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About time, on many fronts. Sales tax is the most economically beneficial tax (from a long-term viewpoint), encouraging savings, reducing consumption, and is t
by jabits 14y ago
About 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.
- zanny 14y agoWell as long as you are trying to tax and monitor transactions, there is always a market for not paying the tax, even if everything is legal to buy or sell.
- SoftwareMaven 14y agoIt's also incredibly regressive, targeting poor people with a higher percentage of their net income than rich people.
- _delirium 14y agoThat's one reason, in practice, for the popularity I think. When a state proposes raising income tax on the one hand, or sales tax on the other hand, raising sales tax is often easier to accomplish, because the lobbies against it are weaker. (There might also be a psychological aspect in that it's more of a nickel-and-diming: people may not realize what it adds up to in terms of a yearly total, while they do see that for income taxes.)
- 1123581321 14y agoIt is actually because it is nearly guaranteed to be collectible when it is attached to inelastic goods which are needed by everybody. On the other hand, raising things like estate tax and income tax increases the amount of legal tax dodging through trusts, municipal bonds and the like so it's unpredictable and difficult to collect. This dates back to a reversal of Andrew Mellon's prudent and lucrative tax policies by FDR and Morgenthau, who turned to gasoline and alcohol taxes to cover shortfalls caused by their extremely high progressive income tax rates, and since then high earners have gotten in the habit of tax avoidance regardless of current political and fiscal strategies, permanently entrenching the regressive taxes as necessary.
- _delirium 14y agoI'm not sure I buy that as a "because". I think it's more likely sales taxes are passed preferentially because income taxes are more often defeated in legislatures due to political opposition, not because of technocratic arguments about collectibility. It would be interesting to have some numbers on collectibility, though. Both income taxes and sales taxes can be dodged (black-market purchases and out-of-state online purchases are two common ways of dodging sales taxes). There are a number of examples of states raising either one, and it'd be interesting if someone has extracted data on the results.
- mbetter 14y agoI've got a serious Poe's law problem with this post.
- adanto6840 14y agoMaybe not a burden for the Amazons of the world, but for smaller e-comm stores it is most certainly going to be a burden IMO. I'd suspect that many online retailers would be forced to go down the path of outsourcing most of this using something like Shopify or similar -- it's just a lot of tax rates and calculations to keep track of, not to mention report on and optimize for!
- NoPiece 14y agoIf you were talking about a single national sales tax, you could be right. But what is being discussed is 50 different state taxes, which would be a burden, regardless of modern tech.
- autarch 14y agoIt's even worse than that, since there are cities and counties which levy their own sales taxes. If an Internet retailed has to collect all of these, they need a comprehensive sales tax database plus a mechanism for sending payments where they're due. I see a great opportunity for a webservice startup here.
- RougeFemme 14y agoSome large retailers already have at least a partial handle on this. My zip code crosses 2 jurisdictions and I'm always asked if I live in jurisdiction A or B. I assume they're doing it for local tax purposes even thought we have only a state sales tax here.
- _delirium 14y agoThere are a number of companies doing this kind of data collection/rental, though they're mostly focused on the enterprise market. The data is needed by folks like supermarkets who operate in lots of jurisdictions and need to charge the correct sales tax in each one. In addition to the rates varying by city/county, the taxable items may as well, e.g. in some jurisdictions food isn't taxed, and the definition of "food" varies, too. This is one of the companies that collects a giant database of jurisdictions and tax rates, as well as a db mapping SKUs to jurisdiction-specific tax categories: http://tax.cchgroup.com/sales-tax-data/default.htm?cookie_test=1 http://tax.cchgroup.com/sales-tax-data/default.htm?cookie_te...
- jonknee 14y agoThese exist. Rates are easy (http://www.zip-tax.com/ http://www.zip-tax.com/) and the filing portion can be handled by HR/Payroll companies like Paychex (http://www.paychex.com/payroll-taxes/sales-tax-payment.aspx http://www.paychex.com/payroll-taxes/sales-tax-payment.aspx) Though I'm sure there is an opportunity to help small companies since most companies who currently need to manage national sales taxes are large (have a presence in every state).
- greenyoda 14y ago"Sales tax is the most economically beneficial tax..., encouraging savings, reducing consumption, ..." Encouraging savings and reducing consumption might be good things for society, but it seems that they hurt the economy (less trade, fewer jobs) rather than benefiting it.
- No1 14y agoSaving money and reducing consumption hurts the economy in the short term, but in the long term it encourages capital investment, lending, and other behavior that creates sustainable jobs and more trade. Whether or not an increase in sales tax will have those effects on Americans has yet to be seen.
- teeja 14y agoSavings would be a good thing, but I don't think the banks care to pretend they want to encourage savings any more ... au contraire. The 5% interest passbook savings rate - which the Depression/lWW2 generation enjoyed - "encouraged" savings ... until it got stripped away after the S&L bailout and was never replaced. So the "good thing" would have to come from Congress. Good luck with that.
- lilsunnybee 14y agoIt also only applies to the upper tiers of society. For poorer people, they are going to be able to save less because essentials cost more, and go further into debt if a catastrophe strikes.