Posted on 08/02/2012 8:11:39 AM PDT by 92nina
[Yester]day the Senate Commerce Committee [held] a hearing to push for an Internet sales tax. This follows a similar effort by the House Judiciary Committee late last month. And while the Wall Street Journal ran a cover story recently claiming (somewhat misleadingly) that GOP governors are throwing in the low-tax towel and signing off on online sales taxes, Sen. Jim DeMint (R-S.C.) has an op-ed in the same pages today telling fiscal conservatives why they should do the opposite. So, what’s all this Internet tax talk about?
The Senate’s Marketplace Fairness Act and House’s Marketplace Equity Act – currently the leading contenders amongst federal online tax bills – would raise state-level taxes on Internet and out-of-state purchases while upending critical taxpayer protections built into the tax code to protect Americans from the tax laws of other states. From a taxpayer perspective, any bill that touches Internet sales taxes must preserve the physical presence standard and protect consumers from a higher tax burden. Unfortunately for taxpayers, the federal online sales tax bills miss the mark widely on both fronts.
Under the U.S. Supreme Court’s ruling in Quill v. North Dakota, it is a violation of the Commerce Clause for a state to require an online or remote retailer without a physical presence in that state to collect and remit the sales tax. The Senate’s Marketplace Fairness Act, sponsored by Sens. Dick Durbin (D-Ill.) and Mike Enzi (R-Wyo.), would permit overzealous state tax collectors to reach well outside their borders and force online and other out-of-state retailers to collect their state’s sales tax.
[Yester]day, ATR submitted written testimony against the Senate bill. Here’s the long and short of it for taxpayers:
State-level Tax Burden Will Increase: In support of his bill, Sen. Enzi stated recently that “the Marketplace Fairness Act is not about new taxes.” The legislation even included a purely rhetorical section called “No New Taxes.” Yet, proponents are also quick to point out that it could raise as much as $23 billion in tax revenue from consumers at the state level. And while consumers do owe “use tax” on products they purchase online and out-of-state, this measure shifts the tax collection burden to out-of-state retailers, which is certainly a new form of taxation. At the least, businesses that do not pass sales tax liability onto consumers at the register will see new out-of-state sales taxes come out of their bottom line.Dissolving Physical Nexus Weakens a Fundamental Taxpayer Protection: The physical nexus standard is a staple of our tax code, preventing states from reaching across their borders to force out-of-state businesses and individuals from complying with their tax codes. The Marketplace Fairness Act will dissolve the physical nexus requirement for collecting sales taxes. To put it simply, measures to dissolve the physical presence standard have the potential to usher in the second coming of taxation without representation in America.
Outsources State Tax Rules to an Unelected Body: Under the Marketplace Fairness Act, twenty-four states operating under the Streamlined Sales and Use Tax Agreement (SSUTA) would be able to tax remote sales almost automatically. Remaining states would have to comply with a number of requirements or choose to join the Streamlined Sales Tax Project (SSTP).
Reliance on SSUTA allows a handful of tax administrators and state lawmakers on the Streamlined Sales Tax Governing Board – which has long advocated for tearing down the physical nexus standard for sales taxes – to control remote sales tax decisions for states and incents the states that are not part of SSUTA to join. Non-SSUTA states will watch helplessly as the “streamline states” hassle their resident businesses to collect more tax revenue.
Increases Tax Code Complexity: The bill will force online, catalogue, TV and other retailers to comply with over 9,600 sales tax jurisdictions across the country, while brick-and-mortar stores must comply with only the one where they are located.
Here’s the bottom: The effects on taxpayers of the Marketplace Fairness Act and similar legislation would be dramatic. From a taxpayer perspective, any bill that touches remote sales taxes must preserve the physical presence standard and protect consumers from a higher net tax burden. Unfortunately, the federal online sales tax bills miss the mark widely on both fronts.
For a more indepth look, check out ATR's written testimony.
Read more: http://atr.org/ramifications-congresss-internet-sales-tax-a7096#ixzz22Oxo5Au8
This administration is working overtime to put small business out of business. An internet tax would drive many companies out of business completely. I believe this is what they want.
The proper Internet tax method would be to:
1) have each state publish as single internet tax rate expresed as a percentage of sales
2) Determine the tax by averaging the tax rates of the states in question (shipping location and billing location)
3) seller/shipper collects the tax
4) sends half of the tax amount to each state
The net effect will be for shippers to move operations and jobs to lower tax states. Likewise, individuals will want to move to lower tax states.
