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Senators propose taxing Internet shopping
CNET ^

Posted on 12/22/2005 7:31:47 AM PST by BradJ

This may be the last holiday season to enjoy tax-free Internet shopping, thanks to new legislation in the U.S. Congress.

Two bills introduced Wednesday propose sweeping changes to how Americans are taxed for online and mail order purchases. Businesses initially would be required to collect sales taxes on purchases shipped to roughly half of the country, and that percentage is expected to rapidly increase.

"Main Street retailers collect sales taxes, while many online and catalog retailers are exempt from collecting the same taxes," said a statement published by Sen. Mike Enzi, a Wyoming Republican. "This is costing states and localities billions in lost revenue." (A related bill has been introduced by Sen. Byron Dorgan, a North Dakota Democrat, who is a former state tax commissioner.)

At the moment, if you order something from a company that's located entirely out of state, you're typically not charged sales tax. Seattle-based Amazon.com, for instance, does not collect sales taxes when shipping to California.

Technically, you're supposed to estimate and pay these taxes voluntarily to your home state every April 15. But practically nobody does.

State tax collectors would like to change that. They complain that the Internet is sapping tax revenues and are supporting Enzi's bill to force companies to collect taxes on many out-of-state shipments in the future. Traditional retailers such as Wal-Mart Stores, which collects taxes on shipments from Walmart.com because it has physical locations in every state, are also supporting the bill.

"It is now time for Congress to provide states...with the authority to require remote retailers to collect sales tax just as Main Street retailers do today," Enzi said. Four years ago, in a CNET News.com editorial, Enzi warned: "Other forms of taxes, such as property or income taxes, may then have to be increased to offset these lost revenues."

Critics of this approach warn that it will complicate life for small businesses and be an unfair burden on states like Delaware, Montana and New Hampshire, which do not have sales taxes.

"The tax commissioners are overreaching by pressing Congress for a national mandate on a collection scheme that is still in the oven," said Steve DelBianco, director of the NetChoice coalition, which represents companies such as America Online, eBay, Oracle, VeriSign and Yahoo. "They haven't worked out the software they need to collect, a compensation system for sellers, and the states themselves are still struggling (to put policies into place). In other words, there's a lot of work left to do before pressing Congress for a national mandate."

Tax "fairness and simplification" Enzi's bill, called the Sales Tax Fairness and Simplification Act (click here for PDF), would affect only shipments sent to participating states. If California joined the so-called compact, for instance, the bill would require Amazon to collect sales taxes even if the state of Washington objected and did not sign up.

The legislation would apply only to businesses with more than $5 million in "gross remote taxable sales" each year.

So far, 18 states have fully signed on. Those include Arkansas, Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Nebraska, New Jersey, North Carolina, North Dakota, Ohio, Oklahoma, South Dakota, Tennessee, Utah, West Virginia and Wyoming. Twenty-two other states, including California, Illinois and Texas, have moved in this direction.

Dorgan's office did not make the second bill, which he also introduced Wednesday, immediately available. But a "discussion draft" seen by CNET News.com would order the Small Business Administration to determine which businesses would be required to comply with the tax collection rules. Congress would be required to ratify that decision.

For mandatory tax collection to take place on mail order and online purchases, the Supreme Court has said, Congress must act. A 1992 case, Quill v. North Dakota, said remote taxing--in the absence of a federal law--violated the U.S. Constitution's interstate commerce clause.

Earlier efforts in Congress to enact such a law have failed, in part because e-commerce companies pointed to the dizzying complexity of taxes. But the states participating in the so-called Streamlined Sales Tax Project hope that if they pledge to simplify their tax systems, they can persuade Congress to make collection mandatory.


TOPICS: Business/Economy; Constitution/Conservatism; Extended News; Government
KEYWORDS: 109th; ecommerce; enzi; internet; otherpeoplesmoney; outofcontrolspending; porkaddicts; senaterats; spendingspree; taxandspendrinos; taxes; taxincrease
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To: Gabz

Doesn't matter now if they listen or not. They're still going to get screwwwwwed. ;)


141 posted on 12/22/2005 3:09:42 PM PST by The Foolkiller ( We're only trying to help people make right decisions-with the full force of government, of course.)
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To: Fawn
AHHHHH!! WHY DON'T THEY JUST TAKE MY WHOLE D@MN PAYCHECK....

Just a little more time Fawn, just a little more time. Blackbird.

142 posted on 12/22/2005 3:16:17 PM PST by BlackbirdSST
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To: BradJ
Sales taxes are so uneven in some cases that this really doesn't make sense.

For instance, I found this two page document of sales tax-exempt items in Florida: DR-46NT (it's a pdf from myflorida.com.)

