Leadership

Net sales tax: Out of state or out of mind?


Net sales taxJust when you think that you've been taxed to death, the government tries to stick you for a few more cents -- or at least that's what a person could argue who's following the Net sales tax debate. Get the details by reading this article by CNET Networks' News.com: "Days numbered for tax-free Net sales."

Here's an excerpt from the story:

What's new:
A powerful alliance of politicians is arguing that out-of-state retailers must be required to charge sales taxes on purchases.

Bottom line:
The political make-up of Congress, coupled with a recently invented sales tax concept, could tip the scales to make sales collection mandatory for out-of-state retailers.

The article points out that currently, "companies like Seattle-based Amazon.com are not required to collect sales taxes on shipments to millions of its customers in California." Do you think out-of-state retailers should be required to collect sales tax for online goods? Join this discussion, and let us know why or why not.

--------------------------------------------------------------------------------

Stay on top of the latest tech news

Get this news story and many more by subscribing to our free IT News Digest newsletter, delivered each weekday. Automatically sign up today!

About

Sonja Thompson has worked for TechRepublic since October of 1999. She is currently a Senior Editor and the host of the Smartphones and Tablets blogs.

74 comments
Eagle77
Eagle77

Most states already have some sort of user tax for purchases from out of state. Yes it is voluntary and probably not honored very well. The issue is virtually all jurisdictions have some sort of sales taxing capability. How do you expect expect an on-line retailer to keep up with ALL of these tax rates and tax structures? In the state of Oklahoma for example there is a state sales tax. All of the counties also levy a sales tax of some sort. That's 77 counties with different tax rates. Many municipalities within the counties also levy a sales tax. If only 10 municipalities within each county levy a sales tax that is a total of 848 differing sales taxes just in the state of Oklahoma. These tax rates can be changed by the voters at any time via a general or special election. Multiply this by the number of states and it becomes an impossible task to expect on-line vendors to comply with. Each seller on E-Bay is a separate vendor and would be subject to enforcement action. Until the Federal and state legislatures do a complete overhaul of the tax structure this would be impossible to enforce.

Rechno
Rechno

The issue is not fairness or legality. This argument is based on the need by politicians to collect additional revenue to buy votes from their constituency. By collecting sales/use taxes from those that make purchases from Amazon in Washington state for example, the politicians get tax revenue from productive individuals and distribute it to the unproductive. However, just try and communicate with a politician in Washington state if you don't live there. You will be summarily ignored. It is taxation without representation.

nighthawk808
nighthawk808

do not "transfer wealth from productive individuals and distribute it to the unproductive". It's the income tax that does that. Sales taxes transfer wealth from the consumer. A consumer is not necessarily a producer. The entire audience of Jerry Springer combined has not produced a single thing, yet they pay sales and use taxes. They don't, however, probably pay income tax because their incomes are too low. If you want to address the redistribution of wealth, either abolish the income tax entirely or replace it with a small flat tax, and change the tax structure to one based on use taxes and let people pay for what they receive instead of paying for what others receive. "just try and communicate with a politician in Washington state if you don't live there". Imagine that--a politician not paying attention to you for the teeny little reason that you can't vote for them because you don't live in their state. What is the world coming to? I wouldn't expect a Washington politician to represent my interests any more than you would expect an Ohio politician to represent Idaho's interests.

glgruver
glgruver

I think I see where this whole thing is going to end up as a form of National Sales Tax, a la Canada's GST. NONE of the States will benefit unless Uncle Sugar decides to share. EVERYBODY will pay, even our Canadian neighbors. At least Canada will refund GST taxes over a certain amount to non-residents...I would not expect our money-hungry governments to be so generous.

TechinMN
TechinMN

First of all, internet purchases ARE already taxed if the vendor has a presence in the buyer's state. If a mandatory tax is levied, who gets the money? The locality where the buyer is located? Sounds good...but then it is up to the vendor to maintain current listings of local (by zip) tax rates, maintain the appropriate documentation, and then figure out how to get the money to the appropriate locale. This increases the vendor's overhead, which is then passed on to the consumer in the form of increased cost for goods. Who will then oversee and enforce the accurate distribution of funds to the appropriate destinations? Who will pay for it? Again, the consumer. If the money doesn't go to the purchaser's locale, then where does it go? To the state the vendor is located in? That I don't like either. If I live in MN, why should I pay taxes in WA? Where's the benefit for me, the one being taxed? If it goes to the buyer's state in general rather than the locality, the money will go for urban (usually major-city) use [as is usually the case in my state and others I've lived in], and the online purchaser who generally buys online because they can't find what they need locally anyway end up supporting the fat cats in the big city yet again. I don't mind (too much) paying sales and/or use taxes on goods I purchase locally, because those taxes are USED locally for such things as infrastructure maintenance and public services (i.e. the road I drove on to get there, or the sewer taking away waste water from the facility, etc.). It's not my responsibility to pay those for some city I've never been to. Internet businesses should be SUPPORTED. The big boys already pay taxes in one form or another due to their physical presence in various locations. The small home-based businesses provide employment opportunities for people who may not otherwise have the option to work outside the home...and again, already pay taxes in some form. No, this whole thing is a vote-buying scheme, pure and simple. It will increase costs for vendors and consumers alike, and will unnecessarily consume yet more resources (paper, metal, storage, construction, electricity, etc.) for no gain other than the politicians' hoped-for votes. It will put the smaller operations out of business (causing loss of jobs due to costs, or penalties for screwing up the tax levy), and increase costs for goods all around, meaning that many purchases will not be made that otherwise would have.

