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The Almighty Buck

Internet Tax Ban Extended 233

Posted by michael from the quelle-surprise dept.
GiorgioG sent in news that the ban on internet taxes will be extended for two years. Not that that will make the recession go away, but it's a start. Remember: every time you buy over the internet, an angel gets his wings.
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Internet Tax Ban Extended More

Internet Tax Ban Extended

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  • State Taxes. (Score:2, Interesting)

    by SuperguyA1 ( 90398 )
    This doesn't affect the ability of States to tax internet sales does it? I know Michigan keeps telling me I am required to pay taxes no matter where I buy from. Is this correct?

    • Re:State Taxes. (Score:3, Informative)

      by wnknisely ( 51017 )
      I know that in PA we're expected (on the honor system) to calculate the appropriate state sales tax on items bought outside the state, and send the amount onto the state office in Harrisburg.

      I'm not aware that there is a large active office for collecting those revenues. (Disclaimer - I only know this in principle - since I'm not aware of anyone actually doing this.)

      I'm pretty sure that I read somewhere that this was true for other states that have a state sales tax. (Some states like Delaware do not.)
      • That's why I route all of my one-click purchases through
        a router in Delaware; it's not me making the purchase,
        the computer is making it on my behalf from a state
        which would not require me to pay a sales tax if I were
        doing it myself.

        Kinda like Bush Senior claimimg to be a Resident of Texas
        (no state Income tax) for the duration of the 12 years he was
        in Washington working in the Oval Office.

        • Re:State Taxes. (Score:2, Insightful)

          by skyhawker ( 234308 )
          Or Gore Junior claiming to be a resident of Tennessee.

          Although I suspect that the critical difference is that the Bush and Gore claims are actually LEGAL, while the legality of your router rationale is highly doubtful. Still, I do like the concept. It's OK by me.
      • I'm not aware that there is a large active office for collecting those revenues.

        Here in Washington state (with our ~ 8.6% rate) - businesess have their books audited once in a while to see of we've been sending off the apprpriate excise/use tax to the state from our out of state purchases.

        Aside: Most businesses here in WA have to pay 2% Business and Occupation taxes - but if you are an airplane manufacturere (Boeing) or software manufacturer (Microsoft) it just so happens that your rate is close to zero. Funny how a little clout bends the laws...
    • Ohio is one of them. I'm pretty sure I'm the only person in the state that does though... It's 5.5% and it applies to internet and catelogs too.

    • Re:State Taxes. (Score:5, Interesting)

      by Trekologer ( 86619 ) <adb@trekologer. n e t> on Friday November 16, 2001 @03:47PM (#2576009) Homepage
      This doesn't affect the ability of States to tax internet sales does it? I know Michigan keeps telling me I am required to pay taxes no matter where I buy from. Is this correct?

      You're supposed to pay sales tax. In my state, the grand old New Jersey, the back of my state income tax return has a form for "Use Tax". I'm supposed to declare purchases I've made out of the state or though the mail where New Jersey sales tax was not collected* and pay the 6% on those purchases. I am not telling you to break the law, but... its very simple to avoid that tax... just don't pay it.

      Sales tax is not a tax on the sale (or seller), its a tax on the purcahse (or purchaser). So, your state wants to collect tax on all purchases you've made, even if they were from out of the state.

      It should be noted that this "tax ban" prevents the Federal government from taxing Internet purchases, not the state governments. It is highly unlikely that the Federal government would tax internet purchases since they do not tax cross-state mail order purchases anyway. This is more to make Internet purchasers "feel good" than anything else.

      * If I purchased online or mail order from a merchant in N.J. they are required to collect the tax.
    • The state has jurisdiction over you if you are there. They also have jurisdiction over the shipper, but likely only go after the big fish. Have you noticed how the large online retailers charge state tax for those states that tax such transactions?

      I remember hearing a few years back that there is a significant enforcement problem for the states because they don't have access to the records of a company if it is out of state.

      • Nexus of operations (Score:2, Informative)

        by alexhmit01 ( 104757 )
        Most states with sales taxes also have use taxes (alluded to elsewhere). You aren't exempt from the tax by paying out of state.

        HOWEVER, the SCOTUS (Supreme Court of the United States) ruled that states can only force a company to collect the taxes for them if they maintain a nexus of operations in the state.

        If the company doesn't have a presence in the state, they don't need to act on behalf of the state and collect taxes.

        This is why companies can't (legally) set up subsidiaries in two states to avoid taxes. Otherwise, locals could order from another state.

        The enforcement problem is that they CAN'T enforce it. They can't cross state lines with their taxes.

