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Go ahead, pass the Internet tax. Your (foreign) competitors thank you.
- jedmeyers 13y agoJust wait for the "foreign transaction fee" on the credit cards to become federally mandated 15% instead of 3%. Then you'll see.
- StuntPope 13y agoThat's where Bitcoin comes in :)
- betterunix 13y agoThat's where federal regulations on Bitcoin comes in. How would you like to live in a world where Bitcoin is a black market product?
- msvan 13y agoWhere I live, kids under 15 have to wear a helmet while biking. But I never see any kids wearing helmets. Because laws that cannot be enforced will be ignored freely. Piracy is supposedly illegal, but look at the attitudes towards it: it's not considered a crime because it's impossible to enforce. Perhaps bitcoins while be regulated, but will it not get green-stamped by the general public just like piracy?
- betterunix 13y agoLet's put it this way: if it is a crime to exchange USD for Bitcoin, where are you going to get your Bitcoin money? Bitcoin would die overnight if exchanges went away, and most people are not going to send an envelope full of cash to some shady person on the Internet.
- L4mppu 13y agoPeople would exchange from USD to GBP or EUR an dthen to BTC. U see no problem there.
- michaelmartin 13y agoAbsolutely agreed here, this is just going to give an edge to companies outside the US. Worse still, it's going to hit small businesses worse because they will simply have no choice but to pay it. The mega corps have their accounting down to an art, they'll figure out a way past it given how many gray areas are inevitable in a completely new form of tax like this.
- dragonwriter 13y ago> The mega corps have their accounting down to an art, they'll figure out a way past it given how many gray areas are inevitable in a completely new form of tax like this. Its not a new form of tax. Its permission for states to opt-in to a more efficient collection method for existing sales and use taxes if they also agree to certain streamlining requirements for those taxes and certain support mechanisms for the retailers that would be required to collect and remit the taxes.
- dbrannan 13y agoSounds like taxation without representation to me.
- dvanduzer 13y agoAre you saying that Network Solutions and GoDaddy should have seats in Congress?
- dangrossman 13y agoI think he's saying that individuals that sell online shouldn't be taxed by state legislators they didn't elect. Congress won't be setting the internet sales tax rates, nor administering the tax, nor conducting its audits -- the 50 individual states will be imposing their individual rules.
- fryguy 13y agoIt's the person that's paying for the product being taxed, and the merchant is merely collecting that tax. At least, that would be my interpretation.
- dangrossman 13y agoIf a foreign state I've never stepped foot in can set laws I have to obey, force me to remit money to them, and audit my accounting under penalty of imprisonment, it doesn't really matter who's doing the paying. Today, only people within the state can be forced to obey and be audited by that state. This bill gives the power for a state to create and enforce arbitrary laws on non-citizens. It's at least a sufficiently different situation to debate. Boy would I prefer a single federal sales tax with the fed doing the distribution to the individual states.
- adventured 13y agoStick around, in the next few years we might just get a federal VAT to go with the state sales taxes.
- davidw 13y agoThis tax could make Oregonian consumers pretty popular: nothing to collect, no tax, no hassle.
- JoshTriplett 13y agoOn the flip side, it'll remove a major reason to start a business in Oregon or another state without a sales tax.
- wcfields 13y agoRecent transplant to California, and I now have to go back to Oregon whenever I make a major purchase. A weekend trip to see friends, have an Amazon order shipped to them.
- danielweber 13y agoYou still owe use taxes on that.
- err_badprocrast 13y agoOregon [Senator] Jeff Merkley said he voted no "because the citizens of Oregon have said nine times that we don’t want our families or small businesses burdened with sales taxes." "It’s a regressive tax. It’s an inefficient tax," he said. "And this bill would force our Oregon retailers to collect this regressive, inefficient tax for other states and municipalities. That is just wrong. I hope the House does the right thing and stops this legislation from trampling on Oregon small businesses.” [1] The other Oregon Senator (Ron Wyden) was one of the co-authors of the 1998 Internet Tax Freedom Act[2] and is similarly opposed to this bill. "Today the senate is voting to take a few more inches off the little guy," said Senator Ron Wyden (D-OR), who has fought the bill hard. "You saw ads taken out by some of the biggest businesses in the country. It's easy to see why, Mr. President. With this vote, what you have is big businesses being given the ability to force new regulations onto the start-ups, onto the small businesses."[3] 1. http://www.ktvz.com/news/wyden-merkley-vote-no-on-internet-sales-tax/-/413192/20043170/-/h0oiv6/-/index.html http://www.ktvz.com/news/wyden-merkley-vote-no-on-internet-s... 2. https://en.wikipedia.org/wiki/Internet_Tax_Freedom_Act https://en.wikipedia.org/wiki/Internet_Tax_Freedom_Act 3. http://arstechnica.com/tech-policy/2013/05/senate-passes-internet-sales-tax-in-final-vote-69-27/ http://arstechnica.com/tech-policy/2013/05/senate-passes-int... EDIT: don't forget to send a message to your house representative at https://house.gov/ https://house.gov/ if you haven't already.