cnaw
cnaw

The administrative costs for handling and paying the taxes would drive small retailers (in the US) off the net. Administrative costs would make even the larger retailers far less competitive, because taxes and shipping added would make online sales far less of a viable alternative. Thsi would leave the advantage to other countries, and put US businesses at a disadvantage. When you do a cost benefit analysis, it is bad for consumers, bad for small businesses, and the resulting tax gains may well be small. Who is served here?

TechinMN
TechinMN

Almost forgot. There are comments being made that online purchasing is making it harder for storefronts to stay afloat. There is no way, shape or form that that is true. LOL Almost every single online purchase I or everyone I know makes is because it is NOT AVAILABLE locally. It would be different if we lived in a big city, but out in the rural areas the selection is small if it is even available at all. Sure, I could burn up $35 or $40 in gas to drive to where the goods are, but it is more sensible (and responsible!) to pay $7 in shipping and wait a few days, thus saving money and my personal time; conserving non-renewable energy resources; reducing wear and tear on infrastructure and my vehicle; reducing pollution due to vehicle emissions; and, avoiding the possiblity of an accident in heavy traffic. Yeah, it sure is more beneficial to buy at a storefront--I can see that now. All that being said, I buy locally when I can and when it's appropriate. The truly ironic thing, though, is that the ONLY company that is actually 'hurt' by my online purchasing is a company that has both a local storefront and online presence--and still loses out to my preferred online vendors by at least 40% every time.

techhund
techhund

As was stated before, WA state is trying to become one of the 21 states already doing the sales tax thing. My question is to consumers, if you have the choice of buying something online where your shipping costs are less than your local sales tax for the same item, wouldn't you rather go online and order up, instead of driving to someplace and paying local sales tax? Of course you would. But now add on sales tax (every state has a base sales tax, WA state is 6.5%) plus shipping? No you wouldn't. My small company does a lot of business nationwide, but adding sales tax to the cost (plus probably having to have a business license in every state = more money to state for sales tax payment), and the cost of paying those taxes and licensing and someone to keep track of this, a national sales tax (and removing the Income Tax) makes a whole lot of sense. I stand to lose 40% of my business if WA state decides to go through with this nonsense. I can't have a store front and keep prices low at the same time, so internet retailers will get screwed as usual. As opposed to some of the online sites, we are an honest company that believes in customer service. Right now every state says that if you buy something out of state and bring it in, you must pay USE TAX on that item. Who does that? The only state that would come out clean is Oregon, because they don't have a sales tax. As everyone has said, all this does is put more money in politicians pockets, without them having to do any work for it. Paul Clemmons PC Networks/Wicked Machines www.wickedhome.com

MrEddie
MrEddie

I am a rational person most of the time so I hate ALL taxes but if I have to pay them, I actually agree with this one. The issue is the society we want to live in. I do not want a city where there are only restaurants, Starbucks, and warehouses. And the unfair advantage online stores have is destroying the brick and mortar places that I love. Of course politicians will screw us but not taxing online transactions won't stop that. At least this tax only targets those who choose to buy online.

jtm811
jtm811

Your argument is flawed. Online stores do not have an unfair advantage. People shop online because it is convenient and they can purchase great products. Competition and our capitalist society are making the brick and mortar places go out of business. This is a good thing!! Starbucks thrives because they offer a great product and people love it. We cannot fault Starbucks for wanting to take a great idea and run with it. That is what America is all about...anyone can take a great idea and make money. If the brick and mortar stores would have dropped their prices, maybe they would still be in business...

jtm811
jtm811

It's funny you mentioned outsourcing. A study was done by the Dartmouth School of Business that showed the three businesses who outsourced the most also hired the most people here in the US. If a company can outsource and save money, they are able to grow (and hence, hire more people in the US).

jtm811
jtm811

If online stores have an unfair advantage, why doesn't every company go online? The answer is because there are drawbacks to online stores that even the scale vs. brick and mortar. The point with Starbucks is they generate a lot of revenue (whether it be because of the product, marketing, convenience, etc). The government stepping in for pollution control, worker safety, etc, is definitely a good thing. Past that, they government rarely does anything efficiently or for the greater good. Sweat shops are a good thing by the way. Righteous Americans think they are bad, but they don't know the alternatives. In one country in Africa, a sweat shop closed down because of American pressures. As a result, prostitution soared in the area. The locals near the now closed sweat shop were happy to have the shop there. The perfect is the enemy of the good.