        The Congress and Governors were trying to come up with a solution for a simplified tax system. The idea would be to at least standardize to the point where given a zipcode, a simple lookup would determine the tax base.

        Keep in mind, not only do states collect sales tax, some counties and cities add them as well. This creates a mess. It is one thing to have to do a lookup on 50 states, it is another to have to deal with localities.

        Companies with solutions have tried to find beta testers, but who will volunteer to collect sales tax just to beta test software that will make it mandatory.

        Interestingly, New Hampshire doesn't charge sales tax on liquor (or anything, if I recall), so Mass got annoyed that residents would cross state lines to purchase things, including liquor at the New Hampshire State liquor stores (can only buy booze in New Hampshire at state run liquor stores, right along the highway... isn't that entrampment?). Mass sent staties into New Hampshire, calling back license plates, and arresting people crossing the line (or something similar)... so New Hampshire deployed their troopers to arrest the Mass employees on silly charges, and the situation went away.

        States' Rights matter outside the northeast, because the states are huge and do their own thing. States' Rights don't matter in the northeast because the states like to squabble with each other and would like to have more central control because people cross the lines regularly.

        Alex
        • Houston (IIRC) used to have an extra .5% sales tax if there was a bus stop on the block where the purchaser lived. Quite how the retailer was supposed to know this was never satisfactorially explained.
    • Many states had sales tax provisions on dotcoms before Congress inacted the moratorium. It's my understanding that those were not eliminated. Rather, new taxes were forbidden.
  • Of course, there's still the matter of that other "tax" -- shipping costs. And many times those can be significantly larger than a regular sales tax.

    Think about it, a $100 purchase in a store with 5% tax is $5. What can you buy for $100 and ship for only $5? Of course, I saw that Amazon is waiving shipping costs for orders over $100...so maybe the point is moot for now :)
    • software. ~5 dvds that i paid about $5 to have shipped ground. ram from crucial [crucial.com], which is dirt cheap and has free 2nd day air shipping... lots of things you can buy at all sorts of places where shipping is less than tax... and most places have things online cheaper than you can find in the store... win-win situation...
    • That really depends. For instance, if you're looking at a $2000 digital camera, it'll cost you $100 in sales tax. But shipping is probably far less for a small item like that, maybe $20-30 with insurance. Coupled with the typically lower prices of internet stores, you can save a lot of money.

      However, for heavy items, or inexpensive items, it's probably not worth it unless you simply don't have easy availability of that item in your locality.
    • "Think about it, a $100 purchase in a store with 5% tax is $5."

      Hrmmm... wonder if a $100 purchase with a 5% rebate is also only $5? Folks, this is why the mean old English teacher made you diagram sentences.

  • no shocker here, move on..... (Score:1, Interesting)

    by Anonymous Coward
    This is not really a big news story. Back a few weeks ago /. posted a story on the tax ban NOT being passed, only in the chaos from the events of Sept 11. Now the senate has gotten to business and passed the ban on internet taxes. Yay. Tax free for two more years. And the next. And probably the next.
  • This is important. Many online retailers have been hurting since before the stock market collapse. The tax exemption helps offset the shipping costs associated with their business model.

    • Re:May help stem further collapse (Score:4, Insightful)

      by the_great_cornholio ( 83888 ) on Friday November 16, 2001 @04:00PM (#2576097)
      Good idea: we as taxpayers should subsidize companies with a shaky business model at the expense of those which have already seen some measure of success. That's our free market at work!
    • I thought it was the lack of a costly 'brick-and-mortar' presence that was to offset the shipping costs associated with their business model. They would then change lower per item, both to compensate the consumer for her extra wait for the item and to offset the shipping costs. Of course, this presupposes these people have a business model that was anything more than let's take other people's money, spend it, and hope for the best.
    • The online retailers have always been operating with the tax exemption in place. This merely extends the rule. Any online retailers who are having problems won't really be helped by this (although they also won't be harmed, obviously). Basically, the online retail world is still headed in the same direction it was before this announcement.
      • The way I read the article, the Congressman is trying to facilitate the collection of sales (a.k.a. "use") taxes on mail-order (a.k.a. "e-commerce") purchases, not eliminate them.

        The original poster is dead on, though--if mail order companies have to charge sales taxes, then they're dead--because it ends up cheaper to buy locally. So the states get what they're drooling over, a "level playing field" for the retailers. What they will then start bitching about is the loss of tax revenue from mail-order companies that happen to be located in their states.

