Tax on E-Commerce Planned

[HankB]

A group of up to seven senators - four of them Republicans Rinos - are planning to introduce a bill to make it possible for states to levy sales taxes on E-commerce.

http://www.reuters.com/article/2011/11/09/us-usa-salestax-idUSTRE7A801H20111109?feedType=RSS&feedName=internetNews&rpc=22&sp=true

Story says states "lose" up to 24 billion a year in sales taxes that aren't currently collected on things like Internet and mail-order sales. Needless to say, large retailers like WalMart (which have a presence in all states to sell their ChiCom made cr@p) are backing the bill in the name of "fairness."

Way to go guys - throw a monkey wrench into a part of the economy that's still working. 

[longeyes]

Fair is making sure no other crab crawls out of the pail.

[roo_ster]

Wait, there's MORE!

The Obamherroids are putting a tax on Christmas, or at least Christmas trees.  I am not making this up(1).

http://blog.heritage.org/2011/11/08/obama-couldnt-wait-his-new-christmas-tree-tax/#idc-cover

To pay for the new Federal Christmas tree image improvement and marketing program, the Department of Agriculture imposed a 15-cent fee on all sales of fresh Christmas trees by sellers of more than 500 trees per year (7 CFR 1214.52).

One of the commenters:

Wow, this is about as dumb as it gets.

Who among us has not decried the lowly position of the Christmas tree? I know I have, and often.

Hey, at least he still manages to use the actual word, Christmas. He didn't institute a Holiday Tree Tax.

And I think it's unfair. It's a tax that targets ONLY Christians. I mean, how many muslims are putting up Christmas trees?

Say it aloud and let it roll off your tongue:
"Federal Christmas tree image improvement and marketing program"

I can only expect some other new Federal initiatives:

Federal mind-blowing sex image improvement and marketing program
Federal milk chocolate image improvement and marketing program
Federal huge stacks of dollars image improvement and marketing program
Federal warm clothes in cold climates image improvement and marketing program
Federal professional and college football image improvement and marketing program

 




(1) I feel the need to make that disclaimer more & more often.

[slingshot]

It was just a matter of time before there will be a sales tax on E-commerce.  I don't know about you, but I shop online much more often now than I did two years ago.  It is hard to find some products locally.

[41magsnub]

What slingshot said, and frankly it is simply easier.  Like most guys I abhor shopping*.  It is easier to just go to amazon.com or whatever and get the item.  Also, I can do my comparison shopping in minutes to ensure I am getting a good deal.

*The exception are things like guns and tools where I want to go handle them.  I don't feel right using a local shops inventory to see what I want and then go online to buy it as long as the local shop is in the ballpark when adding up the item, shipping, and FFL fees as applicable.  I also don't buy shoes online anymore, I got it wrong every time I tried.

I'm opposed to the e-commerce tax on principle, we currently do not have a sales tax here in MT so it would probably be a moot point for us depending on how this would shake out.

Oh, according to the drudge headline they backed down on the xmas tree tax.

[Perd Hapley]

Wait, the "Christmas tree industry" lobbied for a 15%() tax on its own product? And they think this will improve their image?    And they don't expect more people to buy fake trees because of this?   

No, that won't backfire. 

[longeyes]

Who told the gov't they had a right to piggyback on sales transactions anyway?  It's time to challenge the whole concept.

[Monkeyleg]

If it's a federal tax, it will hit the ecommerce sites at a time when many are already hurting. If they try to allow the states to apply their own different tax rates would drive most online retailers out of business, as the accounting costs would be ridiculous.

I wish these idiots would understand for just one minute what it takes to run a business, even a small business. They don't have a clue.

"He has erected a multitude of New Offices, and sent hither swarms of Officers to harrass our people, and eat out their substance."

"For imposing Taxes on us without our Consent:"

I wonder if those sentences ring a bill in DC anymore.

[Perd Hapley]

Wait, sorry. It's not a fifteen percent tax, just a 15 cent tax. And the D of Ag called the whole thing off. Still. Pretty dumb.

[Angel Eyes]

"He has erected a multitude of New Offices, and sent hither swarms of Officers to harrass our people, and eat out their substance."

"For imposing Taxes on us without our Consent:"

I wonder if those sentences ring a bill in DC anymore.

Of course they do.  Obviously the paranoid rantings of a right-wing extremist.  You're probably on a DHS watch list.

[Nick1911]

Surprised it took this long.