MrEddie
MrEddie

You are right - I wasn't using sweat shops to compare online vs. brick but just to comment that using capitalism as the reason for anything is not necessarily useful. And while you are correct that less personnel is one goal of "getting better" it also explains one reason why I think online stores are possibly bad for the longterm interests of America - they hire less people. If I were king (and there are many who would leave the country if that were true!) I would base corporate taxes inversely with staff so that the company that hires the most workers (who pay property, sales and income taxes) would pay less taxes and the company that hires the fewest people, or outsource to use people from other countries, would pay more. The details of how to do THIS would need a book, not a blog but I think it would be workable.

TechinMN
TechinMN

"If unfair means unequal then of course online stores have an unfair advantage - they don't have to pay sales taxes!" Ed, online retailers DO pay sales tax in the states they have a physical presence, just like a storefront. The advantage is that online retailers are able to work with fewer personnel and less overhead, which allows them to offer better deals and a wider variety. It's not unfair--it's the way business has been conducted for thousands of years. I'm not sure how your sweat shop comments could be relevant to the unfair advantage of online vs. brick and mortar establishments, though, since most online products are also available in storefronts as well.

MrEddie
MrEddie

If unfair means unequal then of course online stores have an unfair advantage - they don't have to pay sales taxes! And I would argue against saying Starbucks offers a great product; popular and convenient are not the same as good. Study the pop charts for many examples. As far as saying it is capitalism that is putting the brick and mortar places out of business, that I would agree with. But capitalism, despite its many benefits to individuals and society, is ammoral. Without the government stepping in, most industries would pay their people little, put in few devices for worker safety and put no pollution controls in their factories. See the practices of foreign sweat shops for many examples.

Sonja Thompson
Sonja Thompson

Do you think out-of-state retailers should be required to collect sales tax for online goods? Why or why not?

dantilus
dantilus

What I find amazing, is that the people who are arguing for internet sales taxing aren't examing exactly what this will impact if this goes through (which knowing our money hungry nation, will). Don't just look at the Corporate powerhouses with a internet presence, look at all the smaller companies that they only way they can compete is through basement bargains, partnered with no sales tax, to pull customers in. This law will in effect strangle many of these shops to early graves and for what? Why not tax those who should be taxed, why not spend the money we pay to taxes for good causes and not squander it away on money hungry politicians. This hurts everyone, the only people it will profit are those companies that will GAIN customers when the small ones cave in. If you think for one Second that the taxes that they collect from internet sales will go somewhere other then to politicians pockets or other "government" expenditures... think again. The US government is gasping for revenues, they see the internet sales as a golden egg, ripe for cracking, and crack it will. The people suffering will be those who depended on those "bargain" pricing schemes, and us... the consumer.

Rick F.
Rick F.

Generally speaking, I have no problem with paying sales tax on internet purchases. I don't like it, of course, but I sometimes have to. My real problem comes with my state! I live in what seems to be the state whose government is the nation's best-known for corruption, ignorance, and sometimes literally criminal money mismanagement. It surely would be nice to be able to dedicate some portion of my taxes to something truly useful, and on-line purchases would be an easily identifiable portion.

Inkling
Inkling

Fair Tax. I encourage you all to read and learn about the Fair Tax. It is the MOST common sense approach to the subject I have ever seen. This would also circumvent the "state to state" differences that would cause problems. Aside from making sense, it would be the SINGLE GREATEST shift in political power since the incorporation of income tax. This would take the power away from the politicians. No more breaks for corporate campaign donors. No more class warfare to gain votes. ALL illicit activities will be taxed (drugs, prostitution, illegal aliens, etc.). www.fairtax.org

ruth
ruth

I am personally weary of constant tax hassles, but I have an idea. The good ol' U.S. is probably the only country in the world that has all the yearly paperwork even though the IRS already knows what most folks make with today's technology. Give everybody in the country a break on the tax forms and change the tax system. The big retailers will buck up on the cash, but for smaller folks, there is always a way around the hassle and they will find it, one way or the other since money is always a big motivator. Also, this tax issue goes farther than Amazon, but translates to anyone that does business on the net. The government has their hands in enough pies and I would like to see them cut the public-at-large, including small business, some slack. Pretending that this tax will only affect big companies is ridiculous, whether you agree with a thing I say or not.

skingan
skingan

I would not have a problem paying sales tax on a new item if I am paying retail for that item. If I am buying an item for resale then I should not be taxed. If the item is used then there should be no tax at all.

