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US Senate approves proposed Internet Sales Tax
- Evbn 14y agoInteresting that no one ever talked about the alternative to Internet sales tax, to solve the competition problem: removing sales tax, and replacing it with use/income/property/head/etc tax.
- ScottBurson 14y agoWell, California, for example, has a use tax on items bought out of state, but it's unenforceable and compliance is pretty much nil. There are states with no sales tax, but I think you'd have trouble persuading those that have one to give it up.
- curt 14y agoSales Taxes are the least economically destructive of all taxes. If a government's goal to optimize economic growth they should eliminate income, property, capital, etc taxes are replace them with a sales/consumption tax. Bobby Jindal proposed this in Louisiana.
- lbarrow 14y agoSales taxes are also regressive: poor people spend a higher percentage of their income than rich people, so any tax on spending will affect poor people more than rich people.
- Retric 14y agoSales Taxes are vary economically destructive as unlike income tax they artificially shift the economy from real goods to services. The only way to avoid this is to tax all spending and gift giving which ends up being just another income tax.
- vbuterin 14y ago> from real goods to services Hence inventions like Canada's "goods and services" tax.
- mikeash 14y agoWhat makes sales tax better than other taxes in this regard?
- protomyth 14y agoIt's fairly easy to collect (like gas taxes) since you're dealing with a set of vendors and not the whole population.
- greenyoda 14y agoFor state legislatures, charging sales tax to buyers outside the state (like most internet buyers probably are) is much less politically risky than raising income or property taxes on state residents, since people outside the state can't vote them out of office. And raising income or property tax on someone who doesn't buy a lot of goods may end up being a net tax increase for that person, which might also incur their political wrath.
- just2n 14y agoI'm fine with income taxes so long as they're progressive and have no holes, such as investments in the stock market not being considered "income" so that people can make $800,000+ /yr and pay some obnoxious 15% in taxes while people making under $100,000 can easily pay over 25%. Feels like we're losing out on a few hundred billion/yr in tax revenue due to nonsense like that.
- chatmasta 14y agoBy "nonsense like that," do you mean nonsense like encouraging investment? We live in a capitalist society. Capital is eponymously fundamental to market growth. Discouraging investment by increasing capital gains tax is one of the surest ways to stymie economic growth. To do so for "a few hundred billion in tax revenue" would be unbelievably short sighted.
- JamisonM 14y agoThese are pretty bold claims given that the last cuts to capital gains offered little to no economic growth and hurt government revenues as well as contributing to the recent rise in income inequality in the US. Have a look at the published research on the topic.
- adventured 14y agoThe Fed's massive inflation is far more responsible for the rise in inequality in the US than anything else (and far more than a change in capital gains taxes). Including their constantly exploding bubbles that hammer the bottom 75% far more than the rich in standard of living terms. The cost of a house has doubled in 15 years (and housing is currently spiking again while real unemployment is 14%, thanks to the Fed's massive housing inflation). The cost of gasoline has gone up 3 to 4 fold in the same time frame. The cost of groceries have followed a huge inflationary curve over the last 15 / 30 / 50 years. Ditto the cost of a vehicle. Rich people can shield their money from inflation (easily in fact), average or poor people cannot shield their incomes from inflation. That simple fact is responsible for a huge destruction in standard of living in the US. Incomes have not even remotely kept up with inflation.
- rayiner 14y agoThis is misleading: A score of Internet lobbies, such as Netchoice, representing Facebook, Yahoo, and (TechCrunch’s parent company) Aol, argue that the senate’s bill “does nothing to address what the Supreme Court says was an unreasonable burden on interstate commerce,” explains Steve Delbianco of Netchoice. "Undue burden on interstate commerce" comes from the negative implications of the Commerce Clause, which gives Congress power over interstate commerce and prevents states from putting an undue burden on interstate commerce in an area where Congress has not legislated. If states impose sales tax pursuant to an act of Congress, then there is no Commerce Clause concern since Congress does have the authority to regulate interstate commerce.