[Monkeyleg]

I wonder if they've considered how many jobs will be lost, how much more energy will be consumed driving to stores that have the desired products, and just how much this will reduce the amount of information available via the internet. After all, more profit potential = more websites = more information.

[HankB]

I wonder if they've considered how many jobs will be lost,

private sector jobs lost = more people collecting unemployment or welfare = more work for the bureaucracy = more government workers hired = more likely Democrat voters

Yep, I'd say they considered it in detail.

[slingshot]

I certainly don't want to see a sales tax imposed on ALL E-commerce. I see it coming.  Sales tax is a very effective method of taxation based on comsumption.  It is one of the reasons that I support the 9-9-9 plan conceptually. 

I just ordered a pair of shoes....  yeah, the size thing can be problematic.  BUT I ordered the same size on a duplicate pair that is just about worn our or to be moved to yard work status.  Must be what happens when you get old?  White socks?  The white socks thing is one I chuckle about.  Some may recall Jerry Lewis always wearing white socks and being criticized for doing it.  Didn't change his behavior one bit!  Now, I seldom wear anything other than white socks.  I don't care for the most part just like Jerry Lewis.

[birdman]

If it's a federal tax, it will hit the ecommerce sites at a time when many are already hurting. If they try to allow the states to apply their own different tax rates would drive most online retailers out of business, as the accounting costs would be ridiculous.

It's the latter, sorry.  If I read the bill correctly, retailers would be responsible for charging and sending (don't know the interval) the withheld sales taes to the correct states.

Technically, this changes the burden, since technically every individual is supposed to pay to their state the sales tax on items purchased without sales tax in other states (e.g. Online).  Thats why Pols are saying this is enforcement--since the people refuse to do it (compliance is less than 12-14%), shift the burden to the retailer, as with POS transactions.  It's still dumb, but that's the legal excuse. 

The problem is it federally reduces the ability of states to compete among each other for businesses--right now, since it's only the retailer burden if they have a physical presence in the same state as the purchaser, a retailer can chose a state with fewer people (fewer orders) and/or lower sales tax (reducing the burden for those that do order).  This stupid law will just (as you said) increase accounting costs on the businesses, which will ripple down to consumers.  A side effect will be it will allow states to compete for residents more effectively (MT and DE for example), but that positive will be small compared to the overall negative. 

The funny thing is, technically we are all breaking the law ordering online and not paying sales tax...but rather than pols realizing that as a sign, or even trying to enforce it, (un popular with all voters) they do this (unpopular only with smart voters). 

The question is, why don't they put the requirement on CC companies instead of the retailer?  They have the infrastructure to do it easily, and they already have the data--if the transaction doesn't have sales tax included, the CC company adds it based on the card holders residence (which they have).  I'm not advocating that, but it seems simpler and less disruptive to businesses of all sizes.  (less bad than the current proposal).

The ideal would be to suck it up and let the states deal with it, rather than the high spending states (the ones advocating this) with high sales taxes forcing the rest of the states to enforce THEIR rules.

[Monkeyleg]

The question is, why don't they put the requirement on CC companies instead of the retailer?

IF there is to be a tax on ecommerce, that idea makes the most sense of any I've heard. However, it won't fly if you consider who is lobbying for this.

The brick and mortar retailers complain about online retailers having some unfair advantage, but they have some substantial advantages themselves. For a relatively modest fee, they can be listed in the yellow pages and white pages where people can find them easily. They'll likewise be found when doing local searches ("Walmart in Omaha") on the search engines.

Online stores must spend a lot of time and money getting good rankings on the internet, or spend a ton on pay per click advertising to be found. People don't just drive past websites.

Brick and mortar stores also have the advantage of giving customers immediate gratification. The item is there. Pay for it and go home with it. No waiting two or three or five days.

It seems to me that some powerful retailers want all of the advantages, and they have enough influence to get members of congress to put the playing field off-level, as opposed to the "level playing field" the retailers claim to be pursuing.

There's no way I could afford to file fifty different sales tax returns every month, and I'm not the only one-man business on the internet by any means. Even the Amazon's and other massive retailers would have to spend a fortune on more accountants.

Perhaps online retailers should all advertise a discount  to their customers which would be contributed to the campaigns of candidates running against congressmen who favor taxing internet sales.

[Waitone]

If reality matters any more, a number of states already assess sales tax on internet purchases.  In some cases you have to tally up what you purchased "out of state" and enter the figure into your tax form.  Other states just assume you made purchases based based on your income.  No muss, no fuss--just an assessment.  The problem isn't that there is no tax.  The problem is enforcement is not at thorough as local.gov wants it to be.

