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The Almighty Buck

US States Vote 26-0 To Move Towards Taxing Non-State Sales 132

Posted by Hemos from the lots-more-money-rolling-into-treasuries dept.
buss_error wrote to us with a breaking news story from ZDNN. 26 states, with three not attending/voting have decided to move towards simpliying their tax codes. Why? So that they can begin to try and tax catalog and Internet sales with their applicable state sales tax. I think it was back in 1967, the Supreme Court ruled that you had to have a "nexus" within the state for the state to charge sales tax because of the patchwork of different sales tax laws. Catalog sales are much higher than Internet sales currently, but the states can see the phenomenal growth of Internet sales and want to reclaim some of the sales tax they are losing. The vote here doesn't mean as much as the actual decision they will make - lots of negotiation still to come, I'm willing to bet. CNNfn has a more detailed report.
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US States Vote 26-0 To Move Towards Taxing Non-State Sales More

US States Vote 26-0 To Move Towards Taxing Non-State Sales

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  • Re:Sigh... (Score:1)

    by Anonymous Coward
    The founding fathers would probably be rolling over in their graves if they knew what it's like now!

    I believe rollovers are taxed as regular income, unless the rollover occurs between two qualified plans.

  • What the hell were you thinking boy? Get your aluminum helmet back on before the Illuminati start sending you mind control signals again! Next thing you'll probably blab about is that the United States faked the moon landing.. we can't have the population becoming aware of these facts.. they just can't handle the let down!
  • Based on Michigan, using 6%...
    Buy your $20k car, pay $1200, then next year sell it for $15k, and the buyer pays $900 when they go to register it, then they sell it for $10k, the buyer pays $600, they sell it for $5k, the buyer pays $300. So the state gets $3k just in sales/use tax for one car? (Then there's all the registration/title/plate fees, and gas tax...)

    And if you think you can get around it by putting $2 on the title, some states (I'm not sure about Michigan) will charge based on a alternative price derived from the model year if the selling price is lower...
  • Doesn't your state make the new owner of a car register it in their name every time the ownership of the car changes? Sounds more like a back property tax situation.
  • They are mostly *NOT* looking for ways to reduce the national debt. In fact, there is now a budget surplus, so if they do nothing, the national debt will be reduced over time.

    Instead, though, they are arguing whether to:

    1) Reduce taxes; I admit to liking this idea :-)

    2) Spend more money on more programs

    rather than keep the surplus and thus reduce the debt.

  • By charging tax on many different aspects of the transaction, the overall tax bite is less glaring. Income tax, sales tax, property tax, gas tax, sales tax on other consumables, tolls on toll roads, tariffs, etc. Of the total cost of ownership of the item, the bulk went to taxes of one form or another.

    That would be much more annoying to the citizenry if the 15 other taxes were eliminated and replace with a 120+% sales tax or a 60+% income tax.
  • It probably should sound like that, since I make that argument too. I certiainly don't think that brick and mortar stores should be offered any special benefits or protections, but the current situation of brick and mortars having to pay sales tax and internet and mail order not having to pay sales tax is a bias against brick and mortar stores. I think protectionism (I guess this would be domestic protectionism) is really, really bad, but I think it's even worse that the government would in effect prop up internet stores over everything else.
  • Currently you do have to pay tax - it's called "Use Tax" instead of "Sales Tax". As a CA citizen you are obligated to go down to the office of the State Board of Equalization, fill out a form & give them a check.

    Nobody does, of course. Businesses in CA get audited on a fairly regular basis (this I know from personal experience) and the auditors look for purchases from known out of state vendors. If you have paid, say, Quill for office supplies they will make you pay tax & penalties if you have not paid the "Use Tax" when you were supposed to.

    States like CA have been looking to have out of state vendors report sales into CA. CA would prefer to force the sellers to pay the tax - there's fewer of them - but cannot because a company with no operations in CA is not covered by CA laws.

    I'd rather have a problem with the IRS than any California tax authority - you can reason with the IRS. CA wants to tax anything they can, and other high-tax states do too, hence this coalition.

  • Funny... I'd never really considered Alan Cox to be an 'insignificant individual'.

    Now, I don't like like what cross-state taxation would mean to catalog/internet sales (general softening/decrease in an already softening economy) would mean, but I am an insignificant individual. So I guess it doesn't matter...

  • Oh come on!
    First, your federal governement has nothing to do with that.
    Second: you are still supposed to declare the value of the goods you bought out of state and pay the taxes, eventually, on those goods.
    Almost nobody does, of course, so that's why catalog and other out of state purchases are considered tax free, which is technically not the case.
    This changes nothing, in principle. It just makes it easier to enforce the exsiting principle.
  • It's not the Federal government, its the states trying to do this The Federal government has no sales tax, just states, counties, and cities. The states are just trying to collect the revenue that is already due to them. (You are supposed to pay sales taxes on out on mail-order puchases, but no one ever does.) And those stocks you were discussing, they are losing money, but so are the companies with the crappy business plans that people invested in. One needs to acually look at the companies they are buying and not just go with the crowd. It led a bubble. That bubble burst, get over it. Companies go bankrupt and people lose there jobs, but again get over it. It happens. If someone's whole life savings are invested in Internet companies then they deserved to lose that money, investments should be deversified to protected against one bad thing chewing away all the money. Right now, no banks are going under, the US isn't defaulting on any bonds. The economy is actually very good at this point, we're growing all be it more slowly than last year, but it is going through a period where it is sorting out the wheat from the chaft.
  • But if a poor person spends 95% of their paycheck on needs they will be taxed on all of it, while someone like me who spends about 10% will only be taxed on that 10%.