  • now we have to worry about the post office's plan to charge us for email.

    what's that? you haven't heard about it? i'll send you the email... (COD)
    • I hope that you realize that the Post Office charging for emails was a joke. Do you realize the hardware that would have to be deployed in order to track the emails sent would be severely cost-ineffective and pretty much impossible. I know my company sends out several thousand emails an hour and it is a small company.
  • Remember: every time you buy over the internet, an angel gets his wings.

    Attaboy Clarence!
  • I've got a sneaking suspicion that the folks in Congress have slightly more important things to work out than how taxes should work for Internet sites as opposed to mail-order purchases... especially so in a recession.
  • I think this is a really interesting aspect of the Internet. It is an international system in that there is no notion of physical location (directly) associated with the data used day-to-day on the Internet. To me, that makes it a very good candidate for part of the mandate of the United Nations. Why not make internet taxes (sales tax primarily) be what goes to fund the UN? It is in desperate need of funding, the US is still behind on dues (I think), and it would make the whole issue of multiple tax laws moot. Yes, I think the UN should evolve to become a world government - it is now actually, just not very effective and with a pretty pathetic mandate. All of these global talks going on would be a good place to bring this up. The UN might also have the responsibility to take internet tax income to use for equalization payments to poorer nations.
    • What have you been smoking? It's the United NATIONs, not the United PEOPLE. It's a forum for nations to hammer out disagreements and provide aid to one another, not a world government. And there are a lot of us who are glad its not.

      Are you sure you want to be taxed by an organization whose executive committee gives China a veto? I know I don't.
    • I'm sure other people will be more than happy to point this out, but world government is the exact opposite of the direction that we should headed.

      So many of the problems that we hear being complained about everyday on /. either directly or indirectly result from government centralization. It is the sheer size and power of the U.S. government that allows it to hand over so much power to corporations. I'll tell you one thing, world government certainly means no more data havens and no more numbered swiss bank accounts.

      Globalization is the problem, not the solution.
      • I have to disagree about this. Look at China: there's another huge, centralized government that's far more authoritarian than the U.S.'s, but they're not handing any power to corporations at all. Sure, it's probably not a great government to live under either, but I think the idea that big government == big corporations taking over everyone's lives is totally wrong. It's just the U.S. that has somehow set up such a system.

        However, if there were a global government, the U.S. would probably play the largest role in it, which would of course lead to huge corporations taking over our lives, so I'm certainly against that. When AOL/TW/MicroSoftDisney Corporation passes laws forbidding us to read books without paying per-use licenses, I want the option of moving somewhere more sane.
        • I disagree...I think the US would have a minor role in it, and our freedoms would be stripped away by everyone else...world government = scary thing. A world government means that if you don't like the laws where you live...tough, there is no refuge, you're just fucked. Actually, the big government is a result of the depression in my opinion...the government began to grow at an exponential rate as of the "New Deal." The big corporations are a result of capitolism and it's methods. Personally, I see nothing wrong with it, if people buy their products, no one holds a gun to their heads. I do not like campaign contributions from big businesses, which is a good reason for term limits: if a congress person (as opposed to congressman) knows they only have 8 years or what have you to do their thing, we less likely to have career politicians who make their money off of big corporations.

          Off my soapbox though...remember, the US and other countries with nice liberties like freedom of speech are in the minority. A global government would not help matters.
    • Yeah, that's a great idea; every time I purchase something from someone who is also in the US, but happens to communicate with me via Internet links owned by US corporations instead of by telephone or snailmail, part of my money should be confiscated under force of arms and given to other countries' governmental officials, including those in military dictatorships such as Pakistan.

      While you're at it, let's make the mouse give you a little shock every time you buy something, to discourage use of the Internet for commercial sales even more.
  • The Internet SHOULDN'T be taxed anyway..nothing about the Internet should be taxed..including Internet access, Internet services, nor anything purchased from the Internet. People should have access to the Internet and its products anyway, taxing it would only put another stumbling block between the public and the Internet.
    • People should have access to the Internet and its products anyway, taxing it would only put another stumbling block between the public and the Internet.

      All great in principle, but then when you think about the huge amount of networking resources yo use when you download gigabytes of porn a month from a $19.95 AOL account, then maybe, just maybe, you're use much more of the "public" network than you should be. That network is shared by all, and its resources are both finite and expensive. Have you ever seen the amount of hardware required for a single telephone exchange (i.e. digital switching center)?
    • ah yes the days of dialing up to a single computer with a couple cdroms and a hardrive full full of shareware and sometimes sounds and pictures free for the taking. As long as you had the time to wait for the 1meg file to download on your 2400 baud modem. i personaly used zmodem. but those were the days of cga 8088s and a lil bit of soul and a form of comunity networking. Granted the internet has turned the world in to a community but with the bbs in most cases they lived in your town or the next one over.
  • ...your credit card number gets stored in yet another insecure database and your email address gets sold to spammers.

