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Democrats Introduce Federal Bill to Collect Online Sales Tax

38 points by jenhsun 15y ago

abyssknight 15y ago
Interesting to see Amazon on that side of the fence. If they ask people to report on their own, it won't happen. As much as I hate the idea of taxes online, this makes sense -- collect what is already due.
- troutwine 15y ago
  Reading the language of the bill, I'm unsure on one point: what about those states which do not have a sales tax? Here in Oregon my income tax is slightly higher but I pay no sales tax. This is good for: * the poor * local commerce (we get out of state folks buying) * tax code complexity If this bill passes and the "framework" enforces a federal sales tax I will be most put out.
  - jrockway 15y ago
    My guess is that you will get a refund at the end of the year. Of course, now you'll have to track how much in "taxes" you paid, so you can ask for the right amount back.
    - troutwine 15y ago
      Jolly. I suppose if this bill passes it will provide further incentive for me to shop locally or, indeed, exclusively--especially as Portland _has_ shops in which it is a joy to purchase goods. I dislike the further record-keeping burden it places on each citizen, though that's somewhat par for the course in the US tax code.
petercooper 15y ago
The Main Street Fairness Act doesn't ask anyone to pay a single penny more in taxes. Instead, it would help governors and mayors collect taxes that are already owed. This seems to be an interesting selling point, except that people, in the main, seem to not be paying taxes they actually owe. What I wonder as a non-American, though, is how illegal is this practice? Is it essentially a form of tax evasion and, therefore, a crime? If so, why hasn't there been a random "shakedown" RIAA-style to scare people into declaring these purchases and paying the taxes?
- viggity 15y ago
  They don't owe anything, the Supreme Court has ruled that you don't have to collect sales tax unless you have a presence in the state (a la the Commerce Clause of the Constitution). It isn't tax evasion, pure and simple. Congress has the sole authority to tax and regulate interstate commerce, and if they choose to do so via this act, that is fine and dandy but that is a totally different issue.
  - jerf 15y ago
    You've got too many pronouns without antecedents in your post. The merchants are not liable to collect sales tax, but customers may be liable to pay it under their state law. This is called a use tax: http://en.wikipedia.org/wiki/Use_tax http://en.wikipedia.org/wiki/Use_tax Exact details vary from jurisdiction to jurisdiction... and in fact that's the problem this bill is intended to address. A federal framework is necessary to avoid the problem of being required to track an arbitrary number of non-Federal frameworks.
  - rprasad 15y ago
    The purchaser has always been responsible for the sales tax. However, in America, almost all taxing jurisdictions implement a withholding charge on the merchant, so that the merchant collects the sales tax owed by the purchaser on the purchaser's behalf. Quill v. North Dakota, the SCOTUS case to which you refer, was about a sale-order catalog's obligation to withhold the sales tax for purchases by out-of-state state customers (in the case, customers in North Dakota). SCOTUS ruled that North Dakota did not have the jurisdiction to impose a withholding obligation on Quill because it did not do sufficient business in the state to have a "presence". However, after the case in various speeches, several of the deciding justices noted that if Quill had had a greater volume of business (on the order of an in-state retailer), the outcome would probably have been different.
- mitchty 15y ago
  I think a more general "fix" for this would be to just ditch state sales taxes and go for a more general % of income state tax. Yes it means I'd get hit for more money tax wise, but would eliminate the utter and sheer horror that is state and local sales tax code. That or something more like Britains tax code, though collect for the state the person is in for a flat % and pass that along. But really I think this whole debate sidesteps the real issue our local/federal government has with local vs nonlocal sales tax.
Pewpewarrows 15y ago
I'd much rather be automatically taxed at checkout than having to keep track of all my online purchases year-round when it comes time to file my tax return.
magamiako 15y ago
Though I haven't read this specific bill, the philosophical point of having to collect sales tax in some form is a necessity. The money ultimately has to come from somewhere. Regardless of your views on income taxation, very few people would argue AGAINST a consumption tax (unless you're either brilliant or crazy). Much like the fast movement of our economic system and the rise of "corporations", the rise of the internet has outpaced our government's ability to operate. This is painfully true when it comes to collecting taxes. Honestly, at this point, a National Sales Tax would probably be one of the better things for our country, as much as people hate it--it works.
gopi 15y ago
I am a anti-tax libertarian type and also a affiliate marketer but even i think its an unfair advantage eCommerce companies have. Creating a nationwide eCommerce sales tax system is the best way to solve this
- SamReidHughes 15y ago
  But they require no government services from states they're shipping to so it's unfair to tax them the same.
  - jbooth 15y ago
    That's not how taxation works. Also, presumably the goods they're shipping are traveling on government-maintained roads, right?
    - yummyfajitas 15y ago
      Also, presumably the goods they're shipping are traveling on government-maintained roads, right? Presumably Fedex/etc pay state taxes in rough proportion to their use of the roads. But I suppose that if you don't believe taxes are payments for public goods provided, but are instead fidelity owed by vassals to their lord, that doesn't really matter.
