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The Internet

Warming Battle Over Online Taxes 358

mackertm writes "The NYT (free registration, blah blah) has an interesting story about the fight over Internet taxation. A coalition of states and some big clicks-and-mortar retailers are leading the charge to simplify the process of collecting taxes online. Amazon, Dell, and eBay are the biggest pure e-tailers resisting this movement. It's fun to see Amazon try and talk about how difficult it would be to implement taxes for all states, when it's already doing it for Target and Toys 'R Us."
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Warming Battle Over Online Taxes

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  • To avoid this... (Score:5, Insightful)

    by Tebriel ( 192168 ) on Wednesday February 19, 2003 @03:31PM (#5337330)
    Can't I just start ordering things from companies based in other countries? Say, a Canadian company? No tax then, right?
  • Another Idea (Score:5, Insightful)

    by attobyte ( 20206 ) on Wednesday February 19, 2003 @03:33PM (#5337351)
    I would rather pay the sales tax of the state that the e-tailer is in. Then I can choose if I want taxes to go to my state or to another. If I don't like the current Governer I can shop at buy.com and let my money help their state. Why should a state hand over money when they do not depend on any resources from the state the are giving the money to.

    Mike
  • by in_ur_face ( 177250 ) on Wednesday February 19, 2003 @03:33PM (#5337353)
    I think the little businesses just starting on the web will be hit bad if all sales were to be taxed. A lot of times, I bet the savings of sales tax is the reason for buying online. This will just reduce online sales and profits for these businesses. Everyone wants a slice of the $$$ pie...
  • by RazzleFrog ( 537054 ) on Wednesday February 19, 2003 @03:34PM (#5337358)
    Sure. Double your shipping charge so that you can get out of paying the tax. Legally, of course, you are still obliged to pay use tax to your state (if they require it). These are not new taxes but just ways of enforcing already existing taxes.
  • by tgagnon ( 651625 ) on Wednesday February 19, 2003 @03:35PM (#5337360)
    If they ever really start bringing taxes into online purchases you can bet sales will start to drop significantly...

    I mean, usually, you have to pay more just because of S&H, then add taxes to the mix and ordering online almost becomes too expensive, especially when making larger purchases.
  • by elflet ( 570757 ) <elflet @ n e x t q uestion.net> on Wednesday February 19, 2003 @03:38PM (#5337382)
    Amazon claims "it would be too burdensome to collect and dispense them on behalf of so many different jurisdictions", but the major e-commerce engines (e.g ClearCommerce's engine [clearcommerce.com]) have a tax table broken down by zip code. This table is updated whenever the tax regulations change. Little companies such as Apple Computer, who is required to charge sales tax on online purchases, depend on this to keep the billing straight. It's all handled in the software, and has been for a looooong time.
  • Re:Another Idea (Score:4, Insightful)

    by HarveyBirdman ( 627248 ) on Wednesday February 19, 2003 @03:38PM (#5337387) Journal
    Why should a state hand over money when they do not depend on any resources from the state the are giving the money to.

    Because your state is where you are (theoretically, at least) represented. You are not represented by the other state, and thus you cannot be taxed by their system without representation.

  • by madshot ( 621087 ) on Wednesday February 19, 2003 @03:40PM (#5337403) Homepage Journal
    Lets see.. Federal Income Tax, State Income Tax, Property Tax, Local Tax, Sales Tax, and now, Online Sales Tax.. Did I miss any? (probably missed a few) oh wait, I need to pay rent this month.. wonder if there is any money left from my paycheck.. I love this country very much, but someone needs to learn how to manage their money better and it's not me.. because I'm not the one spending it.. Could be worse I guess.. I could live in Canada.. eh?
  • by DABANSHEE ( 154661 ) on Wednesday February 19, 2003 @03:43PM (#5337439)
    Its simple really.

    If you live in California & travel to Oregon to visity aunty Jill, you pay Oregan sales tax while there.

    So wouldn't the simplest solution be one where you pays salestax in the state you visit vitually, IE the state the etailer resides in.

    Sure it might mean some of the big etailers relocating to the state with the lowest salestax, but that sort of thing happens in regards to corporate/ business taxes anyway, so so what.
  • by azulza ( 651826 ) on Wednesday February 19, 2003 @03:44PM (#5337442)
    I feel this would hurt more than help.