- kyrra 14y agoHad to look this up. Looks like there was an earlier ruling in 1969 about sales tax on mail orders. The 1992 case seems later further refine the ruling. http://en.wikipedia.org/wiki/National_Bellas_Hess_v._Illinois http://en.wikipedia.org/wiki/National_Bellas_Hess_v._Illinoi... http://www.infoplease.com/cig/supreme-court/sales-taxes-mail-orders.html http://www.infoplease.com/cig/supreme-court/sales-taxes-mail...
- rayiner 14y agoBasically in Bellas Hess, the appellant claimed that the tax was unconstitutional on Commerce Clause and Due Process grounds. Specifically, that states imposing a tax on mail orders infringed on Congress's power to regulate interstate commerce and alternative that it violated appellant's rights under the 14th amendment to equal protection under the laws. In Bellas Hess, the Court agreed with appellant without justifying the decision explicitly on due process grounds. In Quill, the Supreme Court clarified that it was deciding on Commerce Clause grounds. The relevant distinction is that Congress cannot pass legislation to allow the states to violate the 14th amendment. It can, however, pass legislation that allows the states to burden interstate commerce since if Congress has sanctioned it than any such state legislation doesn't infringe on Congress's power.
- joonix 14y agoI don't think any new tax will pass in the House.
- adestefan 14y agoIt's not a new tax. It's to allow states to collect taxes that are already on the books.
- andyl 14y agoIf I were King: eliminate sales and employment taxes, replace them with carbon taxes.
- darkchasma 14y agoThis would only penalize the poor, as the rich could afford back yards full of solar panels and wind turbines, and drive Tesla cars... And since the rich are such a small percent, this would have virtually no impact on the environment. I love the idea, but I do not believe this is a better solution to sales and employment tax.
- Xcelerate 14y agoI think a consumption tax is the best solution. Basic necessities like food, housing, etc.. are not taxed (or are minimally taxed). Luxury items like televisions, cell phones, etc. should be taxed though. This wouldn't penalize the poor, but the government would get the money they're looking for. Can anyone think of any downsides to this? EDIT: Yikes, I leave for half an hour and come back to a maelstrom of comments. So, to acknowledge one of your points, it could be difficult to categorize what is or isn't a luxury item. But, c'mon, is a $90,000 car really a necessity? I think it's easy to tell which items definitely aren't necessities.
- nahname 14y agoI imagine that would have severe economic implications.
- quanticle 14y agoWhere do you draw the line? Is a home broadband connection a necessity or a luxury good? How about a computer? Or a car?
- seiji 14y agoIn New York, shoes under $120 aren't taxed. You can segment taxes easily by price range.
- indiecore 14y agoeh, to be expected. Death and Taxes.
- jabits 14y agoAbout time, on many fronts. Sales tax is the most economically beneficial tax (from a long-term viewpoint), encouraging savings, reducing consumption, and is taxpayer controllable. And it captures gray/black market transactions as well. No reason any electronic retail transactions should escape. Modern tech removes any "burden" claims.
- redblacktree 14y agoHow does sales tax capture black market transactions? Does your local pot dealer have a Retail Merchant's Certificate?
- NoPiece 14y agoBut when he goes to buy doritos and a red bull at 7-11, some of that money is captured. I.e., Lot's of black market dollars wind up being used to make legal taxed sales purchases.
- zanny 14y agoBut the legal dollars do to, if you go buy a new garden hose from a local realtor, and the owner goes and buys doritos with his proceeds, you get the taxes off both. In practice, you could tax one thing everyone elses (like food) and just wait it out, and all money will eventually route itself back through the taxed exchange. The point of such taxes is to take a fraction of all exchanges. Though, I'd rather they solve the problem of why a black market needs to exist than try finagling a tax solution on it. You have to go back to the drawing board and ask "what is there a demand for we have artificially restricted such that it is forced onto a black market?" and see that tremendous potential tax revenue for what it is.
