7 ms·

Democrats Push for Internet Sales Taxes

29 points by ojbyrne 16y ago

deleted 16y ago
[deleted]
- MichaelSalib 16y ago
  When last I looked, MA did not have a significantly higher taxes than other comparable states. Do you have a cite showing otherwise? I mean, MA certainly has higher tax rates than some undeveloped backwoods rural states that have little intellectual or human capital to speak of. But it is precisely because MA has real human capital that companies like ITA Software reside there rather than in lower tax states like Mississippi.
kungfooey 16y ago
The title is somewhat misleading. It's not really a new tax, just a different interpretation/application of an existing tax. I do love how these bills always come under such monikers as the "Main Street Fairness Act." Lack of regulation is one part of what makes internet-based commerce so great. I wonder if services (ie: Basecamp, git, etc) would fall under the sales tax, further complicating the legal landscape of 'net based tools. In the state of Tennessee, software development services that I render to local companies is already taxable under a 10% "use" tax (the state has no income tax, and developing software is considered creating something of 'use,' therefore, taxable).
mudil 16y ago
Ronald Reagan liked to describe the sequence of actions that government typically takes toward private business: "If it moves, tax it. If it keeps moving, regulate it. If it stops moving, subsidize it." http://online.wsj.com/article/SB10001424052748704575304575296970648330714.html http://online.wsj.com/article/SB1000142405274870457530457529...
- _delirium 16y ago
  Does this comment add anything to the topic under discussion, or is it just a general "I hate taxes and love Ronald Reagan" political jab? Do we really want DailyKos-quality political discussion here?
  - mudil 16y ago
    The comment is what exactly happens when gov't sticks its nose into private enterprise. It is true regardless who says it.
    - _delirium 16y ago
      Isn't it kind of boring to just copy and paste a generic anti-tax quote, though, with the only relationship being that this is a discussion involving taxes? I could copy-and-paste some generic pro-government quote from JFK or something, but it wouldn't be too useful either.
      - mudil 16y ago
        The quote is dealing exactly with the problem we are witnessing. Internet is a vibrant bazaar of ideas and products and services. It runs: so they will tax it. Stage one is being negotiated. Probably not in our lifetime, but in our children's, the third stage will be accomplished. P.S. Please I want to see a quote from JFK or even Obama Himself on why it is good to strap an industry. But best place to find a quote like that would be in the Lenin Library.
      - harold 16y ago
        "Lower rates of taxation will stimulate economic activity and so raise the levels of personal and corporate income as to yield within a few years an increased – not a reduced – flow of revenues to the federal government." – John F. Kennedy, Jan. 17, 1963, annual budget message to the Congress, fiscal year 1964
_delirium 16y ago
It does make some sense to me to rationalize it somehow, though not necessarily in this direction. It seems somewhat strange that if I sell stuff to people near me, sales tax is collected, but if I sell stuff to people far from me, sales tax isn't collected--- leads to perverse incentives against buying things that are already near you, and instead encouraging you to buy exactly the same thing from somewhere else where it has to be shipped to you.
- itistoday 16y ago
  Yes, but how does this apply to intangible goods and services? I hope they're not planning on taxing that. It also seems like something that would be very difficult to implement and enforce, you know, considering the whole no-boundaries thing.
  - mudil 16y ago
    You hope? You really hope for gov't to restraint itself? Good luck with that!
    - itistoday 16y ago
      Did you skip your civics classes? What do you think gives you permission to say that? Did you forget that the government is run by elected officials? The entire Bill of Rights is an example of government restraining itself. The Constitution is an example of that.
      - drblast 16y ago
        Nothing gives him permission to say that; the U.S. was founded on the idea that you don't need anyone's permission to do things that don't harm other people. It's an inalienable right; you can't take it away. Our entire short history is a narrative of how the government erodes the Constitution and that basic idea at every opportunity. Hardly a model of restraint.
        16y ago
codingthewheel 16y ago
As a freelance developer who sells software and services on the side, I can say this would hurt. Badly. First, the clerical and administrative requirements. It's tough enough to set up e-commerce as it is without also having to track purchases by whatever state's perverse and Byzantine tax infrastructure. My God. But let's assume the payment gateways handled this at their end. Fine. Next: the $$$. I don't know about you, but I'm not a good enough marketer (or developer) to overcome yet another 10% vig on my productivity. I already get to keep less than 50% of what I earn. If margins are razor thin at the equilibrium price point without taxes, then the addition of taxes simply causes business to fail. Not everybody's margins are this thin, but small businesses often are. And that's who this bill would ultimately hurt. Not to mention geolocation issues. We already can't say with any certainty where a particular IP address hails from. Oh we can get it 80% of the time. But proxies, dynamic IPs, mobile connections, cloud the issue. What happens if you're actually in California, but your cellphone is talking to a relay in Nevada, and you live in Texas, but you're buying a product from a company based in Florida, but of course the actual product's not in Florida, it's at the warehouse in Missouri. The last person in the world I trust to make sense out of this is a politician, or a politician's trained IT monkey. Ranting aside though, I don't see any way to change this. The government will have its due, and there's a notion of "implicit collusion" among corporations: which is that incrementally and over time, competition can be squashed by raising the barriers to entry through taxation and regulation. The Internet threw a screwdriver into the gearworks, but rest assured, they'll get you my pretty. And your little dog, too.
