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Internet Taxation May Be Imminent 859

Posted by timothy
from the coming-and-going dept.
redfenix writes " Here, there, and everywhere, the words "Internet Tax" are being uttered with intentions of bolstering state budgets. It may be inevitable that products purchased on the net will be taxed someday. The real question is: can the fragile internet economy really help local tax economies now?"
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Internet Taxation May Be Imminent

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  • by DAldredge (2353) <SlashdotEmail@GMail.Com> on Monday January 13, 2003 @08:51PM (#5077121) Journal
    Why not just cut out all the waste/fraud before they raise taxes again?
    • That would be what is known as the "obvious" solution, that is why. When was the last time one of those was implemented?

      Actually, that was when you had to click the start button to turn your PC off.

      -Mark
    • by Jeremiah Cornelius (137) on Monday January 13, 2003 @09:01PM (#5077209) Homepage Journal
      This "Internet tax", it's not calculated per-packet, is it?
      • by RevDobbs (313888) on Monday January 13, 2003 @10:04PM (#5077631) Homepage
        This "Internet tax", it's not calculated per-packet, is it?

        Don't be a dork. The post should be more correctly be named "Internet Sales Taxation May Be Imminent", and FWIW, why the fuck not?

        Don't get me wrong... I know that mostly, tax money is wasted, and government spending (on all levels) should be reduced, but that's not the point of these articles, or the post. If your state has a sales tax in place, you can
        1. pay the tax
        2. vote in people who will repeal the tax laws
        3. move
        but just because you buy your stuff over the internet doesn't mean you should be exempt from a tax. Hell, those most likely to buy things over the internet are probably the ones who can most afford paying a tax.
        • by Golias (176380) on Monday January 13, 2003 @10:54PM (#5077884)
          FWIW, why the fuck not?

          A very good question. Let me endeavor to give you a good answer.

          The purpose of state sales taxes is to provide services to the people and businesses of your state. If I own a business outside of that state, it's not really fair to ask me to pay for services that I am not able to utilize, even if I am selling an item to somebody who lives in your state.

          Now, you could point out that a sales tax almost always is passed directly to the consumer, so it's really my customers who are paying the tax, but it's still being collected from my business, which means it's my accounting headache.

          Furthermore, as a consumer, I don't mind paying state and local sales taxes on items I buy in brick-and-mortar stores. It's logical... that money goes to pave the road so I can get to the store, and to pay the cops to keep the store from being ripped off, and to pay the fire department to keep it from burning to the ground, it even pays for public education so they can hire minimum-wage 20 year-olds who have an outside chance of getting my change correct. Since state and local infrastructure makes our transaction possible, it seems reasonable to me that we, as buyer and seller, help fund that infrastructure. In the case of something I buy from Amazon.com or EBay, how does the state justify its claim to a slice of the pie? It didn't do anything to facillitate the trade. [Flamebait Warning] Collecting a compulsory percentage without offering anything in return is called racketeering. [Flame off]

          • by weave (48069) on Tuesday January 14, 2003 @12:22AM (#5078299) Journal
            And, let me add, why should businesses in states that don't have sales taxes, like Delaware, New Hampshire, Oregon, and Alaska, have to collect sales taxes for other states? It's a big overhead to calculate and handle all that paperwork.
        • Hell, those most likely to buy things over the internet are probably the ones who can most afford paying a tax.

          Hey, and what better way to make the internet more accessible to those in lower-income brackets than to make it more expensive to do the things that drive people to the internet, like getting items for less?

          I guess next you'll propose to decrease crime rates by letting convicts out of jail?
    • by Ho-Lee-Cow! (173978) on Monday January 13, 2003 @09:29PM (#5077419)
      Where in business you are rewarded for saving money and being efficient to improve profits margins, government runs on a completely different paradigm. For a start, government usually takes on tasks that are not profitable and usually cannot be made profitable. They still have to be done, so it falls to government to fix them.

      But the real problem is that there is ZERO reward for government spend conservatively, and in fact there are disincentives to do so. Agencies and departments that don't use up their budgets are often penalized by not having that money given to them in the future.

      So the first thing we have to do is quit asking the government to wipe our hineys for us, because it takes tax dollars to buy toilet paper and hire certified personnel. Then we have to tell government that spending every dime is not desireable. Then we need to throw out the whole Congress and elect people who understand how money really works, instead of who think that money is in finite supply and that you solve all problems through unfunded mandates and increased taxation.

      • by smitty_one_each (243267) on Monday January 13, 2003 @10:13PM (#5077677) Homepage Journal
        I'd cast the 'real problem' in terms of the planning horizon for government solutions. That planning horizon is not much more than the next election.
        To minimize fraud, most money has a lifespan of the next fiscal year. Prominent exceptions are things like procurements of nuclear aircraft carriers, where Newport News shipbuilding shant order the first part unless they know that the money will be there to finish it.
        Too, there has been a shift from discretionary (pork barrel) spending towards entitlements (Socialist Security [who better to run a Ponzi scheme than your Uncle Sam, eh?], Medicare, etc).
        Good news, bad news, who can say?
        An unfortunate side effect of our representative democracy is that the dependant majority can legally pick the pockets of the minority through socialist-flavored approaches.
        Reform is unlikely when you've got lobbies like the AARP [aarp.org] on the scene. The rich, of course, need not pool their cash to purchase political decisions.
        Waaah, waaah, waaah. I'd argue that our system is muddling along as designed, faithful to its two design requirements: be stable, and preclude tyrrany.
        Are we in greater danger now than in any historical period? Probably not.

        Do this:
        Go to this URL [capwiz.com] and set a bookmark to your elected folks and keep their inboxes stuffed with your /. wisdom.
    • by JimBobJoe (2758) <swiftheart@NOSpam.gmail.com> on Monday January 13, 2003 @10:48PM (#5077858)
      States had been pushing for internet sales tax for some time now...but now everybody's got a bee in their bonnet to see it occur. States feel that they are losing big bucks now because people are ordering online (though their calculations are only thinking about the internet sales going to their state, not necessarily the opportunity cost of jobs and stuff that may be created in their state because of internet commerce.)

      Thing is, states have screwed themselves with progressive income taxes. Sales taxes do go up and down with consumption (obviously) but not as severely as income taxes. California for instance has this really progressive system where the top 10% of income earners are paying for some 75% of California government. So, the economy takes a tumble, income generally does go down...but the top 10% of income earnerrs have *huge* decreases in income, so suddenly California has a $25 billion shortfall. They can't increase the progressivity of the tax structure--you're not gonna get much more out of people who's income's dropping severely, so all ya can do is widen the tax base...meaning increase income taxes for median earners, or sales tax, or find new tax sources. I believe states are starting to understand how easy it is to screw the pooch raw with progressive income taxes (note that the states that have blown their budgets the most are those with income taxes, CA, OR, OH, IL, NY, whereas non-income tax states like TN, FL, NH, TX, are not looking at such bad looking budgets. Those states have much more reliable income streams from property taxes and/or sales taxes.)