    No, thanks.
  • I buy stuff on the Internet, and I buy stuff in brick and morter stores. Unless you don't look very hard, there isn't THAT much of a difference in price, and as anotehr poster pointed out, buying local doesn't result in shipping charges. Unless its something that isn't available locally (or is inconvenient), I would just as well go and check it out personally.
    • That is very true;
      The statements of "traditional" businesses saying that online stores are a significant threat to their success is far exaggerated in my opinion.

      If you consider the recent (past 2-3 years) events, how many e-commerce or online stores out there, that actually started some kind of business, are successful? Just a mere handful!
      And how many of these are not drowned in debts? Almost none!

      Also consider that there still is a very low percentage of customers willing to buy online - especially in europe -, and most of the "online stores" are mere extensions to existing retailers; their "online stock" is just an advertisement to lure more customers into their shops.

      The next thing to consider is taxes;
      Do we not pay taxes when we pay our ISP to access the internet?
      Does the owner of an online shop not pay the ISP? And does the ISP not pay taxes to the government when it runs its business?

      To me personally the whole idea sounds just like another sorry excuse for governments to bring in more revenue - so hopefully for the US (or the rest of the world) the idea will be abandoned in 2 years

      -- just my two pence

    • True, and here I think you came upon something interesting (I choose to comment instead of modding it).

      Why are the Internet prices so similar to the ones in the retail stores?

      One might guess that not having large buildings in attractive and central areas along with a bundle of employees to fill the stores out would some how cost less money. One might also imagine that a new start-up Internet company does not have the financial leverage to get as good deals with their distributors as the large giants have.

      So, what conclusions can be drawn from this (if any)?
      As I see it, either one of the following might explain the situation.

      * The price difference between a large and local retailer and an internet start-up is almost non-existing, since the distributors take a higher cut of the pie for the small firm than for the larger one. (The fat distributors get a higher fat/order ratio from a small firm than from a large one :)

      * The small Internet company does indeed have high margins and earn a lot on each sale. If that money turns into profit is probably depending on a lot of other factors (such as the cost of the jet-set life of the employees in the internet start-up *grin*)

      * The large companies are so financially strong that they can afford to do a Microsoft.
      (That is sell at a loss and thus provide more value-add for each sale until the weaker competition has starved to death).

      Regardless, I don't see why Internet based companies should have any special benefits. Especially as consumers are not seeing the benefits in the form of reduced prices.

      If the companies can not turn a profit, then they have an invalid business model or a wrong company structure. This is a question of ordinary company management and is not unique to the Internet.

    • Actually, there are "shipping charges" associated with buying locally; you just don't think about them. The most prominent are the incremental charges associated with getting yourself to and from the store, and the additional charge tacked on to items to pay for shipping from the central warehouse to the end point store. But the former charges (on the order of $0.10-0.20/mile if you drive, and averaging somewhere around $4.00-5.00 round trip including subsidies in cities with public transit systems) and the latter (already figured into the price) are invisible, and so we don't think of them as shipping charges. The "shipping charges" are nearly identical in both cases, but are explicit in one, and implicit in the other.

  • This does not apply to taxing Internet Services. I know in Texas the first $25.00 of your internet service cannot be taxed. Im not sure if this a Texas tax break or National.
  • I don't understand this facination of the politicians with NOT taxing the Internet, or conversely, trying to tax sales over the internet.

    If they start charging me a tax to purchase items on the 'net, then they had better also start a national tax for purchasing items over the phone or via mail order.

    As for the taxing Internet access, I ALREADY pay taxes for that. My phone and cable bills hanve many federal, state, and local taxes for line access, univeral number portability, exise taxes, etc. How could they start taxing me based on the content of what I do with that circuit I'm already taxed for.

    SO.. YEA!! But I don't unsterstand why they need to specifically state that Internet sales should be treated like all other "on-site" sales.
  • There are also ALOT of new tax breaks for small buisnesses. During a recession the smartest thing to do is help out small buisnesses through tax breaks, and online retailers are just a whole lot of small buisnesses, with the exeption of amazon and a few others.

  • heh... (Score:3, Informative)

    by tcc ( 140386 ) on Friday November 16, 2001 @03:38PM (#2575942) Homepage Journal
    >every time you buy over the internet, an angel gets his wings

    As long as you don't buy from a united states dealer and live in canada, and ship thru UPS.