- avalara 16y ago
  Pointing out Avalara's avatax. Solutions to this problem are not quite as expensive as you point out. http://www.avalara.com/Sales-Tax-Web-Services http://www.avalara.com/Sales-Tax-Web-Services But still a cost, and taxation is still a vile form of theft.
  - MichaelSalib 16y ago
    taxation is still a vile form of theft. Indeed, and that's why I long for the business paradise of Somalia, where no one ever has to pay any taxes.
r0s 16y ago
"online retailers should be forced to collect the same taxes that brick-and-mortar retailers do." Pretty sure all retailers are exempt from tax on out-of-state sales. But don't let that stop the money grab. I'm personally more concerned with closing tax loopholes for the largest businesses and allocating funds from wasteful programs (DHS).
- MichaelSalib 16y ago
  Pretty sure all retailers are exempt from tax on out-of-state sales. I don't think this is true in most states. If I as a resident of MA buy something from a company in CA, the company doesn't have to collect the tax and pay it to MA, but I am still responsible for doing that.
  - steadicat 16y ago
    You are responsible for doing that for Internet purchases as well. See orev's comment above: Everyone is required to pay sales tax for purchases made over the Internet, there's just no way for the states to enforce it. That's why most state tax forms now ask you what purchases you've made online so they can add that into the tax. If you don't answer this question truthfully, then your liable for tax evasion.
    - MichaelSalib 16y ago
      Isn't that exactly what I said?
    - whyenot 16y ago
      I think it's more of a "Greek tax" -- you are supposed to pay it, but almost nobody does. The current system is pretty unfair to local retails. I recently bought a new camera. My local camera store, Keeble and Schuchat, had it for $819. Amazon.com had it for $819. Santa Clara County sales tax adds an extra $75. How many people are choosing Amazon over a local retailer in that kind of situation -- I bet a lot do.
    - r0s 16y ago
orev 16y ago
The article (or at least the headline) frames this politically and that makes the author (or editor) a bad journalist. Everyone is required to pay sales tax for purchases made over the Internet, there's just no way for the states to enforce it. That's why most state tax forms now ask you what purchases you've made online so they can add that into the tax. If you don't answer this question truthfully, then your liable for tax evasion.
DanielBMarkham 16y ago
The saddest part about this story is going to be the people who will rationalize it, even though if it were 4 years ago and the opposite party, they would be raising hell.
kqr2 16y ago
Some states, such as California, already have a use tax. Although they cannot directly tax out of state businesses, they can push that burden onto its residents. You are supposed to track all out of state purchases and pay the tax when you file your normal income tax. In fact, software such as Turbo Tax, will automatically prompt you for it. http://www.boe.ca.gov/sutax/faqusetax.htm http://www.boe.ca.gov/sutax/faqusetax.htm
SkyMarshal 16y ago
What's ridiculous is that the financial industry just extorted a trillion dollars out of the US Government, and now instead of increasing taxes on the industry that makes money by moving money around, the government is looking to squeeze productive enterprises to make up some of the shortfall. There's absolutely no justification for even having this discussion in Congress. Can we please have our Ghandi-esque civil disobedience revolt now?
dublinclontarf 16y ago
Would this not simply mean that even more business would move outside the US? OK for physical good's that won't happen but SaaS, why not relocate to ... Ireland or even better, Iceland (I know for a fact tax in Ireland is much lower, not sure about Iceland, that's an assumption based on something I vaguely remember reading).
TerminalDummy 16y ago
Why does my own party make me hate them more, and more, and more ?
- sabat 16y ago
  My thoughts exactly.
petercooper 16y ago
Scrap sales taxes and replace them with a single, national synchronized VAT. Say 10%. Sure, sure, it'll never happen because hundreds of thousands of people make their living out of taxes being complicated and screwing every one of you over, but hey, I'm a utopian.
- jboydyhacker 16y ago
  Why do you believe a VAT is less complicated than a sales tax. If the issue is conformity across jurisdictions, a 10% VAT made uniform us just as easy to do as making all sales tax 10%. And a Vat is far more complicated to collect since it has to be assessed at every stage of production. In addition, a VAT discourages domestic production since it is not assessed on foreign production, only U.S. production and "value added" is taxed which is horrible if you want to promote U.S. manufacturing. A sales tax is far better than a VAT. We don't need to copy Europe in every single way do we?
CRASCH 16y ago
I hope if they must implement this that they turn it on its head. The sale would take place in the state that the seller is located in, not the buyer. At the very least it would be less work. One state tax code to deal with instead of 50. The bonus is that most online retailers already have to collect tax for in state purchases.
- abalashov 16y ago
  What state is the "seller" located in, in the case of an online store? :-) Is "location" defined by the jurisdiction where an incorporated entity of some description is registered? Or where the business owner maintains residence? What if there are multiple owners; then, which one? Is it about where the servers are hosted? All these attributes can be moved around; I live in Georgia but can register my corporation in Delaware. I can host my servers in Norway. And so on...