- saraid216 14y agoI suspect it's theoretically demonstrable (though I couldn't do it, admittedly) that a black market must always exist.
- svenkatesh 14y agoThese were not the tax loopholes people wanted to be closed! On the other hand, this will benefit brick and mortar stores.
- twoodfin 14y agoJust so you know: Every current rule that could potentially reduce your tax burden is now called a "loophole". For example: Limiting deductions for high earners (but not exactly the same deductions for low earners) is now routinely described by politicians and the media as "closing loopholes".
- pragone 14y agoCan anyone find the text of the resolution? This seems to link to a blog that links to a blog that links to a blog...
- adestefan 14y agoIt's S 336. http://hdl.loc.gov/loc.uscongress/legislation.113s336 http://hdl.loc.gov/loc.uscongress/legislation.113s336 HR 684 is the corresponding bill in the House. http://hdl.loc.gov/loc.uscongress/legislation.113hr684 http://hdl.loc.gov/loc.uscongress/legislation.113hr684 edit: replaced with permlinks
- _delirium 14y agoLooking at the sponsors is interesting. The main sponsor, Mike Enzi, is a conservative Republican, who you might not normally expect to be sponsoring tax bills. But he represents Wyoming, a state that heavily depends on sales taxes, because they've made the decision not to tax personal or corporate income, leaving sales/use taxes as one of the major revenue sources (responsible for ~40% [1] of the state budget). [1] See the pie chart on pg. 4 here: http://eadiv.state.wy.us/s&utax/Report_FY11.pdf http://eadiv.state.wy.us/s&utax/Report_FY11.pdf
- lilsunnybee 14y agoIts not too unusual for a republican to be in favor of a sales tax. Income, capital gains, property, and inheritance taxes are another story.
- pragone 14y agohey thanks
- coin 14y ago"There are some exceptions: Amazon currently charges California residents sales tax" I hate this incorrect terminology. Amazon merely collects sales tax on behalf of the state. The state is the one charging the sales tax.
- greenyoda 14y agoAmazon has also been collecting NY State sales tax for quite some time now. Does anyone know if Amazon has any physical presence in NY State? I've never received anything from Amazon that has been shipped from NY. I noticed that items that are sold by Amazon always incur NY tax, but items sold by independent retailers who sell through Amazon's site often don't incur tax.
- _delirium 14y agoNY argues that Amazon's relationship with NY-based affiliates constitutes a NY-based Amazon marketing force that produces a sufficient nexus with the state to make them subject to NY law on collecting sales tax. It's currently being litigated [1]. I recall reading [2] that Amazon actually supports the federal legislation though, because they're slowly moving towards having a 50-state presence anyway, as things like grocery delivery and same-day delivery become a bigger part of their strategy. [1] http://www.reuters.com/article/2013/02/06/us-tax-amazon-court-idUSBRE9151C720130206 http://www.reuters.com/article/2013/02/06/us-tax-amazon-cour... [2] http://www.slate.com/articles/business/small_business/2012/07/amazon_same_day_delivery_how_the_e_commerce_giant_will_destroy_local_retail_.html http://www.slate.com/articles/business/small_business/2012/0...
- andrewpi 14y agoDidn't Amazon drop affiliates in other states when those states tried to use the affiliate rationale to charge sales tax? Why is NY different?
- _delirium 14y agoThat was their initial "scorched-earth" strategy, but they quickly dropped it. In recent disputes, e.g. with Texas and New York, they haven't terminated affiliates, and have instead opted for a mixture of negotiations and legal battles.
- jacoblyles 14y agoPlease note that BOTH California Senators voted in favor[1]. They also both voted for PIPA. Dear internet - we fail at politics. [1]http://www.senate.gov/legislative/LIS/roll_call_lists/roll_call_vote_cfm.cfm?congress=113&session=1&vote=00062 http://www.senate.gov/legislative/LIS/roll_call_lists/roll_c...
