Support Growing for Extending Sales Tax to Online Purchases

[Frodo]

Does anyone here support it?

States, Congress rallying for an e-sales tax

By Amrita Jayakumar, Published: July 8

Online shopping in the Washington, D.C. region is about to become more expensive.

A wave of states, including Virginia, have passed laws that will require consumers to pay sales tax on all Internet purchases as soon as next year. Other states and the District are pursuing similar measures. And in Maryland, Gov. Martin O’Malley (D) wants to go further and levy a tax on songs and other digital products bought through popular sources such as iTunes.

For states struggling in the troubled economy, this could mean $23 billion in new revenue each year, according to the National Conference of State Legislatures. Had online retailers collected sales tax this year, Virginia would have added nearly $423 million to its coffers, while Maryland would have seen $376 million and the District $72 million, the group said.

The movement in state capitals is driving newfound support for a proposed bill in Congress that could make collection of sales tax a standard practice on the Web, no matter where a consumer logs in to shop.

Bricks-and-mortar retailers are cheering the moves. For years, their online rivals have resisted charging sales tax, giving them a price advantage. They have cited a 1992 Supreme Court ruling that let online companies off the hook if they didn’t have a physical presence in the state where the customer lived.

A Web trade association that includes eBay, Overstock.com and Facebook is fighting the new bills. But notably, Amazon.com appears to have waved the white flag and supports the sales tax measures. Some analysts said they observe a shift by the online retailing leader that could lead to a fundamental change to the rapidly growing e-commerce business.

[Mercenary]

How would it work with Ebay exactly? I mean are they going to require everyone who sells anything on their to fill out a bunch of sales tax nonsense, or will it just be those who do a certain volume? And if it does only include those who do a certain volume, that'll give an advantage to people who only sell a few products since they can sell it for less as they don't have to charge sales tax. However, if everyone has to do it, it will make the ease of Ebay become a pain.

I oppose this. Although these days I don't buy nearly as much in general so I guess it won't affect me as much as it would have when I bought more. Taxes on consumption though certainly make me less desiring making purchases. Not that that is necessarily a bad thing with how much we overconsume as a culture. But it isn't exactly going to boost the economy either.

[muon2]

Most states that impose a sales tax require residents to pay on out-of-state purchases. It's hard for the states to enforce except on big-ticket items like cars and boats. Before the web opened up commerce, catalog sales were the only significant uncollected source.

The 1992 court decision was about catalog sales. It said that an out-of-state retailer had no obligation to collect tax for a state where it had no physical presence. The logic was that the definitions of the categories of taxable items were so different from state to state, it was unreasonable for the retailer to be expected to keep track of them, unless they were in the state itself.

The decision applied to any out-of-state retailer, and that included the new e-tailers. It wasn't a big deal in the 1990's, but by the mid 2000's states were looking into ways to circumvent the decision and force e-tailers to collect. Many states formed a compact and created uniform sales category definitions so that they could collect in each others states. In the last three years states have hit on the fact that many e-tailers use marketing partners in the states and that provides a brick-and-mortar presence in the state as required by the decision.

[Platypus]

Australia's big retailers have been pushing this particular cart up-hill for a year or two, it'll be interesting to see if the US response gets any further.

[Kevin]

Yet another example of why Martin O'Malley is an HP!

[State Comptroller Atkins]

Democratic Governor proposes UK Tory policy. Says something, doesn't it?

[President Marokai]

Of course I support it. I'm not thrilled with the idea, but it seems perfectly sensible considering the sales tax's existence nearly everywhere else.

[bgwah]

Why should online retailers be exempt? That doesn't seem very fair.

[Comrade Funk]

Democratic Governor proposes UK Tory policy. Says something, doesn't it?

No, it doesn't since this seems like a decent and fair idea.

[Fmr. Emperor PiT]

     I prefer the idea of abolishing the sales tax outright. That option is just as fair and it's a regressive tax anyway.

[memphis]

Why should online retailers be exempt? That doesn't seem very fair.

That's Wal-Mart's position as well. Which is kind of funny. Amazon.com got all pissy with TN and threatened not to build a planned distribution center in the state unless they got a special sales tax exemption. Which, of course, the state gave them. Until 2014 IIRC.

[I Can't Get That Sound You Make, Out Of My Head]

Why should online retailers be exempt? That doesn't seem very fair.

[True Federalist]

Why should online retailers be exempt? That doesn't seem very fair.

If you were talking about only State sales taxes, I'd agree, but there are also local sales taxes which can levied as well and is difficult to know which local taxes should be applied based on the billing address.  Not only that, what gets subjected to the sales tax varies considerably from place to place.  Sales taxes are not the simple subject some people think they are.

[muon2]

Why should online retailers be exempt? That doesn't seem very fair.

If you were talking about only State sales taxes, I'd agree, but there are also local sales taxes which can levied as well and is difficult to know which local taxes should be applied based on the billing address.  Not only that, what gets subjected to the sales tax varies considerably from place to place.  Sales taxes are not the simple subject some people think they are.

That's why the best solution would be for the states to agree on taxable categories and make interstate (including internet) sales only subject to the state portion of the sales tax on the agreed categories. Rates could still vary from state to state.

[True Federalist]

Why should online retailers be exempt? That doesn't seem very fair.

If you were talking about only State sales taxes, I'd agree, but there are also local sales taxes which can levied as well and is difficult to know which local taxes should be applied based on the billing address.  Not only that, what gets subjected to the sales tax varies considerably from place to place.  Sales taxes are not the simple subject some people think they are.

That's why the best solution would be for the states to agree on taxable categories and make interstate (including internet) sales only subject to the state portion of the sales tax on the agreed categories. Rates could still vary from state to state.

A Uniform Sales Tax Code is a nice idea, but I'm doubtful you'd get the States to agree to it.  The various exceptions to sales taxes are a wonderful source of campaign donations from those who want what they sell exempted.

[t_host1]

Not a problem. The interstate commerce clause would be settled/met by;
 
One tax rate for all 57 states, (no exemption’s or waivers possible)

The tax paid to the purchasing destination,

Commodity “D” products only – which are all new, retail products for consumer Domestic use.
 
Applying this TAX to efficient use could only be accomplished by the new TEA insurgency, of course.

[True Federalist]

57 States?  There are only 6 inhabited territories.  What gets split up to make the 57th?

In any case, Nationalization of State taxes is an abhorrent idea to anyone who favors a truly federalist form of government.

[t_host1]

 The 57 state thing, was made factual by the current president, confusing I know, I can assure you that he is counting on all them to vote for him. Are we residents, citizens or merely inhabitants? Intriguing when one gets down to the nut of it.
 Before the net when I purchased across state lines, they the seller, collected my states TAX. The state collecting gets a little ding with the bulk going to the buying state. How and why does hypertext change the overall outcome, other than the convenience? Was there a rule change or was the interstate commerce clause twisted in a way to purpusly advantage the net?