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I am English, not American, so I may be misunderstanding this - but I believe sales tax might prove an incentive for some states to oppose any changes to their

I am English, not American, so I may be misunderstanding this - but I believe sales tax might prove an incentive for some states to oppose any changes to their existing laws on this. As I understand it, local sales taxes are paid to the state where the sale is made. I assume every state has lots of car dealerships, but only a few states have car manufacturers. This would mean that if everyone started buying their cars online direct from the manufacturers then the taxes would go from being distributed around the country to being concentrated to a few states. Surely those states without manufacturers would lose a lot of sales tax if this happened, so would have a strong incentive to oppose such a change.

TrisMcC 11y ago
I live on the border of a tax-free state (New Hampshire, live in Maine). When a car is purchased in NH, the sales taxes are assessed at the time of the auto registration (5.5% in Maine). No sales taxes are lost to the state.
mikeyouse 11y ago
In the US, you're supposed to claim the sales taxes for all of your out-of-state online purposes every year. There's a supplement to your tax forms where you can itemize all of the online purchases you made and how much sales tax you owe. Since this form is voluntary and results in higher taxes, you can guess how many people actually go through this step. However, like TrisMcC says, most states assess Sales Tax when you register the car in the state. So if you bought a car for $50k in Oregon (no Sales Tax), but then registered it in California (7.5%+ Sales Tax), your registration fees would be the standard fee + $3,750. If you bought your car more than 1 year ago (in California at least), you don't owe any sales tax and if you bought it in a state with lower tax, you just owe the difference. For big online companies, we've started mandating that they collect sales tax on behalf of the customers, so for instance, Amazon now automatically collects sales tax based on where your billing address is. If direct sales were allowed, there'd surely be legislation to ensure that the manufacturers collect the tax for their customers.

TrisMcC 11y ago

I live on the border of a tax-free state (New Hampshire, live in Maine). When a car is purchased in NH, the sales taxes are assessed at the time of the auto registration (5.5% in Maine). No sales taxes are lost to the state.

mikeyouse 11y ago

In the US, you're supposed to claim the sales taxes for all of your out-of-state online purposes every year. There's a supplement to your tax forms where you can itemize all of the online purchases you made and how much sales tax you owe. Since this form is voluntary and results in higher taxes, you can guess how many people actually go through this step. However, like TrisMcC says, most states assess Sales Tax when you register the car in the state. So if you bought a car for $50k in Oregon (no Sales Tax), but then registered it in California (7.5%+ Sales Tax), your registration fees would be the standard fee + $3,750. If you bought your car more than 1 year ago (in California at least), you don't owe any sales tax and if you bought it in a state with lower tax, you just owe the difference. For big online companies, we've started mandating that they collect sales tax on behalf of the customers, so for instance, Amazon now automatically collects sales tax based on where your billing address is. If direct sales were allowed, there'd surely be legislation to ensure that the manufacturers collect the tax for their customers.