    Although that's true, the money won't do you any good until you spend it. So eventually you will be taxed on all 100%, because eventually you'll spend money.
  • And I can still remember Bush Sr... "READ MY LIPS: NO MORE TAXES!"

    It's so sad that our government has turned into an icon of hate, fear, and frustration by the people. The founding fathers would probably be rolling over in their graves if they knew what it's like now! =(

  • Eh? (Score:1)

    by dubl-u ( 51156 )
    Because government gave itself a legal monopoly on charging taxes.

    Which is a pretty damned good thing if you think about it. Can you imagine how much people would have to pay in tax if just anybody could start one?
  • But State governments cannot lobby other State governments to pass laws. That is an attempt to regulate interstate commerce which is a power explicitly granted to the Federal gov't by the Constitution, and therefore illegal for states to exercise.

    Are you sure that states can't try to influence other states? That strikes me as a far cry from regulation, and presumably there are many matters where commerce isn't affected. Evidence, please!

    Also, in this case the states aren't really trying to regulate each other; they're just coordinating changes to their own state law. My notion is that they do this all the time. Note, for example, the existence of the Uniform Commercial Code [cornell.edu]. Or the National Conference of Commisioners on Uniform State Laws [nccusl.org]. So it sounds like the constitution is applied with more subtlety than you (and a disapointing other number of people on Slashdot) seem to think it should be.
  • Now these may all go by different names (surcharges, access fees, interest rates, etc.) but what they all are is a privately levied tax. It's not illegal either because the consumer is free to not buy/use said product and shop elsewhere.

    Uh... sure. You can call that a tax if you want. Heck, you can call it a flooblezoop if you please. But the normal meaning of tax is different [m-w.com]. People will use it metaphorically like that, of course. Unless, of course, you expect the MasterCard Police to come and arrest you if you don't pay your cash advance fee, in which case you'd be correct.
  • You cannot surcharge. I'm not sure if it's "illegal" or not, but it is (usually) against contract. What I believe you CAN do however, is offer a "cash discount" for items. Basically, this means that instead of raising the price for credit charges, you lower the price for cash purchaces. This accomplishes the same thing, but allows you to use a loophole in contracting.

    Sorry I can't provide the merchant agreement. I don't feel like looking for it or even know if it's in the house.
  • Does alan cox not like this one also?

    Or does LINUS like this one?

    It is funny that how an insignificant individual's opinion can seem to be so important in a slashdot article.

    Sorry, just some rant about a previous post.

  • Internet sales are such a microscopic percentage of all retail sales that having states claim that they're losing sales tax is just ludicrous.

    What they're doing is killing the commercial side of the net. Really. If there is no advantage of shopping online anymore, why would anyone do it? The lack of tax is nearly eaten up in shipping charges for online deals, and if sales tax is tacked on to this, brick-and-mortar stores will have the upper hand. That's what it's all about, folks. It's not about lost sales tax, it's about the brick-and-mortar stores lobbying their governors.

    But whatever the reason, taxing internet sales will kill online shopping. The governors can't figure out that a 7 percent sales tax on 0 dollars is still 0 dollars.

    Nobody ever said that you had to be smart to be a politician.

    As for me, I'd rather be where we were BEFORE NSFNET disappeared.

  • I didn't realise it, but Konqueror did it for me.

    I guess I'll use the tt tag again. Just to piss you off.

    As for _your_ post, it was entirely bereft of content. You disagreed with my typing style only. If you had two brain cells to rub together, maybe you'd contribute to the conversation. You don't however, so you posted as an AC. We're the brave little flamemeister, aren't we?

    OBTopic: In this state we have a Use Tax, that if you don't pay enough sales tax on out of state purchases, you're supposed to remit the remainder of the hypothetical tax to the great state of Rhode Island.

    I wonder if they ever stop cars at the border that have been in New Hampshire, at the state liquor stores there. (no sales tax for the entire state, there)

    So technically, internet sales are ALREADY taxed in Rhode Island.
  • You simply misinterpreted other text in the ruling.

    I've seen that to be the case with every one of these "sovereign citizenship" loons. They quote parts of rulings that look like supporting evidence for their paranoia, and then they trumpet it OVER and OVER and OVER again, just like limboboy here is doing in these comments. I know there's a way to filter out article authors, but is there a way to killfile individual posters?