List of Taxes that exist today
TAXES:
Accounts Receivable Tax
Building Permit Tax
Capital Gains Tax
CDL license Tax
Cigarette Tax
Corporate Income Tax
Court Fines (indirect taxes)
Dog License Tax
Federal Income Tax
Federal Unemployment Tax (FUTA)
Fishing License Tax
Food License Tax
Fuel permit tax
Gasoline Tax (42 cents per gallon)
Hunting License Tax
Inheritance Tax Interest expense (tax on the money)
Inventory tax IRS Interest Charges (tax on top of tax)
IRS Penalties (tax on top of tax)
Liquor Tax
Local Income Tax
Luxury Taxes
Marriage License Tax
Medicare Tax
Property Tax
Real Estate Tax
Septic Permit Tax
Service Charge Taxes
Social Security Tax
Road Usage Taxes (Truckers)
Sales Taxes
Recreational Vehicle Tax
Road Toll Booth Taxes
School Tax
State Income Tax
State Unemployment Tax (SUTA)
Telephone federal excise tax
Telephone federal universal service fee tax
Telephone federal, state and
local surcharge taxes
Telephone minimum usage surcharge tax
Telephone recurring and non-recurring charges tax
Telephone state and local tax
Telephone usage charge tax
Toll Bridge Taxes
Toll Tunnel Taxes
Traffic Fines (indirect taxation)
Trailer Registration Tax
Utility Taxes
Vehicle License Registration Tax
Vehicle Sales Tax
Watercraft Registration Tax
Well Permit Tax
Workers Compensation Tax
COMMENTS:
“Not one of these taxes existed 100 years ago and our nation was the most prosperous in the world, had absolutely no national debt, had the largest middle class in the world and only one parent had to work to support the family.”
They’re out of control
What happened?
List of Taxes that exist today
TAXES:
Accounts Receivable Tax
Building Permit Tax
Capital Gains Tax
CDL license Tax
Cigarette Tax
Corporate Income Tax
Court Fines (indirect taxes)
Dog License Tax
Federal Income Tax
Federal Unemployment Tax (FUTA)
Fishing License Tax
Food License Tax
Fuel permit tax
Gasoline Tax (42 cents per gallon)
Hunting License Tax
Inheritance Tax Interest expense (tax on the money)
Inventory tax IRS Interest Charges (tax on top of tax)
IRS Penalties (tax on top of tax)
Liquor Tax
Local Income Tax
Luxury Taxes
Marriage License Tax
Medicare Tax
Property Tax
Real Estate Tax
Septic Permit Tax
Service Charge Taxes
Social Security Tax
Road Usage Taxes (Truckers)
Sales Taxes
Recreational Vehicle Tax
Road Toll Booth Taxes
School Tax
State Income Tax
State Unemployment Tax (SUTA)
Telephone federal excise tax
Telephone federal universal service fee tax
Telephone federal, state and
local surcharge taxes
Telephone minimum usage surcharge tax
Telephone recurring and non-recurring charges tax
Telephone state and local tax
Telephone usage charge tax
Toll Bridge Taxes
Toll Tunnel Taxes
Traffic Fines (indirect taxation)
Trailer Registration Tax
Utility Taxes
Vehicle License Registration Tax
Vehicle Sales Tax
Watercraft Registration Tax
Well Permit Tax
Workers Compensation Tax
COMMENTS:
“Not one of these taxes existed 100 years ago and our nation was the most prosperous in the world, had absolutely no national debt, had the largest middle class in the world and only one parent had to work to support the family.”
They’re out of control
What happened?
The largest burden would fall on small business's that have internet sales. To subject small online retailers to the tax collecting efforts from 50 different states and who knows how many municipalities will be a disaster.
And the telephone tax was the 1st tax and to this day remains the most ubiquitous in terms of number of taxes on services.
Such a ‘tax’ could become a nightmare for businesses.
They could eventually have to establish appropriate taxation for individual states, for individual counties, for individual municipalities that have different tax rates.
Documenting the various taxes could cost the small businesses more than they might get from some sales.
==
This is another idea that looked good on paper but has not been thought through.
==
Oh yeah more tax money. So what if it ends up killing many small internet businesses. They probably didn’t need to exist anyway. [/s]
Even walking into a store here in Pennsylvania and trying to figure out how much sales tax you owe is next to impossible because the law is so complicated and riddled with exemptions.
Most clothing is not taxed. Sewing thread is taxed. Unless you tell the clerk you are going to use it to make clothing, in which case it is not taxed (I am not making that up!) Six or more donuts are not taxed as they are assumed to be grocery, but five or less are taxed as it is assumed you will eat them on-premesis and hence they are restaurant food.
The tax rate is 6%, unless you are in Allegheny County where it is 7%. How is an online retailer half a continent away supposed to keep track of all that? Local shop owners who were born and raised here can barely do it.
This will compel people to either buy local, shop by phone, or do without.
100 years is what happened. How many would like to live in 1912?
That would be horrible...why?
Proving once again, the road to hell is paved with good intentions.
The government wants at least two out of those three things.
Or maybe all three.
Government hates the Internet.
I’ll just come right out and say it. I EXPECT every vendor on the internet to subvert, avoid, not report, or to defray any no-value added sales tax to their products sold online.
I don’t care if it becomes law, I expect them to find a way around it. I’m not going to subsidize a government skimoff of their efforts and mine.
Business, do what you need to do. We both have a common enemy now. I don’t care about the ‘brick and mortar’ argument or any of that tripe. And, I don’t care if the government gets its due. They aren’t a friend of freedom and they certainly don’t earn their keep.
It’s not just dems and this administration.One of my states’ senators, Lamar Alexander (R), has been pushing this for years.Taxation is out of control and needs to be reduced, but neither side will do it
In NY the DMV tacked in a temporary(HA!) $50 surcharge on car registrations to subsidize mass transit. No doubt quite a few tree huggers and “train brains” are making out like bandits.
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