      - streptomycin 15y ago
        The point isn't that taxes are good or bad. It's that people who shop at Internet companies are effectively getting a tax break relative to people who shop at physical stores. And that doesn't really make sense.
      - jbooth 15y ago
        The point is that you pay taxes regardless of your personal service consumption. I don't consume medicaid and I live in a city so I don't see the work of the Fish and Wildlife dept that much. Tough shit. That's how taxes work because it'd cost way more than it saved to break out fine granularity at the billing level. Fedex pays for their use of the roads? No, they pay for their corporate income. They have no billing related to their miles driven on federal, state or local roads (aside from toll roads, which are a minority case). Spare me the rhetoric about vassals.
martingordon 15y ago
The thing to keep in mind is that internet retails will have to keep track of and pay out to more than just the 50 state-level tax jurisdictions. Many counties and municipalities impose their own sales tax rules, which are often more complicated than just a blanket X% of sales. For example, some states exempt clothing and basic food items from sales tax, and some have periodic tax holidays. I understand the desire to eliminate the tax advantage internet retailers currently have, but I think it would be better solved by a federal sales tax (either directly or indirectly disbursed to states) than by forcing retailers to hire a team of tax accountants to keep up with thousands of sets of sales tax laws.
- IanDrake 15y ago
  The frequent and dangerous assumption here is that a federal sales tax means the end to state sales tax. Obviously that didn't work for income tax, and I would go even further to argue the feds should not be paid one bit of direct tax. When the feds collect money and disperse it to the states, the states become enslaved to the federal government and loose their sovereignty. More importantly, without this sovereignty there is no competition or experimentation amongst the states.
  - deleted 15y ago
    [deleted]
  - deleted 15y ago
    [deleted]
  - drats 15y ago
    I saw someone had downvoted you and went to upvote and gave you another downvote by accident, sorry.[1] I think you are entirely correct, state competition and experimentation is a good thing, as is decentralisation. Even if someone disagrees with your points, I don't see the need to downvote them. I like the idea elsewhere on the thread of standardizing a database to enable the calculation to be readily done by the seller (and those places with systems so complex that they can't be represented with a couple of fields - state, tax level, exceptions - can just lose out). [1] pg can we please have some more space between the up and down vote buttons for touch screens?
Aloisius 15y ago
Anyone want to summarize the bill? I'm not sure how a federal tax is going to help the states since it seems highly unlikely that the federal government would hand revenues over to the states. Also anyone know the constitutionality of this? I can make arguments that it is discriminatory taxation of interstate commerce as well as it not being. Would I get double-taxed if I bought online from a retailer in your own state? Does it apply only to online or also to mail-order and phone orders?
- hugh3 15y ago
  Also: what about people outside the US ordering stuff to be shipped internationally? Fuck, if it turns out the cheapest way to buy something is to have it shipped from Washington to Australia and then back to California, I'm doing that.
rawsyntax 15y ago
>But Sen. Welch also noted that brick-and-mortar shops are also being used as display cases for products later bought online. "When a consumer can walk into a store, try out a product and then go home and buy it online without paying sales tax, Main Street businesses and downtowns lose," he said in a statement. In my experience, sales tax does not account for the price difference, in most stuff I buy. What does account for it is the insane markup. Try buying an HDMI cable at bestbuy, then compare to the $1.50 at monoprice.com
- Yhippa 15y ago
  I think that's true for commodity items like cables and video games but I can see what the Senator is saying if people come into a store to check out a TV or a laptop then go home and buy it online. My guess is that people are more hesitant to purchase an important or big-ticket item unless they've seen it and played with it in person.
- qeorge 15y ago
  I bought a Nexus S at the shop across the street from me. The price was the same as I could find online, but I paid an extra $40 in sales tax (NC). I don't mind paying sales tax (I do enjoy having police, firemen, and teachers) but let's be honest - $40 is enough for someone to think twice.
  - clarkevans 15y ago
    Legally, others still must pay the $40. It's just that they get to pay it at the end of the year as part of their the "USE TAX" line item in their state taxes. They don't avoid the expense: they are deferring (er, perhaps, ignoring? the law).
- naner 15y ago
  It is not always pure mark-up. Small businesses don't have the volume to be able to sell things at the low prices large online retailers like Amazon do.
BillSaysThis 15y ago
The complexity seems like an opportunity for the Hacker community to build an open source, web-based tax computation service. Set up a WikiTaxes Foundation to pay for the servers, devise a simple API, publish sample code for various languages and there you go, complexity dealt with in one go.
hugh3 15y ago
The "Main Street Fairness Act" If I got to congress, the first thing I'd do would be to introduce a bill to ban the use of cute and/or self-advertising names for bills. Let it be the "Sales Tax Collection Act of 2011" or something like that.