MichaelLass
MichaelLass

I enjoy ordering over the internet and view shipping as a Tax. The money I save not having to pay taxes I pay in shipping. Population gets BIGGER and Taxes get HIGHER, but I see no change other than an empty wallet. This Country is going to TAX itself to death. Vote Warren Wilson, stop Taxing Senior Citizens for School Taxes.

ths1
ths1

It would cost the economy more to collect the taxes than the states would collect. Net loss.

frankspruill
frankspruill

OUT OF STATE RETAILERS SHOULD FACE THE SAME COMPETITIVE RESTRICTIONS AS IN STATE RETAILERS. EITHER BOTH OR NEITHER SHOULD HAVE TO COLLECT SALES TAX.

JayGee21
JayGee21

As a business owner who is required to collect sales taxes and hand it over to the state I am registered in, my answer is HELL NO! As it is now I am required to collect state sales tax, city tax and even county tax. Each category has to be tracked and reported and sent in. No business owner goes into business to become a tax collector for the state he is in let alone for other states cities and countys as well. Only gov't paid employees think there is nothing wrong with turning businesses into tax collection systems. The thanks a business owner gets for collecting their tax for them, pay it by the 20th or face audits and god help you if you missed a .005 percent on a city or county tax.

carlton.tilley
carlton.tilley

I did'nt go into business to be a tax collector. It's tough now to keep up on all the local taxes, let alone another states taxes. There is no good that will come of this. I can almost garantee that if anything like this goes through, alot of people will lose thier jobs to out sourcing. For small business like me, I would lay everybody off and just move to Canada or Mexico or may be the Caymen Islands and work my businees untill I'm ready to retire. I can't afford a full time staff of accountants & lawyers to figure out tax for the nation, Thats just plain insanity.

CharlieSpencer
CharlieSpencer

Yes, collecting and turning over taxes is a pain in the gluteus maximus. So you're willing to let your on-line competitors avoid the expense of doing it?

$dunk$
$dunk$

Not that it really matters what the Constitution says because activist judges invent new meanings whenever a new whim meets their fancy. But here's what the Constitution says anyways: Article 1 (talks about congressional powers) Section 8 (1) To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes (2)...imposts and excises shall be uniform throughout the United States; (3) No tax or duty shall be laid on articles exported from any state. Basically, what the above is saying is that: A - only Congress has the right to regulate commerce between the states. (From 1 above). B - If congress were to pass a law allowing taxation across state lines then it would have to be a uniform tax across all states. (From 2 above) C - It is illegal for congress to tax commerce across state lines. (From 3 above) Thus, without a new Amendment to the Constitution no government (whether it be Federal, State or Local) has the authority to tax interstate commerce. However, we know that the Congress and State Governments will ignore this law and the activist judges will let them (because it's for the public good, yada, yada, yada). If there were a couple more Clarence Thomas's (who believes in the law as written and intended) on the court then this would not even be an issue. Everyone would already know that any law to tax commerce across state lines would be declared unconstitutional. As for me, I have been keeping all my receipts that I have been taxed for my internet transactions across state lines. I know that eventually these types of taxes will be declared unconstitutional. My wish is that all those states who knowingly are illegally taxing me are eventually bankrupted by the ensuing class action lawsuits that are sure to follow.

TonytheTiger
TonytheTiger

and buy something in a store, you will pay that state's sales tax. Why should it be different if you surf to their website to buy it?

raybassett
raybassett

Why are we (the U.S.) still trying to distinquish one state from another??? We are all just one BIG state! It's the 50 against the world, together we can succeed !!!Look, isn't it California that has a higher GNP that several countries!?!?!?!? Let's start thinking like - U.S.A. Incorporated, not U.S.A., 50 "islands" of commerce!!!! United we must stand, or divided we will fall!!!

ToR24
ToR24

As a general rule, are Native American Reservations exempt from state sales taxes?

$dunk$
$dunk$

The main reason that it is different is because the constitution says it is different. Besides that, they are 2 completely different kinds of transactions. If you walk across the state border, the entire transaction takes place in the state where the purchase was made. It doesn't matter that you later took it back to your state. The transaction is complete already. When buying from a website, the transaction takes place across state lines. They still have to ship the item across state lines to get it to you. Until you receive the goods, the transaction is not complete. I could post the reasoning as to why the Constitution makes a distinction between inter-state and intra-state commerce, but I suspect not many people would be interested. However, in short, the underlying reasoning is to ensure fair trade practices between the states.

turbinepilot
turbinepilot

The wonderful legislators in Madison have imposed a "use tax" on items brought into Wisconsin for which no sales tax (for any State) has been paid. Thus if I were to visit Minnesota and make several purchases there and pay the appropriate MN sales tax those items could be brought back into Wisconsin without having to pay the use tax. However, if I were to puchase items online, or the old-fashioned way by mail order, those items would be subject to a use tax. This approach very neatly gets around the prohibition of taxing exported items. I suspect other States have a similar tax and their approach would be to petition Congress for assistance in enforcing use taxes (import) as opposed to sales taxes (export).

