Posted on 02/15/2013 3:27:45 PM PST by CutePuppy
U.S. states could collect millions of dollars in online sales taxes, with members of both parties in Congress sponsoring legislation Thursday that would resolve states' decades-long struggle to tax businesses beyond their borders.
"Small businesses and states alike are suffering from the inability to collect due — not new — taxes from purchases made online," said Rep. Steve Womack, R-Ark., adding the legislation is a "bipartisan, bicameral, common-sense solution that promotes states' rights and levels the playing field for our Main Street businesses."
Legislation on the Amazon tax, named for the colossal Internet retailer, has languished for years. ..... < snip >
..... The bills introduced on Thursday reconcile differences in legislation that the House of Representatives and Senate considered last year. The nearly identical details in the bills and strong bipartisan support mean the final bill could be sent to President Barack Obama this year.
Members of Congress recently assured state lawmakers they would pass a law in 2013.
In the last decade, Internet sales have gone from 1.6 percent of all U.S. retail sales to more than 5 percent, according to Commerce Department data, a proportion that will likely grow as shoppers make more purchases on handheld devices. In the third quarter of 2012, "e-commerce" sales were $57 billion, the department said.
Large Internet retailers are worried the tax could drive up the cost of doing business. They would also have to create new systems and software to collect the surcharges, adding to their costs. Amazon said in July it prefers having the tax issue resolved at the federal level.
When the 2007-09 recession caused states' revenues to collapse, Republican and Democratic governors backed the tax as a financial solution that would not require federal aid. ..... < snip >
(Excerpt) Read more at mobile.chicagotribune.com ...
Article is also making a false statement regarding the Supreme Court 1992 decision that sales tax not be collected by merchants in the states where they have no physical presence - it's not because "the patchwork of state tax laws made it too difficult for online retailers to collect and remit sales taxes" - it's because how the interstate commerce is usually conducted, by catalog or between businesses.
Here is the November 14, 2011 WSJ article Should States Require Online Retailers To Collect Sales Tax? that has a pro (by Michael Mazerov of Center on Budget and Policy Priorities) and con (by Steve DelBianco of NetChoice) arguments for "Internet tax."
You can skip the pro-tax part because it's basically the usual "fairness" and "lost revenues" and "government needs the money" pablum (though the latter is the real reason why it's being stealthily moved in Congress).
Here are some salient points from the counter arguments:
• Frustration of state tax collectors and "we really need the money" argument is not a justification or a good reason to overturn Supreme Court's 1992 decision based on the Commerce Clause of the Constitution — to prevent unreasonable burdens on interstate commerce.
• Commerce Department data show that sales tax due on all consumer e-commerce is only 0.5% of total state and local tax revenue, and much of that is already being collected.
• Ironically, an Internet tax bill introduced by Sen. Durbin is called the Main Street Fairness Act, implying that new online taxes would be good for Main Street businesses. In reality, the smaller Main Street retailers will be the ones hurt the most because one of the ways they can compete with big-box stores is by setting an Internet shop, to expand their markets.
• Smaller resellers have to pass through shipping charges which big-box stores can avoid by scheduling in-store pickup and/or return of items ordered online.
• Congressional efforts to overturn the Supreme Court ruling recognized the burdens on small firms by exempting those with less than $5 million in annual sales. Recent tax bills reduced the exemption to $100,000 or $500,000 in sales. (Where did the "fairness" / "equal protection" argument go?)
• The real supporters of this tax legislation are the big retailers who already have extensive brick-and-mortar and online sales presence in most states - it helps them saddle smaller online competitors with significant financial and regulatory burdens.
Also, one of the biggest reasons both big-box and small "Main Street" shops don't make the sale is that they simply don't deal with the manufacturers or don't carry the items or don't have the items in inventory which the buyer needs or wants, but which are readily available and can be easily found online. That goes double for "specialty" items or companies that can't get into distribution, or have no interest in or can't possibly succeed by setting up expensive distribution channels (because of additional costs) and the Internet sales are the only way for them to succeed. No tax law will help the brick-and-mortar reseller compete with this issue, and this is becoming more and more prevalent pattern of shopping. Just because your local stores don't stock or manufacture the items you need, why should you pay additional tax if the item is found and bought in another state, via mailed catalog or online?
States already have collection through the "use tax" - they should not burden resellers in other states to be tax collectors for them... An eventually, if this legislation goes through and is unchallenged in courts, this sets up a perfect detour into (additional) national sales tax - to "simplify" states' sales tax collection and then redistribute the sales tax "fairly" between the states.
This is simply a "camel's nose" legislation and the Republicans should be fighting it tooth and nail, not helping it move along.