    I (and possibly others) buy more things online partially on the basis that it usually isnt taxed. I buy more things online than I should (as many many others do too) more-so on the basis that I can get more for my money. I definately would purchase less if I knew I was going to be taxed. Whats the incentive to buy online (when taxes are involved)? Prices are sometimes lower than retail stores, but when I buy a $1500 laptop at Fry's ELectronics and pay $125 in tax, thats a HUGE incentive to buy from someone online from out of state!!! If the internet plans on being taxed, I would seriously have to reconsider buying expensive items online, in the long run it would put many online retails out of business, for the sole purpose of funding the Gov't. Does anyone else feel this way???

  • by HeelToe ( 615905 ) on Wednesday February 19, 2003 @03:44PM (#5337447) Homepage
    I'm lost.

    There was a recent article on this on /. where I saw many good arguments about states trying to tax internet/mail order sales.

    I am still at a loss to understand why the state I'm sitting in has a right to tax something I purchased elsewhere. Is it solely the fact that I'm sitting in their jurisdiction? Really, then, they're after me, and they're using the retailer as a collector for their tax. How can my state tell some company in another state they must comply with tax laws where I sit? Doesn't this interfere with interstate commerce, the domain of the federal government?

    I saw an argument that resources provided by my state are used in the transaction (things like the roads the UPS truck drives on and so forth). I just don't buy that. What am I (or the merchant) paying for shipping? We're paying a fee to a company that operates in my state which pays taxes based on its revenue which should be used to pay for those state services.

    This whole internet tax thing just feels like a big attempt to get some budget revenue for states in budget crises. It's the big juicy target of today they're all hoping to nail. It seems to me they should be laying off state workers (just like so many of us were laid off from the private industry) instead of trying to cover their lack of financial prudence.
  • What the....? (Score:3, Insightful)

    by s1r_m1xalot ( 218277 ) on Wednesday February 19, 2003 @03:45PM (#5337459)
    It's fun to see Amazon try and talk about how difficult it would be to implement taxes for all states, when it's already doing it for Target and Toys 'R Us.

    I understood this sentence at the first "it".
    It was a little vague by the second "it".
    By the third "it" I was confused.
    At the fourth "it" in it it was a little confusing what part of it "it" was referring to

  • by Hayzeus ( 596826 ) on Wednesday February 19, 2003 @03:48PM (#5337489) Homepage
    I doubt it's this simple.

    I imagine that the problem lies less in computing the taxes, but in actually paying them to the corect parties, along with the appropriate paperwork. Streamlining that part would undoubtedly make compliance a lot less burdensome.

  • by The_Rook ( 136658 ) on Wednesday February 19, 2003 @03:51PM (#5337516)
    while i sympathize with local and state governments having trouble balancing their books, doing so through value added and use taxes are the worst way to go about it.

    value added taxes are favored by (wealthy) tax theorists because they tax consumption and therefore cannot be avoided. however, they are highly subject to the condition of the economy. any economic slowdown and sales taxes drop along with consumer spending. also, they are popular with the wealthy because the tax is paid only when you spend money, and not on income.

    which is their biggest problem. low income taxpayers are disproportionately taxed compared to wealthy. for someone making a hundred grand a year, the value added tax on a computer is nothing. but for someone making 20 grand a year or less, that tax becomes significant. because they are a tax on consumption, value added taxes are a direct drain on the economy - they slow down and reduce consumption and reduce the total number of transactions that can take place in an economy.

    if states and local governments really have a problem with colecting value added taxes, then the true answer is to drop the value added taxes completely, rely on income and/or property taxes, and build up the infrastructure that will encourage internet and mail order businesses to set up shop in their own state.
  • by phorm ( 591458 ) on Wednesday February 19, 2003 @03:54PM (#5337548) Journal
    In Canada, we pay tax on online purchases from major retailers.

    When importing across the border, I've also often got nailed with not only tax, but duty and border charges.

    Unless you can save some money on the item itself and save on tax, it would probably cost you more in the long run.

    Of course, we're always happy to have you supporting our economy, so buy Canadian eh!
  • by squarooticus ( 5092 ) on Wednesday February 19, 2003 @03:55PM (#5337560) Homepage
    The stated purpose of "use tax" is to tax the "use" of items not purchased in the state. But, since that tax isn't levied against in-state purchases in addition to sales tax, isn't that simply an underhanded attempt to regulate interstate commerce? I'm surprised these laws were not struck down by the SCOTUS in the past.
  • by theperplepigg ( 599224 ) on Wednesday February 19, 2003 @03:57PM (#5337591)
    Realize that price is just ONE of the factors when buying online. yes, it IS often cheaper. but that is usually more of a side-effect of the reason that buying online is so great - AVAILABILITY. If the shop in my small midwest town has the same item you can buy online, it probably WILL be more expense, because it of convenience. More likely, though, it ISN'T available here.
  • by AnonymousCowheard ( 239159 ) on Wednesday February 19, 2003 @04:01PM (#5337626) Homepage
    What living bipedal organisms would ask for the government to put taxes on services rendered, that have already been taxed?