    Shipping cost
    15% duty tax,
    7% federal tax
    7% Provencial tax
    profit on the exchange rate on CC or paypal,

    God... when you think about it, it's depressing from a production point of view, you're doing hardware, you must do everything to keep cost super low to get to that 300% mark to recuperate the r&d cost, normally you end up doing maybe what, 20% overall profit!?... in the end, the gov makes almost more profit with your stuff than you... no wonder we got so many people on wealthfare, maybe I've underestimated them and they are the genious :)
  • ...and every time you make fun of a khaki-wearing dot-commer on a scooter, an angel bursts into flames.
  • The US government as banned sex for young girls because of recent terrorist acts. Young girls must black and blue wool tassles to symbolise that they cannot have sex. It is said the tradition of preserving maidens' chastity would be policed by traditional police who still preside over much of american society.
  • The internet, in a way, is somewhat like a new nation. No existing government should be collecting taxes on the internet.

    If taxes are collected for internet transactions, those taxes should be put to use to improve internet infrastructure, not existing government infrastructure.

    Personally, I don't want to see any taxes on internet transactions, ever. But I would be much more willing to pay a small tax if I had a say in what the tax was used for.
  • now if only the canadian government didnt charge me GST when i imported something. Still cheaper to import tho :-) Im just trying to ballance out the trade between the US/CDN since canada sells more to the US then Canada Buys :-)

  • Bush... (Score:3, Informative)

    by nll8802 ( 536577 ) on Friday November 16, 2001 @03:40PM (#2575960) Homepage
    President Bush actually wanted to extend it longer than two years. You can read more about the tax extentsion at Yahoo! [yahoo.com]
  • Not sure this makes any sense economically, but it sure is good politically. But why single out Internet commerce...which is essentially mail-order with an online catalog. Not all that much different than Sears and Roebuck pioneered over 100 years ago.
  • Watch "It's a Wonderful Life" and you would know that it is everytime a *bell* rings an angel gets its wings.
  • It's never a suprise to me when a Republican administration takes an anti-tax position or a Democratic one a pro tax position. Bush may not know a damn thing about the internet but when he sees that word "tax" well gooool-dang it he's gonn say "NO!" It kind of reminds me of Pavlov and his dogs. (just for the record I agree internet taxation is a bad idea.)

  • What about Pr0n? (Score:3, Interesting)

    by laserjet ( 170008 ) on Friday November 16, 2001 @03:45PM (#2576002) Homepage
    "Sen. Ron Wyden, Democrat of Oregon, who favored the simple extension, said Americans don't want to be taxed when they log on the Internet for their news, weather and sports."

    That may be, but I really think that most Americans don't want to be taxed when they "log on" the Internet for their pornography.

    On a side note, does "Internet" really need to be capatilized anymore?

  • How? (Score:4, Interesting)

    by Exmet Paff Daxx ( 535601 ) on Friday November 16, 2001 @03:48PM (#2576018) Homepage Journal
    Isn't this just their way of saying they still have no clue how to implement a tax on Internet sales and make it enforcable? The state of Maryland, for example, imposes a %10 use tax on any goods purchased via the Internet or mail order from out of state in order to "level the playing field" with local Maryland businesses. I know quite a few people in Maryland who owe thousands in "use tax", which requires you to police yourself and send it in at the end of the year, because they have never paid it and don't know it exists. The state picks a few hundred people each year to "audit" for use tax, and they usually get hit with so much back use tax fines that they collapse under the financial load and declare personal bankruptcy. Imagine owing 10% on anything you've ever ordered from out of state, for as far back as the state can get ahold of financial records, plus interest and fines. Ya.

    If this is how the states are taxing the Internet, you can imagine how well the Feds would do. They're probably looking at the dismal failures of the states and waiting for a successful model to emerge.
  • Sen. Ron Wyden, Democrat of Oregon, who favored the simple extension, said Americans don't want to be taxed when they log on the Internet for their news, weather and sports.

    He said there was danger in a "crazy quilt" tax system that would "chew up a vast amount of time for compliance."

    It seems to me that the real issue would be trying to figure out a way to equitably structure the tax rates on the internet - and then decide who gets to charge the tax.

    For instance: Delaware has no sales tax. If I buy something over the net using a server located in Delaware from a company with a branch in PA and headquarters in NY and I live in NJ, who's tax rate applies? The lowest (DE)? The highest (NY)? Should everyone get a cut?

    I wonder how taxes on telephone lines are handled. Are they simply taxed by the locale of the consumer - or is there some complicated relationship that allows states distance from the consumer to charge an "access" fee for information that crosses the state's borders?

