Thread: Another tax for all Americans...

The Online Nightmare Sales Tax Bill that is Sitting in the Senate:

Never trust anyone in Congress. Congressmen are all about aligning themselves with certain power centers, creating new power centers, but always about expanding government in one direction or another. That said, a congressman may, not very often, but from time-to-time find himself on the side of truth, as he tries to maneuver some power center.

Senator Jim DeMint has found himself on the side of truth when it comes to the online taxes. He warns in WSJ:

"The Marketplace Fairness Act recently introduced in the Senate would require online retailers to collect and pay sales taxes to states where they have no physical presence or democratic recourse. Overstock.com, eBay and the like could have to pay sales taxes to any state from which an Internet user placed an order, even if the company's headquarters, warehouses and sales staff are located entirely in other states.

Such online sales tax proposals are taxation without representation. The proposed federal law tells businesses that there is no escape from the clutches of tax-hungry politicians. That concept is antithetical to our federalist system, which promotes competition among our states for the best economic policies...

The Supreme Court ruled (in Quill Corp. v. North Dakota, 1992) that retailers can be required to collect sales taxes only in states where they have a physical presence. The proposal before Congress, however, would give a federal blessing for states to chase revenues far outside their borders.

Consider the absurdity of such a law. When a customer buys a product in a store, does the cashier ask for the customer's home address? Of course not. The store simply charges the state and local sales taxes applicable for its physical location, no questions asked.

The proposed law would hold online sellers to an entirely different standard. Websites would have to add taxes to a sale based on the shipping destination of the product, which may be a state in which neither the seller nor the buyer resides. We would never ask mom-and-pop store owners to do such a thing.

Politicians want this bill passed to raise new tax revenue for broken state governments facing budget shortfalls. But legislators in state capitals don't want to make the hard decisions to cut spending or raise taxes on their constituents—they fear the voter backlash. So they'd like their allies in Washington to make it legal for them to tax people who can't vote against them.

At its core, this is a nationally mandated Internet sales tax on businesses. Once a single state demands these sales tax collections under the new law, businesses in every other state would be forced to comply with that state's tax laws. Dozens of states are eagerly waiting to raise those taxes, as soon as Washington opens the floodgates.

The burden on Internet entrepreneurs could be staggering. There are already nearly 10,000 state, local and municipal tax jurisdictions to navigate nationwide.

Just complying with a single state's tax laws costs small businesses disproportionately more than larger firms that can afford accounting and technology teams to help them work through these arcane laws. A 2006 PricewaterhouseCoopers study found that tax-compliance costs for small businesses (those having $1 million to $10 million in annual sales) are nearly 2.5 times greater than those of larger firms. For businesses under $1 million in sales, those costs explode to 16 cents on every dollar of revenue.

And woe to online sellers if they have a dispute with one of the many states that will be unleashed to tax them. A small business owner in South Carolina could face simultaneous audits from California, New Jersey and Hawaii, with no political recourse.

Who would want to do business in this environment? That's a problem that the Senate bill's authors implicitly acknowledge, since they included an exemption for companies with less than $500,000 in annual sales. But that is a very low threshold to cross. Businesses will be discouraged from growing, encouraged to locate overseas, or even regulated out of business.

Nor would these new Internet taxes satisfy tax-hungry politicians. Already Maryland Gov. Martin O'Malley, a Democrat, has called for a 6% tax on all downloads—music, movies, e-books and more—from vendors like iTunes. It probably wouldn't be long before the burdens of complying with myriad state sales tax laws led to talk of a streamlined national sales tax to replace it, with Washington taking a cut and destroying our nation's healthy tradition of state tax competition."

Source

Opening posts should 'contain a member's opinions or questions with sufficient elaboration to establish a foundation for respectful discussion and debate'. Fancy adding yours? In particular, given the need to reduce the deficit, what policies would you introduce? Would you go for a fiscal fiasco where cuts significantly stunt economic growth?

Well from my point of view many small retailers will simply not collect the tax, I would take just checks or money orders and keep a small business low key. Places like eBid a site I use only is a forum to buy and sell goods they would likely argue and could do so fairly they don't sell, ship or handle goods or services they provide just an advertising space and internet presence for those that do so have nothing to collect.

But I would say this big retailers would comply, some mid-sized ones would but use a third party to handle the money likely adding to prices or the shipping & handling fee or the small ones won't bother a low level online retailer could likely get around this by ignoring it if they don't use any online means to collect money (might cost sales but it might be worth it in many cases).

I think this would be better a national online sales tax with the money split on states based on population say a 6% sales tax but that is not likely to go over well.

I would note this could be good for some states that don't have sales taxes if they become the shipping location the merchant could not have to collect meaning dropshippers and the like could simply relocate to improve business, if this becomes an issue or move to Mexico for example. The law likely would not cover international shipments from what I can tell.

Originally Posted by Reiver

In particular, given the need to reduce the deficit, what policies would you introduce? Would you go for a fiscal fiasco where cuts significantly stunt economic growth?

Absolutely. I don't believe reducing the size of government would stunt economic growth. I think it would fuel it. The reason is that government is a net spender of wealth. Having less of it would preserve more wealth for society. It is plain old common sense.

By the way, for me, the need isn't to reduce the deficit. There should be no deficit. The need is to reduce the level of debt.

Originally Posted by fmw

Absolutely. I don't believe reducing the size of government would stunt economic growth.

The evidence shows otherwise. Why do you think 'opinion' is sufficient when evidence in dispute already exists?

Not much of a fan of the bill either. The internet has allowed for a marvelous experiment in emergent order, it's lowered the price of consumer goods, reduced the costs of procuring information and created a remarkable amount of jobs.

Bureaucrats never miss an opportunity to put their hand in the cookie jar though.

it will never pass

is there no limit to the insanity?

I agree, simply reduce spending and dont allwo printing $

1 end fed 2 end all public school 3 end al grants to university 4 privatize nasa 5 end insurance regulations 6 replace 99% of lawyers with software 7 end all pensions 8 allow private trains union free 9 end all union laws 10 end all welfare 11 fairtax.org

for starters