Proposed online sales tax draws criticism

[Chip NoVaMac]

I say it is about time states claim their stake in missing sales tax revenue....

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2010/02/24/MN5P1C6156.DTL&type=business

California lawmakers are eager to harpoon the great white whale that is
Amazon.com to force it to collect sales tax on every HDTV and Kindle it
sells here. But those efforts could ensnare scores of smaller fish:
mom-and-pop Internet businesses that rely on Amazon and other e-tailers
for their livelihood.
The e-commerce behemoth has avoided paying sales tax in California because it has no offices, stores or warehouses in the state.But California contends that Amazon does have a presence here.

Amazon (which did not return calls), Overstock and other large
out-of-state e-tailers say they will cut off their California affiliates
to duck the sales-tax obligation. The affiliates say that means they'll
lose their income and the state still won't get the sales tax revenue.

I say to this; any state that has an sales tax should adapt similar laws. Reason why is added tax revenue that is being lost. In some instances the loss of tax revenue is not due to lower prices - but at the loss of sales tax revenue.

Eliminate the "tax free holiday" on most if not all internet sales - then the brick and mortar shops might survive. Leading to people that pay income and real estate taxes where you live... boosting the of living that we all want for ourselves.

To those that say our tax dollars are wasted - then get out an vote those people that support the spending you want. For me I have no kids, so education is low on my list. But roads and public safety are high on my list. The lowest on my list is for those that want mega-soccor complexes for their kids to play on.

One needs to read some blogs of some that might be affected. They threaded shutting down their sites. But they don't say how much they earn to be able to "chat" with us....

But in the end it is the loss of B&M jobs that hurt the most. The more you buy tax free at prices close to what you can get local... means unemployment, added health care costs, lower property values that effect your overall

taxes.

California has more than 25,000 affiliates, ranging from part-time
Web-masters earning a few bucks to large enterprises pulling in millions,
said the Performance Marketing Association, their trade group. In 2008
they had revenues of $202.7 million and paid $18.9 million in state income
tax, the group said. Industry reports say e-tailers generate about 10
percent of their sales through online affiliates.

The sensible alternative would be to have threshold on the amount earned by affiliates - part time folk maybe should not be hurt. In the end I think the numbers they mentioned are much higher.

In the end read the article and form a honest opinion.... I have to do more reaerch as to why the likes of Target , Walmart, and others do not have to collect sales taxes on their online sales - even though they have nexus in almost every state..... maybe a loophole to be closed



This week, the state Legislature is considering a bill that says
California Web sites known as affiliates that send customers to Amazon and
other e-commerce companies in exchange for a commission constitute a salesforce, giving Amazon and others a physical presence, or "nexus," here.
Under a 1992 Supreme Court decision, only retailers with a nexus in a
state can be compelled to collect sales tax from its residents.

In this online world (both the web, tele-conferncing, and travel) nexus exists with much of the big online retailers IMO. I remember working for a company post 1992 that limited trips to surrounding states to limit tax liability for sales tax collection.

To this day there are reports that some of the biggies in the online world go to shows for what have you and "fail" to collect sales taxes. Some of these companies may end up passing these off as "sales tax" savings - but never reporting them to the state involved.

What I do see in this new law that the likes of Amazon may end up loosing affiliates and local suppliers in the short term. Yet as more states come on board with this approach there maybe few options to dodge paying your fair share of sales taxes.

I will admit that I work for a brick and mortar store... but one that plays by the rules of collection of sales taxes. Why should we be hit by another local company or out of state company that might that might be an affiant of Amazon or others?

 

[Abstract]

As a Californian consumer. I would hate this. However, as someone who doesn't live there, I think it sounds kind of fair. Personally, I'd rather pay a bit of tax. Infrastructure doesn't support itself, and California isn't exactly a rich State, are they.

Perhaps the sales tax can be slightly lower than State sales tax. I'm sure there's an argument for reducing it for one reason or another, but I wouldn't care either way.

 

[Chip NoVaMac]

Perhaps the sales tax can be slightly lower than State sales tax. I'm sure there's an argument for reducing it for one reason or another, but I wouldn't care either way.

An argument that some online resellers use that it would be too hard to collect multiple tax rates. Hard to claim that given computers being used to do business today. But a standard across the board sales tax to be given to states that vendors are not located in would be an easy work around.

 

[rdowns]

An argument that some online resellers use that it would be too hard to collect multiple tax rates. Hard to claim that given computers being used to do business today. But a standard across the board sales tax to be given to states that vendors are not located in would be an easy work around.