    -Legion

  • Frankly, I don't know why they Federal Government is going hell-bent to ruin the economy with decisions like this... First it was denying to lower the high interest rate, then this. Stocks that were good buys are now tanking - million dollar businesses that have been around for years are going bankrupt, people are losing their life savings, and Greenspan just sits behind his nice little desk and smiles like an idiot.

    I can see the potential revenue source - but it's not worth the problems it will cause to harness it. It would only be a consideration (not that I'd back it) IF the individual states removed their sales tax - but that will never happen. The Federal Government has already proven it cannot effectively spend the money given by other taxes and forms of revenue - why would this be any different.

  • I don't see this as a major issue, as that I am required to either collect or absorb the sales tax whenever I make a sale, regardless of where I am at, or where my customer comes from. Since I can conduct my business online, by law, I must collect my state's sales tax, since my customers are ordering from me, although the point of sale was on the Internet.

    As for how the money is spent, that is a separate issue that is worthy of a separate discussion thread on /. Best advice is to write your state representative, and ask them to consider looking at projects and issues in your area that should be worthy of your state tax dollars.
  • Does this new "standardization" of laws across State lines like this and UCITA, along with the uproar over the "unstadardized" voting practices this year represent another move toward a monolithic government in the US of A? Will the bureaucrats negotiate away the founding principle of individiual States?

    I suspect we will see more attempts in the future to erase the lines between States, with plenty of fear keywords, "We must STANDARDIZE laws against CHILD ABUSE among the States because the current PATCHWORK of laws is CONFUSING." Because, to a bureacrat, the idea that someone is outside their jurisdiction only because of a "technicality" like State lines is frustrating. And because, to the yokels, the idea that "them thar californeeuns got themselves aborsheeun and gay marrij" is intolerable under their concept of a National Spiritual Destiny and threatens America's status as God's Chosen Country, while concerned New Yorkers will want to legislate the educational curriculum of kids in Tennessee, lest they be crippled by their non-pc and "intolerant" upbringing.

    Eventually, the majority will rule, irrespective of State and other local boundaries, and our National Government will begin to approach the level of bureacratic masturbatory excercise that has crippled many of the "democracies" of Europe.

  • As a percentage of our income we acually are taxed much less than most european countries.
  • The Foxrun mall and the surrounding bestbuys etc are even more over run, since it is 5 minutes from maine, and 25minutes from mass. Quite a colorful place to shop =]

    NightHawk

    Tyranny =Gov. choosing how much power to give the People.

  • You are right, nexus is required if Congress doesn't do anything.

    Basically, the Supreme Court said that the States can't do sales taxes without nexus unless Congress explicitly lets them. Even if the States get together, the Supreme Court is unlikely to change its mind. What happens the day after the a decision allowing the taxes when all the states start messing with their rates? The Supreme Court isn't going to sit back and try to micromanage that.

    The cops keep the UPS trucks safe as well as bricks-and-mortar establishments. I don't see why ordering through a catalog or the internet should get a special break on paying the costs of running society. Especially since keeping track of the "patchwork" of laws would easily be handled with the internet to distrubute new databases of tax structures as they happen.

    Of course, if the same people update the tax tables as update system security at a lot of businesses... could be ugly :)

  • I am also an Oregon resident. If I had to pay sales tax on out-of-state purchases, I'd be willing to shit a brick on some Congressmen's doorsteps. We are legally exempt from sales tax in any state (including places like Florida or Hawaii). They just don't know about it, and will make you go to hell-bent lengths to prove it. So, if they do instigate a tax like this, I sure hope they have an "I am an Oregon resident" box or something (and one for the other states; i can't recall which they are, though), allowing you to be exempt to the tax.

    But alas, b/c I'm a citizen, and not a big corporation, my opinion, vote, and desires have nothing to do with how the country is run.

  • Uhm, buying something from out-of-state is NOT a tax ``loophole''

    Secondly, I doubt your local places are losing much business to internet sales, since in gerneral people still prefer buying things at a store. Plus, buying things on the internet helps fund our wonderful postal service (they're good 'cause they're cheap, and fairly fast) sometimes, and helps pay UPS' taxes, which make them hire more ppl which makes said people pay more taxes, etc. Oh, right, but the states want an EXTRA cut, of course they do.


    He who knows not, and knows he knows not is a wise man
  • God, I'm going to move to Oregon. How's the weather?

    --

  • I think the aformentioned should be seen the same in the eyes of tax law; you get the tax rate of the state that the server resides in.

    So what if the server isn't in a state? What if the server is colocated in HavenCo, Sealand?


    Tetris on drugs, NES music, and GNOME vs. KDE Bingo [pineight.com].

  • You have your simpli-yin' and your simpli-yang.

    -- Pinocchio Poppins


    Tetris on drugs, NES music, and GNOME vs. KDE Bingo [pineight.com].
  • It may appear that way, if you only read the first part of the Majority opinion, which is just restating the defendant's case. However, a bit further into the text we find Justice Chase stating:

    "Our conclusion, therefore, is, that Texas continued to be a State, and a State of the Union, notwithstanding the transactions to which we have referred."