38 points by jenhsun 15y ago

Interesting to see Amazon on that side of the fence. If they ask people to report on their own, it won't happen. As much as I hate the idea of taxes online, this makes sense -- collect what is already due.

troutwine 15y ago
Reading the language of the bill, I'm unsure on one point: what about those states which do not have a sales tax? Here in Oregon my income tax is slightly higher but I pay no sales tax. This is good for: * the poor * local commerce (we get out of state folks buying) * tax code complexity If this bill passes and the "framework" enforces a federal sales tax I will be most put out.
- jrockway 15y ago
  My guess is that you will get a refund at the end of the year. Of course, now you'll have to track how much in "taxes" you paid, so you can ask for the right amount back.
  - troutwine 15y ago
    Jolly. I suppose if this bill passes it will provide further incentive for me to shop locally or, indeed, exclusively--especially as Portland _has_ shops in which it is a joy to purchase goods. I dislike the further record-keeping burden it places on each citizen, though that's somewhat par for the course in the US tax code.

petercooper 15y ago

The Main Street Fairness Act doesn't ask anyone to pay a single penny more in taxes. Instead, it would help governors and mayors collect taxes that are already owed. This seems to be an interesting selling point, except that people, in the main, seem to not be paying taxes they actually owe. What I wonder as a non-American, though, is how illegal is this practice? Is it essentially a form of tax evasion and, therefore, a crime? If so, why hasn't there been a random "shakedown" RIAA-style to scare people into declaring these purchases and paying the taxes?