- brokentone 14y agoPlaying devil's advocate here. No one pays "use tax" -- the tax you already owe your state for things you purchase online/on the phone etc and do not currently pay sales tax on. This is already an illegal activity that I'd hazard nearly 100% of the US is in on. If I wanted to come into compliance here, I'd have to save all of my reciepts from every time I shop online, and probably hire an accountant to figure out all the extra tax I owe. This doesn't sound interesting to me, or enforceable by the government. However, online stores collecting this for me could be a value add in some ways. Let's take a look at the free market though (although I get that issues of tax law cannot be fully free as they start in a non-free place). What if online retailers _offered_ to collect the tax for me, with the note that you owe it either way and they're trusting you to pay it on your own otherwise? I would likely opt-in much more often. Similar to suggested tips increasing tipping in NYC cabs, this might move the needle in the right direction.
- jmharvey 14y agoI pay use tax. I've also been audited several times. It's easy to say, "oh, everybody ignores x tax, it's completely unenforceable," but if you get audited, yeah, the state can look through your bank and credit card records and get a pretty good idea of what you owe.
- brokentone 14y agoHonest question, what sort of process does it look like for you to total everything up? Do you keep running totals or do it at the end of the year? Do you have an accountant? Would you prefer that online stores collected for you?
- jmharvey 14y agoUsually I'd use a combination of my Mint records (which had convenient totals for each online merchant, of which I really only used 5 or 6 in a typical year) and the Massachusetts safe harbor law (which essentially allowed me to assume that I spent 1% of my AGI on untaxed purchases less than $1000, and pay use tax based on that number). If I bought anything online or out-of-state that cost more than $1000, I'd add that in separately, but that happened rarely enough that it was pretty hard to forget how much I spent on those items. What we have right now is a situation where some stores collect taxes in some states. As a consumer, I would prefer it if all stores collected taxes for all states, for three reasons. First, I wouldn't have to figure out which stores already collected taxes, so it would save me time. Second, because I like seeing how much I'm going to pay for something, taxes included, at the time of purchase. And third, because I believe that taxes should be levied fairly and consistently, and that would put online stores on the same footing as brick-and-mortar stores, and honest taxpayers on the same footing as people who are inclined to see what they can get away with. As a startup founder, however, I'm less enthusiastic. The process of filing taxes in all 50 states would be a huge burden. If a national sales-tax clearinghouse existed, it would be a different story, but under the status quo, it's just too much paperwork for a small company to handle.
- dreamdu5t 14y agoAnother tax increase without any corresponding budget relief. So more taxes and and the same debt.
- adestefan 14y agoThis has nothing to do with the Federal government. This bill only allows states to collect taxes.
- dreamdu5t 14y agoI'm aware of that. California does not need to tax people more for the exact same reasons. Competition between brick and mortar stores and Amazon is a smokescreen. Tax deals are given to big box stores all the time, to this day. The whole "protecting small business from online competition" angle is a ruse.
- adestefan 14y agoThey're not taxing you more. You already need to report and pay any sales tax that you didn't not pay on items purchases over the Internet. The so called Internet tax moratorium was not an actual ban on taxes, instead it did not allow states to force Internet entities to collect sales tax. This removes that barrier.
- tocomment 14y agoDon't all tax bills have to start in the house?
- juniatian 14y agoSo does this mean that the United States government will now accept bitcoins?
- protomyth 14y agoAt this point I wish the Federal Government would pass a straight 5% sales tax for goods crossing state lines. Vendor pays the Fed quarterly with report of zip codes bought from. Fed pays the origin state and the destination state 2% each and keeps 1%. Fed tell states no other taxing of items bought online.
- maratd 14y agoYes, let's introduce another federal tax. Because we don't pay enough in federal income taxes, duties on imports, state income taxes, state sales taxes, county sales taxes, local sales taxes, and local property taxes. Let's add another tax. I'm sure I missed a few.
- protomyth 14y agoI'm normally in the same belief, but the cost of each state getting to tax what is sold online differently will cost more than this. I figure it is a replacement for 50+ taxes with weird rules for one streamlined tax. I'll take that.