29 points by ojbyrne 16y ago

deleted 16y ago

[deleted]

MichaelSalib 16y ago
When last I looked, MA did not have a significantly higher taxes than other comparable states. Do you have a cite showing otherwise? I mean, MA certainly has higher tax rates than some undeveloped backwoods rural states that have little intellectual or human capital to speak of. But it is precisely because MA has real human capital that companies like ITA Software reside there rather than in lower tax states like Mississippi.

kungfooey 16y ago

The title is somewhat misleading. It's not really a new tax, just a different interpretation/application of an existing tax. I do love how these bills always come under such monikers as the "Main Street Fairness Act." Lack of regulation is one part of what makes internet-based commerce so great. I wonder if services (ie: Basecamp, git, etc) would fall under the sales tax, further complicating the legal landscape of 'net based tools. In the state of Tennessee, software development services that I render to local companies is already taxable under a 10% "use" tax (the state has no income tax, and developing software is considered creating something of 'use,' therefore, taxable).

mudil 16y ago

Ronald Reagan liked to describe the sequence of actions that government typically takes toward private business: "If it moves, tax it. If it keeps moving, regulate it. If it stops moving, subsidize it." http://online.wsj.com/article/SB10001424052748704575304575296970648330714.html http://online.wsj.com/article/SB1000142405274870457530457529...

_delirium 16y ago
Does this comment add anything to the topic under discussion, or is it just a general "I hate taxes and love Ronald Reagan" political jab? Do we really want DailyKos-quality political discussion here?
- mudil 16y ago
  The comment is what exactly happens when gov't sticks its nose into private enterprise. It is true regardless who says it.
  - _delirium 16y ago
    Isn't it kind of boring to just copy and paste a generic anti-tax quote, though, with the only relationship being that this is a discussion involving taxes? I could copy-and-paste some generic pro-government quote from JFK or something, but it wouldn't be too useful either.
    - mudil 16y ago
      The quote is dealing exactly with the problem we are witnessing. Internet is a vibrant bazaar of ideas and products and services. It runs: so they will tax it. Stage one is being negotiated. Probably not in our lifetime, but in our children's, the third stage will be accomplished. P.S. Please I want to see a quote from JFK or even Obama Himself on why it is good to strap an industry. But best place to find a quote like that would be in the Lenin Library.
    - harold 16y ago
      "Lower rates of taxation will stimulate economic activity and so raise the levels of personal and corporate income as to yield within a few years an increased – not a reduced – flow of revenues to the federal government." – John F. Kennedy, Jan. 17, 1963, annual budget message to the Congress, fiscal year 1964