viggity 15y ago
They don't owe anything, the Supreme Court has ruled that you don't have to collect sales tax unless you have a presence in the state (a la the Commerce Clause of the Constitution). It isn't tax evasion, pure and simple. Congress has the sole authority to tax and regulate interstate commerce, and if they choose to do so via this act, that is fine and dandy but that is a totally different issue.
- jerf 15y ago
  You've got too many pronouns without antecedents in your post. The merchants are not liable to collect sales tax, but customers may be liable to pay it under their state law. This is called a use tax: http://en.wikipedia.org/wiki/Use_tax http://en.wikipedia.org/wiki/Use_tax Exact details vary from jurisdiction to jurisdiction... and in fact that's the problem this bill is intended to address. A federal framework is necessary to avoid the problem of being required to track an arbitrary number of non-Federal frameworks.
- rprasad 15y ago
  The purchaser has always been responsible for the sales tax. However, in America, almost all taxing jurisdictions implement a withholding charge on the merchant, so that the merchant collects the sales tax owed by the purchaser on the purchaser's behalf. Quill v. North Dakota, the SCOTUS case to which you refer, was about a sale-order catalog's obligation to withhold the sales tax for purchases by out-of-state state customers (in the case, customers in North Dakota). SCOTUS ruled that North Dakota did not have the jurisdiction to impose a withholding obligation on Quill because it did not do sufficient business in the state to have a "presence". However, after the case in various speeches, several of the deciding justices noted that if Quill had had a greater volume of business (on the order of an in-state retailer), the outcome would probably have been different.
mitchty 15y ago
I think a more general "fix" for this would be to just ditch state sales taxes and go for a more general % of income state tax. Yes it means I'd get hit for more money tax wise, but would eliminate the utter and sheer horror that is state and local sales tax code. That or something more like Britains tax code, though collect for the state the person is in for a flat % and pass that along. But really I think this whole debate sidesteps the real issue our local/federal government has with local vs nonlocal sales tax.

Pewpewarrows 15y ago

I'd much rather be automatically taxed at checkout than having to keep track of all my online purchases year-round when it comes time to file my tax return.

magamiako 15y ago

Though I haven't read this specific bill, the philosophical point of having to collect sales tax in some form is a necessity. The money ultimately has to come from somewhere. Regardless of your views on income taxation, very few people would argue AGAINST a consumption tax (unless you're either brilliant or crazy). Much like the fast movement of our economic system and the rise of "corporations", the rise of the internet has outpaced our government's ability to operate. This is painfully true when it comes to collecting taxes. Honestly, at this point, a National Sales Tax would probably be one of the better things for our country, as much as people hate it--it works.

gopi 15y ago

I am a anti-tax libertarian type and also a affiliate marketer but even i think its an unfair advantage eCommerce companies have. Creating a nationwide eCommerce sales tax system is the best way to solve this

SamReidHughes 15y ago
But they require no government services from states they're shipping to so it's unfair to tax them the same.
- jbooth 15y ago
  That's not how taxation works. Also, presumably the goods they're shipping are traveling on government-maintained roads, right?
  - yummyfajitas 15y ago
    Also, presumably the goods they're shipping are traveling on government-maintained roads, right? Presumably Fedex/etc pay state taxes in rough proportion to their use of the roads. But I suppose that if you don't believe taxes are payments for public goods provided, but are instead fidelity owed by vassals to their lord, that doesn't really matter.
    - streptomycin 15y ago
      The point isn't that taxes are good or bad. It's that people who shop at Internet companies are effectively getting a tax break relative to people who shop at physical stores. And that doesn't really make sense.
    - jbooth 15y ago
      The point is that you pay taxes regardless of your personal service consumption. I don't consume medicaid and I live in a city so I don't see the work of the Fish and Wildlife dept that much. Tough shit. That's how taxes work because it'd cost way more than it saved to break out fine granularity at the billing level. Fedex pays for their use of the roads? No, they pay for their corporate income. They have no billing related to their miles driven on federal, state or local roads (aside from toll roads, which are a minority case). Spare me the rhetoric about vassals.

martingordon 15y ago

The thing to keep in mind is that internet retails will have to keep track of and pay out to more than just the 50 state-level tax jurisdictions. Many counties and municipalities impose their own sales tax rules, which are often more complicated than just a blanket X% of sales. For example, some states exempt clothing and basic food items from sales tax, and some have periodic tax holidays. I understand the desire to eliminate the tax advantage internet retailers currently have, but I think it would be better solved by a federal sales tax (either directly or indirectly disbursed to states) than by forcing retailers to hire a team of tax accountants to keep up with thousands of sets of sales tax laws.

