Thursday, February 28, 2013

US Lawmakers Push for Internet Sales Tax

Anthony Freda Art
Eric Blair
Activist Post

Did you pay sales tax on the last item you bought on the Internet?  Unless it was from Amazon, you probably did not. You may soon though if a gaggle of U.S. lawmakers working hand-in-hand with big business get their way.

And if you're an online retailer, you may have to collect and remit sales taxes for all fifty states no matter where your online business resides. But don't worry, lawmakers want to force all states to adopt the same standard for sales taxes, thus making it easier for you to comply.

Earlier this month, a large collection of lawmakers introduced the Marketplace Fairness Act in both the Senate (S. 336) and the House (H.R. 684). Lawmakers who oppose the measure have renamed it more appropriately, the "National Internet Tax Mandate" because that's what it is.

The law essentially does three things:
1. Forces customers to pay sales taxes for online purchases.
2. Forces states to "simplify" their sales tax laws.
3. Forces online retailers to collect and remit state sales taxes..

That's right, no transaction in America must be allowed without the State taking its portion. The legislation has so much corporate support that it has its very own website which describes the law as follows:
The Marketplace Fairness Act grants states the authority to compel online and catalog retailers ("remote sellers"), no matter where they are located, to collect sales tax at the time of a transaction - exactly like local retailers are already required to do.

On the website they argue that this is not a new tax even though it hasn't ever been enforced in the history of the Internet, saying "Consumers are required under existing state laws to pay sales and use taxes on the goods they purchase, but online sellers simply are not required to collect the tax in the same way that local businesses do – which puts local businesses at a disadvantage."

The law attempts to solve two problems. First, it seeks to protect brick-and-mortar businesses from "unfair" competition from online retailers and, second, it seeks to increase revenues to state coffers.

Yet the lack of sales taxes is just a tiny part of why most brick-and-mortar retail businesses are struggling. The Internet offers a massively competitive marketplace for the same products, thus better prices. Customer reviews are just a click away, and products can be purchased in our underwear from the comfort of our homes. No driving, no annoying salesman, no lines, etc.

Besides, leveling the taxes won't work. For example, online retail giant started collecting state taxes in June 2012, and yet, in 2013 Barnes and Noble announced it would close up to 500 stores over the next decade. They're not closing their storefronts because of unfair taxing systems, rather because the business itself has changed due to the Internet. Borders Books declared bankruptcy in order to restructure to this new model. No law can save retailers who don't adapt to the competitive realities of the Internet.

Next, the law attempts to boost state tax revenues, which it may do. But at what cost? And will this solve the state deficit problems?

The lobbyists, who no doubt put together the website for the legislation, write:
Although some suggest these States have a "spending problem" rather than a "revenue problem," it is important to recognize that these States have already been reducing their spending levels year-over-year and increasing collection and enforcement efforts based upon their existing sales and use tax laws. However, a State can only enforce these laws within its own borders unless (or until) Congress recognizes the significant advances made by "man and his ingenuity with machines" over the last 44 years. Simply put, without the Marketplace Fairness Act, our States are unable to require remote retailers to collect the existing sales or use tax already approved by that state's residents.
And what will be the cost to enforce this tax collection on every worldwide online retailer? Please don't laugh, they actually believe it will be possible and beneficial.

The first thing that states must do is fall in line with other states to simplify (unify) their state sales tax laws:
States are only granted this authority after they have simplified their sales tax laws. 
Simplification is required because of two Supreme Court rulings (Bellas Hess and Quill, described below) cite concern that collecting sales tax for multiple states would be too difficult. 
The Marketplace Fairness Act requires that states must simplify their sales tax laws in order to ease those concerns and make multistate sales tax collection easy.
States are given two options for how to do this; join the Streamlined Sales and Use Tax Agreement, or adhere to the following rules:
  1. Notify retailers in advance of any rate changes within the state.
  2. Designate a single state organization to handle sales tax registrations, filings, and audits.
  3. Establish a uniform sales tax base for use throughout the state.
  4. Use destination sourcing to determine sales tax rates for out-of-state purchases (a purchase made by a consumer in California from a retailer in Ohio is taxed at the California rate, and the sales tax collected is remitted to California to fund projects and services there).
  5. Provide free software for managing sales tax compliance, and hold retailers harmless for any errors that result from relying on state-provided systems and data.
Yes, they give "free software" to help online retailers comply with the regulations, ehem, taxes. Surely, the millions of average people who make a living from selling things online won't have any problem getting up to speed complying with regulations taxes for all 50 states. Most of them have lots of time to learn new software, accounting, and mailing 50 more checks.