    • by hey! (33014) on Tuesday January 14, 2003 @12:21AM (#5078296) Homepage Journal
      <rant>As somebody who works with state and local government, let me tell you the reason why cutting waste and fraud won't happen. Because we elect politicians who pander to us by wasting our money.

      Government, especially local government, does tons of useful, but rather boring stuff, like painting the underside of bridges, maintaining water and sewer lines (also called "putting money into the ground" by politicians), or tracking potential emerging diseases. When they do a good job, nothing happens.

      This is the kind of thing that gets sold to voters as "waste". So what gets sold the voters as useful spending?

      To answer this question, it's important to understand somethign that public and private efforts have in common. When it comes to funding, there should be just enough money to get the job done if you are creative. This level of funding leads to efficient spending. Deviating from this level of fuding, either up or down inevitably leads to higher levels of waste. One point of view is that if you put enough financial pressure on somebody, they will be more efficient. This theory is fine up to a point, but if you take too much money away, there isn't enough to do anything useful. The only thing the agency (public or private) is struggle to survive; the resources aren't there to accomplish anything. It's like a starving person whose body begins to consume it lean tissue to keep the brain going. Now in the private sector, you'd just eliminate a department. However, in the public sector, frequently doing this would be so shameful it's bad politics. You can't just say we're going to stop painting our bridges or educating our children. Instead, if you are good politician, you give these things just enough money so they can limp along, then decry their inability to get anything useful done with the money you've given them. In other words, you decry their wastefulness, which literally speaking is true but is really your fault.

      Does this mean the answer is to increase spending across the board? Absolutely not. Again, if you want to do any particualr thing, there is an optimal level of expenditure. If people would just realize that spending ten times as much money doesn't get things done ten times as fast, then we could make some headway on this government spending thing. However, there's one category of expenses we could do without: tax money spent by politicans to convince the public that they are doing something overnight, when the problem will take years to solve if ever. The hot issue can be anything: West Nile Virus, Homeland Defense, Nuclear Terror. The political reaction to this kind of thing is what I call "Dropping the M-Bomb". Good people in government may have been struggling for years to address the problem but have been limited by inadequate funding. Then overnight staggering masses of money are poured into the problem.

      Unusual pulses of money in the government are like high levels of sugar in the bloodstream. The human body reacts by turning the sugar into fat. The government reacts by converting the money into waste. Realistically, you can't get a huge initiative off the ground overnight, or even in a few months. In the best of situations, the people who have been soldiering on on these problems year after year go on a spending spree and buy everything that they can think of that is remotely useful. However, this is only a best case scenario. Usually, the money goes to some politically better conected agency or office that hasn't been working on the problem all along and the good folks are frozen out. The better connected agencies have even less idea of how to spend money in a useful way, so they end up hiring consultants and contractors, who specialize in absorbing huge volumes of government money. There is a considerable art to this, beleive me. You have to go through convolutions to prove to the government that you are charging Uncle Sam the lowest price you charge anyone else for your services.

      Now if there were ever a rule that sounded good on paper but turned out to be absurd in practice this is it. It's so involved and expensive to prove you aren't stiffing Uncle Sam, that by in large organizations who do business with Uncle Sam can't sell their services at all to the private sector (since they aren't allowed to charge anybody less). This means that instead of going for the best price for something on the general market, which economic theory tells us is the most efficient way, we instead create a smaller niche market which caters just to government contracts. So, when we buy something as a people, we don't get the lowest price, we get the lowest price from a selection of prices that are all much higher than market price. We've eliminated "fraud" (if you consider getting the best price possible for your wares in a sale "fraud") at the expense of introducing waste (which I'd define as simply spending more for something than you need to).

      By in large, when these private sector firms take these M-bomb contracts, they don't get much done. They just have to shuttle the money out of the political system before it chokes. A few months later the hot button issue changes, and the issue du jour drops off the radar screen.

      This, unfortunately, is an intractable problem. The problem is not the public servants, who are, on average, just as smart as their private sector counterparts and are, on average, more dedicated than their private sector counterparts (specific and sometimes spectacular counterexamples notwithstanding, I'm talking about on average). The immediate problem is with the people we elect. The underlying problem is the voting ignoramuses we share our democracy with who, are cozened by self-servign rhetoric from politicians who decrying "waste and fraud", all the while creating it for their own selfish ends.

      However, as a consumer of governent services, there are things I think one can do to get a better deal.

      One principle I'd like to offer is this: the closer your money is spent to your home, the better deal it is for you. Money spent in your hometown benefits you more than money spent at the state level, which in turn benefits you immensely more than money spent at the federal level. All things being equal, I'd like a big cut in my federal income tax, but a raise in my local property taxes and state taxes. And while boondoggles do happen at the state level, at least at the state level they're still considered a scandal. At the federal level responsibility is so diffused the money just dissapears into the big contractors' pockets with nary a peep of indignation.

      To bring this back on topic, on the theory that local tax money benefits you more, when a local merchant goes out of business because of the tax advantage of an Internet competitor, your local tax base suffers and you pay higher taxes for less services. Ideally, government taxes should not be a distorting factor in consumer choice. Either you should pay the same tax on the same purchases from every merchant, or we should switch to other tax schemes like a consumption tax that don't distort consumer decisions.

      &lt/rant>

  • Interstate taxes? (Score:3, Insightful)

    by connsmythe96 (576445) <slashdot@MENCKEN ... com minus author> on Monday January 13, 2003 @08:52PM (#5077124) Homepage
    Aren't interstate taxes unconstitutional? Or is there some kind of stupid loophole?
    • Re:Interstate taxes? (Score:5, Informative)

      by Anonymous Coward on Monday January 13, 2003 @08:59PM (#5077182)
      Technically you are obligated to pay your own state sales tax on any purchase made outside your state and imported. This is strictly enforced (at least here in the northeast) on car purchases, but there is no enforcement for more or less any other purchase (I can't think of any other anyways).

      Why do we need a new law when an old one will work perfectly fine?
    • Re:Interstate taxes? (Score:5, Informative)

      by Detritus (11846) on Monday January 13, 2003 @09:08PM (#5077260) Homepage
      I think that is why there is a distinction between sales tax and use tax. The state can't apply a sales tax to out-of-state purchases but they can apply a use tax to those purchases.
      • Re:Interstate taxes? (Score:3, Informative)

        by LostCluster (625375)
        Businesses pay use tax, people never will.