- Svip 13y agoI am slightly bemused by the fact that the US - which in Europe is often seen as very lax on taxes - is doing this and it is not even being considered in Europe. That might change, sure, but Europeans tend to like taxing things. And if this haven't even made a consideration among European lawmakers, just how far from the pack have the US lawmakers gone?
- jedmeyers 13y agoEurope is already taxing all internet purchases made within it's borders. I was buying some shoes in UK and only after I assured the seller that Ukraine was outside of EU was the tax taken off the price.
- Svip 13y agoBut that's because of the internal market, that isn't some specific internet tax, is it?
- _delirium 13y agoThe U.S. one isn't a specific internet tax either. The U.S. legislation is just trying to implement what the EU already has: purchases will have tax collected based on the destination jurisdiction. The current situation in the EU is that if you order a book from the UK to Belgium, you pay Belgian VAT for the transaction. There is also an exception that sellers below a certain volume are exempt from dealing with the cross-border VAT. That is precisely what the new situation in the US will be, if this passes: cross-state purchases will be taxed based on the destination state's sales tax, with sellers below a certain volume exempt.
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- saurik 13y agoThe 2003 VAT on e-Services laws are: they are a modification of the general VAT laws to better level the playing field between companies inside and outside of the EU for digital goods downloaded over the Internet. Before, companies in the EU had to collect VAT on all purchases (including from people in other countries), and companies in other countries did not have a realistic way to collect VAT from countries in the EU. Since the inception of that law, companies in the EU do not have to collect taxes on sales to other countries, and companies from all countries must collect VAT for sales to customers in the EU. They established a simplified registration process by which companies can register in a single jurisdiction and then remit collected VAT in a single currency, accompanied with a breakdown of which countries are owed which amounts. (None of this applies to physical goods, nor would such things be necessary, because those are taxed at the point of collection based on the declarations goods stated on the import/export documentation.)
- gambiting 13y agoIn EU internet purchases were always taxed, and yet online-only competitors still manage to compete with brick-and-mortar stores very successfully. So this article is quite bollocks.
- cmircea 13y agoEverything was taxed, equally (with a few exceptions like food). No wasted time figuring out which tax to use, keeping up with tax changes, arguing why the brick & mortar store has a 5% rate while the online shop has 10%, etc. Over the pond it's the same for everybody. Doesn't seem so in the US.
- davidrudder 13y agoI think you misunderstand. The proposed changes are simply to remove the tax exemption. State sales tax will apply to internet purchases, just like they do for mail order. The confusion comes from the weird sales tax systems in place. I live in Colorado where the sales tax rates change according to a maze of Byzantine laws.
- _delirium 13y agoThe main thing the EU did to simplify that is require one set of VAT rules per country. They can differ. For example, Denmark charges VAT on books, while the UK doesn't. And, like with the proposed US legislation, it's based on destination: if you order from amazon.co.uk to a Danish address, you pay VAT based on Danish rules. But what can't happen is a situation where Herning, Ishøj, and Copenhagen charge different rates for different products. That simplifies the system considerably.
- rgbrenner 13y agoWith one additional part: VAT is paid on imports (on any package over a certain value). Correct me if I'm wrong, but an import duty was not part of the sales tax bill.
- 13y ago
- aashaykumar92 13y agoDo you think the US government is unaware of this? I, for one, do not. I bet they will do SOMETHING (not sure what, but @jedmeyers gives a possibility) to ensure that US online retailers will not be defeated by foreign retailers that easily.
- nullc 13y agoWill be pretty funny when we get a matching duty for their services thats twice as much as typical salestax. :)
- grecy 13y agoThe US government will just mandate that any online business doing business with US citizens has to collect that tax on behalf of the IRS. Quarterly deposits will be acceptable.
- dangrossman 13y agoHow would the US government mandate a non-US business do anything? They can't prohibit US citizens from buying from these companies without violating their own free-trade agreements. That'd be a bad idea, since 41% of the country's exports go to countries we've signed those treaties with.
