Posted on 05/01/2013 5:54:14 AM PDT by xzins
The internet is the most recent, best equalizer for small businesses hoping to make it a business world that requires millions in facilities, start-up, advertising, and delivery.
That is why the following letter caught my attention regarding the proposed, new online sales tax. It is such a great, concise summary of the wrong-headedness of the internet sales tax. The great businesses spawned by the advent of the internet, the googles, facebooks, and amazons, are now huge. But the smaller businesses and potential start-ups are the real story.
Please read the following letter and, if it mirrors your sentiment, strongly consider sending a similar letter to your own Senators and Representative. Just as important are letters to governors and legislators, for they are the ones whose greed for new revenue that the Fed is appealing to.
RE: SENATE BILL 743; ONLINE SALES TAX
Dear Senator ________________:
There is nothing good about the so-called “Marketplace Fairness Act” – it is simply an attack on small business in America. Never forget that the Obama administration hates small business. Small businesses are poor organizing targets for Unions. There are more than 9,500 regional and local tax jurisdictions in our country; it will be an outrageous burden on small businesses to try to comply with all of these sales tax laws.
The only reason huge corporations like Wal-Mart are proponents of this bill is to stifle and crush competition. E-commerce is driven by product selection, price, and convenience – otherwise known as old-fashioned competition. It is not driven by the avoidance of local sales taxes. If you shop online, you realize that shipping charges are always added to your purchase. These shipping charges are always higher than what sales tax would be.
As a matter of principle, Republicans should be against this tax increase. This bill is about politicians in cash-strapped states (e.g. California) looking for new sources of income to fund their already irresponsible spending. Please do not be a party to that.
The GOP had better not become tax collectors for lib governors like Martin O Malley and Jerry Brown by supporting this crap.
I see McCain and many others voted to stab us in the back with this in Senate.
I don’t believe any republican who advocates “enhancing revenue” is any variety of fiscal conservative.
If the prongs of political conservatism are: social, economic, and defense, one would think that a conservative would be laughable if he didn’t support at least 2 of those 3 prongs. (Personally, I think 3 of 3 is required.)
Just being a defense hawk would mean that Joe Lieberman qualifies as a conservative. That’s just silliness. And we already know that McCain is not a social conservative.
They just want the whole pie. They don't care if it's smaller, just so long as they are the only ones who get to eat it.
Has it occurred to anyone that the proposed internet sales tax is exactly a tariff between states? We all know how tariffs suppress the economy.
I am not even that enthused about McCain's defense hawk positions esp with regard to Syria.
I saw McCain and Grahamnesty on the Sunday shows barking about Syria and it struck me as a smoke screen for all the backstabbing they are doing by siding with Obama and Reid on most issues : guns, amnesty and taxes.
Watch Gramnesty closely as he is very deceitful and dishonest.
Its intent is to encourage us to buy in-state even if the state-has high sales taxes as lib MD and CA both just raised theirs and WA has a high-one.
So big chains like Walmart Lobby $$$$ Senators and House members for this.
But this puts a number of GOP in a bad situation.
What if they apposed the tax cut extension because billionaires were NOT included in it and then they support this on us non-billionaires?
That would expose them.
I remember seeing a clause in the constitution stating all tax bills originate in the house.
For some reason, everyone is ignoring the fact that if this passes then sooner rather than later, every small business (online or not) will have to collect and distribute these taxes.
This is sure to harm the US Postal Service too.
There are more than 9,500 regional and local tax jurisdictions in our country; it will be an outrageous burden on small businesses to try to comply with all of these sales tax laws.A well-written law would require that states meet a common standard for a level of simplicity in order to participate in this new program. There is such a movement afoot, and Nevada for example joined that coalition and changed their sales tax to comply a few years ago.
But in the end, this is a red herring. A computer program will take any address in the country, and spit out the correct tax. Every business in a sales tax state has the software doing just this for their state. All you need to do is tie them all together.
Moreso, WalMart and other major brick-and-mortar companies already do this on-line, so they already have the program that provides the correct results.
This is like claiming that the government can't possible give you a tax refund, because there are 100 million different tax filings and each one is unique. It is all computers now, and lookup tables are trivial, you could build a million-item database or a billion-item database, makes no difference. Your IPAD could run the software (I've seen this done on portable devices at trade shows).
The issue isn't how hard it would be, the issue is whether the software will be cost-prohibitive. I would argue not once the bill is law, because of economy of scale. But if it is, the law could be written to require each state to provide a free program that meets interface standards and provides the answer needed; you would then tie the 50 programs together with a master program you'd buy.