        Technically, it's already on the books in most states that have sales taxes that individuals must pay use tax. However, they can't make an individual tell when they have made an out-of-state purchase, because of that pesky 5th Amendment. (The IRS works around this by making your employer tell them how much you made, so they have that as evidence if you claim you made less.)

        They can't make the out-of-state store tell either, because by definition that store is out of state and therefore your state's laws do not apply to it.

        It'll take a federal law to create an effective interstate sales tax... but if the Feds are doing the taxing do you really think the money is headed to the local budget?

  • by Anonymous Coward on Monday January 13, 2003 @08:52PM (#5077129)
    And we go back to mailorder, out of state purchases, called in by phone..
  • So.. (Score:4, Insightful)

    by RaboKrabekian (461040) on Monday January 13, 2003 @08:53PM (#5077131) Journal
    It seems to me that most internet retailers are operating on such razor-thin margins that adding a sales tax would probably shove them further over the edge in to non-profitability.
    • Re:So.. (Score:5, Insightful)

      by fname (199759) on Monday January 13, 2003 @09:06PM (#5077240) Journal
      Uh, so what. Why shouldn't we be charged sales tax on internet purchases? Oftentimes, the lack of a sales tax is the primary driver in a purchase; this is distorting the system. If the whole reason that those retailers exist is because they thrive on buyers who seek them out to avoid paying sales tax, then they are not adding a lot anyway.

      And what's with this whole notion of "the internet economy." There is no internet economy. That's a figment of the late 90's VCs who profited off the public gullability.

      A completely seperate issue is taxing internet services, i.e. access charges, etc. And are digital downloads taxed? all these issues fall into the grey area, but there are several distinct shades of grey.

      Personally, I'd just pass a constitutional amendment to ban all sales taxes, since 99% of all products cross state lines, the US gov't should be able to regulate it as interstate commerce. Let the states tax in-state produced & consumed good if they want-- but they won't.

      Alternatively, everyone collects sales tax depending on the state of the buyer. And yeah, I'd keep the lid on access charge taxes; that's a juridstictional nightmare. Everyone will want to levy a "bit" tax.
      • Re:So.. (Score:4, Insightful)

        by Mitreya (579078) <mitreya@gmMENCKENail.com minus author> on Monday January 13, 2003 @09:35PM (#5077457)
        Uh, so what. Why shouldn't we be charged sales tax on internet purchases?

        We probably should be. The taxes are not charged not because someone feels that you should be exempt from taxes, but rather because it is extremely difficult (i.e. impossible) to figure out the taxes. It is unreasonable to require each retaler to file and keep track of all 50 states rules/laws/tax amounts.

        • Re:So.. (Score:5, Funny)

          by swb (14022) on Monday January 13, 2003 @10:51PM (#5077871)
          We probably should be. The taxes are not charged not because someone feels that you should be exempt from taxes, but rather because it is extremely difficult (i.e. impossible) to figure out the taxes. It is unreasonable to require each retaler to file and keep track of all 50 states rules/laws/tax amounts.

          I understand that they have a new device that all the kids are talking about called a "com-pu-ter" that is pretty amazing at keeping track of stuff like this. You match up something like the state's abbreviation and it returns the percentage sales tax. I guess it's pretty useful.

          But I guess they're not in widespread use, because there's very few nationwide retail chains who are able to keep track of all those complicated rules. The ones that are nationwide I think are getting smaller, like Wal Mart, Target and Best Buy, primarily due to the business overhead they face trying to keep track of all those state taxes.

          They'll never thrive like E-Toys, reach the profitability of Amazon, or any of the other successful internet businesses that don't have to charge state sales taxes. What a help it has been.
          • Re:So.. (Score:3, Funny)

            by Kanasta (70274)
            Hate to rain on your parade, but remember this place called 'the rest of the world'?

            Damned well better not try to charge us sales tax based on ANY of your 5x state laws...
        • Re:So.. (Score:3, Interesting)

          by standards (461431)
          50 states? Plus all those non-state entities... cities and protectorates have sales tax too!

          But you know what? The tax would be easy if it weren't for local rules... MA has 5% sales tax. Easy, eh? Well, it is until you consider the exceptions: The first $150 of clothing sales are tax free. Food is tax free (what is food?). Books? I forget. And that's an easy state. CT actually defines "luxury foods" that are taxed, like potato chips and soda! Think of it as a "poor tax".
      • Re:So.. (Score:3, Interesting)

        My state/nation gave up whatever moral right it had to sales tax, when it started taxing income.

        So I dont't really give a flying fuck if they're eating it or not. They tax spending, they tax saving, and the only thing they encourage is earning no income at all. Sorry, but if they want to play these games, they'll have to do better. I actually know my way around the net.
      • Re:So.. (Score:5, Interesting)

        by yog (19073) on Monday January 13, 2003 @10:41PM (#5077827) Homepage Journal
        There is no internet economy, you say? There are people making money off the internet who used to be school teachers or accountants or lawyers. Now, they have web sites and sell some product or service to the world via internet technology. People get things done by internet that were impossible or very difficult before, such as telecommuting. There exist online courses that there was no equivalent before except maybe closed circuit TV. Forums for exchange of ideas such as this one. Software and music downloading, whether for free or fee. And on, and on. Therefore, I put it to you that by definition there is indeed an "internet economy". How big it is, is open to debate, however.

        Living in Massachusetts, I was able to buy a gift item from a store in southern Texas simply because I found them on the web and they had what I wanted, a relatively hard to find type of sand pendulum for someone's desk. They did not have to lift a finger; I found them via a web search. Internet technology enables this store to have a national presence for merely the cost of a few static web pages. That, I would argue, is an internet economy.

        As for internet sales tax, it's a bad, stupid, unenforceable thing. The conventional wisdom is that it's folly to raise taxes in a recession; it can only hurt. Perhaps these states which spent so freely during the boom years should have put more away for a rainy day, just as private citizens are supposed to do. History has shown that we have a cycle of boom and bust.

        But they'll never learn.
    • Re:So.. (Score:5, Informative)

      by guacamole (24270) on Monday January 13, 2003 @09:22PM (#5077369)
      It seems to me that most internet retailers are operating on such razor-thin margins that adding a sales tax would probably shove them further over the edge in to non-profitability.