I believe this a misprint “ Rep. Steve Womack, R-Ark.,”
Should read “Rep. Steve Womack, R-Walmart”
I’d like to know how may of Steve’s citizen constituents have call his office and asked for a an internet sales tax. Let me offer a guess - 0
Call me a raisin bran but this is inevitable.
My first thought, exactly. Many people who will be squeezed out of their small business (both online and brick-and-mortar) have no idea that this is coming, and that this is at this late stage that it looks like a done deal already.
It will take time for it to be challenged and/or declared unconstitutional in courts, while small businesses and jobs will be killed.
It will be a nightmare for small online businesses to meet the tax requirements of all the various tax districts within the nation.
Womack needs needs a serious challenger in 2014.
For so many of us, the blood has already been squeezed from the turnip. All the taxes and fees will only make things much worse.
We pay too many stinking taxes as it is. WTH are these so called Republicans doing with this nonsense?
These elected morons will always try to get more out of us that earn a living so they can fork it over to the lazy SOBs takers. Every politician that proposes yet another tax should be smacked upside the head until the show some common sense or get a real job.
I do wish ill upon any scumbag trying to take more of our EARNED money.
Fine. Bring it on. Been living that lifestyle for decades and happy to continue.
Lots and lots of Republican owned, brick and mortar small business folks want online retailers to pay sales tax. They don't see it as a new tax, they see it as currently unfair that they have to collect sales tax and that online merchants don't. There is lots of pressure on Republicans from otherwise conservative small business folks to "even the playing field" when it comes to tax collection. For the record, I don't buy those arguments and will be furious if a GOP House actually goes through with this.
YEP...been spending the last 5 years preparing so that our needs are met....if an internet tax hits...barter/trade/sell locally it will be...Amazon has to be worried.
I think they should "know what's in it before it passes" (to channel Nancy Pelosi).
As the arguments "against" from the WSJ article and others show, these small business owners will be mighty surprised when the tax does absolutely nothing for them, except possibly destroying their and others' small brick-and-mortar shops' opportunity in online business.
It would simply limit their opportunity to compete against the big multi-state retailers.
yes this will help the economy. /s
lots of small brick and mortar people also sell product on the internet they don’t have to collect taxes on, too.
“You can skip the pro-tax part”
Only if you like state income taxes LOL!
Sales taxes are the fairest taxes.
And enforcement of ‘use taxes’ would be extraordinarily intrusive: Orwellian!
So internet sales must, at some point, be taxed by the states the purchase is made in.
I expect the courts to find that the physical infa-structure of the internet is the “brick and mortar presence” of the store.
An interesting exercise would be to imagine your own personal life with absolutely no "brick and mortar" retail stores except for those that sell things with a very limited shelf life (fresh fruit, dairy products, etc.). If every durable product was sold through an Internet retailer, your life could be miserable. Imagine a UPS tractor-trailer -- not your typical brown box truck -- making its way down your street to deliver things to the entire neigbhorhood on a daily basis.
I read elsewhere about this strong bi-partisan support amounts to 53 co-sponsors.
Well that is less than 10% of congress. I think the media is carrying water for the democrats, again because I don’t think they have the votes to pass it.
I work for an online retailer...midsized...and this would be a nightmare.
Already we collect state tax, with 67 different counties in our state, and many counties charge different sales tax so our program varies the tax according to the county.
Imagine programming costs for 50 states not to mention if they have different rates for different counties, as our state does.
But what no one can answer, even about the state sales tax we collect...how is it redistributed to the individual counties.
And nationally, when tax is collected for different states, how is it distributed back to the states, or if the feds step in, will it just go in one huge “lock box” (haha) for the feds to redistribute to each state as they see fit.
Add a whole new level of bureaucracy to figure out how much is collected for each state. Every purchase online would have to be tracked as to location of buyer, tax rate of that particular state and/or county, Reports submitted to the “collecting” agency as to what tax came from sales in which state. And then how is the money going to be redistributed back to the states...anybody know?
Dealing with the state tax agency is problem enough, add to that the cost of programming, and probably hiring another person just to deal with sales tax issues would definitely hurt businesses like the one I work for.
They’re already taking a hit with Obamacare, how many hits before these businesses start going out of business due to the cost of doing business. Or each buyer is the one ultimately paying because costs will be raised to compensate for the extra personnel needed to implement the tax collecting.
Imagine every brick and mortar asking each customer what state they live in, then collecting the rate of the tax in that state, and keeping it all straight...preposterous, of course. They collect the rate of tax from the state and county they’re in. But they’re asking online businesses to essentially track every customer’s data to determine their sales tax.
The big brick and mortars do it (like Walmart, etc.) Amazon has resisted. But I think it’s a tactic, as you said, to drive the medium and small sized online retailer out of business because of the programming and reporting costs.