    Which was the actual opinion of the court. You simply misinterpreted other text in the ruling.

    -- Fester
  • Yes, the use tax predates the internet. And the imputous was NH etc.

    Maine and NH are always fighting about taxes. They are currently awaiting action from the Supreme Court on territory issues which encompas the Portsmith Naval Shipyard. Maine has documentation that it owns it going way back, Maine provides all the services for the area (police, fire, snow removal etc) but.... if a NH citizen works there not only does Maine collect income tax from the them but also their spouse. So NH fights it by trying to annex the property. But I digress and ramble....

    The use tax is one of my pet peaves. Its also applies to this discussion imo as it shows that the states already cover taxing the internet. As others have pointed out, the consumer is generally responsible for paying sales tax. Or in this case use tax. And they could care less about the vehicle by which the purchase was made.

    This pretty much comes down to the the states wanting a new dilevery channel for an old tax. They want to make people in other states responsible for collecting the taxes for them.

    Thats simply wrong. It is also short sighted. Any merchant that sells over the internet will generate income tax. The states should perhaps be encouraging this stuff instead of discouraging it. Merchants/manufactures can be anywhere now. Compete in that arena and attract business to the state and everyone benifits. Hound them to collect taxes for other states and you are increasing their costs and discouraging smaller outfits from trying and in turn reducing income taxes.

    What will likely happen is that several states will gather together and found some sort of consortium and clearing house to handle this stuff. It will grow and pull in more and more states until there is a defacto national sales tax administered by the states. Politically difficult and imo wrong headed but its never stopped them before.

    I realize that taxes have to be collected. I do disagree with the type and and the manner in which they are collected.

  • The page comes up mostly blank under netscape.
  • According to my marketing professor, The gross sales of all Internet sales over a year pretty much amounts to the gross sales of Walmart over a 3 day period.
    And if the Internet sales are growing so phenomenally why are so many of the Internet superstores going out of business?
    Now that the insane discounts and coupons have been irradicated after these businesses have finally realized that they are subject to the same laws of business that their brick and mortar counterparts are bound by, what are the benefits of ordering online? Sure there's the benefit of being able to get something on there that you can't find locally, and being forced to live in the rural south that fact is certainly not lost on me. But otherwise? You have to pay fairly large shipping costs which usually make the price equal to what you would have to pay locally. And if you add tax to that...
    I guess we'll see Internet retail shrink if these taxes are applied, which only goes to show that politician's have their heads up their collective asses. But I don't guess that's news to anyone.
  • Not when democrats like al gore refer to it as a "living document" meaning they can change/interpret it to whatever they like. It was designed to be able to change, but slowly and not at will.
  • use tax in maine was setup not because of the internet or mailorder catalogs, but because of the large number of people heading down to new hampshire to buy things(namely vehicles and campers) tax-free. Maine, is way-tiny...and those small amounts of tax-losses can hurt it. Yes, it's still a messed up system. Tax in general is screwed up, I'm more pissed paying income tax than any sales or use tax. Taxing me...because I *earn* money? How bout, since the companies are spending the money...to buy a product(my time and work) they pay tax on it, not me. I agree...a fed run system needs to be in place...interstate commerce is going to grow exponentially with the internet growing as it is...but sales taxes are the least important taxes to worry about.
  • The consumer is the one responsible for paying sales tax.

    True. Some retailers are already collecting it on website sales, too. I just ordered several books from Calibre Press in Illinois, to be shipped to my address in Colorado. CP did collect the CO state sales tax.

    Right or wrong, I can't find anyone else carrying most of their titles so it's either play with them or do without.

  • I thought we had more then 29 states...
  • The States are not LOSING taxes, they never had them. They wish to increase the tax burden by now taxing that which was not taxed before. These folks need to be stopped. They are typical money hungry so they can spend more politicians.
  • Since many people rent (including a large percentage of the posters here), reduction in sales tax revenue *must* result in large and disproportionate increases in property taxes, while renters end up paying less and less of the total burden to provide those services.

    Is that fair?

    ROTFL...

    Do you know what you're talking about? You seem to think that renters don't pay property tax.

    FYI, A good portion of rent paid IS property tax.

    What, do you think landlords pay it out their pockets, out of the goodness of their hearts?

  • I don't really see how this will mess up the economy. If anything, I think this could only turn out for the better. The government isn't looking for new ways to come down on the Internet (at least, not apparently), they're looking for new ways to solve the national debt. Now, while I am a very big tightwad and hate paying more than the next guy, I think the good points overweigh the bad points here. This certainly won't discourage online sales. I mean, there are exorbitant prices on cigarettes and alcohol but people still buy them. Until we have more details, I don't think this is anything to get too riled up about.
  • I agree with both of those. To people that complain about taxes going up so they go down: "It has to start somewhere." This could possibly be the solution to a lot of our nation's financial flaws.
  • Auctions (as in in-person public auctions) are not taxed in the first place. Ebay is just the auctioneer and it is the individual who is selling the item. State taxes cannot be collected on such sales, kind of like at yard sales.