- dave5104 13y agoI imagine the US government could just add said non-US business to an embargo list of some sort. Prevent them from doing any business whatsoever with US citizens.
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- grecy 13y agoThe same way they mandate foreign law enforcement to do their bidding.
- ajross 13y agoI guess there's the open question of forcing foreign agents to collect and report IRS-friendly numbers. But it's not like taxing of import items is a new idea or a controversial one. The US government has been collecting duties for as long as it has existed.
- larrys 13y ago"But it's not like taxing of import items is a new idea or a controversial one" Different. You have to get those goods by customs.
- coldtea 13y ago>What lawmakers fail to understand is that taxation specific to the internet, ostensibly to boost revenues into government coffers, in practice will probably diminish them as US businesses lose competitiveness against foreign companies. And what you fail to understand is that if everything is sacrificed in the name of "competitiveness", then every country will be in a race for the bottom. It already happens, with outsourcing, cheap foreign labour, tax heavens etc. A successful US company used to benefit American society at large (beyond merely paying some wages) -- and this is what made the US rich with a large middle class etc. Now (with outsourcing, factories in China, money kept in foreign accounts that never make it back to the US, tax havens enabling the company to pay almost nothing in taxes etc) a company can be American in name, but of no more benefit to the US as a country than Toyota or Samsung. And no, places that are strongholds of industry and innovation don't help much either. A 100 billion new innovative product out of Silicon Valley can be as lost a boon to the country as any innovation coming from Tokyo or Europe. Hence, shrinking middle class, hence budget and trade deficits, hence trouble. Of course, for those owing or running companies and benefiting from the whole thing, business hasn't been better. But those benefiting are increasingly fewer (and the few tend to benefit all the more, hence huge imbalances in inequality). I'm not saying that amazingly successful companies cannot come out of this situation. I'm saying that this success trickles down to the overall country/society, far less than what it did in the past. Coming to a point where it will be possible to be the host of the worlds greatest companies AND having a population living like in a third world country. The only reason everything has not collapsed already is because there are other advantages beyond "cheap" that keep companies throwing a bone to the US. The infrastructure, the engineering savvy, and of course the inherited middle class and large market, from better times. But those things are rooted in the past and are transient. >To our American friends, easyDNS is a foreign company, so don't let us stop you. And how about you aren't let to serve customers in the US unless you pay taxes too? How would you feel about losing the rich US market then? And how about people in Europe and other affluent societies conspired so that you cannot sell your crap without paying proper taxes to someone? (I'm not even arguing in favor of the internet tax. Just against the arguments easyDNS used here against it. Heck, I'm not even American. I just know that those same issues affect my country too).
- dclowd9901 13y ago
- rayiner 13y agoI must have missed the memo. Why are we ranting and raving about collecting sales tax on internet purchases? Is there some other internet tax I'm not aware of?
- dclowd9901 13y agoA federal law is in process right now to guarantee states' rights to collect tax on cross-state purchases. As of yet, it's been spotty.
- dangrossman 13y agoYes, the "internet sales tax bill" (marketplace fairness act) passed the Senate this week. It has White House support, so only needs to pass the House to become law. A summary: http://www.dangrossman.info/2013/04/24/what-startups-need-to-know-about-the-internet-sales-tax-bill/ http://www.dangrossman.info/2013/04/24/what-startups-need-to...
- rayiner 13y agoWhat's bad about it?
- dangrossman 13y agoI don't have time to read 50 states' tax codes, file 50 tax returns and potentially be audited 50 times a year. What small business does?
- tptacek 13y agoMost of them. As soon as you have any real cash flow, you engage accountants.
- dangrossman 13y agoMy accountant would not be able to handle a XX-fold increase in the number of tax codes, forms and filings he has to handle per-client. We're going to have to train more accountants.
- tmuir 13y agoEssentially, the article is saying that if you could save money by buying a physical product from a foreign country, domestic businesses would suffer. Those conditions exist today with the ability to buy things from China, and all of the accompanying downsides will apply to buying something from Europe. It takes weeks instead of days to ship overseas at acceptable rates. Who do you call to complain/return/get service? Do they even speak English? Does this product meet safety standards? Do I even have legal standing to sue the company if I am defrauded/injured? All of these go away buying domestically, and are not a fair trade off for a marginally lower price.
- belorn 13y ago> What will probably happen is that affected businesses will have to "eat" the tax and drive their margins down... Or e-commers will do what they always have done when legislation change. They "move" their cloudy servers to somewhere where said laws do not exist. We saw this exact thing each time EU passed some new data privacy law. People stayed in their country, but the servers suddenly poped up in NA, or Ireland, or some small Caribbean island that no one has heard of. Trying to enforce taxes or privacy laws on e-businesses is like trying to shut down the Pirate Bay. It simply moves on to a new IP under the same domain name.