The only reason huge corporations like Wal-Mart are proponents of this bill is to stifle and crush competition.Walmart is a proponent because they already do this job, since they have real stores in virtually every state, so they see this as making their competitors follow the same rules.
Amazon is now supporting this because they are spending a lot of money in lawsuits, and have decided that having a bill which provides some protection and forces all companies to do this would be cheaper for them than the legal bills -- it has reached the point where the advantage they get as a business helping people cheat on their state taxes isn't worth the cost.
No doubt, some companies are doing this to crush the competition; but the laws being proposed don't cover small business anyway, depending on how they define small business.
E-commerce is driven by product selection, price, and convenience – otherwise known as old-fashioned competition. It is not driven by the avoidance of local sales taxes.If that was true, Amazon wouldn't have constructed their entire business model on avoiding qualifying for sales tax -- since they have business partners for which they collect sales tax in every state, they weren't worried about the program, or the cost of reimbursing states. It was all about the competitive advantage of telling people "no sales tax". The argument is laughable -- I just went to several sites last night online, every one of which prominently told me on the front page "And No Sales Tax Collected".
Amazon has gone so far as to cancel productive affiliate programs JUST to avoid collecting sales taxes that they were already set up to collect and remit.
If you shop online, you realize that shipping charges are always added to your purchase. These shipping charges are always higher than what sales tax would be.That is hardly the case. Every item you buy from anywhere is shipped from where it is built. Most big chains have warehouses for intermediate storage, and then ship to their stores. FedEx and UPS are highly efficient now, and there is only a marginal extra cost to drive the truck around to every house, instead of stopping at every physical store. You can bet Amazon is not paying the same cost for shipping as you are.
I'd also argue that you can find free shipping at many online stores, but I realize that they have simply absorbed those costs, and adjusted their prices. But so have brick-and-mortar shops, which also have to pay someone to check you out, and someone to stock the shelves and clean them up at night -- the cost of putting an item on the shelf and then selling it is about the same as the cost of shipping an item to your home from a warehouse.
As a matter of principle, Republicans should be against this tax increase.There is no tax increase. Every state that has a sales tax already has a "use tax", payable by the purchasers whenever sales tax is not collected, or insufficient sales tax is collected. If people aren't paying the taxes now, it is because they are cheating on their taxes. Republicans should oppose tax cheating, but a lot of conservatives seem to actually applaud those who cheat on their taxes, since government takes too much in tax.
The conservative position is that everybody should be equally afflicted by the tax burden, and then the taxes should be reduced for everybody. We shouldn't support "tax cut by fraud", because that benefits the criminals at the expense of the law-abiding.
A better argument would be that republicans should oppose this law because they think it is the inappropriate way for the problem of tax cheats to be handled. However, to make that argument, you really need to provide another solution that works better. Because it is un-conservative to have two people who live next door to another pay different tax burdens simply because of where they choose to buy something. As conservatives, we should want taxes to be a little as possible, as broadly-based as possible, and as evenly applied as possible. We shouldn't be standing up for tax cheats.
This bill is about politicians in cash-strapped states (e.g. California) looking for new sources of income to fund their already irresponsible spending.It is about state politicians in EVERY state (Virginia is hardly cash-strapped, and they are pushing this legislation) which has a sales tax and has seen the sales tax revenue dropping every year, wanting a method by which they can get their residents to obey the tax laws and pay their required sales taxes.
Please do not be a party to that.I support making every person in a state pay the same sales tax on the same item purchased at the same price, regardless of how they purchased the item. If I buy Mark Levin's book from Barnes and Noble online, and my neighbor buys the book from Amazon.com for the same price, we should both pay the same sales tax.
I don't know if I support the specific bill coming out of the senate. You can do this right, and you can do this wrong. But I support fixing the problem, and I reject the argument that there is no problem.
The state should not be in the business of picking winners and losers. The tax code should be neutral, so that each business, big and small, compete on the same field, with the same costs. If shipping goods makes things more expensive, we shouldn't subsidize shipping by waiving sales tax. If you can't compete because of shipping costs, then you should fail.
B U M P
Wal-Mart in recent years, as a large corporate retailer, has basked in the 5% of tax subsidies out of all tax subsidies our social corporatist nation has handed out to large corporations. Wal-Mart’s take has been in the neighborhood of 2.5 BILLION dollars.