GentleRF
GentleRF

a duty or tariff on goods shipped into a state.

$dunk$
$dunk$

They can call it an (import) tax, but in order to import, it has to be exported. Just because you call a dog a cat, doesn't make the dog a cat. Also, this still violates regulating commerce among the several states. If they simply taxed all imports, then this would probably not be a violation of this clause. However, since they inquire into the tax situation of the purchase (a commerce issue) that makes this a clear violation. I'd even venture to say this violates that excises shall be uniform throughout the United States. I guarantee that if these *use tax* laws were to make it to the supreme court that the conservative judges would declare them unconstitutional. As this *use tax* definately violates the intent and reason for creating the clause(s). Whether that ends up being the majority opinion is another matter, because the activist judges decide the law based on what THEY think the law SHOULD say and not what the law actually says.

turbinepilot
turbinepilot

The myriad tax laws, rates and taxing jurisdictions make tax collection for inter-state sales somewhat complex. Enforcing online retailers to collect state sales tax may even prompt some retailers to locate their operations in foreign countries to avoid the entire tax headache. One possible solution would be the implementation of the "Fair Tax". Please take a look at http://www.fairtax.org for some interesting ideas on taxation.

ToR24
ToR24

The forces that keep the status quo are far too rich, powerful and large in number to allow any sort of Fair Tax, Flat Tax or any other simple tax mechanism to be instituted. Huge industries and sectors of employment depend on this complexity, like accountants, attorneys, judges, publishers, computer software and hardware manufacturers, the uber-rich, the impoverished, tax cheats and anyone else who has managed to dodge the existing system or who wants to keep their little loophole, credit or deduction and let us not forget the underappreciated IRS employee. Imagine the societal upheaval that would result in this country and the domino effect around the world. We'll have to pay a majority of these folks to do nothing for at least a generation, as these unemployed masses try to find some sort of gainful employment or attempt to displace others of their jobs. A silver lining around a dark cloud improves the conductance of lightning.

Tig2
Tig2

Cannot improve on a good truth. Thanks for the link!

Inkling
Inkling

I posted about this further down in the thread before I saw your post. I encourage everyone to check it out for themselves. Hell, I have a copy of the book at home that I will send to someone if they want to PM me about it.

TonytheTiger
TonytheTiger

If the retailer doesn't collect it, the consumer should pay it. Most states have a place on their tax return to put this tax. If yours does, and you don't report your out-of state purchases, shame on you.

mph
mph

Most of the posters in this thread are ignoring the fact that many states already have "Use" tax. Anything you use, consume, or store that was purchased out-of-state, whether via the internet, catalog, or by driving across the border, is subject to the state's Use tax. Out of state purchases are not a tax-free ride. It's the law in many states, but many people are either ignorant of it, or choose to ignore it. If you are unfamiliar with the sales and use tax, look it up; you may be surprised.

Labrat636
Labrat636

Do they send you a form? Certainly you don't just "volunteer" the info, do you? If they want money from me they better send me a form - otherwise - forget it - they get enough of my hard earned dollar - that's for sure - If they don't know about it I sure as hell am not going to tell them.

GentleRF
GentleRF

And I think that of the US Constitution, the taxation of interstate commerce is the purview of the Federal Government.

flsw19
flsw19

The costs associated with delivery of goods, i.e. roads, airports, and other infrastructure, also the disposal costs associated with packaging and obsolete goods.

crypticmatrix
crypticmatrix

If we starting to pay taxes, whats the point of online purchase. it reduce the amount of money you can potentially saved, and still need to wait like a week or so before receiving you stuff. Local retailers seems more and more favorable now. And on top of that, you get to know rather the item u r getting is physically broken or not before you make the purchase, and always the ability to walk into the store for an exchange sounds better than online purchase.

Wayne M.
Wayne M.

The biggest difficulty in collecting sales tax on Internet sales is the current method is based on the location of the buyer rather than of the seller. To require each seller to track state and local tax regulations and forward the correct amounts to the appropriate agencies would be quite a burden. If the situation were that the seller paid the taxes to its home state and locality, then it would be feasible and less complicated to apply than the current mechanism of collecting taxes sometimes but not always. I'll leave the question of taxes in general to others to debate. My only observation is that if we have taxes, they must be applied equally (by at least some definition), and the collection must be made as simple as possible.