      No. The tax will be passed onto the customers. THe customers are the ones who are going to pay the tax, not the online retailers. Yes, this might indeed drive some vendors out of business because of the laws of supply and demand. The consumers will treat the sales tax as the part of the cost of the goods that they buy. Since the price goes up, certainly, they're gonna buy somewhat less goods online.
  • The Reason? (Score:2, Informative)

    by trite (614780)
    What would the reason for taxing internet users be? Do the even have one thats not just to get more money for the state?
    • What would the reason for having both a consumption and an income tax in the first place be? Other than most politicians being STUPID, that is?
  • by autopr0n (534291) on Monday January 13, 2003 @08:53PM (#5077135) Homepage Journal
    Theoreticaly, you're supposed to figure out sales tax for stuff you buy online and send it to your local government. All they'd be doing is enforcing this.
    • How are they going to "enforce" this? I can see this being used as a vehicle for far more than collecting a few nickles off instate transactions from the tiny internet puchasing that exists. You would think that they would collect it on the dealer end, but you know how things go. I'll bet these clueless dolts also talking about "trusted" computing? Next thing you know you won't be able to use a computer on the internet that does not have the equivalent of a liquor license on the power button. If you thought it was bad that every road will be a toll road, just think about every computer being owned by the state.

      Are those enough reasons for you? We had better fight this.

  • Yes (Score:3, Insightful)

    by I Am The Owl (531076) on Monday January 13, 2003 @08:53PM (#5077136) Homepage Journal
    This makes a lot of sense. Sure, I'm a libertarian who believes in a very limited government, but I also believe that taxes should be used to pay for infrastructure and civil defense. So, with the Internet becoming an increasingly important part of our national infrastructure, it only makes sense for the states to be able to tax us for the upkeep and maintainence of this valuable service.
    • By your logic where does taxing stop? Soon there will be a crossing the road tax to pay for troops stationed on the far side of the moon.
      • Re:Yes (Score:3, Insightful)

        by BrookHarty (9119)
        Soon there will be a crossing the road tax to pay for troops stationed on the far side of the moon.

        I voted against it, did you vote?

        Seriously, you need to vote and organize, support your political party with your same views.
        -
        A citizen of America will cross the ocean to fight for democracy, but won't cross the street to vote in a national election. - Bill Vaughan
    • Re:Yes (Score:5, Insightful)

      by AltImage (626465) on Monday January 13, 2003 @09:00PM (#5077199) Homepage
      It's not the governments that are maintaining the infrastructure of the Internet. Especially not the state governments who would be benefiting from Internet taxation. So you're saying we should tax the Internet and give the money to who? AT&T? MCI? Maybe Internet taxation would have saved the Woldcom situation, right?
    • Re:Yes (Score:4, Insightful)

      by brooks_talley (86840) <brooks@NOSPaM.frnk.com> on Monday January 13, 2003 @09:05PM (#5077229) Journal
      You mean, tax us to pay for invasions of our privacy like Carnivore and Son Of Carnivore?

      Otherwise, states don't pay for the "upkeep and maintenance" of the internet. This is not a gas tax that pays for roads, but a sales tax that goes into the general fund. If it's used for any internet-related purpose at all, it will be very anti-libertarian, like censorship, eavesdropping, etc.

      -b
  • how taxes work (Score:4, Insightful)

    by Kallahar (227430) <kallahar@quickwired.com> on Monday January 13, 2003 @08:54PM (#5077142) Homepage
    If the goverment takes more of our money, that doesn't help the economy recover -- it hurts it. When taxes are lower people have more money to put back into the companies that power the economy. While it is true that the government is the biggest "company" in the country, it is also one of the most inefficient and wasteful.

    Perhaps the states should learn how to use their existing funds better, rather than forcing people to give them more money.

    Travis
    • Re:how taxes work (Score:5, Insightful)

      by kalidasa (577403) on Monday January 13, 2003 @11:17PM (#5077965) Journal

      If the goverment takes more of our money, that doesn't help the economy recover -- it hurts it. When taxes are lower people have more money to put back into the companies that power the economy.

      Classic statement of supply-side economics. The classic criticism described it as voodoo economics: there is never enough money in the economy for the money saved from tax rates to be made up by increased taxable economic activity (think about it: if you're making 100K a year, and you're taxed at 15%, you're paying 15K a year in taxes. Now your tax rate drops to 10%. You're paying 10K a year in taxes. That puts 5K a year into the economy that wasn't there before. So whoever you give that money to instead pays 10% taxes on it, resulting in -- low and behold! -- an additional 500 in tax income, for a total difference in tax revenue of -4500.

      There are only two ways to create genuine wealth: value-added work, and the exploitation (to use the word in a morally neutral sense) of natural resources. All other activities that "create" money actually are either redistributive (don't create, but merely redistribute, wealth; for instance, interest on a loan redistributes the wealth created by the value-added work of the borrower to the lender) or inflationary (don't create wealth, but simply change the value of the markers used to count wealth; commodoties speculation is an example of this). While lowering taxation might have some effect on wealth creation, allowing marginally more people to be employed and thus allowing more people to add value to the economy, it is merely a second-order effect (if I'm using this mathematical term correctly; IANAM nor an economist): that trickle never can grow bigger than the flood it replaced!

      In the end, the economy changes not because of changes in tax structure or monetary policy, but because of changes in the business cycle and in consumer confidence. Sometimes people are afraid and hoard money, other times they are confident and spend it. Sometimes businessness make good investments in people and resources, other times they don't.

      All that said, it is true that lower taxes are better if one can get the same quality of services for them. So don't imagine that I'm saying that there's no such thing as too much taxes. Only that the notion that lowering taxes always improves the economy is - as the President's father knew so well before the Dark Times, before he joined the Emperor, Darth Reagan - nothing but voodoo.

      While it is true that the government is the biggest "company" in the country, it is also one of the most inefficient and wasteful.

      Another classic misunderstanding on the part of conservatives. The purpose of a business is to maximize investor value. The purpose of a government is to maximize consumer value. When looking at a government as a company, one should not see the voters as stockholders, but as customers; the stockholders are - surprise, surprise - the politicians. Understanding this might help to explain why politicians are so willing to take major cuts in salary and spend millions of dollars to do an annoying job. The dividends - we call them campaign contributions at best - are worth it.

      Perhaps the states should learn how to use their existing funds better, rather than forcing people to give them more money.

      It is the nature of taxes that there will always be calls for reduction. Let me ask those of you who agree with Travis - a bright, if misguided (imho) fellow, what you would consider to be the right tax rate? At what tax rate would you promise never to complain?

      Can't think of one, can you? The fact of the matter is, even a perfectly efficient government would still have to tax its citizen. And there would still be a large percentage of people who would complain about those taxes. Look at Massachusetts: a large minority of voters indicated that they favored eliminating the income tax. What would this have done? Pretty much wiped out the state government. Not cut, eliminate.

      Take the pledge: whenever you argue against taxes, include your estimate of how much you would consider to be a reasonable tax rate.