That argument fails because there are hundreds of e-tailers who collect varying tax rates.

FWIW, Amazon has been charging tax in my state (NY) for over a year and it hasn't made me look elsewhere.

 

[ucfgrad93]

I am actually surprised that it has taken so long to see this kind of a push.

 

[Rodimus Prime]

I am actually surprised that it has taken so long to see this kind of a push.

I agree.

I think legally speaking we supposed to of been paying the sales tax. When you buy something on amazon you are supposed to send the sales tax to your state. This just forces the businesses to collect it and be liable for it.

 

[Chip NoVaMac]

I am actually surprised that it has taken so long to see this kind of a push.

If Cali is successful in getting it passed - I think other states will follow their lead....

I agree.

I think legally speaking we supposed to of been paying the sales tax. When you buy something on amazon you are supposed to send the sales tax to your state. This just forces the businesses to collect it and be liable for it.

Not sure if ALL states require paying sales taxes on out of state purchases. I can only comment on Virginia (which requires that it be declared on the state income tax form each year). And DC which businesses are required to file a "sales and use tax form" each year. Not sure if regular citizens have to in DC.

Working in a B&M store... I can say that the lack of collecting sales taxes is the major reason that folks buy online. Even when the price is close. Did have a customer that I talked with complain in our extended chat - that they were forced to pay an extra fee for their kids to play soccer last year...

Yet she beat me up that she could get the same camera for the same price online - without the sales tax!!!!!!

A pet pieve of mine is that folks that bought online feel that it is their right to come in to my store to teach them about the cameras they bought!

To me it is like going in to Wendy's to complain about a burger from McDonald's. Yet in the end we do try to help them and show them the next time they need a camera why they should come to us.

But as long as the tax issue looms they might go to the lowest bidder. Sales tax or not..

 

[Rodimus Prime]

A pet pieve of mine is that folks that bought online feel that it is their right to come in to my store to teach them about the cameras they bought!

To me it is like going in to Wendy's to complain about a burger from McDonald's. Yet in the end we do try to help them and show them the next time they need a camera why they should come to us.

On those people I would almost feel to day sorry because you failed to buy it from us in the store you do not receive the extra services we provide our customers who do buy from us.

 

[JNB]

Considering California has been driving business out of state for several years, I'm not surprised.

 

[carlgo]

I don't want to pay it, but the present taxless situation isn't fair at all to other retailers. What would work is a uniform tax, a national rate, collected and then dispersed to each state based on their population's purchases.

It would be a nightmare to have each state apply a different rate and then try to collect it based on where the item was shipped from, to where and which state lines it crossed, etc, etc.

 

[Kamera RAWr]

I'll admit that I buy certain items online to save, in part, on the sales tax. However, that said, as long as the prices stay the same... I'll still be saving quite a bit and wouldn't mind much paying tax.

 

[JNB]

I don't know, if I purchase something from a retailer out of state, I do so because the retailers in-state either don't carry it or do so at a price that is substantially higher than it can be gotten online (tax notwithstanding). So that's just a matter of competition, and I don't feel any particular obligation to make a purchase simply because of proximity or any sense of "loyalty" to local business.

Now, where the state feels that it's inherently entitled to a cut of that purchase is beyond me. Similarly, if I made that same purchase in person, in a no-sales-tax state and transported that item to my home state, should they feel that same entitlement?

Should I be liable for only the state tax? What of any county or municipal taxes based on my specific residence?

It's just too messy, and smacks too much of legislators and business lobbyists seeking to maximize revenue and reduce competition, both without any moral justification. As citizens and consumers, we are the ones that make our choices known through our vote and purchase decisions, and through those actions express how we want it to all work. Changing the rules because they don't like the score is fundamentally wrong.

 

[yg17]

Similarly, if I made that same purchase in person, in a no-sales-tax state and transported that item to my home state, should they feel that same entitlement?

Technically, I believe you are supposed to declare that on your tax return and pay a use tax, but no one ever does.

 

[rdowns]

If Cali is successful in getting it passed - I think other states will follow their lead….

NY passed a similar law in 2008. Amazon and Overstock sued NYS and lost. We pay tax on Amazon purchases.

 

[JNB]

Technically, I believe you are supposed to declare that on your tax return and pay a use tax, but no one ever does.

I think that's only for online & mail-order sales, IIRC. Brick & mortar purchases are almost universally taxed in person, with the exception of a couple states, and writing those exceptions into statute is damnably difficult, and quite possibly indefensible should the matter ever be seriously challenged.