These are only federal level tax breaks. There are untold dollars in state, city, and local tax breaks that these companies control due to concessions given for “building in our town.”
Wal-Mart is also an international corporation with the ability to keep profits overseas, get credits on that money, and then use it for depreciation costs that net them even more tax breaks.
Yahoo in 2010 made about a billion in profit, got back about 100 million in concessions, and had a MINUS 10% tax rate.
Looking again at the list, the costs for a start-up business or a small business are not those of corporate sized monster than can wrangle better prices and better tax rates from everyone.
So, the principle of “everyone gets taxed the same” is simply not taking place.
But none of that has anything to do with the issue in this thread, which is individual purchasers paying the sales tax that the state they live in requires of them.
Under current law, the obligation is shared by all, whether a company collects the tax or not. But because it is so easy to cheat, most people do, because we have apparently long since lost the moral code expressed by this statement “Who would know? I would know”. When I grew up, “I would know” was indelibly imprinted on me.
There are many ways I could break the law, or cheat my company, or cheat others — but I would know. (and God would know, of course, but this is not a religious discussion). And since I value my own honor, more than I value the money I could save, I dutifully pay my “use tax” when sales tax is not collected.
But apparently most people see a chance to not pay their taxes without getting caught, and think it’s Christmas. So because people won’t obey the law “simply because it is there”, we are stuck with finding some way to make people comply with the law.
Our country cannot survive an immoral population. Freedom requires the vast majority of citizens to do what is right because that is what they are supposed to do. We have enough police to catch the few miscreants who don’t, and to put just enough “fear of God” into the rest of the people to help them remember that they are moral people.
If any sizable number of the population decides to break the law, we would need a vastly increased police force, and would lose our liberty to the police state that follows.
IN once sense, that is the real problem with this sales tax thing. It’s not a good solution, per see — if people would just pay their use taxes, we wouldn’t need it. But when too many people are willing to break the law, it becomes a burden to those who don’t break the law.
Imagine if every person decided to run red lights EXCEPT if there were cameras to catch them. You’d have accidents all the time. Eventually, you’d have to put up traffic cameras, and then the law-abiding who on a rare instance slid through a light a bit late when there was no traffic would get a ticket.
Nobody wants the police to have radar on them all the time, but if the entire population decided to drive recklessly, this would be the result.
And we see what happens whenever you get a mob together — they realize strength in numbers, and start looting and pillaging, knowing they can’t be caught. It’s a shame.
The new internet bill is not needed. There is already a law about sales taxing of internet purchases.
If the sale is to a person in the state where the business is located, then they are to collect that tax.
It imposes an ADDITIONAL burden on small businesses to collect sales tax for every state in the nation. That is not required of other businesses in the same state, so it is placing an extra burden and extra cost on them.
Even worse, if I in Ohio buy a gift for my son-in-law in Florida from an Ohio-based internet company, to be delivered to my Florida S-I-L, then I have to pay a Florida tax and not an Ohio tax, and the Ohio company has to somehow pay Florida and explain to Ohio.
You realize that does not happen if I buy from Wal-Mart here in Ohio and send the gift in the mail to Florida.
In short, the businesses are made collection agencies for EACH OF 50 GOVERNMENTAL ENTITIES AND COUNTLESS LOCAL ONES and that should not be. It is an inequality imposed on them that other businesses do not have to deal with, so it puts them at a disadvantage.
The current law requires the purchaser to report his out of state purchases on the internet and pay his own tax. He does the same with interest from bank accounts, with personal business income, etc. Self-reporting is not a new concept in the tax world.
There is no reason some business should be forced to be EVERY state and locality’s tax collection agency.
Where we really should be looking is at the fine print. Why is there a need for a new law when the old law already requires me to pay my sales tax?
What else is in there in that law that we won’t know ‘til the other shoe drops, as with ObamaCare?
And all of this is on top of the tax incentives and subsidies given to big businesses by local and state governments.
Keep the system as it is. Let each buyer be required to inform his state of his purchases and pay his own sales tax.
What does happen? Is Walmart smart enough to bill you at the Florida tax rate? There's no reason any internet company couldn't do that.
You are correct that the states have long decided to live with the fact that purchases by their own residents made in other states were taxed by those other states. Although the 'use tax' rules clearly require the resident to make up for any difference in the tax rate. I think the states figure that it is a wash, as each state loses taxes to the other states, but also gains taxes from residents of those states coming to their stores.