  • by nother_nix_hacker (596961) on Monday January 13, 2003 @08:55PM (#5077151)
    If this happens do you think it would work like English road tax (the older the car the less you pay?) My 1Ghz box should be cheap to tax by then! :)
  • Bad Idea (Score:2, Insightful)

    by bach37 (602070)
    An internet tax will do nothing more but hurt internet sales. Shipping charges and taxes??
    The cost to buy something "cheaper" online would become a internet myth.

    -Scott
  • by Neck_of_the_Woods (305788) on Monday January 13, 2003 @08:57PM (#5077169) Journal

    Just call it Tax#, and everyone will just jump on board!

  • They should tax spam. It's not fair, but fuck em.
  • by Alien54 (180860) on Monday January 13, 2003 @09:00PM (#5077190) Journal
    I keep telling people to push a Spam Tax instead.

    This will solve several problems, and make the states lots of money. Also, there is plenty of precedent for taxing spam as part of interstate commerce.

    Forced registration of spammers (a spammer's license) would enable people to track them down (spam hunting) and make money from the spammers. Money strapped countries around the world could get on board with this one.

    The extra bonus brownie points for having a bounty on spammers avoiding the law just sweetens the deal. And Spamming would no longer be a free ride on the back of the internet.

    This is a match made in heaven.

    Why not use the greed of the law makers to our advantage?

    • by wowbagger (69688) on Monday January 13, 2003 @09:26PM (#5077402) Homepage Journal
      Since spammers try to hide who they are, getting them to register for a tax would be difficult at best.

      A far better option would be to sell hunting licenses for them.

      I know I'd sign up.

      Enlarge your penis....

      Enlarge THIS! BOOM!
    • Nice idea, but how do you regulate it? So my spam now says 'in accordance with US SpamTax(tm) Law' instead of 'click here to unsubscribe'. Do I forward all my spam to some agency who then track the spammers down?

      The technical solution needs to be developed to support this... and that's going to be tricky. I don't know much about alternatives to SMTP but I do know it's very pervasive... until you can solve the problem of accurately tracking spam mail, taxing it will be impossible.

  • by Synithium (515777) on Monday January 13, 2003 @09:00PM (#5077197)
    How am I represented with my tax dollar in the state of Ohio when the tax income is going to the state of, say, California? That's the whole reason interstate taxes don't exist in the first place. Ah well, it's all for the better.

    The more taxes we pay, the more Iraqi we can eradicate. Thanks Mr. Bush.
  • Commerce is taxed (Score:3, Insightful)

    by Tomster (5075) on Monday January 13, 2003 @09:06PM (#5077236) Homepage Journal
    It's nearly a natural political-economic law. There are few transactions that don't fall under the purview of a tax.

    So the question to ask is not if Internet transactions will be taxed -- but when and how.

    -Thomas

  • Depends (Score:3, Insightful)

    by Apreche (239272) on Monday January 13, 2003 @09:07PM (#5077243) Homepage Journal
    Depends on what you use it for. The money I pay when I stop at a toll on the road is a tax used to pay to improve the roads. The social security tax I pay on my paycheck is used, for social security (the fact that it's dying is anohter story). So if there is an internet tax, it should be used to improve/maintain the infrastructure of the internet. Otherwise, screw it.
    • Re:Depends (Score:3, Informative)

      by DAldredge (2353)
      No. The Social Security you pay is used to by Goverment Bonds. Then the money goes into the general fund. It is not used just for social security.
  • Semantics! (Score:3, Funny)

    by Anonvmous Coward (589068) on Monday January 13, 2003 @09:07PM (#5077247)
    "Internet Taxation May Be Imminent"

    So... if it may be imminent, then it's not imminent, right? Heh.
  • by Anenga (529854) on Monday January 13, 2003 @09:11PM (#5077281)
    Then you can sign this petition [nomorenettax.com].
  • by linuxwrangler (582055) on Monday January 13, 2003 @09:12PM (#5077288)
    I don't see the big fuss from a tax perspective - the paperwork is the problem. Of course the level of government waste and high rates of tax are a disgrace but this is not really a new tax, just a shift in enforcement of an existing one.

    Not wanting to give the money grabbers any ideas, but I have not been directly taxed for viewing a web page, sending an email, etc. Sure, I pay lots of indirect taxes related to connecting to the internet (just try to make sense of all those charges on you phone bill sometime), sales tax on my hardware, utility tax on my power bill, etc.

    The so-called internet tax is not a new tax. Most states require the purchaser of out-of-state goods to pay a "use" tax on those items. Of course most people don't. Note, this also means that out-of-state sellers have an unfair advantage over local businesses.

    The real shift of the "internet tax" is to place the burden of collecting the tax on the sellers. This is a real burden as it could dealing with 50 (or more considering local tax districts) rates, returns and such. The overhead of dealing with the government could be far more damaging than the effect of the tax itself.

    Of course (as always) someone will build a business around handling the government overhead for you but that'll cost, too.

    Final comment on taxes:

    "If you could steal all the money you want and print all the money you want, don't you think you could stay out of debt?"
  • by aquarian (134728) on Monday January 13, 2003 @09:20PM (#5077357)
    All this does is reinforce the positions of the current big ecommerce players -- Amazon, Wal-Mart, K-Mart, etc. -- because they can most easily afford the software upgrades and new software packages/services that will be required.

    A lot of small businesses found new life on the internet, becuase they were able to extend their reach. Now they're faced with huge new expenses to either develop new software themselves, or be chained to a third party who can. Unfortunately, this will probably Microsoft, Intuit, Yahoo Store, etc., who will rake in a fortune selling new ecommerce-in-a-can systems with tax tables built in.

    I have a couple of clients who were thinking about expanding into web sales in the next year, but in light of this will probably nix the idea.
  • by 3seas (184403) on Monday January 13, 2003 @09:22PM (#5077368) Journal
    US Military Budget this year is something like $780 billion US dollars. The ten year tax reduction plan Bush is babeling about is $670 billion over a ten year period.... In other words we are being given a tax break that is less then ten percent of the US military Budget, this year alone.

    Now where is the government getting all that money from?

    As to taxing the sale of products reguardless of what state the company and consumers are, via mail order (internet is just a means of communication) some companies (few) do it in a manner that the state the consumer is in determines what the tax is and also gets the money.

    And what is taxes being spent on? Warmongering!
    • by Newer Guy (520108) on Monday January 13, 2003 @09:47PM (#5077521)
      and when the govt. borrows, that puts them in competition with me for borrowing that money. If I want to buy a house or car, and the govt. wants to buy guns and airplanes to use in Iraq or North Korea, we're both borrowers. If there's only so much money available that means that according to supply and demand, the COST for borrowing that money goes up. In other words, we both pay a higher interest rate. This means that the govt. has to either borrow more money or raise taxes to make the payments (something like 18-20% of the federal budget goes just to pay the INTEREST on the loans the U.S. already has (AKA the deficit)). It means that my monthly mortgage payments go up (if I can still afford to buy, that is). It also means that I have a larger mortgage deduction which means that I pay less income tax which forces the federal govt. to borrow more $$ to pay for next year's guns and airplanes. See how it's interrelated? It isn't an easy problem that has an easy solution. The only way to really help the deficit is for the federal govt. to SPEND LESS MONEY.

