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.
It isn't costing the states anything.
You don't think the delivery companies are already paying taxes in your state? Your position could benefit from some serious thought.
You really don't seem to understand who is using the roads here. UPS, USPS, FedEx, are using your precious roads, not the internet retailer. Those companies are already taxed by your state in several ways. If I visited Uncle Elmer in your state and drove on your roads but I filled my tank at home and didn't pay any fuel taxes in your state do I need to send you a check at the end of the year? If the man who robs my house flees across the border and is arrested in your state where do I send the check? Do I make out separate payments to the local, law enforcement agency that arrested, the state law agency that issued the notice of his warrant, the municipal jail that held him, the court that extradites him? Your sense of the governments entitlement to collect from everyone, everywhere for everything is frightening.
psst.
You say this like it is more than a tiny percentage of money spent.
Personally, I'll go along with anything that reduces the amount of taxes I pay. I'm happy to have the internet be a tax free zone.
I highly recommend you take a few hours and read the Supreme Court decision of Quill vs. North Dakota.
You are making many of the same arguments that North Dakota tried to make. (And they lost...)
I have read through the decision and the court ruled against many of the ideas you are advocating. Not just any court, the Supreme Court.
I've spent many many hours researching this about 2 years ago and I still agree with the Supreme Court's decision.
http://www.law.umkc.edu/faculty/projects/ftrials/conlaw/quill.html
Tty the above link and read the decision. Also, take note which justices were in the majority.
It's good reading.
Great plan to destroy the economy big-time. As usual in a free market economy, whole businesses are springing up and growing to support something new & of value to people - in this case the burgeoning on-line business environment. Taxes will put a major damper on it, add layers of bureaucracy (cost), and shut down new & vibrant businesses built around the Internet - which is the biggest current engine of economic growth we have.
We already have to pay shipping costs for on-line stuff, which often more than makes up for taxes. However, it's still worth doing to eliminate the hassle of driving around (good for environment) looking for something you can quickly find online. Plus the online world is more competitive, so you can usually find a better deal to offset the shipping costs. Throw taxes on top of shipping charges and we'll be forced back to the cave man days of driving all over kingdom come to hope to happen upon the right store that sells something for a reasonable price & actually has it in stock -- all to avoid draconian shipping charges PLUS taxes on top of anything you buy on-line.
The message to date has been obvious to modern retailers. Go on-line to grow your business, or risk going out of business. These "legislators" don't like this. They are out to maintain the status quo & protect mom & pop stores against progress and new competition presented by the Internet and on-line shoppers. Kind of like protecting the whip & buggy industry. Plus, they just can't keep their money-grubbing hands out of anything that involves growing revenues in the private sector. Greedy, knuckle-dragging jerks - no matter what party they're in.
How do we NOT permit it?
They don't pay sales tax.Any other taxes they pay are payed by the people of our state.
>Do I make out separate payments to the local, law enforcement agency that arrested, the state law agency that issued the notice of his warrant, the municipal jail that held him, the court that extradites him? Your sense of the governments entitlement to collect from everyone, everywhere for everything is frightening.<
That is a asinine argument.It actually explains why the state is entitled to collect sales tax and brick and mortar presence in the state coupled with they don't recieve any services is a nonstarter. That is the silly argument I was refuting.
You don't seem to understand...if I own a business and sell a product to someone living in your state, I'm not costing your state ONE penny. You're not providing police, fire, emergency services, etc... for my business. Under your looter mentality, if I send a postcard to a friend living in your state, I should be liable for sales tax because the USPS has to drive that postcard to the address of the recipient.
I think I am coming to really dislike senators lately.
Exactly. It has gotten to the point where I really couldn't care less who wins elections anymore. It has been shown to me time and time again that once Republicans gain power they start acting like Democrats.
Yeah... good luck with that. Not that it isn't a worthy goal, but in case you haven't noticed... things are trending the OTHER way.
Bull Cr@p
In Wisconsin, we have what is called a "Sales and Use Tax". It is our law that if you purchase anything that has not had the sales tax collected on it (internet purchases for example) you are supposed to report it and pay the tax.
>We already have to pay shipping costs for on-line stuff, which often more than makes up for taxes.<
Bet you think corporations pay taxes also.You paying shipping cost on everything you buy unless you are picking it up at the point of origion.
I bet you think that I think that you are a troll too :P
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.