And nationally, when tax is collected for different states, how is it distributed back to the states... Add a whole new level of bureaucracy to figure out how much is collected for each state...
Dealing with the state tax agency is problem enough, add to that the cost of programming...
Imagine every brick and mortar asking each customer what state they live in, then collecting the rate of the tax in that state, and keeping it all straight...preposterous, of course...
That's already the kind of issues that retailers that have several stores, even in the same state but in different counties or even in different cities which have their own different sales tax rates, some of them "special" or "temporary," already have to deal with - the expensive programming and reporting nightmare, every time sales tax changes happen in one of their "presence" locations.
But at least it's done only on a one-location-one-tax basis, which doesn't even begin to address the shipping to other states or countries which online businesses often do.
But I think it's a tactic, as you said, to drive the medium and small sized online retailer out of business because of the programming and reporting costs.
Yes, it will disproportionately benefit large online and integrated b-a-m/online retailers at the expense of small/midsize e-tailers and b-a-m retailers.
Unfortunately many Republican single-store b-a-m proprietors don't understand who and what really behind it and think it's a "fairness" issue and may benefit them, without realizing that it's simply a transfer of money from their potential customers (who will have less money to patronize their business) and will make it more expensive for them to do business with potential customers in another state.
This is a large merchants' and states' protection/enrichment power grab, at everyone else's expense.
Actually, 10% is a huge number, there are very few bills that have this many co-sponsors. Most of them are Democrats, but too many Republicans signed on to this.
From Lawmakers claim momentum in push for Internet sales tax - The Hill, by Brendan Sasso, 2013 February 13
This is gaining momentum, and this is the year to do it, Sen. Mike Enzi (R-Wyo.), the lead Senate sponsor, said during a Capitol Hill press conference. Rep. Steve Womack (R-Ark.), the bill's top author in the House, said he is confident the measure will become law this year. I have talked to [Senate Majority Leader] Harry Reid [(D-Nev.)]. Harry Reid wants to bring this to the floor, Sen. Dick Durbin (D-Ill.) said. Many of the same lawmakers pushed similar legislation last year, but the measures never made it to the floor for a vote. The latest version of the bill, called the Marketplace Fairness Act, combines several proposals from the last Congress and includes revisions aimed at winning over skeptics. Under current law, states can only collect sales taxes from retailers that have a physical presence in their state [nexus]. People who order items online from another state are supposed to declare the purchases on their tax forms, but few do. ..... < snip > ..... The Marketplace Fairness Act would empower states to tax online purchases. The bill would exempt small businesses that earn less than $1 million annually from out-of-state sales — an increase from the $500,000 threshold proposed last year. ..... < snip > ..... The National Retail Federation is lobbying aggressively for the legislation. ..... < snip > ..... Online giant Amazon also backs the tax. The company reportedly has plans to expand its network of physical distribution centers, which would make it subject to state sales taxes under current law. Critics of the bill say it would create a complicated new tax system and would stifle Internet commerce. "Congress should reject any Internet sales tax legislation that throws a new tax barrier in front of small businesses, Tod Cohen, eBay's deputy general counsel, said in a statement. Americans for Tax Reform President Grover Norquist warned the legislation would be a nightmare to enforce. At the end of the year if there are any disputes over sales tax collection, the Virginia business would be subject to the New York Department of Revenue and New York Courts, he said in a statement. ..... < snip > ..... Durbin said he is trying to convince Senate Finance Committee Chairman Max Baucus (D-Mont.) to take up the legislation. He has some concerns. We are trying to address them, Durbin acknowledged. It is important that we bring this matter up sooner rather than later. ..... < snip > ..... The bill will head to the Judiciary Committee in the House, but committee Chairman Bob Goodlatte (R-Va.) has shown little enthusiasm for the proposal in the past. ..... < snip > ..... Sen. Heidi Heitkamp (D-N.D.), one of the new co-sponsors of the legislation and the former tax commissioner of North Dakota, was the losing party in the 1992 Supreme Court decision that ruled that, unless Congress changed the law, states cannot tax out-of-state retailers.
A bipartisan group of 35 House members and 18 senators introduced legislation on Thursday that would allow states to tax online purchases.
$1M exclusion doesn't really help much for most single-store b-a-m retailers who are mistakenly so gung-ho for it (because they think it will help their sales, instead of just killing some business who they think are their direct online "competitors") so how long after this bill passes, whatever exclusion that is "fair" now will be considered a "loophole" because, you know, "the states need money" and the "loophole" is "unfair"? Or maybe just to "simplify" things, why not have the IRS collect the new "national average states' sales tax" and then distribute to the "states that really need them"?
"Camel's nose" - that's why Dick Durbin et al are rushing it to pass "sooner rather than later"... ya'll can deal with [un]intended consequences after "you find out what's in it."
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