posted on July 9, 2001 12:25:34 PM
I wonder how long it will take mayors and governors to start citing this report to get some "relief" from the feds to start getting taxes from interstate Net sales and/or useage?
posted on July 9, 2001 01:17:46 PM
This whole sales tax thing has me seeing red. I wrote an article about it so many years ago, it was practically pre-Internet and definitely pre-ebay. Basically, the states in their greed can't get together and agree on a common sales tax. Therefore, they can only charge in their home state. This leaves a wide-open loophole for tax-free mail order sales.
Why is is that if I am visiting Chicago and walk into a store, I have to pay sales tax, but if I call that same store from my home in NY and place an order, I don't? New Yorkers once got a big bonanza when they crossed the border into New Jersey and bought clothes that were sales tax exempt. Eventually NY got smart and started passing laws to give us sales tax exempt days and no tax on less than $500 purchase.
Folks dont realize that by law they are supposed to voluntarilly pay sales tax to their local states where the item will be used (which is why is it called USE tax). It is only that the vendor is exempt from collecting it on out-of-state sales. Part of the reason is that it would be a hardship for a vendor to track every state and every tax rate and send out checks all over the country.
If the states were smart, they could do one of two things:
1) get together and agree that all sales will be taxed by the state in which the sale is made. Sure, someone from CA might make a purchase from a NY vendor and thus pay NY sales tax, but it will even out by the number of NY folks who might purchase from CA vendor.
or:
2) all sales will be taxed at a set rate nationwide. the money will be sent to one central office which will divide it among all the states. This will eliminate the vendors' complaint about having to track all these sales.
But the law as it stands now gives a big break to mail order while strangling B&M stores. It also costs the states millions in sales tax. Here is another example (like the kid whose hand got stuck in the candy jar because he tried to grab too much) where greed backfires.
posted on July 9, 2001 01:34:47 PM
The United States are 50 SEPARATE states. Period. They are banded together in a UNION, but that Union was founded with limited control by the Union, and power to the States.
However, the failure of the Civil War (Slavery=BAD, States' Rights=GOOD) thwarted the design of the founding Fathers and the Federal Government took more power that they were authorized.
It's all been downhill from there.
As it relates to your question. If I walk into a store in Chicago (being in Atlanta), I should pay sales tax. But if I am taking those goods home, then I should be allowed a refund (which we don't have such a system in place). Each state has its own unique needs and charges whatever sales tax it must. This is the way it should be.
If you visit Canada, you pay the GST/PST at the store. Then when you are leaving the country, you apply for a refund (of one of those two) because you are not receiving the services that tax covers.
A national sales tax will not overturn state and local sales tax. It would be in addition to them. In Georgia, we are 3% (I think). However, each county adds their own as well. So in my county it is 6%. Others it is 5% or 7%. These are totals.
There is no need for Georgia to develop a single tax for all counties.
There is no need for the USA to develop a single tax for all states.
posted on July 9, 2001 01:54:23 PM
Every state, many cities, and the federal government deliberately set their taxes to generate a surplus. In effect, they already have more money than they spend. It is a giant lie to say they need every last dollar of sales tax from mail order and/or Internet sales when you are ahead of the game from the getgo. Net businesses definitely generate sales on the local level and provide income taxes to their home-based state. Since these businesses exist in every state, you can be sure they bring in money one way or another.
I certainly do not buy over the web to save on sales tax--shipping often costs far more. I buy over the web because the prices are either way lower (not very often but the savings are there) or the item is not available locally (9 times out of ten). If I save money sometimes by buying out of state, I have more money left to spend in my state.
Do the math folks; the average person will spend more than 50% of his money in his home state every month. He already pays more in taxes than a medieval serf. It's that simple. Tell the lying greedy politicians where they can put their Internet sales tax revenue plans when you vote.
posted on July 9, 2001 02:15:11 PM
Let's avoid the issue of whether the states need the money or not. Let's stick to the issue of is the whole sales tax thing fair, the way it is currently handled?
>>I certainly do not buy over the web to save on sales tax--shipping often costs far more. <<
I have a B&M store. In the past few years, I have lost 50% of my local business. How can I sell a digital camera for $400 plus $33 tax when it is available on the web for $389 plus $10 shipping? Now my customers are willing to pay a little extra for the convenience of getting it locally, but not $44. Let's not get into even more expensive purchases, like PCs.
Years ago I wrote a letter to the NY Commissioner of Tax, at a time when they were hounding me for sales tax I had already paid. I told him that if they did not overhaul their system, they would find themselves done in by their own greed and incompetence. I suggested as follows:
"I have an associate in New Jersey, just a few miles from me. If the two of us were to get together and agree that I would handle all the New Jersey sales from my New York company and he would handle all the New York sales from his New Jersey company, we would both be freed of the onerous task of dealing with your office, our customers would enjoy substantial savings on their purchases and the only losers would be New York and New Jersey."
I don't know if this threat had anything to do with it, but shortly afterward, I received a letter of apology and my record was cleared.
So now the states are whining that the Internet is costing them tax revenue? It's not the Internet. It's their own greed.
posted on July 10, 2001 01:59:17 AM
If we're going to overhaul the sales tax structure, let's start by dropping sales tax from the sale of ALL USED GOODS.
Mr. Jones buys a new van and pays $2000 in TAXES on the purchase. Two years later, he sells it used, and the new owner has to pay $1000 in TAXES on his purchase. Five years later, the second owner sells it to a third owner who has to pay $500 in TAXES on the purchase. It finally ends up in a used-car-parts yard, where SALES TAX is collected for every radiator, hubcap, door, engine, back seat, fender, tail light, and 'whatever part' sale it generates.
Ever buy your college-aged kid a used sofa at a thrift store? The original owner paid SALES TAX when he bought that sofa brand new, he donated it to charity when he tired of it, and now YOU are paying SALES TAX on it again. When your kid graduates and you donate the sofa back to charity, a THIRD owner will pay SALES TAX on the purchase of it......and so on, until it ends up at the landfill.
yisgood, you said, "But the law as it stands now gives a big break to mail order while strangling B&M stores.....How can I sell a digital camera for $400 plus $33 tax when it is available on the web for $389 plus $10 shipping?"
You have to do the SAME THING you do when Best Buy moves in down the street---if the competition is selling the camera for a total of $399 ($389 plus $10 shipping on the net, or $369 plus $30 tax at Best Buy down the street), you have to MATCH PRICES or close up shop.
eBay killed B&M sales for many, many, many antiques & collectibles dealers who had to give up their stores when their customers opted to stay at home and buy online (and usually at cheaper prices), so you're not alone in feeling the "pinch" at your B&M.
But forcing sales tax collection on internet sales isn't going to solve the problem. All it would do is KILL struggling small online businesses, many of which are owned by displaced B&M business owners. Shipping costs (which have gone up drastically this year) factor into online prices that consumers are willing to pay---and sales tax PLUS shipping charges added to prices will put an end to most online purchases.
Besides which, knowing the government I pay taxes to......an internet sales tax law would be enacted in addition to existing sales tax laws rather than in place of them, and every state and local politician would have his hand in the cookie jar.