It won't put any small online retailers out of business, right? Regulations are good for business, right?

This law is bad for customers, worse for online retailers, and the effectiveness for helping brick-and-mortar businesses and increasing tax revenues is questionable. The one thing it does is begin to regulate small online retailers who will have to comply.

Former Congressman Ron Paul vehemently warned against the government toying with the Internet, calling it the last "truly free market" left. His technology manifesto, through Campaign For Liberty, states:
Technology revolutionaries succeeded not because of some collectivist vision that seeks to regulate “fairness”, “neutrality”, “privacy” or “competition” through coercive state actions, or that views the Internet and technology as a vast commons that must be freely available to all, but rather because of the same belief as America’s Founders who understood that private property is the foundation of prosperity and freedom itself. 
Technology revolutionaries succeed because of the decentralized nature of the Internet, which defies government control. 
As a consequence, decentralization has unlocked individual self-empowerment, entrepreneurialism, creativity, innovation and the creation of new markets in ways never before imagined in human history. 
But, ironically, just as decentralization has unleashed the potential for free markets and individual freedom on a global scale, collectivist special interests and governments worldwide are now tirelessly pushing for more centralized control of the Internet and technology.
If this legislation passes you can bet it will open the door for the government to begin regulating more aspects of Internet businesses. This must be opposed.

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Anonymous said...

Fine. Then who would owe me deductions and fees never received? If I have to collect sales tax on yard sale items I decide to sell on ebay, should I not get a "depreciation" for items I've had for over three decades? What about deductions for "overhead" and "storage" and insurance for breakables? Do I get a deduction because I shelled out homeowners insurance during the time I owned said objects? What about shipping as a cost of doing business? And what about the things that broke ten years ago? Do I get a settlement on what they would be worth if the insurance did not pay out? After all, if it didn't break, I could sell it now. Opens up a whole can of worms. I am watching how is going to handle this. Right now I'm paying most of what I make there to them for fees, and it's getting increasingly difficult to sell used items because of the higher, and higher costs involved, right down to the gas it takes to get it to the post office. I can imagine a few people going without groceries or paying late (if at all) on the water bill because they were unable to make any money selling their used items. This whole thing is getting way out of hand.

Anonymous said...

Leave it to Ron Paul to get all high and mighty about the sanctity of the internet retailers who have done more to destroy mom and pop retail stores than anyone else.

Buy local from a store that employs people,not from a corporate giant.
Buy used where possible, from a human being.
Internet shopping is the ultimate support of the system that we are supposedly trying to stand up to. Opt out and avoid their tax.

Hide Behind said...

We or rather they in Congress and the Executive branch cannot figure out a way to tax corporates so they are going to attack the populace, makes perfect cents in todays world.
Actually it would not be hard to program a way that all PC's would automaticly defuct such a tax and deposit it in treasury automaticly, as retail outlets already do in some states.
In WA State, which has an almost 9% sales tax, gives a portion of that back to the retail stores for collecting it.
IN WA just one outlet Wal Mart makes some $5-7 million a year in collection fees that are not counted as income.
What total loss to state coffers is unimagineable; And state employees of tax and accounting have nothing to due but report on amounts collected ss the collection is done automaticly every 24 hour period as Wal marts computers do its daily inventory and financial statements reporting to their central finance and inventory Computers.
The tech side of Wal Mart is main reason they are as sucessfull as they are.
Since its beginnings the internet has not only been a flow of data but the largest gathering of Black Marketeers and internationaly a tax evaders successful scheme in history.
Many of those early day pioneers that hyped the freedom of internet and made billions in software for the individual made even more off of corporate and government.
Today they find consumers of their products to individuals lagging and it is they more likely they than any Elected reps who are introducing the ideas to congress, and dream of profits to be made selling them the software.
But then why not it will cost the IP's and soon to be but three to 5 majors under cloud not one red cent to implement.
Who cantell maybe even they will be paid a % of tax as well.

Hide Behind said...

