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Huh? Not paying taxes on out-of-state purchases will cause the price of in-state purchases to go up? Significantly? Maybe if the state government raises taxes

Huh? Not paying taxes on out-of-state purchases will cause the price of in-state purchases to go up? Significantly? Maybe if the state government raises taxes on the in-state sellers to compensate for perceived loss of revenue due to out-of-state purchases. That is the state's fault. Mom-and-pop shops don't go out of business because their prices are rising. They go out of business because they are trying to keep their prices low to compete with larger businesses all the more complicated by a greedy state that is trying to tax them because they qualify as "wealthy". The tax system is broken and it won't be fixed because of political and/or idiot-in-the-street greed. No one asked but there's my two cents.

timdev2 15y ago
Surely you're oversimplifying and playing a bit dumb. The fact that an in-state business has to collect sales tax, and an out-of-state entity doesn't, coupled with the fact that it's not feasible to enforce sales/use tax against individuals, means that out-of-state merchants get an relative price advantage. At the end of the day, it's a lot like what's happened to the recording industry. The internet disrupted a long-established model that had been built up around physical artifacts. In the case of sales tax, consumers used to spend most of their money with merchants in their own state. This made it easy to establish and enforce sales and use taxes, because the state government had jurisdiction on both parties to the sale, so they could devise a collection mechanism based around the relatively small number of merchants (as opposed to trying to track the relatively larger number of individual consumers). In the past 1.N decades, a lot of that economic activity that used to be intra-state has become inter-state. And this has, predictably, caused a very real problem for state governments who depend heavily on those sales/use tax revenues. Tax reform is absolutely necessary. In this case, the smartest thing is probably to abandon sales taxes in favor of higher state income taxes. The benefit there is that income taxes are more progressive anyway. But the states need to weigh the risk of capital flight. The other, less palatable, option, is federal intervention. Unlike Colorado, the Federal government does possess the power to regulate inter-state commerce. It's possible that a bunch of states-other-than-california could get federal laws passed that would force merchants in any state to collect and disburse funds to satisfy the sales tax statutes in the purchasers' states. That latter option would probably end up leading to bad unintended consequences. I'd rather see the states find ways to replace the lost revenue by abandoning the sales tax and increasing income taxes.
- fpgeek 15y ago
  Given Amazon's short-term "settlements"/compromises in states that have (or have proposed) affiliate-based sales tax rules, it looks like Amazon expects federal action sooner rather than later.

timdev2 15y ago

Surely you're oversimplifying and playing a bit dumb. The fact that an in-state business has to collect sales tax, and an out-of-state entity doesn't, coupled with the fact that it's not feasible to enforce sales/use tax against individuals, means that out-of-state merchants get an relative price advantage. At the end of the day, it's a lot like what's happened to the recording industry. The internet disrupted a long-established model that had been built up around physical artifacts. In the case of sales tax, consumers used to spend most of their money with merchants in their own state. This made it easy to establish and enforce sales and use taxes, because the state government had jurisdiction on both parties to the sale, so they could devise a collection mechanism based around the relatively small number of merchants (as opposed to trying to track the relatively larger number of individual consumers). In the past 1.N decades, a lot of that economic activity that used to be intra-state has become inter-state. And this has, predictably, caused a very real problem for state governments who depend heavily on those sales/use tax revenues. Tax reform is absolutely necessary. In this case, the smartest thing is probably to abandon sales taxes in favor of higher state income taxes. The benefit there is that income taxes are more progressive anyway. But the states need to weigh the risk of capital flight. The other, less palatable, option, is federal intervention. Unlike Colorado, the Federal government does possess the power to regulate inter-state commerce. It's possible that a bunch of states-other-than-california could get federal laws passed that would force merchants in any state to collect and disburse funds to satisfy the sales tax statutes in the purchasers' states. That latter option would probably end up leading to bad unintended consequences. I'd rather see the states find ways to replace the lost revenue by abandoning the sales tax and increasing income taxes.

fpgeek 15y ago
Given Amazon's short-term "settlements"/compromises in states that have (or have proposed) affiliate-based sales tax rules, it looks like Amazon expects federal action sooner rather than later.