Freebird54
Freebird54

Of course, nothing is that simple. Whatever system is imposed (and the most reasonable one is that seller's state taxes are collected) is going to cause huge upheavals across the US. Because of the differing rates and applicability of taxes, you would be giving unfair advantages to businesses in the states that have a lower, or no state sales taxes. Thus - the big boys move out of their current state - and the state suffers worse than they do now. There are reasons that there has NOT been a tax - and the scenario above is only one of them! The whole idea of sales taxes is pernicious to begin with. After all - they are taxing the money that you have LEFT after they finish collecting taxes on it! If more revenue is actually needed (and it probably is) it should be generated by closing loopholes that the rich drive through in their limos. There is no justification for the rich to pay so much less proportionally than the middle and below do. Of course, too many jobs depend on the current tax systems (and their interpretation) to do something sensible like: First $10,000 income - no tax Every subsequent dollar, no matter how earned, goes 10% to Feds, 5% to States/Provs. Sounds utopian - sure - but it would actually net them far more than the current hodge-podge. It would also be much less costly to collect, and is demonstrably fair to all. It would also provide incentive for people to work harder - as you don't have to worry about 'breaking out' of your tax bracket. It should also make it harder for criminals to explain their income - if there was no tax on it - you can't have gotten it legitimately! Well - back to the real world..(sigh)

macumazahn
macumazahn

Politicians are just sniffing money, the mail order business has been sales tax free for years, what's different, the millions of dollars of online sales, and who will track and post and submit these taxes to all the states in question, and what will prevent retailers from just pocketing this money?

ryanmichelle
ryanmichelle

OK, so I may not be a tax expert. However, I have learned a little about the internet and sales taxes. (See 1998 Internet Tax Freedom Act on Wikipedia) It seems that many states are losing millions and billions of dollars in sales taxes from consumers. Boo Hoo. Here's what I would like to know as a comsumer. What the hell would be done with all of that money anyways? E-Commerce is great! There are no stores being built to sell these goods. Therefore, no parking lots, no traffic, no wear and tear on the community. Also, without theft there's no profit loss. The business is making their profit and reducing overhead costs. They are also saving energy. The consumer is saving money by getting their products without driving (reducing air pollution), and saving their time which (in essence)is money. God forbid the general consumer or entrepreneur gets ahead in this world. Until I can see a valid reason that the government NEEDS this money and will put it to good use, I say NO INTERNET SALES TAXES. I'm already being taxed on my bonuses and my unemployment insurance checks, so I can pay for a war in someone else's country. In the meantime, our children and society is suffering while the government pisses our hard earned money away. Instead I donate what little I have to charities and make(tax deductable) contributions. If they want my money, they're going to have to come and get it.

jdw242
jdw242

if I drive south to Nashville and buy something, I pay Tennessee sales tax. I don't see a viable reason to bitch about paying sales tax on items purchased on the internet. BUT This is only a problem for the IRS. A Fair Tax system would include taxes on internet purchases. Who fights for fair though... Anyway, the retailers probably don't want to add another process to an already complicated system any more than we want to pay more for products we buy from them. The last issue is that of taxing used products. If this passes it won't be long before it's spun into requiring taxes on eBay or other online auction sites. Nobody will stand up and fix it, so my opinion is it's going to happen, just like Internet Radio dying off...

robertrobinson
robertrobinson

As a Canadian, I do not want to pay state taxes when I live outside the US and use the product outside the US. Do we have to start another level of legal issues and opportunities for lawyers to get their claws into all sides that are doing business. Where is the value added other than for the legal weenies!

ToR24
ToR24

If I understand the premise correctly, you pay the sales tax to the state where you live. You live in Canada, and therefore, this tax won't apply to you. However, there may be conditions where certain goods, that when imported to Canada, are subject to an import duty. These are typically applied to protect local industries or to account for unfair trade practices. This import duty might apply to raw and manufactured goods where the exporting country subsidizes an industry, thus leading to an unfair trade advantage to the exporting country. A hypothetical example, Country X exports some the best maple syrup on the planet rivaling the best that Canada has to offer, but gives its farmers money to grow trees and produce syrup, applies no duties to exporters, and gives tax breaks to everyone connected with the maple syrup industry. The nation's goal is to give Country X a monopoly on the profitable and lucrative maple syrup market. Canada produces lots of maple syrup, but Country X can sell its maple syrup around the world for half price, mostly due to low wages. Syrup harvesters in Canada start cutting down maple trees solely for wood, because they are unable to compete with Country X. Neither country wants to join into a maple syrup cartel called OMSEC (Organization of the Maple Syrup Exporting Countries). The Canadian government wouldn't stand for diminishing the enduring symbol of the country and chooses to stop the import of Country X's maple syrup by imposing import duties of 200%, to make Country X's maple syrup cost 50% more than Canada's maple syrup. And to make it more attractive to the global market, gives Canadian farmers tax breaks on producing maple syrup. Ultimately it's self defeating, because now Canadians will have to spend more on maple syrup and pay more taxes to fund the farm subsidies. For better or worse, NAFTA and other trade agreements were supposed to correct some of these practices and allow market forces to regulate the flow of goods. However it minimized the effects of destabilizing economies especially in the area of employment, where workers need to find other gainful employment. We are still experiencing the fallout effects of these agreements, with job losses in traditional industries all over the globe, many of which were unintended consequences from the free flow of cheap goods. The simplistic ideology of trade agreements like NAFTA can result in instability of some markets, which are notoriously sensitive to changes in trade regulation. There are always winners and losers in any tax or trade regulation. Losers are most often the result of the unintended consequence of the legislation, regulation or treaty. Winners are those who recognize and also have the capital necessary to seize upon the rendered opportunity. Simplistically, increased taxes results in temporaily reducing economic activity. This is not a good thing to do, when the ecomomy is on a downward trend. It might have been appropriate to cool down the meteoric overestimation of capital in the 80s to slow down the inflation of the dot com bubble. But it would need to have been done on an international scale to prevent the collapse of some entire national economies dependent upon the supply of goods to the dot coms. Even industry practices can adversely affect industries on a global scale, but let's leave that one alone. Now the money line. If the cost of shipping offsets high tax rates in certain states, there now may be a window of opportunity to exploit this temporary international loophole, should it emerge. Of course it will result in more jobs moving to other countries, perhaps even to Canada. Good for Canada, up to a certain point. But people without jobs don't buy things. The result may be that NAFTA or other trade agreements will be nullified or not be renewed. Import duties will most likely resume to close these loopholes. And the cycle will continue. The lucky ones are those who are born and live in the good times. We just need to smart enough to recognize the good times when they've arrived.