      "If you let me write $50 billion a year of hot checks, I'll give you the illusion of prosperity too!" - Lloyd Bentsen in a 1984 vice presidential debate against Dan Quayle
  • by redragon (161901) <codonnell&mac,com> on Monday January 13, 2003 @09:34PM (#5077446) Homepage
    It seems to me that something like this can only serve to hurt an already weak economy. Seems like a bad idea to ask people to pay more for online goods when people are already spending very little.

    Just a thought.
  • by sielwolf (246764) on Monday January 13, 2003 @10:16PM (#5077694) Homepage Journal
    Considering that they had to slash their discounts just to stay afloat. I searched two [amazon.com] cds [amazon.com] and found that I could save 32% on one and 0% on the other. And has the company even hit the black for a full fiscal year yet?

    Sure, we can say "fuck 'em" but usually crushing a fledgeling industry (especially after the backlash of the Dot-bomb and now this Recession) isn't in our best interests.

    And I especially like how they say this will solve the States' budget woes. Heh, Michigan alone has a $500 million dollar deficit. Do they really think that much internet merchandise is heading out of state to make up for that (roughly $10 billion in sales would be needed if a 5% internet sales tax was enforced)? Hell, even a fraction of that would still require a ridiculous amount of sales anyway.

    And even then, who the hell is going to enforce it? What about ebay? Are they going to raid Paypal.com and demand that they turn over their records so the member states can bill people accordingly? How much bureacracy is that going to cost? I think they might be playing around with 1998 numbers here. Pfff. Try again.
  • by neurostar (578917) <neurostar@pri v o n.com> on Monday January 13, 2003 @10:19PM (#5077717)

    I think it's a big mistake at this point to specifically tax internet sales. I purchase goods off the internet because they're cheaper than in retail stores. The prices are usually just barely cheaper after shipping. However, they are cheap enough to more than offset the delay in receiving the product.

    Since I'm currently in New York State (which has outrageous taxes, at least compared to Idaho), I am often taxed for internet purchaes. For example, ordering from CDNow [cdnow.com] (which I did before they were 'swallowed' *cough cough* by Amazon.com [amazon.com] it was about the same price ordering from them (after shipping and taxes) as buying the same $18-$20 CD from a retailer. It simply wasn't cost effective. I only continued because I don't have a car to drive to stores :(. If they start taxing internet sales, it won't be worth waiting a week to get a product that I'll end up paying full retail for. It will destroy online stores. I for one won't buy from them, because it won't be cost-effective for me.

    <soapbox>

    IMHO, states should think about eliminating unnecessary government programs instead of looking for more revenue. That's the best in the long run. It ensures a fiscially responsible government that isn't bloated. It also allows private companies (who can do the jobs for cheaper) to save money and provide better services.

    </soapbox>

    neurostar
    • by alienw (585907) <alienw...slashdot@@@gmail...com> on Monday January 13, 2003 @11:19PM (#5077973)
      IMHO, states should think about eliminating unnecessary government programs instead of looking for more revenue. That's the best in the long run. It ensures a fiscially responsible government that isn't bloated. It also allows private companies (who can do the jobs for cheaper) to save money and provide better services.

      This is a collection of preconceived misconceptions. First, let's discuss "unnecessary government programs." Typically, these don't exist. If something is not necessary, it gets cut. Most of the things you think are unnecessary are really very necessary, though perhaps not for you. For example, you may not be in a public school or have children that go to a public school, but I don't think you would consider public school unnecessary. The same applies to many other programs -- senior benefits, medical programs, education, parks and conservation, whatever. If you still don't agree, please name a specific government program which you consider unnecessary.

      Now let's address the other issue - the mistaken belief that a private company can save money and provide better services than a government agency. You are 100% mistaken on this count. Private companies are inherently more costly than government agencies. They not only need to provide the same service, but they also need to make a healthy profit - often to the tune of 30-60%. Thus, a well-managed company would have to charge 30-60% more than a well-managed government agency.

      Now enter the reality. Most companies are fairly poorly managed. Companies that deal with the government are particularly notorious in that regard. Thus, they would be less efficient, and would have to charge much more in order to make a profit. Furthermore, profit-boosting initiatives in such companies would most likely focus on cutting costs and reducing services as much as possible while still charging the taxpayers or its clients a hefty fee.

      To sum up: with a private company, you typically get a poorly-managed, government-sponsored monopoly that provides fewer services of inferior quality to taxpayers while charging more than the equivalent government agency and, many times, still having problems with making money.

      For example, if the US Postal Service (one of the more efficient government agencies -- how many times have they lost or stolen one of your letters? How does their price compare with Fedex?) was suddenly replaced by a private company, you would have an unreliable mail system with 75-cent postage that would lose your mail at least once a week and constantly beg for more government subsidies. It would also need constant government intervention and regulation to keep it from acting completely unreasonably.

      These types of things have happened many times, both in and out of the US. Just read about Edison Schools [corpwatch.org] to get an idea of what this would be like. And next time, I would suggest advocating laws that would make government agencies more efficient rather than replacing them with poorly-managed, profit-driven corporations.
      • This is a collection of preconceived misconceptions. First, let's discuss "unnecessary government programs." Typically, these don't exist...

        Well, that's your opinion. Without trying to get into a flame war... I'll explain my position.

        I'm a Libertarian [lp.org], so I feel that the government should be there to protect the nation, provide basic services (mail, justice system, etc). Not included in the list of necessary services are things such as: Public Schools, Welfare, Social Security and programs of the like. I feel that those government services should be better taken care of by non-government organizations, or eliminated all together. I know these are controversial topics, but that's my opinion.

        Now let's address the other issue - the mistaken belief that a private company can save money and provide better services than a government agency. You are 100% mistaken on this count...

        I agree that many companies are mismanaged. I realize now that I put down the wrong thing on this issue. I was refering to non-profit corporations. My main focus with this point (which I didn't explain in my original post, sorry about that) was government's role in services such as Welfare. In this area, locally based non-profit (and religious) organizations are much more effective at distributing aid to those in need. Those types of organizations are simply there to do good, and they don't have the type of overhead that government has, because many of the people are volunteers. So they can generally do things for cheaper.

