Internet Taxation May Be Imminent 859
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?"
The Reason? (Score:2, Informative)
Re:Interstate taxes? (Score:5, Informative)
Why do we need a new law when an old one will work perfectly fine?
Re:Blame it on the regime (Score:2, Informative)
Re:So.. (Score:2, Informative)
Jay
Re:Why shouldn't they be taxed? (Score:2, Informative)
Re:Interstate taxes? (Score:5, Informative)
Re:i don't really care (Score:2, Informative)
Don't want Internet Taxes? (Score:3, Informative)
Article I Section 10 (Score:5, Informative)
No state shall, without the consent of the Congress, lay any imposts or duties on imports or exports, except what may be absolutely necessary for executing it's inspection laws: and the net produce of all duties and imposts, laid by any state on imports or exports, shall be for the use of the treasury of the United States; and all such laws shall be subject to the revision and control of the Congress.
No state shall, without the consent of Congress, lay any duty of tonnage, keep troops, or ships of war in time of peace, enter into any agreement or compact with another state, or with a foreign power, or engage in war, unless actually invaded, or in such imminent danger as will not admit of delay.
I think paragraph 2 above covers this. As I read that the only way one state could tax goods heading out of the state would be to turn said funds over to the Federal Government minus whatever admin cost the states incur.
Re:How smart of slashdotters? (Score:3, Informative)
Once the states "simplify" their tax codes, there is no impediment for Congress to make a new law allowing or requiring interstate sales taxation. In fact, as representatives of the
Re:So.. (Score:5, Informative)
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.
Re:Interstate taxes? (Score:3, Informative)
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?
Re:Depends (Score:3, Informative)
and the $1,000,000 question is ... (Score:3, Informative)
Are those enough reasons for you? We had better fight this.
And now a date with Section 8 (Score:3, Informative)
To borrow money on the credit of the United States;
To regulate commerce with foreign nations, and among the several states, and with the Indian tribes;
To establish a uniform rule of naturalization, and uniform laws on the subject of bankruptcies throughout the United States;
To coin money, regulate the value thereof, and of foreign coin, and fix the standard of weights and measures;
To provide for the punishment of counterfeiting the securities and current coin of the United States;
To establish post offices and post roads;
To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries;
To constitute tribunals inferior to the Supreme Court;
To define and punish piracies and felonies committed on the high seas, and offenses against the law of nations;
To declare war, grant letters of marque and reprisal, and make rules concerning captures on land and water;
To raise and support armies, but no appropriation of money to that use shall be for a longer term than two years;
To provide and maintain a navy;
To make rules for the government and regulation of the land and naval forces;
To provide for calling forth the militia to execute the laws of the union, suppress insurrections and repel invasions;
To provide for organizing, arming, and disciplining, the militia, and for governing such part of them as may be employed in the service of the United States, reserving to the states respectively, the appointment of the officers, and the authority of training the militia according to the discipline prescribed by Congress;
To exercise exclusive legislation in all cases whatsoever, over such District (not exceeding ten miles square) as may, by cession of particular states, and the acceptance of Congress, become the seat of the government of the United States, and to exercise like authority over all places purchased by the consent of the legislature of the state in which the same shall be, for the erection of forts, magazines, arsenals, dockyards, and other needful buildings;--And
To make all laws which shall be necessary and proper for carrying into execution the foregoing powers, and all other powers vested by this Constitution in the government of the United States, or in any department or officer thereof.
The bold print clause is the FAMED commerce clause which is so vauge as to be anything. It doesn't mention taxes Sec. 9 and 10 do. Note section 9 doesn't just say duties it also says TAX.
No tax or duty shall be laid on articles exported from any state. To me that says to sales tax from another state.
Re:how taxes work (Score:3, Informative)
You should try studying your American history once in a while. The U.S. federal government operated without a personal income tax just fine for over 130 years.
Typical AC stupidity. What was the population of the US at that time? How big was the military? What kind of infrastructure did we have? I'll tell you what: we'll create a microcosm of 1920s America for you, a few towns surrounded by a wall, and throw a massive depression, a violent World War, a Cold War, racial tensions, drug problems, and all the other ills of the past 80+ years at you, and see how you cope with them without an income tax.