    If a person were running a business, and I'm not quite sure how that is defined, they would have to collect taxes. Of course they would have to licensed by the state to do so....

  • This is one reason the states fight so hard to be able to tax mail order transactions--they feel like merchants in their state (that would be feeding that state's coffers with sales taxes) are being undercut by catalog merchants.

    Of course, this will drive the online retailers to move to some state where they do not have to charge those taxes. I suspect that some states will not require it. Then those states will get the money spent by businesses which is required for them to simply do business, and the other states will lose it, and ultimately lose money as a consequence.

  • Total BS!

    This is going to hurt web-retailers big time, in a time when the industry is still in it's infancy. The whole point of shopping online is to keep things simple, and avoid the middle man.

    If the government really must have it's tax money, Maybe it would be easier to eliminate all State sales taxes and replace them all with ONE simple Federal tax that everybody would know how to use. How about tearing down some of these barriers to free trade!
  • 1. The "taxes" on bringing products into the country are called "customs duties", and have been around since before the revolution.

    2. If your bonus did not have income tax withheld from it, you would have to pay the tax anyway.

    The issue here isn't "Why should the states have sales tax?" The true issue is whether or not the Internet should be a tax-free zone.
  • It's a little bit complicated.

    The constitutional prohibition against regulating interstate commerce was included in the constitution in order to prevent the several states from levying import taxes. There were two reasons for this. The first, of course, is to prevent a sort of highway robbery - the state standing upon the bridge like the troll from that Three Billygoats story.

    The second reason is to prevent a state from discriminating against the citizens of other states by giving their own citizens an economic advantage.

    The states can regulate interstate commerce, in areas in which the federal government has given the states the authority to do so. In addition to that, the states may have laws, such as the sales tax laws, that have an effect on interestate commerce - if 1) The laws do not discriminate against interstate commerce in favor of local commerce; and 2) The laws do not present an undue burden on interstate commerce.

    At one point in time it would be an undue burden to allow states to tax retailers in other states. But it wouldn't be too hard to cobble together a continuously updated database of local tax rates, so a state sales tax wouldn't be that much of a burden on interstate commerce.
  • I don't believe it. Why? Because it's just so complicated, why you'd have to have a computer to figure it out.

    Oh yeah.

    I don't see any problem with this. Honest. Why should Internet commerce be singled out as getting a tax break. I'm all in favor of e-commerce, but the tax advantage of buying on the internet is having an effect on snail-world retailers. How many local books stores are left in your hometown? The ones that weren't killed off by Waldenbooks are being wiped out slowly by Barnes Ignoble and Amazon.com.

    The technical reasons for excluding interstate sales no longer apply. The Department of Commerce could probably put together a functioning state and local sales-tax lookup database in about a week.

    The only question is whether or not it's constitutional for the states to tax out of state commerce. They can do it only if there's no discriminatory effect on interstate commerce. Since the interstate sales will be taxed on the exact same basis as local sales, there is nothing in such a tax to penalize businesses for doing business out of the local jurisdiction. Unless of course they can't afford a computer to figure out how much sales tax they must pay on each transaction.
  • I'm sorry if this isn't insightful, or funny, or if you don't care and don't think this is interesting, but it's my view none-the-less.

    I shouldn't have to pay taxes for something twice. Say I buy a car for $20k. Sales tax is 5%, so I'm now paying $21K. The government already made $1000 dollars, and hasn't provided me a service for it. Then they tax me for owning the car. I don't know the rate (I don't pay taxes...). But now they've got more money from me. Of course, I use roads to drive my car on, so they tax me for that - I pay taxes on my gasoline, even if I'm using a lawnmower. Did you know that you pay roaduse taxes for the gas you put in your lawnmower? Tell me, have you ever mowed the street?

    That's a lot of tax, just for my car, isn't it? Well hold on, because there's more. I have to pay tax on that new spark plug I just put in my car. Don't forget the cost of the tires when I get those replaced. Notice how bloated this is getting? Now imagine I got the car from overseas. Then I'm going to pay a tariff - essentially another tax!

    And we wonder why the US has poverty...

    It's all about the Karma Points...
    Moderators: Read from the bottom up!

  • That is when federal juristiction becomes applicable for interstate tariffs.

    Macx
  • Sorry; not interstate, but intercountry.

    Macx
  • This is true, the US only wants to impose tarrifs on the unfriendlies. Look at the context for why the tarrif would be imposed on the Data Haven--the server was brought there to avoid taxes, and accordingly, they can impose a tarrif on a specific line of goods, or a company from a certian country so as to avoid improperly resticting other goods/services that the country offers. I will cite the tarrif on Japaniese motorcycles in the early '70s just to try and improve "The Hog's" sales (which was taxable). They didn't put a tarrif on other items from Japan at that time, just the cycles. So they can tarrif these server havens, or just a line or company that comes from such a haven.