        The most common opposition to this point is that people are too selfish to give to these types of organizations. While it's true that no everyone would donate, there are many people (I have met many) who don't give at the current time because they are under the illusion that Welfare is enough. And as one can see, welfare hasn't exactly solved the problem. So, if Welfare was elminiated, people would be giving money to these more efficient, charity organizations. They would be motivated to do so because it's a tax deduction as well as the fact that it's the "right" thing to do (forgive the sweeping generalization).

        If you are interested in learning more about my position, I'd recommend taking a look at the Libertarian Party Issues Page [lp.org]. They explain things much better than I ever could.

        Sorry for the confusion in my earlier post.

        neurostar
        • by alienw (585907) <alienw...slashdot@@@gmail...com> on Tuesday January 14, 2003 @01:18AM (#5078594)
          Thank you for your polite reply to my post. However, I would like to point out the problems I personally see with Libertarianism. Please keep in mind that these are not some kind of preconceived notions. Some of my views agree with those of the Libertarians, but I don't think the advertised goals of that party are consistent with its platform. To me, Libertarianism seems like a platform that favors private corporations to the extreme.

          As an example of what I see wrong with Libertarian politics, let's examine the page about the education proposal [lp.org]. It is basically the voucher system that has been proposed many times; it also shares the problems of the voucher system. It allegedly seeks to solve the problems of poor kids being forced to attend a sub-par public school by distributing tax money to private schools on a voucher system.

          The advantages seem obvious. With the current system, private schools are typically known for their educational excellence. The voucher system seems to be capable of bringing this excellence to every child. However, this is not so.

          Imagine a school system based on vouchers. Suppose that you are a low-income family. You have a voucher that you may spend at local schools A, B, C, and D.

          Schools A and B are very selective, choosing only the brightest kids from the best families that could afford such an education even if the vouchers were not offered. Since they are private, they can use any criteria they want to determine eligibility, including family status and income as well as academic potential. They will most likely reject your child, because they will not want to contaminate their prestige with poor kids from ghetto neighborhoods. Even if they accept him/her, they will still charge too much (on top of the voucher) to be affordable.

          School C is for the middle class. It is fairly large, and many children go there; it is comparable to a today's mid-to-upper-level public school. However, it has to charge a fee of $2000/year per student to deliver a decent educational experience. Remember, it does not get as much funding as a typical public school. Your poor family cannot afford this extra expense. Thus, your only option is school D.

          School D is a mid-size school, composed mostly of poor students from ghettoish urban neighborhoods. It is privately run. It does not have enough teachers, and the ones that it does have are inexperienced, underpaid, and overworked. Many students who go to this school have problems. Unlike today's public schools, school D does not have significant funding. Furthermore, it is being run for profit, and 30% of the voucher money goes right into the pocket of a rich local businessman. Since there is no Dept. of Education, virtually nobody enforces minimum standards, develops the cirriculum, or oversees this school. Many of its graduates are unable to read and write, and none go on to college. However, you have to send your child to this school, because none of the others will take him/her.

          This would be a typical scenario of a voucher-based school system. As you can see, it causes much more problems than it solves. However, Libertarians propose similar systems for healthcare, law enforcement, the justice system, and all kinds of other things.

          As you can see, this system would heavily favor the rich and the upper classes and significantly hurt the lower classes. Negligible benefits may be provided to the middle class. Such a divisive system would propel any country that adopted it back into the middle ages, when the system of class division permeated every pore of society.

          Although you would be paying slightly fewer taxes to the government, you would spend much more on the things the government normally gives back to you. No, the "corrupt politicians" don't magically suck up all the money they get. Probably around 95% of it is given back to you through direct and indirect benefits.

          Also, I would suggest reading a book about the Great Depression. Before and during the depression, welfare was provided by private charities, exactly as you propose. It did not work very well; poverty was rampant and welfare money were scarce. The Depression was solved only through government intervention and direct government investment in the population through taxes.

          In short, my beef with Libertarianism is that it aims to give everyone the same responsibilities. Do you think that a person with $50 million/yr income should pay as much/little for healthcare as a person with $10,000/yr income? Congratulations, you're a Libertarian.

          Anyway, I do not want this rant to be insulting or degrading to you or your beliefs; I'm just trying to politely explain my disagreement. Please reply, as I'm genuinely interested in your take on this. Keep in mind that I'm not interested in starting flamewars, so don't assume I'm just trolling.
  • by saskboy (600063) on Monday January 13, 2003 @10:27PM (#5077764) Homepage Journal
    Frankly anyone who know anything realizes that an "Internet tax" would be hell for governments to implement and regulate.

    People already have to pay taxes for things bought on the Internet, and do pay them if they are imported from another country. Customs looks at the sticker on the package, calculates the duty and tax, charges a fee for handling, and presto - Internet Tax.

    This is not new stuff to anyone who sells on eBay for example.
  • by nfras (313241) on Monday January 13, 2003 @10:42PM (#5077830)
    I have a few situations which US lawmakers may need to look at.

    1.If I (a foreign national) visit the US and buy goods subject to sales tax, when I leave the country I am able to claim this sales tax back. How does this apply in this situation when I do not physically arrive in the US and I do not physically leave?

    2. I (hypothetically) own an e-commerce business based in Australia. If I sell goods to a customer in say, California, will I be required to charge them a Californian sales tax? If so, how will the state of California ensure that I pay the tax to them. They have no recourse through the californian courts as I have no material resources in California and any judgement against me would be ineffectual. They have no legal recourse under Australian law as Californian legislation is overidden by Australian federal or state(NSW for the sake of argument) law.

    3. I reside in Australia. I use my credit card to buy a book online at Amazon.com. I ask for the book to be sent to the UK. As Amazon has UK offices they elect to send stock from there rather than ship the book across from the US. Who gets to levy the taxes here? The purchaser is in Australia, the vendor is in the US (I forget which state) while the goods are in the UK.

    It seems to me that this is a mad grab to try and get money which the states feel they are losing out on. My personal feeling is that the entire thing is unworkable and that the effort will not be worth the end result.
  • by GrouchoMarx (153170) on Tuesday January 14, 2003 @12:28AM (#5078329) Homepage
    Firstly, the administrative costs of Internet Sales Taxes would eat up any profits involved, unless it were (a) strictly Federal or (b) so staggerinly high that it would wipe-out the online sales market.

    Secondly, sales tax is a horrible way to raise money anyway. Of the three forms of taxation (income, property, sales aka "outgo"), it is the most regressive (meaning impacts the middle class more than the upper class and the lower class more than the middle class). A sales tax discourages purchasing. Sales tax HURTS the economy more than any other form of taxation.

    If the states wanted to raise taxes to get more money, they should be looking at the income tax, specifically at the upper-end. Income tax may reduce spending (since people have less to spend), but unlike sales tax it does not also discourage spending as well. If taxation is the only answer, then at least tax the right thing! Sales tax only hurts the economy more.

