply competing conservative principles in a practical way.
In my town, we have Walmart. We also have some tiny “city” stores. Those tiny stores have to understand the sales tax for our state (we don’t have local add-ons, except if they are a prepared food provider, many cities add a food tax). They have to collect the tax on their low-volume sales, just like Walmart, and send the checks in, just like Walmart.
So the sales tax requires this tiny business to incur a huge fixed cost, which to Walmart is a small small part of sales. Is that “fair” (I hate the word “fair”, but it describes the concept)?
But this small business has many areas of high fixed costs. Worse, the best thing they DO have, that small-store personal touch, well so does that internet store in Delaware. Only that store doesn’t have a building overhead, and it doesn’t have to collect 5% sales tax.
That means they save money on overhead, they save money on tax collection, AND they can charge 5% less since they don’t actually make the person PAY the 5% tax. Is that “fair”? Well, they did have to pay shipping, or they could add it to the purchase which negates some of the savings. If the order is big enough, it works out better for the consumer.
From the state’s point of view, they have decided to collect a portion of the money they use to provide legitimate government services like police protection by charging residents of the state a fixed amount of whatever money they spend. It would be great if everybody voluntarily paid their tax (I hate that word “voluntary”, because some people deliberately mis-interpret it as meaning you don’t have to pay the tax, rather than what it REALLY means which is that the government didn’t physically take the money from you, you have to send it to them).
Now, we live in an internet age, where I can in 10 minutes pen an entire opinion column on sales tax and “post” it and you can see it 10 seconds later. I can go online and find my workmate’s speeding citation, show her how much it will cost, find how many points she has, figure out how many points you get for the infraction.
Then I can come into this conversation, and no matter what state you live in, I can tell you in 10 minutes what your state sales and use tax laws are, provide you the form you need to fill out, and tell you the state and local tax rates. All while sitting around in my family room.
It simply is not that hard anymore for a company who already does business on the internet to also collect sales tax. It is a hardship, but every company doing internet sales would get the same hardship, and the costs would be passed along equally to every purchaser.
And of course, this would help local businesses to some degree, since now they wouldn’t be the only ones having to collect a sales tax. And it would help Barnes and Noble, who sell the same books at the same price as Amazon, but then have to collect sales tax based on your state and locality, because they made the mistake of building a real store and hiring people from your state.
But I don’t support extending this collection to small business. There is a band I like in California. This is a small band. They sell their own CDs and shirts and stuff, out of their living room, one of their girlfriends gets the orders off the internet, packages the stuff, writes nice little quips, and sends them off. It would be ridiculous to also make them try to collect taxes. It wouldn’t be cost effective. (Of course, most of their sales are to people in California, since that is where they are based, and they have to do taxes for those sales, and remit them).
If I were designing the law, I’d provide for compensation to companies outside a state who collect taxes in this way. And I’d require states to set up an easy internet application to provide billing and collection information. And I’d allow the tax to be paid on a yearly basis.
I’d probably require each state to set a single collection point for the money as well, and make the state then push the money to localities.
The hard part is determining how to exempt “small business”. The best way from a business side would be, at the end of the year, you only have to remit to a state if the sales for that state exceeded some dollar amount. Unfortunately, by the time you knew that, you’d have already collected the sales tax.
So instead, you’d have to base the decision on last year’s earnings, except for small business earnings vary wildly.
BTW, I think states would be happy to accept a large TOTAL SALES VOLUME cutoff, rather than worry about state-by-state numbers. If they could collect taxes from the top 25 internet companies, they’d be 80% of the way to getting all the money they are due. The small mom-and-pop stores would just be too little to matter.
And the reason they don’t collect much now is that it also is hard to justify the expense of going after individuals. I consider myself an average internet shopper, and I have to remit about $150 at most in taxes at the end of the year. If the state spent an hour of lawyers trying to get me to pay, they’d spend more than I’m worth.