[RoadKingLarry]

Screw 'em. Just one more reason to go off the record, under the table cash/barter.
The damage to small businesses this will cause is calculated and intentional.
Screw 'em.

[slingshot]

The problem is enforcement is not at thorough as local.gov wants it to be.

There is that, but the enforcement is nearly impossible.  Consider the number of man hours and so forth necessary to prove a citizen owes sales tax on e-purchases.  States are already short handed and their budgets limited.  States like Tennessee which does not have a state income tax would have a lot to gain if it could be enforced inexpensively.

Paying the sales tax to the various states would be a book keeping nightmare for small business.  Figuring out the correct tax rate would be another problem.  I suspect there would be accounting firms that would allow you to download pertinent data for a fee, or would act as a clearing house to the various entities.  But this costs money.

[Monkeyleg]

If reality matters any more, a number of states already assess sales tax on internet purchases.

Wisconsin and most other states have had use taxes in place for decades. If you bought something by mail, while on vacation, or anywhere else that didn't charge WI sales tax, you're required to report it on your state tax return and pay an amount that --surprise!!!---is the same as the sales tax.

Nobody pays it, though, so .gov wants business to pay for enforcing the law. Do we get to wear badges and carry state-paid-for automatic weapons if we merchants have to do this?

[slingshot]

When possible, the govenment always wants somebody else to collect a tax and shoulder the responsibility for its payment.  It is easier to prosecute a Cabelas or Bass Pro than each of the 100,000 customers who might have purchased merchandise without paying state sales tax because the business has no brick and mortar presence in that state.

[longeyes]

Instead of bitching about unfair competition the brick & mortar guys should be fighting to lower sales taxes and all regs that inhibit business. 

While e-commerce is growing rapidly there are still a lot of Americans who don't trust it and patronize the "tangible" merchants.

[AZRedhawk44]

What kills me is the fact that some dumbazzes actually think that e-Companies don't pay taxes.

Dick's company pays through the nose for shipping.  With UPS or Fedex.  And so, each package he sends pays licensing fees for the fleets of UPS/FedEx trucks, the Fed Excise tax on fuel, various airport duties on overnight packages that cross the country via air, and so on.  Not to mention the necessary profit margin to UPS/FedEx so they can make payroll, pay their state/fed taxes, and shareholders.

WalMart has cheaper bulk freight.  Things arrive in the store and are distributed from there.

Dick has to distribute to the doorsteps of 150 million households.

Dick's "tax" is the distribution costs of his product.  I bet half of what he pays in shipping is sponged up by our leprous and rotting Government in the form of various taxes on infrastructure or fuel, or income taxes on employees of contracted delivery agents to deliver the product.

[slingshot]

Unfortunately, shipping is not a tax. It has taxes built into the cost, but it is not a tax.  One of the attractions of the e-commerce merchants is that the shipping costs is often offset by the apparent savings on state sales tax.  A Federal law requiring the collection of sales tax from all customers would certainly change the playing field for e-merchants.  Whether we think it is right or not, taxation has a big impact on business profitability/success and where dollars are spent.  

All you have to do is look at Amazon....  in Tennessee, they are building or have built in the last year, a number of distribution facilities.  One of the conditions was that they would NOT have to assess Tennessee sales tax on Tennessee customers.  They apparently closed several facilities down due to this issue in the Carolinas.  The issue caused a big ruckus both locally and statewide due to the tax issue.  In the end, Amazon got what they wanted, but they are hiring several thousand workers who will be paying federal and state taxes from their earnings.  The Amazon facilities that come to mind are in SE Tennessee.  The argument was that if TN didn't give Amazon this tax waver, they will simply locate in Georgia who will give them what they want.  It is all about "jobs".  But it tilts the tables in terms of what customers choose to spend their money with Amazon.

A change in Federal law would eliminate such things.  It is why Walmart supports such a law because they can buy in huge volumes and out compete small e-merchants.  Walmart would stand to make millions as a result of such a federal law and they already have the sales tax computation built into their current accounting system because they pretty much have stores in all 50 states.  Everything comes down to money....

[Monkeyleg]

Of course everything comes down to money. It's business.

If Walmart can charge less for something than I can, that's the breaks. I either find out how to shave some costs to compete, or offer some value-added service that Walmart doesn't, or lose sales.

Using the legislative process to gain an edge is a different story.

Unfortunately for online retailers, there's no way to go underground. If you want business, you have to be visible, which means being visible to the IRS, too.