- mikeburrelljr 13y agoIs the Internet tax on goods only? (This article speaks as if it is on services as well.)
- dangrossman 13y agoThe bill allows states to force out-of-state retailers to collect their sales tax, rather than requiring the end-customers report and pay them with a use tax return. Each state will still set its own classes of taxable goods, and services are already taxed in many states.
- mrgoldenbrown 13y agoThis post seems to imply that we're considering a special Internet tax here. Last I heard, the proposed bill was simply about removing the special exemption Internet and mail order purchases currently enjoy. Since when is there an additional, special Internet tax being proposed?
- adventured 13y agoSo re-frame it as the removal of the exemption. Makes no difference how you spell that out, it adds up to an increase in taxes on goods sold / bought for American companies.
- dragonwriter 13y ago> So re-frame it as the removal of the exemption. Makes no difference how you spell that out, it adds up to an increase in taxes on goods sold / bought for American companies. No, it doesn't. US buyers were already responsible for local use taxes for remote purchases. This just shifts who is responsible for the taxes to the retailer (if the taxing states opt-in, which requires them to adhere to certain tax streamlining provisions and other requirements that make the process simpler for retailers.) This is a tax simplification and collection efficiency measure that doesn't change the amount of tax due on any sale.
- deleted 13y ago[deleted]
- Turing_Machine 13y agoIt doesn't really have anything to do with the Internet or mail order per se. Businesses have never, in general, been required to collect sales taxes for other states. It doesn't matter if the sale is on the Internet, mail order, or face-to-face. In some states (Washington is one for sure, but I believe there are others) you can even get out of paying their own sales tax for face-to-face purchases. For example, if a resident of Alaska (no state sales tax) has proper ID, he can travel to Washington state and pay no Washington tax on his purchases (you do have to certify that you're planning to take your purchase out of Washington state -- if it's going to be consumed or used in Washington, you have to pay Washington tax). See: http://dor.wa.gov/Content/FindTaxesAndRates/RetailSalesTax/Nonresidents/ http://dor.wa.gov/Content/FindTaxesAndRates/RetailSalesTax/N...
- rgbrenner 13y agoEasyDNS.. the company that closed my company's paid account over a month before the term ended because I informed them we didn't want to renew. If they think paying a modest sales tax is going to offset their terrible service, they are dreaming.
- StuntPope 13y agoI think I just sent you an email, if you don't get it can you drop me a line at markjr [at] you-know-where What you're describing isn't supposed to happen and I want to figure out how it did.
- rgbrenner 13y agoI got it... I'll get back to you in a bit.. I still have the emails from the ticket.. I'll forward them to you. I had a very positive opinion of EasyDNS before it happened.. I was lucky enough to have already moved to another service a few days before so there wasn't any site disruption... but your rep didn't know that. Have 18 domains @ DME now....
- ojbyrne 13y agoThis post is idiotic for at least 3 reasons I can think of: 1. The tax is not "specific to the internet" but is designed to make it so that internet-only businesses are required to collect the same taxes that bricks'n'mortar businesses are required to. 2. EasyDNS's right to sell to US customers is regulated under a giant freaking, bureaucratic law known as NAFTA. If they every got large enough to compete with large US corporations, they could become subject to all sorts of mechanisms to ensure that US corporations can compete with them (countervailing duties for starters). They should shut the hell up. 3. Everything they say also applies to US companies selling to Canadian customers.
- dangrossman 13y agoBrick-and-mortar businesses collect, at most, two sales taxes. Even if a customer from every single state walks in their door. They can engage one local accountant and pretty much have all their questions about tax classification of different products/services, filing requirements, etc. covered. Online retailers will have to collect, at most, 53 different taxes, under 53 different tax codes, remitted to 53 different entities all with audit rights. That's not really the same.
- dragonwriter 13y ago> Online retailers will have to collect, at most, 53 different taxes, under 53 different tax codes, remitted to 53 different entities all with audit rights. More than that, actually; I have no idea where you get 53 from; the relevant entities ("states" as defined in the MFA) include the 50 states, the District of Columbia, 5 named territories, and "any other territory or possession of the United States." But its not just "online retailers", its any remote seller. Including anyone who does online and/or mail and/or phone sales, which includes lots of entities that are also brick and mortar outlets. But only if they choose to sell into each of those jurisdictions: you choose where you will accept orders from, and as a consequence of that choice you choose which tax laws you will deal with. Just like with a brick and mortar business, where you choose where you open outlets, and as a consequence of that choice you choose which tax laws you will deal with. And each of those jurisdictions is required to provide free-of-charge software to calculate tax rates and hold retailers harmless for any errors due to the software.