    I generally don't like sales tax anyhow as a revenue producer for goverment. Sure it taxes spending and not saving, but it's a flat rate and hit's the lower economic rungs harder than the upper rungs.
    • I am going against the grain here, but I strongly disagree with the tax breaks on Internet sales.

      I dislike sales taxes generally, because as you point out sales taxes are regressive taxes, hitting poorer consumers harder than wealthier consumers. The lack of an Internet sales tax further compounds the problem. Wealthier consumers who can afford to shop over the Internet get a tax break. Why do they need a tax break? For that matter, why do the Internet companies need what amounts to a subsidy to keep them in business?

      The net effect of the sales tax break is for a lot of money to go into shipping companies' pockets. I want to subsidize UPS even less than I want to give money to the govt.
    • If you buy something online or through mail order from a company which has an actual physical presence in your state (e.g., you order from BestBuy.com and there is a Best Buy store somewhere in your state), then the vendor must collect state sales tax for your state.

      If you buy something online or through mail order from a company which does not have an actual physical presence in your state, the vendor is not obligated to collect the sales tax for your state, but you are obligated to pay the sales tax yourself (which no one does). Incidentally, the same thing is true if you drive to a state which has no tax, buy something there, and bring it back to your own state. Additionally, some states enter into agreements with individual vendors to collect sales tax for purchases being shipped there.

      If there is a local sales tax, most vendors don't collect that unless they are located in and shipping within the jurisdiction in which the tax applies. Again, its up to the consumer to pay the tax themselves.

      The reason the internet tax ban is good is because there are literally tens of thousands of state, county, municipal, school district and other governments within the USA alone that can collect varying amounts of tax on purchases. And this changes every year with changes to the tax code. Imagine the complexity of a program that would have to keep track of all of that.

      And if people think it can be done with a few lines of Perl and MySQL, then they've never programmed.

  • How taxes really work. (Score:5, Interesting)

    by ers81239 ( 94163 ) on Friday November 16, 2001 @03:49PM (#2576028) Homepage
    I was the programmer elected to serve on a tax compliance comittee for an online retailer. Here are some things most people don't realize about taxes and the internet.
    • There are 2 kinds of tax that can apply to a sale. They are sales tax and excise tax. Both of these taxes are paid to the juristiction where the goods were sold (not where they were received).
    • In a face to face transaction, the SELLER is responsible for collected the tax due to the jurisdiction where the sale is taking place. This is called a sales tax.
    • In a non-face to face transaction, the BUYER is responsible for paying all applicable taxes to the proper jurisdiction (as well as any taxes that could be incurred from the transport of the goods). This is called an EXCISE tax.
    • Sellers are required to collect SALES tax to facilitate commerce (imagine if you had to file paperwork for every purchase you ever made).
    • The internet ban restricts states from requiring the companies in their jurisdiction to collect sales taxes on internet sales. There aren't any proposals in congress that deal with some kind of special 'internet' tax. They are talking about they ways that sales and excise taxes are handled.
    • What does it all mean? When you buy $1000 worth of hardware online, you actually owe taxes on it. The deal is that states can't afford to come track you down to collect it.


    • Remember something called the "Boston Tea Party", which happened in 1773? The English government tried to impose an excise on tea sold in America, and that was one of the origins of the American revolution.

      As a consequence, there is a legal principle in the US known as "no taxation without representation", by which no one can be made to pay taxes for a government where the payer doesn't have elected representatives. Since this principle is stated in the Declaration of Independence, it takes priority over the US Constitution; not even a constitutional ammendment can rescind it.

      And here is the problem: a state cannot collect an excise from a buyer in another state. It's the buyer's duty to pay the excise to the state where he receives the goods, not to the state where the seller resides.
      • You may be correct on the DoI trumping the Constitution, but as I understand it the DoI has no legal or constitutional standing. Nonetheless, taxation without representation happens all the time.

        I am a resident alien. I pay income taxes and social security taxes and sales taxes and property taxes and get no vote whatsoever. They don't even let me vote for the local school board who run my childrens (who are US citizens) schools. Oh, and despite paying in to Social Security for 35 years, I will not be able to collect Social Security when I retire.

        Case 2: my mother-in-law (a US citizen) owns a lake cabin. The city of Battle Lake, MN, has a huge disparity in its taxes on homesteaded versus non-homesteaded properties. Only people homesteaded in the city limits are permitted to vote. Hence taxation without representation.
        • If you live in the US you receive benefits from the taxation. It's the same thing with the lake cabin. It has access to roads and public services maintained by those taxes. The revolt against the 1773 Tea Act was because it was an excise levied on the people of the American colonies, paid in England, where the American people had no representatives and from which they wouldn't get any benefit.
          • So why is the slogan "no taxation without representation" and not "no taxation without benefit"?