_delirium 16y ago

It does make some sense to me to rationalize it somehow, though not necessarily in this direction. It seems somewhat strange that if I sell stuff to people near me, sales tax is collected, but if I sell stuff to people far from me, sales tax isn't collected--- leads to perverse incentives against buying things that are already near you, and instead encouraging you to buy exactly the same thing from somewhere else where it has to be shipped to you.

itistoday 16y ago
Yes, but how does this apply to intangible goods and services? I hope they're not planning on taxing that. It also seems like something that would be very difficult to implement and enforce, you know, considering the whole no-boundaries thing.
- mudil 16y ago
  You hope? You really hope for gov't to restraint itself? Good luck with that!
  - itistoday 16y ago
    Did you skip your civics classes? What do you think gives you permission to say that? Did you forget that the government is run by elected officials? The entire Bill of Rights is an example of government restraining itself. The Constitution is an example of that.
    - drblast 16y ago
      Nothing gives him permission to say that; the U.S. was founded on the idea that you don't need anyone's permission to do things that don't harm other people. It's an inalienable right; you can't take it away. Our entire short history is a narrative of how the government erodes the Constitution and that basic idea at every opportunity. Hardly a model of restraint.
      - 16y ago

codingthewheel 16y ago

As a freelance developer who sells software and services on the side, I can say this would hurt. Badly. First, the clerical and administrative requirements. It's tough enough to set up e-commerce as it is without also having to track purchases by whatever state's perverse and Byzantine tax infrastructure. My God. But let's assume the payment gateways handled this at their end. Fine. Next: the $$$. I don't know about you, but I'm not a good enough marketer (or developer) to overcome yet another 10% vig on my productivity. I already get to keep less than 50% of what I earn. If margins are razor thin at the equilibrium price point without taxes, then the addition of taxes simply causes business to fail. Not everybody's margins are this thin, but small businesses often are. And that's who this bill would ultimately hurt. Not to mention geolocation issues. We already can't say with any certainty where a particular IP address hails from. Oh we can get it 80% of the time. But proxies, dynamic IPs, mobile connections, cloud the issue. What happens if you're actually in California, but your cellphone is talking to a relay in Nevada, and you live in Texas, but you're buying a product from a company based in Florida, but of course the actual product's not in Florida, it's at the warehouse in Missouri. The last person in the world I trust to make sense out of this is a politician, or a politician's trained IT monkey. Ranting aside though, I don't see any way to change this. The government will have its due, and there's a notion of "implicit collusion" among corporations: which is that incrementally and over time, competition can be squashed by raising the barriers to entry through taxation and regulation. The Internet threw a screwdriver into the gearworks, but rest assured, they'll get you my pretty. And your little dog, too.

avalara 16y ago
Pointing out Avalara's avatax. Solutions to this problem are not quite as expensive as you point out. http://www.avalara.com/Sales-Tax-Web-Services http://www.avalara.com/Sales-Tax-Web-Services But still a cost, and taxation is still a vile form of theft.
- MichaelSalib 16y ago
  taxation is still a vile form of theft. Indeed, and that's why I long for the business paradise of Somalia, where no one ever has to pay any taxes.

r0s 16y ago

"online retailers should be forced to collect the same taxes that brick-and-mortar retailers do." Pretty sure all retailers are exempt from tax on out-of-state sales. But don't let that stop the money grab. I'm personally more concerned with closing tax loopholes for the largest businesses and allocating funds from wasteful programs (DHS).