- tokenadult 13y agoThe legislation now before Congress simply allows states to collect sales taxes (if the states have sales taxes) on transactions to residents of their states by online retailers. (There was a special act of Congress that exempted online retailers that don't have "nexus" in a particular state from such taxes.) The immediate effect of this legislation, in my opinion, is that Amazon will open a distribution center in my metropolitan area, located in a state with sales tax, and offer same-day delivery for Prime customers. And I will probably take up Amazon on that offer rather than shop in my locally owned retail chains such as Target (walking distance from my home) and BestBuy (which I loathe shopping at, and hardly ever visit). The United States Senators from my state support allowing states to impose sales taxes on online retail transactions, because Target and BestBuy (and some other large retailers) employ a lot of their constituents, and because new tax revenue for Minnesota will be spent by a governor and legislature who belong to the same political party they do. But I will shop at Amazon if this happens. The new law is not going to hurt my favorite online retailer at all.
- nhashem 13y agoSorry, but this is asinine. Easy DNS charges $19.95 CAD/yr for its basic package of DNS services for a domain. Amazon's Route 53 charges $0.50 per month, or $6.00 USD/yr. Given the OP claim to be "traditionally anti-big government, pro-free market, pro-capitalist whack jobs," they are offering a service 3x more expensive than a comparable service US company. Maybe EasyDNS has some extra goodies that Route 53 doesn't to justify the higher price. Either way, that is what drives Mr. Smith's invisible hand, and acting like US states enforcing their 6% or 8% or even 8.75% sales tax is some sort of game changer is absurd. The OP seems to woefully misunderstand that this is not a new tax. This requires any internet business with over $1 million in sales -- which I'm guessing doesn't apply to a lot of startups whose founders/employees read HN, btw, mine included -- to collect any applicable state/local sales tax at the point of sale, just like pretty much every local business. And if these businesses are getting squeezed by internet retailers, I'm guessing it has nothing to do with sales tax. Recently I needed a DisplayPort/DVI adapter, and impatiently went to Best Buy, where the only one I could buy was $30. Then I saw this one on Amazon for $4.95 on Amazon -- http://www.amazon.com/gp/product/B003BHHIA4 http://www.amazon.com/gp/product/B003BHHIA4 -- promptly ordered it, and returned the Best Buy one, even though Amazon sales tax meant I actually paid $5.45. Best Buy is getting destroyed because retailers can sell similar products at a 84% discount, and that would still be true if it was only a 78% discount. So, to the OP and all the other people I've seen on HN lamenting that this bill is akin to exhuming Adam Smith's corpse and urinating on it: can we please stop acting like this is the end of the world? Making sweeping states predicting economic outcomes without practical considerations (e.g. many internet retailers have a pricing advantage that dwarfs sales tax) and human responses (an effective 6-10% increase on purchases -- 'effective' because this is a tax they should have been paying anyway -- is not really accomplishing much. There are times to get infuriated about the government fucking up the free markets and disincentivizing capitalist innovation and production, but I don't think this is one of them.
- Falkon1313 13y agoA few years ago, there was a big case where Massachusetts tried to force (non-internet) retailers in New Hampshire to collect Massachusetts state taxes from people who purchased things in New Hampshire that might in the future be used in Massachusetts. The case got thrown out by the state supreme court because to enforce it would require Massachusetts to force New Hampshire businesses to violate their customers' privacy about where products would be used. New Hampshire in turn passed a law prohibiting retailers from sharing private customer information with Massachusetts auditors. Trying to make the citizens of one state liable for enforcing the laws of another seems ridiculous by itself. Making them enforce the thousands of arbitrary, convoluted, constantly changing laws of 49 other states and all of their localities is way beyond reasonable. At least there appears to be a clause that states will have to simplify their tax rules and provide free software to manage it. Although the idea of integrating an e-commerce system with 50 separate bureaucratically-designed systems doesn't really seem that appealing either... If the states also had to pay for every integration and the maintenance of all e-commerce software, then it would be a little more reasonable.
- tss20147 13y ago24 states have already certified 6 sales tax service providers. It is expected that most states will certify these same providers. The providers have already integrated their service/software with a significant number of the major e-commerce platforms. After all the integration drives business to them. Depending on the service provider and the features used there may or may not be a fee for the retailer.