            Oh, and who do you think was paying for the redcoats that protected the pre-revolutionary colonists from the French, Spanish, Dutch and Native Americans?

      • Although I am not a lawyer, I do remember by U.S. Constitutional studies courses, and in fact, the Declaration of Independence does not take priority over the Constitution. As far as the government of the United States is concerned, there is NOTHING that takes precedence over the Constitution:

        from Article VI

        This Constitution, and the laws of the United States which shall be made in pursuance thereof; and all treaties made, or which shall be made, under the authority of the United States, shall be the supreme law of the land; and the judges in every state shall be bound thereby, anything in the Constitution or laws of any State to the contrary notwithstanding.

        And the Declaration is not a law of the United States.

        The reason that a State cannot collect taxes from a citizen of another state is that the Constitution allows Congress to forbid it:

        Article I, Section 8

        The Congress shall have power ... To regulate commerce with foreign nations, and among the several states, and with the Indian tribes;

        Which is known as the Interstate Commerce Clause.

    • When a government entity which relies on something like a sales tax to make ends meet has a continued reduction in their revenue, they will either A) cut services; or B) replace that source of revenue with another.

  • Thank you George Bush! (Score:2, Flamebait)

    by Anonymous Coward
    Notice how the Slashdotnicks carefully avoid mentioned the fact that this was Dubya's doing?

    C'mon Commando Taco, get over it. Dubya's been a decent president.

    +1 Taco Bait

  • I've said it before (Score:2, Insightful)

    by frankie ( 91710 )
    ...and I'll say it every time an Internet Tax [slashdot.org] story shows up. Please tell your Congressperson [house.gov]: Internet commerce should be taxed exactly the same as phone sales and mail orders, because they're the same damn thing.

    No more, no less; no sooner, no later.

    • Internet commerce should be taxed exactly the same as phone sales and mail orders, because they're the same damn thing.

      How about they remove sales tax from all three?

      They can start taxing internet sales as soon as they stop taxing me to pay for someone else's laziness and ineptitude.
  • So, internet companies continue being able to not absorb their shipping costs into the price of their products like every "brick-and-mortar" business does. Great. Whoopee. Not only that, but states get to continue finding new ways to "extract" money from their local economies that would normally come from their sales tax bases. Let's all celebrate. Thank you Congress.
  • We learned that when the economy grows, the government grows proportional to it (by taxation) and when the economy (aggregate demand, at least) shrinks, the government tries to pick up the slack by expandinga bit (to increase demand). It seems like tax-free Internet sales will stagnate the Man's willingness to grow with the economy, maybe our government:corporate consumption ratio (currently about 1:3 in America) will decrease over time with these tax exemptions. Sounds good to me! Now all they need to do is incite more competition in the OS market!
  • Are these angels good or bad? and if they get wings, does this mean it counts as a good deed towards heaven? Or does it depend on your religion? If I buy pr0n, does it create another hell spawn? Taxes and angels confusing...
  • I believe that the time has come from an Internet government. Any person or entity with an online presence can VOLUNTARILY join this government. By joining the Internet government you promise you pay a small tax on any income you earn from an Internet transaction (wither it be sales or service. This government shall declare its sovernity as a nation, and will defend (using the tax money) that soverity from governments that wish to take it away (by laws or otherwise) It will also use the money to promote commerce by adding to the existing infrastructure by creating public "roads" not owned by any corporations and free to use by citizens and non citizens alike. (sorry my spell checker didn't know how to spell word sovernity?)

  • Has anybody (Score:1, Interesting)

    by Anonymous Coward
    from the Congress or academia thought about adopting value-added tax like that in the Europe? VAT may solve the problem of interstate trade in the US. It basically works by taxing everytime, say a desktop, each of its components is assembled. So tax is also collected thru stages of production instead of just distribution like retail tax. A whole lot different but might be useful in this case.
  • Remember: every time you buy over the internet, an angel gets his wings.



    I thought it was a Dotcommer cries out in joy and a ray of sunshine lands on his face?

  • However it has been marketed, the moratorium is less a ban in Internet sales tax and more an extension of a long-standing Federal policy to not require mail-order companies to collect taxes for every state and city in the country. Companies are required to collect these taxes from purchasers who live in jurisdictions in which the company has brick and mortar stores whether or not the the transaction was over the Internet.