    Macx
  • IMHO, I think that it should not be applied "to mail order when both the sender and recipient reside in the same state." It is my opinion that they should tax the Internet sales based upon what state the server resides in, not the client. If a New Yorker or Michigander goes to Canada, do they get their respective state's tax rate? No. While this differs slightly such that in one you are actually in a diffrent location, and the other just pulling info from it--in both cases the transaction actually occurs where the server resides (whether computer based or a real person). I think the afformentioned should be seen the same in the eyes of tax law; you get the tax rate of the state that the server resides in.

    Macx
  • I think it's only fair if current interstate tax laws applicable to mail order are followed for internet sales taxing. For example, I don't have to pay tax in CA or NY if I live in CA and buy something from NY.
  • So, if everyone buys mail-order from out of state, who gets to pay the taxes NEEDED by the state? Imagine you're in a state that doesn't have the population to support hundreds of computer stores per town like California, for some states, mail-order is significant!
  • Those of you wishing to avoid paying for things like schools and roads, skip this message. For the rest of us with some sort of social responsibility, sales tax is an important part of your state's budget. Some states more than others, obviously. Mostly, the sales tax is something promoted by the people living WITHIN that state, sometimes voted on by those people in leiu of other taxes. Shipping does not go to supporting schools, state parks, etc., so the whole idea of justifying NOT paying taxes because you're paying shipping instead is simply flawed logic. Maybe I shouldn't pay federal income tax because I have to drive farther to work? Since we voted for the taxes in YOUR state and not the neighboring state, we should pay those taxes I voted for (or perhaps your representative you voted for). As is the case for Oregon residents who shop in Washington and don't pay Washington sales tax by showing their Oregon ID.
  • That depends on what is taxed or not. I'm lucky enough to live in a state that doesn't tax rent or food. Maybe you should write your government and have it changed to that way.
  • Is it just me or is there something going on here with the mass ZDNet stories being posted?? rtnz
  • "I like not paying taxes as much as anyone, but I have to admit it's not fair that a local retailer gets taxes, but if I order from an Internet site, it's not taxes."

    Actually, after you factor in shipping costs it works out to be about even if you purchase locally or over the Internet. Our current system is fair to all parties (except maybe the consumer).

  • I don't live in a big city, but there are several local PC shops in my area that offer very competitive pricing. I've found that large chain stores sometimes can't compete with Internet retailers but most of the mom and pop stores will generally have quite competitive pricing. I don't mind spending an additional $5 or $10 to support a local retailer, and in most cases, if the price is signifigantly higher locally, the retailer will honor a Pricewatch quote. I buy a lot of hardware and that's just my personal experience. Things may be different elsewhere.
  • I'm by no means a legal scholar, but isn't such a move as federally implementing state sales taxes unconstitutional?
  • This debate is one of those that expose the ignorance of the /. crowd towards issues not relating to operating systems.

    There are several issues here:

    1. Sales taxes fund an enormous number of essential services throughout the United States. In most States, the state takes a percentage of those taxes, and the municipality the sale occurred in takes another percentage on top of that. Where municipalities are concerned, there are only three ways to raise revenue, to pay for things like sewer systems, roads, traffic lights, garbage collection, water service, and other utterly vital government services: property taxes, sales taxes, and franchise fees.

    Franchise fees are capped by law, which leaves only one other source of revenue if sales taxes are reduced: property taxes. Since many people rent (including a large percentage of the posters here), reduction in sales tax revenue *must* result in large and disproportionate increases in property taxes, while renters end up paying less and less of the total burden to provide those services.

    Is that fair?

    2. Brick and mortar stores must pay sales taxes, in addition to overhead for their shop location itself. Providing one class of citizens (online retailers) the opportunity to evade paying their fair share of the tax burden, and giving them an hugely unfair advantage competitively is utterly unjust. Why should a retailer, simply because it chooses to do business on the net, receive *any* preferential advantage? If the business model works, online retailers will make profits. If it doesn't, there is no justification for cutting the throats of local merchants, in order to provide special treatment to website merchants. If net commerce is to succeed, it must make business sense for it to do so. If it doesn't make business sense, then it *should* fail.

    3. On what grounds do we presume that online commerce is a worthy goal to pursue? In point of fact, local retailers provide large numbers of jobs, distributed everywhere, while online retailers concentrate jobs in a single location, and often vastly reduce the number created. They also focus profits in the hands of fewer and fewer companies, preferring instead, large corporations. Is this what we want? Fewer jobs? Higher property taxes? Unjust treatment? More powerful Corporations?

    Is this the morality that Slashdotters espouse? or is it simply "online at any cost because it's our passion and our hobby and screw everyone else, including, ultimately, ourselves".

  • What about Oregon (and that other state)? Would I have to pay taxes to the state were my purchase comes from, even though I live in happy tax free Oregon? Would I pay an equivelent amount of taxes to Oregon that I would pay to the other state?
  • Ofcourse it is 0% so its kind of a non issue. Actualy About 2 miles from my flat is the Phessant Lane Mall which is huge because all the folks come up from Mass to get the no tax shopping.