IanDrake 15y ago
The frequent and dangerous assumption here is that a federal sales tax means the end to state sales tax. Obviously that didn't work for income tax, and I would go even further to argue the feds should not be paid one bit of direct tax. When the feds collect money and disperse it to the states, the states become enslaved to the federal government and loose their sovereignty. More importantly, without this sovereignty there is no competition or experimentation amongst the states.
- deleted 15y ago
  [deleted]
- deleted 15y ago
  [deleted]
- drats 15y ago
  I saw someone had downvoted you and went to upvote and gave you another downvote by accident, sorry.[1] I think you are entirely correct, state competition and experimentation is a good thing, as is decentralisation. Even if someone disagrees with your points, I don't see the need to downvote them. I like the idea elsewhere on the thread of standardizing a database to enable the calculation to be readily done by the seller (and those places with systems so complex that they can't be represented with a couple of fields - state, tax level, exceptions - can just lose out). [1] pg can we please have some more space between the up and down vote buttons for touch screens?

Aloisius 15y ago

Anyone want to summarize the bill? I'm not sure how a federal tax is going to help the states since it seems highly unlikely that the federal government would hand revenues over to the states. Also anyone know the constitutionality of this? I can make arguments that it is discriminatory taxation of interstate commerce as well as it not being. Would I get double-taxed if I bought online from a retailer in your own state? Does it apply only to online or also to mail-order and phone orders?

hugh3 15y ago
Also: what about people outside the US ordering stuff to be shipped internationally? Fuck, if it turns out the cheapest way to buy something is to have it shipped from Washington to Australia and then back to California, I'm doing that.

rawsyntax 15y ago

>But Sen. Welch also noted that brick-and-mortar shops are also being used as display cases for products later bought online. "When a consumer can walk into a store, try out a product and then go home and buy it online without paying sales tax, Main Street businesses and downtowns lose," he said in a statement. In my experience, sales tax does not account for the price difference, in most stuff I buy. What does account for it is the insane markup. Try buying an HDMI cable at bestbuy, then compare to the $1.50 at monoprice.com

Yhippa 15y ago
I think that's true for commodity items like cables and video games but I can see what the Senator is saying if people come into a store to check out a TV or a laptop then go home and buy it online. My guess is that people are more hesitant to purchase an important or big-ticket item unless they've seen it and played with it in person.
qeorge 15y ago
I bought a Nexus S at the shop across the street from me. The price was the same as I could find online, but I paid an extra $40 in sales tax (NC). I don't mind paying sales tax (I do enjoy having police, firemen, and teachers) but let's be honest - $40 is enough for someone to think twice.
- clarkevans 15y ago
  Legally, others still must pay the $40. It's just that they get to pay it at the end of the year as part of their the "USE TAX" line item in their state taxes. They don't avoid the expense: they are deferring (er, perhaps, ignoring? the law).
naner 15y ago
It is not always pure mark-up. Small businesses don't have the volume to be able to sell things at the low prices large online retailers like Amazon do.

BillSaysThis 15y ago

The complexity seems like an opportunity for the Hacker community to build an open source, web-based tax computation service. Set up a WikiTaxes Foundation to pay for the servers, devise a simple API, publish sample code for various languages and there you go, complexity dealt with in one go.

hugh3 15y ago

The "Main Street Fairness Act" If I got to congress, the first thing I'd do would be to introduce a bill to ban the use of cute and/or self-advertising names for bills. Let it be the "Sales Tax Collection Act of 2011" or something like that.