    The problem is what to do with pure Internet retailers. Which jurisdictions do they collect taxes from? Does it matter where their servers are? Where their distribution centers are? The confusion surrounding these issues has so far made collecting sales tax on impractical. So the politicians have decided to make hay while the sunshines; taking credit for suspending taxes that have never existed.
  • At http://www.zdnet.com/zdnn/stories/comment/0,5859,2 825260,00.html [zdnet.com], Senator Mike Enzi, in a carefully scripted political message, tries to convince citizens that this is not a new tax. But it is. Enzi conveniently neglects to tell you that while many states' laws authorize the collection of "use taxes," they have never actually been imposed. The US Supreme Court, in Quill v. North Dakota, ruled that such taxes were unconstitutional unless they were imposed or authorized by Congress -- not the states.

    What Senator Enzi's bill does is impose the taxes which the states were justifiably blocked from imposing. The result: the imposition of new taxes -- ones that will cripple e-commerce and new high tech businesses -- in the midst of an economic recession.

    The $5 million minimum in Enzi's legislation is a red herring, too. Any e-commerce business that does not achieve at least $10 million in sales per year cannot compete due to a lack of volume purchasing power and economies of scale.

    Why did Senator Enzi advance the legislation? To find out, we need look no farther than his own state -- Wyoming -- which has a sales tax but no income tax. Wyoming's Governor Jim Geringer, and his state revenue director Johnnie Burton, have decided that rather than putting a tax increase to the voters (which might allow a fair debate on the issue and give citizens some control of the outcome), or creating a state tax regime that is fairer and less regressive, they would aggressively pursue this new tax, which could be imposed without such "inconveniences."

    The fact that this tax would appear to be imposed from without (by Congress), and that it could be implemented without a vote of the people or debate in the state legislature, makes it just the ticket for Mr. Geringer, who has failed to confront tough issues and has bowed in the past to the influence of large, out-of-state coporations at the expense of his citizens' best interests. For example, the mineral industry, which is the single largest campaign contributor in Wyoming, favors measures which will make Wyoming a less desirable place to live, because this makes it easier to carve up Wyoming's vast, unpopulated open spaces in their relentless quest for minerals. This industry also favors every measure which raises taxes on residents rather than upon itself.

    It is also telling that Mr. Geringer, during the Microsoft antitrust case, favored Microsoft (see http://www.state.wy.us/governor/press_releases/199 8/june_1998/micro.html [state.wy.us]) -- even though Microsoft had just been proven to have fabricated evidence and lied to the judge during the trial. "In a time when most of us are striving for excellence, [the Department of] Justice and the 20 states want only to assure mediocrity," wrote Geringer, conveniently failing to note that Microsoft was using Internet Explorer -- a "knock-off" product that showed no innovation whatsoever -- to crush the innovative Netscape. In Wyoming, whatever large corporations want, they get... and the shameless greasing of palms is barely concealed.

    Michael Enzi's legislation would do nothing good for anyone -- except large corporate interests (Wal-Mart and other "big box" retailers favor the tax because they have retail stores everywhere and want to have an edge over e-commerce) and cowardly state politicians. It should -- no, must -- be defeated. And so should Enzi. (Geringer, now a "lame duck" due to term limits laws, is -- no joke! -- reputed to be considering a position with Microsoft.)

  • Remember: every time you buy over the internet, an angel gets his wings.

    And, at the same time, the devil gets your credit card number.
  • You are legaly obligated to report purchases, and pay taxes on them, to the stae franchise board.
    unless you have no state tax.
  • One of the problems with non-economists trying to decipher analyses of economic impacts of tax policy is that frequently you are looking at a very narrow viewpoint of the economic impacts.

    Furthering the Internet tax ban merely delays the imposition of state sales tax on Net transactions.

    The delay actually increases local instabilities, lowers the tax base, and thus drives up the local sales tax rates to recapture the income.

    When you cheat taxes by not paying them (which is what this is), you force the local governments which have to meet those service needs to increase the rates on the bricks-and-mortar employers in the area, increase unemployment, and only the Net industries get a tax break.

    What made sense in the 90s no longer makes sense in the 21st century.

    There is no free lunch. When you drop taxes but expect the same net outflow, you either borrow the money or you raise taxes on all other participants. This is merely a shift of tax costs from the owners of Net-based shops onto the backs of people who actually create more jobs and have to pay higher property taxes to start with.

    Be careful what you ask for, you may get it.

    -
  • Oh, thank you, thank you, United States Congress, for not threatening (at least for a couple more years) to throw me in one of your HIV-infected ethnic-gang-rape-infested prisons for failing to pay yet _another_ of your goddamned taxes!

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