Literally, in order to administer such a law for Floridians, a retailer would have to know for every product that it carries its tax status in Florida. For instance, candy is generally taxable in Florida -- but chocolate-covered walnuts are tax-exempt, as well as chocolate-covered pretzels. Ice cream is quite complex: if it is sold to be consumed off-premises and is not in pints, cups, or cones is tax-exempt, but otherwise is taxable. (So apparently a gallon of ice cream or an ice cream sandwich is tax-exempt (if it is not immediately consumed), but not a pint of ice cream, which is always taxable.)

A book retailer would have to know that all books are taxable except Bibles and hymnals, which are always sales tax-exempt.

In Florida, all water is tax-exempt, unless it is carbonated or flavored.

And a vitamin peddler would need to know that cod liver oil is tax-exempt, but apparently not fish oils made from fatty fish such as those made from salmon or herring.

And then a retailer of sundries would need to know that bunion pads are tax-exempt in Florida, but not soap.

143 posted on 12/22/2005 3:16:27 PM PST by snowsislander
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To: steve-b

Well, how about making the govt schools FUNCTIONAL AND EFFECTIVE. start with discipline and uniforms, not more money!


144 posted on 12/22/2005 3:22:05 PM PST by Recovering Ex-hippie (The Fifth Column is alive and well in the U.S.)
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To: BradJ
"It is now time for Congress to provide states...with the authority to require remote retailers to collect sales tax just as Main Street retailers do today," Enzi said

It is now time for Wyoming Republicans to throw Enzi out on his ass.........

145 posted on 12/22/2005 3:31:56 PM PST by Hot Tabasco (It must suck being an Islamofascist.......I don't bring them Christmas presents)
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To: BradJ
How about less intrusion into our lives, and start things like letting us get our energy and stop telling us how to live?

Eh?

For starters?

146 posted on 12/22/2005 3:35:53 PM PST by drc43 (Judges... Judges... get it done, then we can discuss priorities)
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To: The Foolkiller

Too bloody bad about them...........


147 posted on 12/22/2005 3:44:15 PM PST by Gabz
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To: capydick

You must live in a red state. Here in blue New York, it would have to be 2.850 cents.

Regards,


148 posted on 12/22/2005 3:47:25 PM PST by VermiciousKnid
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To: Blessed
Sale takes place where product is taken possesion of by the customer not where it is shipped from.

Nope. If I buy a product in New York and have it shipped to Georgia, the product wasn't purchased in Georgia.

Try buying a car in another state and dodging sales tax in your home state

I do it all the time. If I purchase a car in Florida, I don't have to pay sales tax for that vehicle in Georgia.

149 posted on 12/22/2005 3:47:39 PM PST by jess35
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To: Blessed
I find the argument to give an unfair advantage to one retailer over another by using the tax code to be against everything a free people should stand for.If you don't like taxes get them repealed for everyone not a group of elites.

Your premise is that one locality stands to profit unfairly from not having to pay taxes due to purchases from that other location. To you I say tough Sh*& and more power to them. Any individual who stands to profit from not having to pay taxes on whatever should be applauded not derided. Thats what conservatism is all about in case you weren't aware......

150 posted on 12/22/2005 3:53:37 PM PST by Hot Tabasco (It must suck being an Islamofascist.......I don't bring them Christmas presents)
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To: The Foolkiller
They are not out to 'protect' ANYONE.

I stand corrected. What they are "protecting" are their revenue streams, as embodied in draconian taxation of B&M retailers, and they're trying to spread the pain in the interest of "fairness."

151 posted on 12/22/2005 4:14:08 PM PST by MCH
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To: Uncle Vlad
Not only that, but Wal-Mart sees the Internet as their present and future competition. They would love nothing more than to destroy e-commerce, so eventually no one would have any other choice than to go to them and buy their cheap crap.

Perhaps, but Walmart sells on-line as well. Fortunately for the local tax collector, they have a presence in every state in the union. But, they're still selling on-line and going with the trend toward on-line commerce vs. the more antiquated mode of physically looking at merchandise on a shelf, and using local roads & services to drive there themselves.

152 posted on 12/22/2005 4:20:26 PM PST by MCH
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To: Founding Father

"The difference between pubbies and democraps is ..."

It is not that there are differences...similarities, yes. They are all pols...money grubbin' pols. It seems hard to find real conservatives among any of them today. With real conservatives there are real differences between the others.


153 posted on 12/22/2005 4:24:37 PM PST by GGpaX4DumpedTea
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To: BradJ
If I buy it in the store I already pay tax.
I don't see what the big deal is if I pay tax for buying it on line.
154 posted on 12/22/2005 4:35:59 PM PST by Jorge (Q)
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To: The Foolkiller
How many posters in this thread laughed at smokers when they came after internet taxes?