MichaelSalib 16y ago
Pretty sure all retailers are exempt from tax on out-of-state sales. I don't think this is true in most states. If I as a resident of MA buy something from a company in CA, the company doesn't have to collect the tax and pay it to MA, but I am still responsible for doing that.
- steadicat 16y ago
  You are responsible for doing that for Internet purchases as well. See orev's comment above: Everyone is required to pay sales tax for purchases made over the Internet, there's just no way for the states to enforce it. That's why most state tax forms now ask you what purchases you've made online so they can add that into the tax. If you don't answer this question truthfully, then your liable for tax evasion.
  - MichaelSalib 16y ago
    Isn't that exactly what I said?
  - whyenot 16y ago
    I think it's more of a "Greek tax" -- you are supposed to pay it, but almost nobody does. The current system is pretty unfair to local retails. I recently bought a new camera. My local camera store, Keeble and Schuchat, had it for $819. Amazon.com had it for $819. Santa Clara County sales tax adds an extra $75. How many people are choosing Amazon over a local retailer in that kind of situation -- I bet a lot do.
  - r0s 16y ago

orev 16y ago

The article (or at least the headline) frames this politically and that makes the author (or editor) a bad journalist. Everyone is required to pay sales tax for purchases made over the Internet, there's just no way for the states to enforce it. That's why most state tax forms now ask you what purchases you've made online so they can add that into the tax. If you don't answer this question truthfully, then your liable for tax evasion.

DanielBMarkham 16y ago

The saddest part about this story is going to be the people who will rationalize it, even though if it were 4 years ago and the opposite party, they would be raising hell.

kqr2 16y ago

Some states, such as California, already have a use tax. Although they cannot directly tax out of state businesses, they can push that burden onto its residents. You are supposed to track all out of state purchases and pay the tax when you file your normal income tax. In fact, software such as Turbo Tax, will automatically prompt you for it. http://www.boe.ca.gov/sutax/faqusetax.htm http://www.boe.ca.gov/sutax/faqusetax.htm

SkyMarshal 16y ago

What's ridiculous is that the financial industry just extorted a trillion dollars out of the US Government, and now instead of increasing taxes on the industry that makes money by moving money around, the government is looking to squeeze productive enterprises to make up some of the shortfall. There's absolutely no justification for even having this discussion in Congress. Can we please have our Ghandi-esque civil disobedience revolt now?

dublinclontarf 16y ago

Would this not simply mean that even more business would move outside the US? OK for physical good's that won't happen but SaaS, why not relocate to ... Ireland or even better, Iceland (I know for a fact tax in Ireland is much lower, not sure about Iceland, that's an assumption based on something I vaguely remember reading).

TerminalDummy 16y ago

Why does my own party make me hate them more, and more, and more ?

sabat 16y ago
My thoughts exactly.

petercooper 16y ago

Scrap sales taxes and replace them with a single, national synchronized VAT. Say 10%. Sure, sure, it'll never happen because hundreds of thousands of people make their living out of taxes being complicated and screwing every one of you over, but hey, I'm a utopian.

jboydyhacker 16y ago
Why do you believe a VAT is less complicated than a sales tax. If the issue is conformity across jurisdictions, a 10% VAT made uniform us just as easy to do as making all sales tax 10%. And a Vat is far more complicated to collect since it has to be assessed at every stage of production. In addition, a VAT discourages domestic production since it is not assessed on foreign production, only U.S. production and "value added" is taxed which is horrible if you want to promote U.S. manufacturing. A sales tax is far better than a VAT. We don't need to copy Europe in every single way do we?

CRASCH 16y ago

I hope if they must implement this that they turn it on its head. The sale would take place in the state that the seller is located in, not the buyer. At the very least it would be less work. One state tax code to deal with instead of 50. The bonus is that most online retailers already have to collect tax for in state purchases.

abalashov 16y ago
What state is the "seller" located in, in the case of an online store? :-) Is "location" defined by the jurisdiction where an incorporated entity of some description is registered? Or where the business owner maintains residence? What if there are multiple owners; then, which one? Is it about where the servers are hosted? All these attributes can be moved around; I live in Georgia but can register my corporation in Delaware. I can host my servers in Norway. And so on...