porwig
porwig

Indeed... I work for a company based in California, but I live and work in Nebraska. I don't pay California income taxes because I don't live within that state's jurisdiction. State sales taxes are charged to residents of that state, or for purchases made in that state. If I drive into Kansas and buy gasoline, I don't pay a Nebraska tax - I pay Kansas taxes. Unless a company is doing business in a particular state, that state has no jurisdiction to impose a tax. I have no problems with a Texas company charging me a Texas sales tax, but I do have a problem with requiring a Texas company to collect California sales taxes.

LeFebvreC
LeFebvreC

I'm sorry but in general I have to say that I'm taxed more than enough already, federal, state, local, social security, gas tax, sales tax, disability and any number of other taxes that I can't think of off the top of my head. It's just another way for the government to rape the public at large some more while they turn a blind eye to every big company and business that re-incorporates outside the country to avoid having to pay taxes and shifting more and more of the burden to John Q. Public.

ryanmichelle
ryanmichelle

I agree! One thing I didnt mention in my post was the offshoring. I don't see the government worrying about that. Our government is absolutely rediculous in what they waste their time and our money worrying about. I wish they would get their heads out of their asses and figure out how to effectively and fairly tax the public and use our money for some good. Have you ever watched a congress meeting on tv? It cracks me up. They sit there for hours arguing about stuff, talking out of their asses and making no sense. It should be a debate marathon or something. Our politicians should pay less attention to motives and religion, and more attention to the facts. The facts that the income gap is widening (http://www.nytimes.com/2007/03/29/business/29tax.html?ex=1332820800&en=fb472e72466c34c8&ei=5088&partner=rssnyt&emc=rss) and that people still cannot afford healthcare, childcare, prescriptions, and housing. I am proof of that. With a college degree and years of experience under my belt, I cannot remember a time when I could afford these luxuries. I'm sorry if I have to shop at Walmart because it's the only way I can afford groceries. I have no choice. The richer are getting richer, and the poorer are getting poorer.

raybassett
raybassett

I agree with you 100%....but until WE the PEOPLE get OUR heads out of OUR asses and come together, NOTHING will change!!! The Politicians laugh at us! they believe that we're all THAT stupid!!! and ya know what?? WE ARE!!! Because we let THEM get away with it!!! By voting for them, we are endorsing it!!!!

raybassett
raybassett

No retailers should not be held responsible for collecting out of state taxes. Are they responsible now for some one driving over the state line, making a purchase, and driving it home...???? The only thing that more taxes accomplish is putting more money into politicians pockets!!! I'm VERY tired of doing that!!!!

dabler
dabler

If they had to collect the taxes, then I would probably have to pay the taxes. Also, if companies like Amazon have to charge state taxes, they would have to track all local tax rates. Do mailorder companies (catalog) have to do this?

CharlieSpencer
CharlieSpencer

Collecting taxes on web sales would be no different from collecting taxes on catalog sales. Many companies selling on the web are also selling from catalogs already, so don't accept any nonsense from them about it being too difficult to implement.

Endoscopy
Endoscopy

Guess again. 50 states plus territories, however many counties in each state. Also a large number of cities. In Florida the county taxes come and go because of state law. The taxing situation is very dynamic and would require updates like anti virus software.

