Internet Sales Tax Looms - Simplified Sales Tax Initiative

PC World ^ | Rita Chang, Medill News Service

[Henrietta]

"UPS and FedEx stocks would collapse."

Oooh...note to self: short FedEx and UPS stock!

Sad, isn't it...our Federal Government making it easier for the states to tax us. If this passes, I won't shop online. The only reason I do so now is because it allows me to deprive the government of money. I would just save up my shopping for trips to Oregon (which are fairly frequent) and shop there, tax-free.

[Still Thinking]

The hypocrites who are constantly pushing this tripe claim that they simply want to "level the playing field" for brick and mortar operations in their home states, conveniently overlooking the fact that they could make it just as level by repealing the sales tax on the traditional merchants. No matter, though, because the more appropriate comparison is a mail order house, which is not required to collect tax on interstate shipments as this would be interdiction of interstate trade. These greedy leeches are incapable of intellectual honesty.

[oceanview]

that's right, that part of the law is legitimate.

remember, this law will also apply to all catalog companies to, its not just "online" merchants.

[jjm2111]

It's never enough.

[Gabz]

Here's another one

FORCES

Online tobacco purchasers have been under attack even more so than any one else - we've been working on this for a while.

[Gabz]

U.S. Constitution, Section IX:

No Tax or Duty shall be laid on Articles exported from any State.

Except tobacco products (1954 Jenkins Act)

[Gabz]

No matter, though, because the more appropriate comparison is a mail order house, which is not required to collect tax on interstate shipments as this would be interdiction of interstate trade.

EXACTLY

No where do I see this will impact the catlogs, unless they have an online presence. If that is the case, they will just contribute to further dumps in the e-commerce business by dumping their online stores.

DUMB and DUMBER

[Myrddin]

The standard equation is still price + tax + shipping. If the online merchant beats the local price + tax + round trip expense, then the online merchant gets the business. I have to drive 46 miles to Idaho Falls to get to a Barnes & Noble bookstore. That's $33 in transportation expense as permitted by Uncle Sam. Plus another 6% state sales tax. Amazon has better prices than the best day at B&N, they don't charge tax and most items ship free because they exceed $25. Amazon is still going to win with online sales tax.

That said, I'm totally against sales tax for internet purchases.

[oceanview]

it will apply to catalogs also, it has to, there is no difference. otherwise, people would just use the website to get product info and then call to place the order, avoiding the sales tax.

[oceanview]

that free shipping is either included in the price, or adds to their negative EPS. there is no free ride forever. it costs them money to ship the item, they have to get it from someplace. it may well be that the shipping costs are less then having to pay for the physical store and employees, but so many customers will bail out when they see they have to start paying sales tax, that these etailers will never get to find out if that business model can be cash flow positive.

the space will be dominated by "under 5 million" players, who buy specialty items and resell them sales tax free, and they will re-incorporate under a new company name when they reach $4.9 million in sales, or setup different companies in many states. plasma TVs are one area I can see this happening, if you check out the top plasma websites, nobody pays sales tax on a $5000 TV.

[kevkrom]

U.S. Constitution, Section IX: No Tax or Duty shall be laid on Articles exported from any State.

Correct. And absolutely irrelevant. This is a state issue, not a federal issue -- section IX refers to the federal government. The fact is that these taxes have always been required (look up the term "use tax"), but because of enforcement issues, they usually go unpaid.

Or, as Al Gore would say, they has been "no controlling legal authority". The SSTI simply becomes that "controlling legal authority".

[Gabz]

I saw that after I had already posted my comments........but thank you for the clarification.

[RightWhale]

If there is to be taxation, it ought to be on the same basis as mail-order taxation.

[DeepDish]

"No one will buy anything online if they have to pay sales tax and shipping, at that point it becomes cheaper to just go get the product locally and avoid the shipping charges. UPS and FedEx stocks would collapse."

People shop price vs convenience. If I had to pay sales tax on the last computer I built it would make no diffference in my decision. I can buy what I need online for as much as 50% less than what a local store would charge. It may be because of the area I live in. Online sales tend to keep the local merchants in line and they do not like that at all. I do not think that the local taxing authorities have any business messing with the internet but the local business interests wish to protect their little fiefdoms and do not wish to endanger their rip off profits. What they are proposing is just the same as attempting to outlaw the Sears mail order business of the 1900/1960 time frame.

If this assault on free enterprise succeeds I would urge people to buy online and mailorder wherever it makes sense economicaly. If this angers you to action let that action be a boycott of local business interests wherever possible. If you are truly outraged, find a place to buy things online where you can make the overall puchase less than shopping locally. I do not tell people to cut off their nose to spite their face by shopping locally for something which will go up 6% when they will still save 40%.

Compact light weight purchases are the best items to look at when making your buying choises.

Improvise, Adapt, Overcome.

Check my tagline.

[Paul C. Jesup]

They just can't keep their thieving hands out of our pockets.

Prehaps it's time for us to start sticking ours hand into their personal wallets.

[angkor]

True enough, but at some point it will be taken before the USSC and deemed unconstitutional.

Making it an "agreement" among the participating states is one thing. Enshrining it as "law" enacted by the U.S. Congress is quite another.

Its a cheap attempt to find a loophole in Constitution prohibitions against state "export duties" and will eventually be struck down (that's why the states have "use taxes" for this sort of situation, they can't tax sales in another state failing the physical presence or nexus tests).

Not the first time this kind of thing has been attempted by Congress.

[Indrid Cold]

"...and they will re-incorporate under a new company name when they reach $4.9 million in sales..."

What an excellent idea. I wonder if Amazon could "farm out" its work to subsidiary companies that it owns, each one specializing in a very narrow field of books.

[angkor]

The fact is that these [use] taxes have always been required

You're confusing the issues.

The Constitution certainly does prohibit Congress from collecting export taxes from the states, or enforcing those collections, which is exactly what they're attempting to do here.

State "use taxes" are invoked for precisely the reason that one state cannot itself collect sales tax from commerce in another state. That fails the nexus and physical presence tests. So they invoke a "use tax", which if you think about the linguistics, is called that precisely because it cannot be called a "sales tax" that regulates interstate commerce. States do not have that power.

But in this case, neither does Congress, and calling it "an agreement among the states" doesn't make the case any stronger. Federal law cannot be used as an enforcement mechanism for actions that egregiously violate the Constitution.

This will be struck down by the USSC, eventually.

[oceanview]

I think we are seeing that there are 5 votes on this SC to diss the constitution on just about any issue for "our side".

[Valpal1]

If its not a federal issue then why is Congress passing an authorization bill?

They are pulling a fast one here precisely because SCOTUS has hinted that this fast one is the one they are willing to wink at. Once again, taxpayers and small business is getting the shaft.