    "But my income tax is too high already!" Only because the current federal income tax system (state income tax is typically around 2-3% compared to the up to 33% federal) is effectively regressive. If we didn't give upper-class income brackets all sorts of effective loopholes to reduce their income (eg, Congress just declared the capital gains tax to be zero, eliminating BILLIONS of dollars of federal income, and returning money to the people in the country who are in the least need of additional cash), because, and this is the important part, different income levels tend to get their income from different sources, and those sources are taxed differently.

    You want to raise more money through taxes? Fine. All income from any source whatsoever is treated the same. Wage, stock options, capital gains, everything. Then impose a staggered, progressive income tax on it, without any loopholes or exemptions or "business deductables". Then drop the percentage rate from where it is now by, say, 25%.

    Then eliminate all sales tax, Internet or otherwise.

    Not only will 90% of the population have MORE money to spend (stimulating the economy), it will reduce the cost of operations for the IRS and for state tax agencies (reducing the budget), and still give the government (at various levels) more money to play with to fund social programs or invasions of other countries (whichever they're in the mood for this week).

    Internet Sales Tax? No. Let's not have an Internet sales tax. Let's not have a sales tax at all. There are far less damaging ways for governments to raise money, and they involve smaller (and cheaper) armies of accountants to do it.
    • by mccoma (64578) on Tuesday January 14, 2003 @01:18AM (#5078595)
      until recently I was in the "high" income bracket as defined by the Democrats (>$100k) and I got a huge chunch of my check taken out. My friend and his wife are still in that bracket and are getting killed by taxes. The myth of the upper class paying zero taxes is just a political argument to generate hate so Democrats can get elected.


      "Progressive" taxes aren't. This class warfare stuff is really starting to get to me. All it does is get in the way of building a tax system that doesn't require me to hire / be an accountant.


      We need a flat tax with a high minimum deductable (to keep all the kids / summer jobs out of the paperwork). Perhaps a $20k deductible with a flat percentage after that. Treat everyone as an individual (no lumping spouse in with you / marriage penalty). No deductible for children or interest on homes (we want people to save after all). Do not tax interest on savings (need more money for people to borrow).

      • My friend and his wife are still in that bracket (>100K) and are getting killed by taxes.

        I'm so sorry to hear that they're being taxed at a rate of 90% or so, so that even with that much income they end up below the poverty line.

        What? They're not below the poverty line? They live very comfortably on their post-tax income? Fuck 'em then, I have no sympathy.

        Graduated taxes do not discriminate against the rich, they provide relief for the poor. Someone who makes $20K a year NEEDS a greater percentage of that amount just to get by than someone who makes $100K a year.

  • by poiu (106484) on Tuesday January 14, 2003 @12:36AM (#5078367)
    With mail order, the seller enforces the sales tax if it has a business location within the state. Otherwise its technically up to the buyer to report the sales tax to the state.

    There is no such thing as tax free catalog sales or internet sales. Its just that no one ever reports the taxes their supposed to unless its a big ticked item that they need to register anyway (car, etc.).

    So for example if Borders was going to merger their internet and brick & mortar operations into a single business entity (maybe they are, this is just an example), then they'd have to charge sales tax on every trans action. That's why many internet operations are seperate business entities from their main company.

    What this proposal is all about is the fact that many legislators think that because the internet is all technology driven (duh!) that its easy to whip up a whiz bang tax feature and *blamo* instant tax collection for the state that used to go unregulated.
  • Paying taxes (Score:3, Informative)

    by phorm (591458) on Tuesday January 14, 2003 @12:37AM (#5078369) Journal
    Here in Canada, when I buy online services in-province - I pay provincial tax. In-country, I pay federal tax. If I order from the US, 75% of the time I pay the tax as it crosses the border (even on used items!) plus border duties, etc.

    Over here, I don't think we can be taxed anymore than we are. I also wonder... with free trade, why is there border taxation/duties?
  • by NightHwk1 (172799) <jon&emptyflask,net> on Tuesday January 14, 2003 @01:20AM (#5078602) Homepage
    If this becomes law, how would the government determine what was actually purchased online?
    Wouldn't businesses simply find some kind of loophole like reporting all their sales as mail orders?

    That brings me to my next point... that the internet is not a physical place. In this case it is just another communication method, like a phone, or the US Postal Service. If there is a tax placed on items purchased online, there will have to be a tax on everything else.
  • by Irvu (248207) on Tuesday January 14, 2003 @01:40AM (#5078687)
    It seems to me that what is really standing in the way of all of this is a simple agreement over who really "has" the right to tax. Take a for instance; I hop on the computer in Austin Texas. Look up a CD on Amazon (based in Seattle). I then have the CD Shipped to my friend in Brighton England.

    Who has "the right" to tax that? You could make a legitimate argument that every city, county, state and country involved in that transaction can claim a peice of the pie. In that case either I or Amazon would be responsible for tracking all of those different agencies and laws and ensuring that everyone gets their share. The case gets even more complex if you start factoring in the fact that both servers and stock are colocated. For all I know the "Amazon.com" that I contacted may be served from somewhere in the midwest, and the CD may have been shipped from some Amazon warehouse in France.

    Obviously that would stifle any and all internet commerce. One alternative is a moratorium on all taxation. I disagree with this because it gives Amazon and other online outlets an unfair advantage over their "bricks and mortar" competitors. It also exempts them from paying for the infrastructure that sales taxes are (or should be) spent on, infrastructure that they depend upon.

    The problem with the middle ground where some people can tax but not others is that you have to make a convincing argument (or carry a big stick) to explain it. In the past I know that the U.S. Federal government has used its power to regulate interstate commerce as a means to control or "simplify" interstate taxes. I suppose that could be one with internet purhases in the U.S. but when it comes to international purchases thewre's only groups like the World Trade Organization (*Shudder*) or local elements such as NAFTA.
  • Double taxing (Score:3, Insightful)

    by wackybrit (321117) on Tuesday January 14, 2003 @06:25AM (#5079474) Homepage Journal
    A lot of people are arguing how Internet sales taxes are fair, since taxes are already levied on purchases in 46 states. But you need to remember that Internet sales are not entirely taxless.

    1) The company that sells the goods has to pay taxes on their annual profits.

    2) The person buying the goods had to pay tax on their income.

    Those taxes more than cover the buying chain. Why should everyone be doubled taxed for things? They were already taxed on their income, so why tax them AGAIN on purchases?

    I can two viable solutions. 1) Raise income tax and ditch sales tax. 2) Ditch income tax and have a federal flat rate sales tax.

    I'd prefer the 2nd option myself.

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