The issue is when there are stores you don't have to go to, and which collect sales tax for no state. Going after just internet companies doesn't completely fix the problem; but I hardly think those objecting would like it if we "fixed" that problem in the bill, by including requirements for stores to do the same job when people walk in to purchase things.
But if that was the insistence, at least I could support that as being consistent with the principle that the taxes be applied in a standard fashion to all purchases.
I would say that there is a reasonable assumption that a company selling over the internet has some ability to use computers, and to track purchases and payments electronically. It is not going to always be the case for a brick-and-mortar store. But if they have online access in the store, they could easily ask for the address of the person buying a product, and go online to calculate the sales tax. It's just that you are at a point-of-sale at that point, and dealing with cheap hired labor who are not trained for the task, and training every cashier in a state for the half-dozen occurrences would not seem to be cost-effective.
It imposes an ADDITIONAL burden on small businesses to collect sales tax for every state in the nation. That is not required of other businesses in the same state, so it is placing an extra burden and extra cost on them.
The burden is based on a decision by a company to sell things to a state. And the burden would be shared by every company who makes that decision. Yes, you are correct as I said before, that the burden does not extend to a business where the "out-of-state" purchaser is actually IN the state and at the shop, but that is a rational distinction. IN one sense, if the guy is standing at your cash register, he is IN YOUR STATE, and it isn't your job to find out if that person is going to use the product in the state, or take the product to some other state to use it (which is what triggers a "use tax" liability).
If a person orders a product and asks for it to be shipped to another state, then you could tax based on the state. That is what the internet companies are going to be asked to do -- apply taxes to the place where the purchase is made (the buyer's computer), or to the place where the purchase is finalized (the location where the product is delivered).
In one sense, an online business exists in every state, because it exists as a web page on the computer in the person's home.
That isn't far-fetched. Think about another law -- the law against child pornography. If a person pulls up a web page, and that page has child pornography, and they are caught, who is getting arrested? The person looking at the pornography, because it is considered that the porn is IN HIS HOUSE.
So by the same token, the online business is "in my house" when I am telling MY computer that I want to buy something, and MY computer is collecting my information, and the product is delivered to MY door. Yes, the supreme court ruled that the business was not located here simply by having a web page, but as a conceptual matter, it isn't a farfetched idea.
I wish there was a better way to do this. Every way has issues. For example, rather than having business collect the information, we COULD have business simply provide to each state a report of every address that purchased items, with the date and price of the total purchase.
Then the state could collect all these reports, generate an audit list, and pick the biggest value targets. They could go after the individuals, and ask them to show why those purchases didn't require a "use tax". It would be like the W-2, 1099, and other forms that businesses are required to submit in order to help enforce tax law.
This has the benefit that the out-of-state business doesn't have to know anything about a state's sales tax, doesn't have to handle money, and doesn't have to transfer money to 50 states.
The argument I've seen against this is the very idea of letting the government know that you are making purchases out-of-state. This opens up privacy concerns -- especially if you go a bit further and include the actual invoices so the state would know WHAT you bought, rather than just how much you spent.
This already happens on some limited basis though. For example, Virginia had some deal with North Carolina where the big furniture suppliers would report purchases (this was the really big sales-tax issue decades ago), and then the state would go to those buyers and make them pay their sales tax.
I will say that if you did this, people would then know they could get caught, and be fined or have to pay penalties. That knowledge would be enough to get a significant number of people to stop ignoring their tax liability, and would largely solve the problem.
What do you think? Would you find such a solution worse than the "make business collect taxes"?
I think the best solution is the honor system. People should report their own purchases and pay their own taxes to their own state.
That means there will be no need for this new law. That is already the requirement.
That is already the case with any independent earnings I manage, so if it’s good enough for earnings, then it’s good enough for sales.
That would be the best, except that a vast majority of the people in this country no longer have any honor.
It is already the law. The Fed gets nothing out of this so far as the focus of all the news reports are saying. Out of the kindness of their hearts, they’re promoting this on behalf of state sales taxes.
I’ve not seen the text of the law, and I smell a federal rat. Not for a moment do I believe there isn’t something in that text — overt or covert — that the fed really wants.
Have you read it in its entirety?
No. Haven’t seen the latest wording.
But you know that congress is made up of representatives from the states, and when all the states are asking for something, their representatives can push a bill that would help their states, without the feds getting anything.
None of the bills that I have seen had anything for the fed. Doesn’t mean they couldn’t put something in.
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.