    (To give you an idea how close to the state line it is I think part of the parking lot is in Mass)


    The cure of the ills of Democracy is more Democracy.

  • none of the three states i traded cars in required registration until you started driving it around. At least, not that anybody ever told me, I just circulated junkers.
  • Sales taxes are due on most aution and yard sale type transactions, it's just that harldy anybody bothers about it.

    The people involved don't know to collect it or where to send it how to report it etc, the people charged with making sure the sales taxes are collected have better places to spend their enforcement efforts.

    Bring a car title to the wrong secretary of state's office and they might demand to see every bill of sale since the last time it was registered and tell you you're liable for sales tax on every one of those transactions. As a result of having that happen to myself, I haven't sold a car for more than $2 in years.

  • So, they aren't going to create any 'new' taxes, they are just going to force retailers to collect the taxes that have always applied.

    Reminds me of England and the soon-to-be U.S. a few hundred years ago...

    --

  • First, I reject the assertion that costs are even on the aggregate. The fact is that internet sales are growing rapidly. Beyond the obvious implication that local stores are losing sales, this strongly implies that the internet is offering more favorable terms to the consumer. What's more, when I look around I see many instances where local retailers simply don't have a chance to compete. For instance, there are no local stores near me (nor any of the places that i've lived and been) that can compete against the likes of online computer retailers (i.e., Dell).

    Secondly, your definition of "fair" is not fair at all. I equate "fair" with equal OPPORTUNITY, not equal RESULTS. What you are saying is that the results are equal, because the government is effectively "evening" things out by taxing. That's simply wrong. Businesses should compete based on what THEY can bring to the table, not on what the government decides to dole out to them. If you decide to locate your business in India, then your business model should allow for the shipping costs that you incur. Similarly, if the retail store decides to locate their business on prime real estate in Manhattan, the government should not subsidize them because of their increased overhead. It is not "fair", it is not practical, and it is certainly not economically desirable.

    Businesses bring a lot of different things to the table. Some have better service, some have faster delivery, some have higher quality products, some have superior warranties, some have more selection, some have lower prices, some are better situated, etc etc etc. The point is that it is virtually impossible for the government to even decide what is "better". The government should not even enter into this kind of role. This is what capitalism is for. Let it be.
  • Second-rate cases based on flawed legal theory, but impressive nonetheless

    Puhleeze, that's about a thousand federal circuit and appeals court cases, not some rogue hillbilly judge who doesn't know the law. It may well be that they are ALL coincidentally based on "flawed legal theory", but until you find a higher-ranking judge on appeal with a theory more to your liking that IS THE LAW.

    As far as I know the US Supreme Court has not seen fit to examine such fine legal arguments as "well, the flag has fringe on it, therefore this is a court of admiralty!" (duh, does that mean if I wear a Harvard sweatshirt that i can't possibly have gone to Yale?)

    That's what happens to sovereign Citizens in court who haven't done their homework

    What homework would that be? I'd love to hear about a single so-called "soveriegn citizen" who has ever been legally challenged and found by a court to NOT be under the jurisdiction of the US court system despite living within the geographic boundaries of the US (because of course you don't have to be a citizen of a country to be bound by their laws).

    It takes longer to learn and research, and one is likely to find oneself challenged on various obscure fine points

    Would that be "obscure fine points" such as the crystal clear regulations of what constitutes an US citizen, and who laws apply to? (hint: laws apply to EVERYONE, citizen or not -- whether you volunteer to recognize them or not!)



    ---------------------------------------------
  • Ok, what's wrong with making mail-order and internet shopping less attractive? You have to pay shipping on the book from fatbrain, becuase they actually have to ship it to you. Taxes, as much as everyone hates them, are artificial but necessary and should not be applied with bias. What if there were no sales taxes at all and fatbrain et al didn't have that unnatural advantage over local stores. Would you suggest taxing local stores so that the places that had to ship things could compete?
  • The government already made $1000 dollars, and hasn't provided me a service for it

    So who then pays for and maintains the roads you drive on? Corporations? Funny, I have not seen Microsoft Highway or Red Hat Lane recently. Little green men? No! The governement that taxed you that thousand dollars gives you many servies. They maintain the roads, put up streetlights, pay for the police and fire departments, and many other thngs. Lets not bitch about taxes so much, because taxes are what keeps the country running. If you have to bitch, at least bitch about the government when it wastes your tax dollars.

  • Isn't that supposed to read "simply lying"?

  • In this debate, it's important to note that even i f you don't pay tax on a out-of-state purchase, AFAIK every state with a sales tax still says that you are supposed to pay them something called a use tax; they just can't force the company to collect.

    For example in this Texas government FAQ, you find the quote
    Do I owe Texas tax on mail-order merchandise?