    Obviously, we are not dealing with living bipedal organisms...

    This is also an issue of TAXATION WITHOUT REPRESENTATION. What services are offered for paying such a "tax", why do they not recognize the contractual relationship as this "tax" being formed as an "optional" service, and who recognizes that the internet is composed of private communications networks that can't legally be taxed?

    This "tax" is a violation all the way, up and down, my Constitution; me being a sovereign State.
  • by xanadu-xtroot.com ( 450073 ) <xanadu.inorbit@com> on Wednesday February 19, 2003 @04:02PM (#5337632) Homepage Journal
    than pay taxes to the state & local gov't

    Please explain how you're gonna get 2.5 feet of snow off your roads if you don't give money to your local government, then please. Are you suggesting the money to fuel the plows and pay for the salt and the guys driving the trucks grows on trees or something? (just an example, I don't know where you live)
  • by Anonymous Coward on Wednesday February 19, 2003 @04:03PM (#5337644)
    Great, tax my apps. Now my low priced shareware, already getting beaten up by the percentages to an e-commerce company and a publisher will yield even less $$$ per unit. Nice.

    I actually don't have a problem with taxes, but when you consider:

    1) There's no physical product (it's download-only; practically a service perhaps?)
    2) Other companies are being "fed" (e-commerce, publisher)
    3) I still pay income tax, as does everyone else making money off this product

    ...well, I don't see how Wal-Mart can really pull me into their part of the fiscal universe. If they sell a product (a product, not a service) that is electronic only, then I'll shut my face....otherwise I think they should butt out.

    On the other side: Physical products purchased over the 'net benefit more than the producers/e-commerce sites: how about the shipping companies? Why the UPS and/or FedEx unions aren't bitching about this is beyond me...this could really blitz their quarterly earnings..

    I can understand WalMart and others trying to crush competition. Hopefully (for their sake) they won't be too surprised at the opposition..

    Okay, someone will blow apart my arguement...I don't care :-)
  • by dave_aiello ( 9791 ) on Wednesday February 19, 2003 @04:04PM (#5337663) Homepage
    The Amazon Marketplace, ZShops, etc., are a huge moneymaker for Amazon now. They are also a safety net for a lot of people who have lost their jobs.

    Do the states that are pushing for sales tax collection really expect all of these small-scale sellers to set aside and remit taxes to the hundreds of separate jurisdictions in the USA? Or, do they expect Amazon to collect the tax based on where the 3rd party seller says they are located?

  • by Gorimek ( 61128 ) on Wednesday February 19, 2003 @04:05PM (#5337672) Homepage
    Internet mail order is no different than phone or mail based mail order.

    If they want to enforce sales tax on those sales, fine. But call it what it is.

    Or will they actually tax mail order orders ordered over the web, but not the same orders from the same customer to the same vendor using phone??

    That would be so stupid that it may just happen...
  • by kfg ( 145172 ) on Wednesday February 19, 2003 @04:06PM (#5337677)
    No, where it will hit the small time operator hardest is in implimentation costs.

    Toys Be Us and Shit already *has* a presence in all states, and accounting services to deal with it. For them paying online taxes, while costly, isn't really as big a deal as it might appear. It's more a question of how to put it into reasonable practice.

    But for the little guy it means setting up tax accounts in every state before he can even do a lick of business, and the cost of maintaining them properly may well exceed his profit margin.

    It's already hard enough to deal with the paperwork and compliance issues in *one* state. Having to do it in all 50 will be enough to force many of the moms and pops of the world into tending the fryer istead of being independent business people.

    Think about that for a minute and think about why the big boys might be very, very, VERY much in favor of paying all these taxes.

    KFG
  • by lunenburg ( 37393 ) on Wednesday February 19, 2003 @04:25PM (#5337880) Homepage
    I feel fairly sure that if you add up all the taxes you pay (income, sales, property, utility, phone, gas, etc.), it'd amount to over 50% of the average person's income.

    Don't you cross some sort of line into communism or socialism when more than half of your money goes to the government?
  • Time for tea party (Score:3, Insightful)

    by Camel Pilot ( 78781 ) on Wednesday February 19, 2003 @04:33PM (#5337963) Homepage Journal
    As an online retailer why should I spend my resources to act as a tax collector for another state of which I use no services or even visit.

    This is an issue between the State's tax agency and the citizen of the that State, leave be the hell of of it.