The rest of this isn't directed to you specifically, but additional general commentary. I have diarrhea of the keyboard today, apparently.

Consumers are—with few exceptions—rarely ever the statutorily responsible party in the collection, reporting, and remittal of a sales/use tax. If as a merchant you undercharged taxes, the state comes to you for it, not your customers, even if all the underreported sales can be traced to the end user.

Again, the use tax precept is part of a relationship between the consumer, the vendor, and the state the transaction was conducted in. In purchasing from an e-tailer, I gain no benefit from taxes collected in their state of business, so they cannot justify collecting from me there. Also, my state and the licensed merchants here incurred no costs nor participated in any part of the transaction, so I fail to see how they can claim entitlement to any taxes based upon it.

Lastly, what part of a use tax is part of the "natural order" of it all, anyway? Are they entitled to it "just because"? Should I give them more because they can't manage their allowance as it is?

At the end of the day, it's just a money grab.

 

[Chip NoVaMac]

Now, where the state feels that it's inherently entitled to a cut of that purchase is beyond me. Similarly, if I made that same purchase in person, in a no-sales-tax state and transported that item to my home state, should they feel that same entitlement?

I believe that would be a no. Depends on how the use tax laws are written in that particular state. Some states require you to, others don't. Also some state IIRC require you to pay the difference between the lower tax rate and the tax rate you pay in your home state.

Should I be liable for only the state tax? What of any county or municipal taxes based on my specific residence?

Here I think the answer would be no, unless you are required under the use tax codes for your state to do so - and they forward that on to the locality.

It's just too messy, and smacks too much of legislators and business lobbyists seeking to maximize revenue and reduce competition, both without any moral justification. As citizens and consumers, we are the ones that make our choices known through our vote and purchase decisions, and through those actions express how we want it to all work. Changing the rules because they don't like the score is fundamentally wrong.

Got to disagree with you here. If it is just state sales taxes being collected not messy at all. If the small company I work for can collect sales taxes for states that we have a nexus in - surely bigger operations can do the same.

As to the thought you had about legislators and business lobbyists seeking to maximize revenue and reduce competition. Yes it is about revenue, not about reducing competition. You stated that you buy online sometimes because the product is simply not available or is substantially cheaper online. So there would still be competition. It is morally wrong though if your state has a use tax form in not filling it out.

The revenue that is potentially lost in sales taxes is great. A forecast for 2009 (could not find actual in a quick search) was for online retail sales to be $156 billion dollars. Even if half were not taxed that would leave $78 billion dollars; which if taxed at even 4% a staggering $3.1 billion dollars of uncollected sales tax.

Just as shoppers go online to save the tax money sometimes, the states need to do what they need to in order get the tax money they are due and need as well.

I will give full disclosure that I work in a local camera shop. Our prices are very competitive overall - very often very close to one of the biggies in NYC or even cheaper. Yes we are higher on some things, but not often. Our shop has simply lost sales - even when prices were the same! - simply because of the sales tax. Now that is morally wrong IMO.

Also morally wrong if what a customer told me is true - is his being able to visit one of the biggies in NYC and have them ship the product to him to skirt either sales tax!

 

[IntheNet]

It would be a nightmare to have each state apply a different rate and then try to collect it based on where the item was shipped from, to where and which state lines it crossed, etc, etc.

Good point...

I am opposed to on-line sales tax; in my opinion we should do what we can to keep the internet tax free to the extent possible... in most cases the web sites that sell merchandise reside on servers far from where the merchandise is actually shipped so fair tax application is near impossible.

 

[JNB]

I was asking rhetorically.

The revenue that is potentially lost in sales taxes is great

I understand your points. My issue and position, specifically as it pertains to the quote, is under what train of thought is this revenue the state entitled to? That's the fundamental issue. We are so accustomed to paying a multitude of taxes we've forgotten the entire point of what we, the governed, consent for them to be used for, and whether or not our legislators are spending what we allow them to take wisely and prudently in those intended purposes.

Remember, WE decide what is to be collected, how it's to be spent, and how the functions of government are to be executed.

Government, at any level, has absolutely no entitlement to a single cent that we collectively do not allow them. We've just gotten stupid and lazy.

I'm no "the IRS is unconstitutional" nut-job, I will pay any and every tax that lawfully and constitutionally required of me, and I pay more per year than many members here gross. I just think we've lost our way and our sense of ownership of our own country.

Speaking of paying taxes, what's Charlie Rangel up to?

(OK, sorry for the rant. )

 

[Antares]

A lot of online retailers already collect state sales tax. If the business operates in the same state that you live in, they'll likely charge you the tax.

