Posted on 05/01/2013 2:37:20 PM PDT by Kaslin
At a 2008 shareholders meeting, Amazon founder and CEO Jeff Bezos explained why he opposed requiring businesses like his to collect state and local taxes on their interstate sales. "We're not actually benefiting from any services that those states provide locally," Bezos said, "so it's not fair that we should be obligated to be their tax collection agent."
Last year, Paul Misener, Amazon's vice president for global public policy, testified in favor of a bill allowing states to demand sales tax from online merchants, saying Congress should "level the playing field for all sellers." As that switcheroo suggests, there are plausible fairness arguments on both sides of this issue. And although there is a way to bridge the gap, it is not the route Congress seems intent on taking.
The Marketplace Fairness Act, which Congress is expected to approve soon, sounds like something out of an Ayn Rand novel. But it reflects understandable complaints from brick-and-mortar retailers who believe their online competitors have been enjoying an unfair advantage for way too long, thanks to Supreme Court rulings that bar a state from requiring a business to collect sales tax unless the company has a physical presence in that state.
Shoppers are still legally obligated to pay their state's sales tax on items they buy online, but few are aware of this notional requirement and even fewer comply with it. The upshot is that online sales are effectively tax-free, unless you happen to live in the same state where the merchant is located.
At the average combined state and local tax rate, the savings amount to about $9 on a $100 purchase. That's not a huge difference, but it helps online merchants (and hurts their offline competitors) to the extent that it makes people care less about shipping charges.
At the same time, companies with customers throughout the country are understandably worried about complying with the multifarious demands of the 9,000 or so jurisdictions that have the authority to impose sales taxes. That burden is less daunting to big companies like Amazon (which might even be said to enjoy an unfair advantage in that respect) than to their smaller competitors. In partial recognition of that reality, the Marketplace Fairness Act exempts merchants with less than $1 million in annual out-of-state revenue.
The bill seeks to reduce the compliance burden by requiring each state to offer free software allowing merchants to calculate sales tax and file a single return for all taxing authorities within the state. States could not audit a business more than once a year.
Still, that's 46 returns (45 states with sales taxes plus the District of Columbia), which have to be filed monthly or quarterly, and 46 potential audits every year, not to mention all the misunderstandings, disputes and hassles that fall short of an audit. You can start to see why the Supreme Court deemed collection of sales taxes from remote vendors an unconstitutional burden on interstate commerce.
But the Court also said Congress, under its power to regulate interstate commerce, could authorize such tax collection, which is what it is poised to do. Unfortunately, it has overlooked a simpler, fairer and smarter way of letting states get the revenue they crave.
In a 2011 paper published by the Mercatus Center at George Mason University, Veronique de Rugy and Adam Thierer recommended "an 'origin-based' sourcing rule for any states seeking to impose sales tax collection obligations on interstate vendors." Under that rule, which mirrors what happens when you buy something while visiting another state, each business collects sales tax on behalf of the state where it is based, no matter where the customer happens to be.
The beauty of this approach is that it treats all retailers equally, eliminates the daunting challenge of dealing with many different taxing authorities and respects state policy choices while encouraging tax competition between jurisdictions. Evidently the idea makes too much sense for Congress to consider.
Anytime the government is talking about fairness it is a ruse. Somebody’s gonna get screwed.
The word “fair” and the act of seizure of private property (aka “taxes”) should never be used in conjunction with each other. The only “fair tax” is the one that someone else pays. Ask anybody.
Governments don’t care about ‘fair’, they care about ‘revenue’. Just more government greed.
SnakeDoc
this wil surely help the economy. /s
Nope.
They are absolutely stoopit and gubmints are looking for any opportunity to loot our wallets.
To the headline: NO
Lower brick and mortar taxes first, stop making the regular Joes tax collectors.
Why tax sales? Aren’t sales the necessary ingredient for a successful economy? Logically we should tax things we want less of and subsidize things we want more of. We tax income and subsidize (some) debt. We tax success and subsidize failure.
The internet is currently a LEGAL black market.
That is NOT to say I believe in taxing internet sales.
A black market is where people go to avoid paying taxes to buy/sell goods.
Once E-commerce got it’s start, we all knew and understood that at some point Uncle Sam-Boma would eventually catch up.
The decision to not tax it originally was based upon the desire BY government to see it expand as an industry faster. They got what they were looking for.
This just means that THE “Black Market” will soon regain it’s traditional clout as an illegal industry.
Justice Blackstone said, “the power to tax is the power to destroy.” When Congress initiated the legislation allowing internet sales they specifically didn’t tax it because they wanted it to grow and taxing it would have impeded that growth. So, taxation impedes growth. Okay...eliminate all taxes. If the government can (and is) printing all the money it needs, why does it tax us too? It’s printing 87 billion per month. It has more than tripled the money supply since 2008. (From $900 billion dollars to $3.1 trillion dollars + 87 billion per month for the last year or so.)
Anytime the government steps it’s foot into something, we ALL know it’s bad for us.
Bezos’ premise is false when he says Amazon doesn’t benefit from services provided locally. What does he think the trucks that deliver his merchandise run on - thin air? If your Amazon package is stolen off your doorstep, will the Amazon police come or will you rely on local law enforcement? Do you go to Amazon court if you have to sue an Amazon merchant?
There are two issues here. One, is the size/role/cost of government and we can all agree it’s too large and out of control. Fix that.
But the other issue is how to pay for the local services you and I use and rely on - streets, cops, fire fighters — public infrastructure. I like a bargain too, but online sellers have enjoyed a competitive advantage while making use of public infrastructure they do nothing to support. That needs to be fixed, too.
From a small business point of view — I cannot imagine the headache of quarterly paying 50 different states the taxes I have collected. The paperwork would be humungous,even if there was just one purchase. So — I betcha the gov. steps in with a New Agency. “Just send US the money and, trust us, we will distribute it to the various entities.” (After they take out their cut that is for their services).
Everybody thinks FedGov is going to stop at this once the system is implemented. Chortle.
Amazon doesn’t use the roads in your state. I get so sick of that false argument for taxing mail/internet sales. Amazon pays billions of dollars a year to UPS and FEDEX - Those are the businesses that use your roads and the pay hefty taxes to fund them in all 50 states - gas taxes, income taxes, etc. That’s who calls your police when someone steals your package.
What do you mean "soon"?
Check out what happened with tobacco.
A pack of cigarettes costs about $0.05 to grow and manufacture. The distributors get about another nickel. The retailers get about a dime.
Who gets the other $5.00? Government.
Damn straight I buy mine on the black market.
>>> From a small business point of view — I cannot imagine the headache of quarterly paying 50 different states the taxes I have collected.
I would imagine that it will begin by going directly after online pay methods such as pay-pal.
And, since most online transactions involve some sort of debit or credit card, It’s most likely that online taxes will be handled directly by card processing companies.
So, you probably won’t have to worry about seeing your paperwork demands going up, but rather your tax free profits going down.
I could do without all of that. Unfortunately, the cops occasionally show up anyway - even though I would prefer they wouldn't.
“I would imagine that it will begin by going directly after online pay methods such as pay-pal.”
I’ll have to think about that — how would they know that taxes hadn’t been paid — perhaps the pay pal payment is a balance owed or something. Guess it works better with a credit card. Don’t know.
Actually, I don’t have a business so it’s not for me — just wondering how they are going to do it.
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