The internet is the ultimate underground economy,along with being the very last vistage of open place marketing and the, other than prostitutions independents and drug dealers that rank nuber 1&2, a fine example of free market economy and the spirit of the true entreprenure.
In the US today the places such as e-bay, Craigs list and such has been away to keep many peoples heads above water and in some caes saved homes and familys from being destroyed by the Political leaders who destroyed the national economy.
The very same Politicos who now need more money to keep themselves in power, Besides the need to fullfill their egotistical fantacys, are hell bent on limiting the last hopes of the little people.

Anonymous said...

It's time to implement an intelligence test for all politicians and wanna-be politicians. Not one of the current crop would pass it.

Or we could do one better and simply dissolve the damn federal government all together.

Anonymous said...

They talk about leveling the playing field, but it's already not level. The main reason to buy things from the internet is because they cannot be found locally. When you do, you almost always have to pay shipping, which far exceeds sales taxes. Adding an addional tax would make the playing field even less "level."

Anonymous said...

The Devil Never has Enough..more..more..more...all..all...all, They can have it all, hope it gets 'em where they think they are going, but I wouldn't bet on that!!!

Anonymous said...

I live in a state without a sales tax. By requiring every state to adhere to the same standards will they institute a new tax on us?

abinico said...

How about a real hefty tax on Wall St transactions and repeal all sales taxes. Sales tax is the most regressive form of taxation possible, so I am sure all the rich liberals will jump on this idea and tax themselves instead.

Anonymous said...

I like the commerce law as it is. No tax if it is bought across state lines. Early politicians were smarter.
I guess governments don't steal- I mean "make" enough money now?
How about a get out of bed in the morning tax?
No reason to wait a week or two for an internet sale, I'll use the gas and drive to get it. Burning more gasoline and polluting more must be better for us all.!

ohio farmer said...

tax,tax,tax,when are ever going to stop spending.

Anonymous said...

There is no law that says over state border items are not taxed. The premise is that the person buying does not live in state A, so is not subject to collection of said tax. But, he is liable to report and pay said tax according to the state he lives in. It was not meant to be "free", it was meant to work so that every state received their tax. So if he lives in state B, buys from state A, then he has to pay state B the taxable amount of the item.

Anonymous said...

"Marketplace Fairness Act"

I'm a stupid rube, I do not understand what is going on, but it clear to me by the title of the law that there is "unfairness" in the marketplace.

I DEMAND a law be written to end the fucking euphemism titling of things, especially when used to convince the ignorant population that the tax isn't a tax, but it is for helping others.

Registration tax
Sales Tax
Real Estate Tax
License Tax
Income Tax
State Income Tax
Surcharge Tax
Fuel Tax
Resale Tax
Phone Tax
Wireless Tax
Internet Connection Tax
Excise Tax
Shipping Tax
Hazardous Materials Tax
Rental Tax
Bottle: glass plastic Tax
Trash Tax
Property Tax
Health Car Tax

Did the King ever tax this much? This just simply isn't enough, when seen under the illumination of the "fair" vs "unfair" system of evaluation.

Anonymous said...

So, you found the website. Did you read the bill?
It seems at least reasonable.

Anonymous said...

if this internet tax is higher then the tax in the state i live in, i will pay a higher price and drive to buy item if it means the actual tax percentage is lower by even a couple of points of a percent, i dont beleive in taxes of any sort, and go out of my way to pay the absolute least possable, and if that means going back to actual stores, so be it.

that being said, i do understand some level of tax is needed, to pay for fire dept. (which is a direct benefit) and maybe even roads... but schools should be paid for by the people that use them, i dont have kids, why should i pay for school? well, i dont, since property tax is what pays most of the taxes for things i dont use... i just dont own property, most people who do have kids dont own property, which means they are not paying school tax, if those with kids arent paying it, i am not paying it when i dont have any. besides in today economy, you are better off renting anyway.

i have no problem paying for things that i benefit from, like roads and fire dept. police is questionable lol, but i refuse to pay for something i dont use.

Anonymous said...

who is behind all this?Who are they-the law makers?

Dave Mowers said...

This is the beginning of the VAT tax Republicans so desperately want to use to eliminate taxes for the rich and push the sole burden of the cost of government onto the poor.

Anonymous said...

This is why I use Amazon FBA to sell stuff. Let them take care of it. What I don't sell via FBA goes to my yearly yard sale. And I'm sure not going to charge any taxes. There's more than one way to skin a cat.