But if tax was collected all of the time, regardless of what state you live in, that could seriously harm the internet economy. One of the main incentives of buying online is the lack of sales tax. If you have to pay tax AND shipping, it kind of nullifies most of the advantages of buying online. You might as well just buy from a brick and mortar store, then, if you're going to pay almost the same price in the end.

 

[Chip NoVaMac]

Good point...

I am opposed to on-line sales tax; in my opinion we should do what we can to keep the internet tax free to the extent possible... in most cases the web sites that sell merchandise reside on servers far from where the merchandise is actually shipped so fair tax application is near impossible.

The point being is that many of these online sites have "affiliates" located in the sate that the product is shipped... maybe legally a "nexus" for taxes to be collected?

I was asking rhetorically.



I understand your points. My issue and position, specifically as it pertains to the quote, is under what train of thought is this revenue the state entitled to? That's the fundamental issue. We are so accustomed to paying a multitude of taxes we've forgotten the entire point of what we, the governed, consent for them to be used for, and whether or not our legislators are spending what we allow them to take wisely and prudently in those intended purposes.

Remember, WE decide what is to be collected, how it's to be spent, and how the functions of government are to be executed.

Government, at any level, has absolutely no entitlement to a single cent that we collectively do not allow them. We've just gotten stupid and lazy.

I'm no "the IRS is unconstitutional" nut-job, I will pay any and every tax that lawfully and constitutionally required of me, and I pay more per year than many members here gross. I just think we've lost our way and our sense of ownership of our own country.

Speaking of paying taxes, what's Charlie Rangel up to?

(OK, sorry for the rant. )

States look at what they can expect in sales taxes.... the internet changes that... so hard to figure?

QUOTE=Antares;9352668]A lot of online retailers already collect state sales tax. If the business operates in the same state that you live in, they'll likely charge you the tax.

But if tax was collected all of the time, regardless of what state you live in, that could seriously harm the internet economy. One of the main incentives of buying online is the lack of sales tax. If you have to pay tax AND shipping, it kind of nullifies most of the advantages of buying online. You might as well just buy from a brick and mortar store, then, if you're going to pay almost the same price in the end.[/QUOTE]

And the harm in that is? Competion in pricing would then be the key... and the states win with added revenue... Even though by not paying sales taxes as required by many states is a crime?

 

[macEfan]

As soon as we lay off some of those extra upper management politicians our tax problems in CA are over.

 

[Plutonius]

But if tax was collected all of the time, regardless of what state you live in, that could seriously harm the internet economy.

In NH, we have no sales tax and I still do almost all my shopping on-line. How about CA and other cash strapped states solve their problems by spending LESS money ? Why do I have to pay taxes to bail out irresponsible states ?

 

[ucfgrad93]

How about CA and other cash strapped states solve their problems by spending LESS money?

While this is a great idea, it has 2 problems. First, spending less is a relatively unknown concept to most politicians. Second, CA is so far in the hole, that just spending less isn't going to solve the problem.

 

[Chip NoVaMac]

In NH, we have no sales tax and I still do almost all my shopping on-line. How about CA and other cash strapped states solve their problems by spending LESS money ? Why do I have to pay taxes to bail out irresponsible states ?

For the folks like you that live in states like NH or DE - you have a choice to make maybe... not buying through states that collects sales taxes through click throughs or buying direct through the online store.

The issue here is that some blogs out there are truly nothing more than "store fronts" on the web. So if you click a link to the likes of Ken Rockwell's site to buy something - then you should be willing to pay the CA sales tax as if you were to have gone in to his "real" store if you were in CA.

In the end there is nothing to prevent you from "bailing out" states in the end. Just buy direct....

While this is a great idea, it has 2 problems. First, spending less is a relatively unknown concept to most politicians. Second, CA is so far in the hole, that just spending less isn't going to solve the problem.

To this I would say that we are the problem here in the end. We all have things that are near and dear to us when it comes to our tax dollars.

If you are married with kids - then it is schools and soccer fields...

If you are single it might be roads ands dog parks....

If you are older and on fixed income it might be transportation and health care....

So where is a state to make cuts in the end?

 

[JNB]

To this I would say that we are the problem here in the end. We all have things that are near and dear to us when it comes to our tax dollars.

If you are married with kids - then it is schools and soccer fields...

If you are single it might be roads ands dog parks....

If you are older and on fixed income it might be transportation and health care....

So where is a state to make cuts in the end?

Funny, we used to be able to pay for all those things with fewer taxes and still end up with budget surpluses.