    And what if I don't. If I do not have any presence in that State of question can they really do anything. Can Florida AG enforce compliance in Idaho?
  • by cdipierr ( 4045 ) on Wednesday February 19, 2003 @04:41PM (#5338048) Homepage
    I'm a little sick of all of the "I buy my laptop online because it's $125 cheaper without taxes" argument.

    Yes, you're right, it's cheaper to do that, but that's primarily because you're breaking the law. Just because you don't pay taxes at the time of purchase does not mean that your laptop is tax exempt. You should be filling out the appropriate "use tax" form for your state and sending the money to them.

    I realize that hardly anyone actually obeys the use tax laws, but that doesn't make your argument any more valid. It's basically the equivilent of saying "Laptops would cost more if they stopped letting me steal money from banks!"

    So, would this tax enforcement at the time of purchase hurt online sales? Maybe. But, please realize it's not a new tax, it's just forcing you to pay one you're already supposed to be paying.
  • by Royster ( 16042 ) on Wednesday February 19, 2003 @05:07PM (#5338320) Homepage
    My local government does a terrible job of plowing snow off the roads, particularly in the residential neighborhoods.

    Because you've been ducking your taxes.

    When your neighborhood pools its funds and hires someone to clear the roads, you're acting like a government. But I seriously doubt that you understand the costs involved. You'll have to pay someone even if it dosn't snow. You at the mercy of those who choose to pool and those who opt out, but still get the benefit of plowed roads.

    This anti-government lunacy seems to be contagious.
  • by Bassman59 ( 519820 ) <andy&latke,net> on Wednesday February 19, 2003 @05:59PM (#5338834) Homepage

    RocketScientist: .but rich people tend to spend more, so they pay more tax. It's the exact same percentage of what they pay on goods/services if you're rich or poor. That's why tax theorists favor it, its FAIR.

    No, it's not fair.

    The proportion of income that poorer persons pay for the necessities -- food, shelter, transportation -- is greater than the the proportion of income that a richer person pays.

    And, no -- we're not talking extravagances here.

    $20 for dinner may seem like no big deal if you're a working IT person bringing in the cash, but if you're making $6/hr, it's a huge expense.

    And the argument that "rich people spend more money" doesn't wash, because the rich person doesn't need to buy the BMW when a Chevy would suffice. If the rich persons chose to be frugal -- which many of them do, which is how they get rich in the first place (unless they're like Dubya and born into it) -- that could have a serious impact on tax receipts.

    The only truly progressive tax system is a graduated income tax. And that tax should not be so full of loopholes so as to make it unfair.

    An income tax will also allow the governments to make a more accurate assessment of their tax receipts. Example: your city may base much of its budget planning on expected sales tax receipts. In lean times, like the recession we're in right now, consumers choose to spend less (because of fears over losing a job, or whatever). Thus, the city doesn't bring in the expected tax revenue, and there's a budget deficit. At least with an income tax, they can better estimate the revenue.

    As you readers can tell, I'm in favor of an income tax over any sort of sales/use tax. That doesn't mean that I'm in favor of how our federal government is spending my money. Given the choice, I'd say NO to the war in Iraq, and YES YES YES to universal health care, education and services for the citizens of this country.

  • by Bassman59 ( 519820 ) <andy&latke,net> on Wednesday February 19, 2003 @06:34PM (#5339187) Homepage

    Nolife: "The federal gov wants to lower taxes so you will have more money to buy more things and hopefully jump start the bad economy."

    No, the Federal Gov't is in the grip of a conservative orthodoxy whose mantra demands zero tax collection. Unfortunately, it's not clear how a government is supposed to run on zero revenue.

    It's been shown that tax cuts, especially those that benefit the rich, have no effect on "jumpstarting" the economy, especially when the majority of consumers are scared that their job may be axed.

    "The states want to start collecting taxes to collect more revenue because the economy is bad and they are in the red."

    They're in the red for many reasons, not the least of which is that the federal government mandates all sorts of programs and policies (like, um, the "Homeland Security" clusterfuck) and then helpfully decides not to fund them -- leaving the states in the hole for the costs of these programs.

    Remember that a lot of states have their state income tax rates pegged to the federal tax rate -- so any time the White House starts talking about abolishing capital gains taxes, or taxes on dividends, or reducing the federal tax rate, the states start quaking because THEIR revenues go down. And, unlike the feds, state governments are not allowed to run deficits.

    So, think about it: which federal, state and local taxpayer-funded programs would you like to see shitcanned? Do you like your roads to be paved? Your police officers and firemen to be trained and paid? How about your teachers?

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