Anonymous said...

Fuck this shit!!

Rooster said...

Ebay asks their members to help campaign against this law, but I'll bet anyone five bucks they already have a system developed where they will collect and remit the tax for you, for a fee of say, three percent of your total sale?
Any small-time seller knows that collecting and remitting sales taxes to thousands of possible jurisdictions would be a logistical nightmare.
Trust me, ebay has a collection system ready to go.

Carroll said...

Since Fed-x and UPS benefit greatly from on-line sales, I assume they would oppose any kind of internet tax.

wishbone said...

theres a simple reply to this tax idea. "go fuck yourself". we've had enough of government thieves.

Michael Kinsey said...

Here it comes. Sales tax,vat tax,carbon tax,but they got a little problem with garage sales, and other barter mechinisms, done with cash. The profit potential is the best that could ever be created by governments.No escape from paying any tax they impose immediately, electronicly. They just have to hook everyone into the system.Obviously, the mark of the beast.The greed pups will also require a change in religion, because Christianity forbids this enslavement and the worship of thier new god.We, waited 2,000 years for this divinely given prediction of manifest. Here is it. Know anybody else who can match this accuracy?

Tall Mohammad said...

Hold on, if we want to promote mom-n-pop businesses, local stores and main street instead of large corporations and wall street, then we do need to fix the unfairness of local businesses having to charge more because of sales taxes and many Internet businesses including large corporations getting an unfair pricing advantage of between 5% to 10% or more because they have been exempt from charging sales taxes.
This tax advantage or exemption for Internet sales as been very unfair to local small businesses. Either make all businesses charge sales taxes or exempt all of them. Stop the favoritism and special exemptions for friends and corporate donors of the politicians .

Anonymous said...

Will there be tax for breathing air or rain from the sky? It is very appalling for me to see what Lawmakers in America in terms of Business/Retail want to do online. The decentralized nature of the Internet as Rand Paul iterated has work. It has allowed internet businesses to flourish and prosper. Now State Governments want to get their hands on it because of greed. If they cared about "Mom" and "Pop" businesses, they would lower business taxes and sales taxes on brick and mortar operations. Government just has to have control of everything. In doing so, they destroy beautiful flowers, for they are the greedy weeds.

Anonymous said...

Now Mom and Pop businesses have to pay an added surcharge for credit card purchases. This will be implemented this year. How can we survive? We can't NOT take credit cards and debit cards, but the customers do not like having it passed onto them. We have to add it to the item prices and offer discounts for cash paying customers. Just more red tape and another business expense that Mom and Pop places simply do not need. We cannot compete.

Anonymous said...

Compliance with this will cost small and start up online retailers more than they can handle -an estimated 13.5% of sales tax collected, and will be a deal breaker. Larger companies like Amazon will easily comply costing them only an estimated 2% of sales tax collected. This certainly gives them an unfair advantage and the
ability to squash any real competition.

Right now nothing is stopping any retailer such as myself from setting up an online marketplace and competing directly with retailers of ANY size. Add the daunting task of complying with burdensome federal regulations and sales taxes that vary by state, not to mention county sales tax, and district sales taxes some of which change quarterly and now how easy is
the task of competing? Forget about the little guy growing their business big - this legislation would be a raw deal for everyone but the goliaths.

This type of increased taxation would also put the most burden on the already overburdened middle class, as they would now have to pay taxes on all of their online purchases. Legislation like this would ensure the next generation of retailers would never be able to compete in new marketplaces by truly giving larger business the real advantage, an advantage they do not have now as we can all currently compete with them on a level playing field without burdensome and costly regulations to comply with. Add in questionable expansion of states authority, and/or a disastrous national sales taxes (which would likely spread beyond internet sales in the future -
think about it) and all you've done is burden an already overburdened citizenry with more government regulations and taxation - undoubtedly to our own long term detriment.

This is neither necessary nor smart. I own a mom and pop store, and yes we can compete. We do not have to charge shipping, we get to greet the customer face to face and offer them service like no web site can ever do. We can also choose to sell online if we want to, but enact this type of legislation and you close the door for future generations like our children to be able to compete in new marketplaces. This has nothing to do with helping mom and pop stores like mine, as it certainly will not do so, and customers are likely to spend less when they have less in their pocket.

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