CharlieSpencer
CharlieSpencer

you can manage sales tax. Cripes, Amazon has how many different titles in inventory? They can tell you how many they have on hand, how much new items cost versus used, what hasn't been released yet, what's on sale, at least three different shipping methods to destinations all over the world, etc. Managing seventy or so state and city sales taxes should be a piece of cake in comparison. If you can manage millions of customer transactions daily, you can handle seventy or so quarterly electronic deposits. If this were mandated some third-party developer would have a plug-in for SLQ in under a month, along with a subscription service to keep the rates current. Set a minimum taxable gross sales figure so the little guys don't have to mess with this, say $500,000 U.S. What about overseas companies? Even with tax, the cost of buying from U.S. companies will be less than the S&H from overseas.

ballistabob
ballistabob

As I recall from my last catalog purchase they only collect taxes for states where the company has a "Physical Location". So if I ordered a widgett from a company that has stores in Colorado and Florida but I live in New York, I do not pay sales tax on that purchase. So it will cause these companies both significant amounts of time and money to implement and maintain a sales tax collection and distribution database. This will basically spell the end of the internet sales boom by eliminating the little business person who runs a widgette sales page out of their home office.

poppawookie
poppawookie

Let's look at this from a technical standpoint. The retailer would have to keep track of all state taxes (big job since taxes change so often). I have used some mail order companies and not had the taxes lumped in. If the government mandates this taxing, it can spell big problems for the online retail community. Who is crying "foul"? The government. They want to bilk as much income from the citizens as possible without having to be accountable for the spending of that tax money. Who loses in the end? The consumers, whether online sales or retail store sales are the method of sale.

GentleRF
GentleRF

Something to remember is here in the US we have many governments. Federal, State, County (or whatever its named), and Municipal (for those who live in a city). Which one is mandating the taxing? The initial point of this was Washington State Government enacted a law taxing internet sales where the final delivery point was inside the boundaries of the State. I had mentioned in an earlier posting, that this could be a violation of the Federal Government's purview in regulating interstate commerce which includes taxation. Try to remember it was the Socialist State of Washington which in enacting an internet tax law, prompted this discussion, not Oklahoma. If we all band together and force this into the Court of Appeals and on up to the SCOTUS, then we can be rid of bad law. Voting helps get rid of politicians who make bad law.

macumazahn
macumazahn

They will have to know every tax increase for every state, county and city, a huge nightmare, and then send that money out, astronomical job!!

glgruver
glgruver

Been a lot of discussion about this in our State. Biggest stumbling block so far has been the local option "piggy back" sales taxes levied by various local governments. It is a big mess to figure out here. Expect similar problems in other States as well. To answer the question though, I would pay the taxes if the internet vendors had to charge them. I do not shop online merely to avoid local sales taxes. My biggest reasons for shopping online are availability, convenience, and price in that order. If I cannot find exactly what I want from a nearby store, I go online. Once online, if I find what I want, then I can choose by price if I so desire. If such measures are actually implemented, I would expect some enterprising individual(s) would set up an offshore internet business that would circumvent U.S. laws. Hmmmmm, think I just found me a nice retirement business opportunity.

Beilstwh
Beilstwh

Just like any business with multiple stores, web sites will simply buy a software plugin that will calculate the correct sales tax. The maintenance fee will pay to keep it current.

Hobbits
Hobbits

i guess what you all are not thinking about is to tax online orders couold lead to the end of the online trade as we know it today, People would stop buying ...period the freight charges are going up and if the merchant is going to have to to charge tax the delivery in some state will be taxed and in other states not. depends on how they see and interpet the laws. It will become a quagmire of legal headaches and i dont know of any merchant who wants to go thru it, the bookkeeping alone would make it more feisable to just close up shop... think about it 50 states...50 sets of laws.. the federal laws...more forms for the irs.... thenyou have the territories to consider..... it would not help the economy at all.

allenr1
allenr1

I buy online to cut costs if they start adding taxes ontop of what I'm already paying for shipping it won't be cutting any costs.

Larry the Security Guy
Larry the Security Guy

Don't confuse state sales taxes with corporate income taxes. Mail-order merchants have always been required to collect state sales taxes, but this has never been enforced. I assume the potential tax revenue didn't cover the cost of receiving and processing it, but now with online sales being such a huge market the potential tax revenue may make enforcement worth while. Personally, I think any interstate commerce should honor the tax laws of the buyer's state, but I would say that considering Oregon has no sales tax, but also because brick & mortar merchants in Washington State don't charge sales tax to Oregonians.

havenmoth
havenmoth

But I agree- the shipping cost they apply to the invoice is usually way more than necessary. Perhaps they should be made to pay the tax out of this... oh wait.....they are part of the "corporate" protected world.... they (and their polotician friends) better pass this tax on the working people tooo.....circle of life for the cubie dwellers.....

havenmoth
havenmoth

But I agree- the shipping cost they apply to the invoice is usually way more than necessary. Perhaps they should be made to pay the tax out of this... oh wait.....they are part of the "corporate" protected world.... they (and their polotician friends) better pass this tax on the working people tooo.....circle of life for the cubie dwellers.....

Editor's Picks