It's also worth pointing out that there were other sources of income which are lower now: for instance, tarriffs were much higher back then.
Re:Why shouldn't they be taxed? (Score:2, Informative)
(kidding about the laws, but we really don't have those taxes)
Re:Why not cut spending/waste/fraud? (Score:2, Informative)
This is why mail order and internet retailers don't collect sales tax on out of state orders. They aren't legally required to remit sales tax beyond the state they are in - you are. In theory, everytime you buy something, you are supposed to pay the sales tax (actually called a use tax in most places) but few, if any, do. This is the problem - everyone is buying "out of state" and avoiding taxes completely.
Frankly, I think this is a better argument to forget sales tax, but it is a revenue generator, and perhaps even more fair than an income tax.
Either way, it's because the majority of people purchasing over the internet are skipping the taxes that this has become such an issue. Businesses don't want to mess with keeping up with hundreds of tax laws, and having to deal with keeping up with it all.
The real money in a few years is going to be in the companies that develop tax software to help internet retailers deal with all this crap - because it is coming. It's too much money for cash strapped states to ignore.
I'll tell you about waste and fraud. (Score:5, Informative)
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.
</rant>
Paying taxes (Score:3, Informative)
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?
Re:It'll Hurt if they Tax (Score:4, Informative)
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.
the numbers on military spending (Score:3, Informative)
Now that's ridiculous enough. It's a good deal more than we spent during the Cold War, more than any other country on the face of the earth, and several times that of all of our potential enemies combined. Meanwhile, we're slashing funding for social services.
Then there's another $17 billion for nuclear weapons, that politicians have thoughtfully placed under the Department of Energy budget, for a total of $396 billion. (Both of those figures, incidentally, are also from the CDI's website [cdi.org], only for FY 2003).
My suspicion is that the original poster probably got his numbers from the War Resisters League [warresiters.org], which puts out a great little flyer called Where Your Income Tax Money Really Goes [warresisters.org]. Their purpose is not so much to discuss year-to-year policy decisions as to emphasize the degree of the tax burden that is the fault of military spending.
They come up with a total figure of $776 billion for 2003. $437 billion is current military spending, which is the DoD budget, plus DoE nuke programs, plus portions of the budgets for other federal programs which are used in large part for military purposes (CIA, Coast Guard, NASA, FEMA, etc.). Then there's $339 billion in military spending: $57 billion in veterans' benefits and $282 billion in interest on the national debt (80% estimated created by military spending). Neither of those are discretionary from the point of view of the annual budget process, but they are definitely indicative of how runaway military spending increases our tax burden.
None of this, however, is particularly relevant for the original context of this discussion, because sales taxes are state and local, not federal. My personal opinion is that we can solve the whole problem by doing away with most sales taxes, which are regressive, and funding government primarily through a steeply progressive income tax (both personal and corporate).
Re:OK not OK or just plain stupid (Score:4, Informative)
One of the major aerospace companies wanted to build a big new plant in Palmdale CA (one of the most economically-depressed areas in all of California), where they already own a major swath of bare ground. City of Palmdale said, "Sure thing! Just cough up this $14,000 application fee, and we'll discuss it."
Aerospace company said "Fuck you very much" and dropped the whole idea; instead, they renovated an existing plant they owned in Atlanta.
Palmdale lost out on an estimated 25,000 long-term jobs that the area desperately needed, not to mention all the fresh tax revenue that would have been paid not only by those workers, but also by the increased business infrastructure required to support them (grocery stores, etc.), plus all the immediate construction jobs that would have come from building the new facility. All because the city got greedy for a little income up front, instead of waiting for a LOT of income over the long haul.
Re:Double taxing (Score:2, Informative)
So it's not double taxation at all, since different monies are being taxed. In the case of the sales tax, the tax is imposed on the purchaser, and in the income case, on the profiteer.
Makes sense that the internet should not be immune to this line of thinking.