Great point. I believe I've been on record against all this crap for years. People just don't understand the concept of incrementalism, and it's killing us. Literally.

155 posted on 12/22/2005 4:41:33 PM PST by zeugma (Warning: Self-referential object does not reference itself.)
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To: Dead Corpse
Dead, If you ever notice a good thread discussing corporate structure from a philosophical/practical standpoint, I'd appreciate a ping. I have serious concerns about the advisability of corporate "personhood".
156 posted on 12/22/2005 4:44:11 PM PST by zeugma (Warning: Self-referential object does not reference itself.)
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To: Blessed
Blessed: Quotes you've made in this thread...

Tax free zones like the internet are just government giving an unfair advantage to a few.

Even if it [government reduction of taxes] gives an unfair advantage to one retailer over another without any increase in productivity other than obtaining a government subsidy?

Having the federal government protect certain retailers and give one vendor a completive advantage is not free enterprise or anti-Uncle Sugar.The internet vendors are asking for welfare.

I am not saying the lack of a tax is a subsidy but exempting one group from paying an existing tax is a subsidy just like a welfare check.

If that is the case why do they need the extra advantage of having the Federal Government exempt them from State Taxes? That is not Free enterprise.

Why don't you explain to me how giving government protection to one competitor that another can't have is free enterprise if you understand it so well.

There is nothing Free Market about getting protection from the Federal Gov. to give yourself a competive advantage.

Obviously there's a common theme there, having to do with your argument that the government is "giving" things to Internet retailers such as (in your own words) "subsidies", "protection" and "advantages".

Remember, the government does not giveth, the government only taketh away. The government is not "giving" Internet retailers ANYTHING. They're merely "taking away" from B&M stores, because that way of doing business has been well established for a long time, and was identified long ago as a deep pocket that government could stick its hand into.

Do you also think that that tax breaks are unfair because they disproportionately "give money" to rich people? Same argument & connotation. If you do, then your true stripes are revealed. If you don't, you should change your argument to talk about the unfairness of "taking" from B&M retailers and not from Internet retailers. Much more accurate.

As for me, I'm all for much less of government legally extorting (taxing) money from ANYONE in a retail transaction. Sales taxes are regressive anyway - at all levels, and they're scoff-law taxes that are routinely skirted by everyone, if they can get away with it. How many private sellers do you think report eBay sales on their taxes? Are our elected "public servents" coming after eBay sellers & yard sale "vendors" next? Where will it all stop?

Hopefully it will stop NOW, before they get their grubby hands into yet another business arena. B&M retailers are already screwed. That doesn't mean everyone else should be screwed too. If you as a B&M retailer feel you are being treated unfairly, it's in your best interest to try and do something about it -- i.e. starting selling on-line or via catalog, figure out how to get around the latest tax laws to give yourself an advantage, or start lobbying to get rid of EXISTING sales taxes that unfairly burden you. This has been going on for years. If you're a B&M retailer (sounds like it), doing something about your plight should NOT involve trying to make yourself feel better about it by advocating having the government screw someone else over too. Internet retailers are not getting an advantage - you're getting a disadvantage.

157 posted on 12/22/2005 4:54:27 PM PST by MCH
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To: BradJ
Technically, you're supposed to estimate and pay these taxes voluntarily to your home state every April 15.

Well, maybe it's high time to begin enforcing THIS law that's ALREADY on the books, but has been ritually ignored, instead.

WTH IS it with these damnable fools in Congress that they have to make some NEW law in place of enforcing what's already there? Will we NEVER be FREE from the ignorance and seemingly unending cavalcade of bureaucratic stupidity?!

At the very LEAST, enforcing what's already been signed into law would encompass not only inernet sales, but mail order sales, as well. But, NOoooo, they've got to undertake some gold digging mission in cyberspace.

Obviously their brains have gone to Hell, perhaps the rest of their anatomy will soon follow.

158 posted on 12/22/2005 5:01:23 PM PST by HKMk23 (-- speechless --)
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To: HKMk23
Well, maybe it's high time to begin enforcing THIS law that's ALREADY on the books, but has been ritually ignored, instead.

LOL...of course it's ignored. The feds and state take money from me by force 365 days a year. Do they really think I'm going to go out of my way to figure out how they can seize even more money? The burden of proof should be on them, not us.

159 posted on 12/22/2005 5:30:12 PM PST by jess35
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To: Jacquerie

Every politician should be forced to read the Federalist Papers and take a test on it before being allowed to run.


160 posted on 12/22/2005 5:33:21 PM PST by Arkinsaw
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