    Yes, tax is due on items purchased out of state and used in Texas. If the mail-order company has a Texas use tax permit, the company will collect Texas tax. And Texas use tax is due even if the mail-order company doesn't have a permit and doesn't collect tax.

    A white paper [commerce.net] at CommerceNet [commerce.net] gives extensive information on the California law, and mentions that this is pretty common. For the curious, here is a table of State Sales Tax Rates [taxadmin.org], which mentions that Alaska, Deleware, Montana, New Hampshire, and Orgeon have no state sales tax.

    <opinion>

    Personally, I favor raising the sales tax and dropping the income tax. As a general rule of thumb, taxing something tends to discourage it (e.g., cigarette tax), so it seems silly to tax something like income. I'd much rather tax consumption, and I'm even more interested in taxing things that are environmentally bad. If society is going to allow pollution, we might as well get paid for it.

    </opinion>

  • If it weren't baloney, you'd see a lot more constitutional powergrabs by the states with that as the excuse.

    Instead, you don't hear about it at all--because it's baloney.

  • I think it's unfair for places to have to compete with out-of-state sales simply because they get around a tax loophole.

    It's not a loophole, it's a clause in the Constitution. States are not technically allowed to tax residents of another state. (Wish I had a link... I'll try to track one down.) IIRC, this was one of the things that The South(tm) wanted to change in the Civil War.

    Even if it were not stated expressly in the Constitution, sales tax on mail order and internet purchases is completely unjustified. Sales tax exists to generate revenue for things like roads, schools, and other public facilities. If I live in Michigan and I'm buying from an online store in Washington, your state has no justification to tax me because I do not use any of your facilities.

  • While you don't specifically mention it, your argument reminds me slightly of the people who maintain that internet sales ought to be taxed merely on the assumption that "ma and pa, brick and mortar" stores are losing out on sales to the internet. And believe it or not, it IS one of the major arguments that proponents of internet sales tax use.

    Sounds a bit like the RIAA & MPAA debates, doesn't it? I'm sure most everyone on slashdot knows where they stand on those issues.

  • Heh, no it's not illegal. :) My mom owns a store and explained this to me just last night. Some stores will charge a 3% surcharge, because that's what the credit card company charges *them* to use their system to make a sale. It isn't as common now, but I remember a period in the late 80's where every store and gas station had huge "CREDIT SAME AS CASH" signs everywhere.

    Nowadays, most stores just choose to eat the 3% in the interest of keeping the customer happy.
  • Heh, well I guess that could be true also.
  • From the constitution:
    The Congress shall have Power... Article 1, Section 8, Clause 3: To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes.
    I don't know what arguement allows the states to get away with Use Tax. But they should expect a fight if they want retailers in other states to collect their sales tax.

    --

  • Hemos writes:

    US States Vote 26-0 To Move Towards Taxing Non-State Sales ... 26 states, with three not attending/voting ...

    Did the other 21 states go home for holidays? Or were they voted out of the Union recently?

    I guess it should be noted that these twenty-nine states belong to a coalition known as the Streamlined Sales Tax Project [geocities.com].

    My beloved North Dakota seems to be a participating member [geocities.com]. Guess it hasn't become a wildlife reserve just yet.

    Happy holidays, and remember: there are fifty states in the Union. Should any fewer involve themselves collaboratively, you [the editors of Slashdot] may want to mention in passing the reason why. :)

  • Here's the actual proposal [geocities.com], from the Federation of Tax Administrators. [taxadmin.org]

    The basic idea is that sellers who sell interstate will be required to use a commercial "tax service provider" who takes in the shipping address, computes the tax rate to be applied, collects payments from the seller, and sends appropriate amounts out to the appropriate state and local taxing authorities. This makes interstate sales taxes for online sales practical.

    No sign yet of a protocol spec for transactions with the tax service provider.

  • This is also the case in Massachusetts. If you purchase something outside of the state (via the net, via mail, in person, or whatever) you are legally obliged to pay a "use tax" that is equivalent to the local sales tax in MA when it comes across the state border. Enforcement is non-existant except for companies. In those cases the recovery is large enough and the purchases well enough documented (for other tax purposes) that it is worthwhile for the MA to take a bunch of accountants and squeeze folks for it. Still I get fried that the other states want me to be their enforcement mechanism when I don't live in their states and derive any benefit from the taxes that they will collect. If they have laws like MA and TX, then they should go after their own citizens.
  • I have never known the "state" (be it the federal gov't, the state gov't or the local gov't) to not want to opt in on people's wallet. While there may be some real rationale in taxation at the source of a transaction, since the seller theoretically enjoys the benefit of the services derived from their tax dollar, taxation at the full rate is excessive. At most, the state should be taxing at 50% of their normal rate since only one of the parties lives within their state. Anyway, this sort of stuff has always been an effort on the part of the state to demand that I be their unpaid tax collector. While I do not mind "doing my part" as my contribution to the common weal, it is getting to the point where I am having to devote large amounts of space and time to compliance, Enough already!

    Anyhoo, there is a jurisdicitional issue here. Where am I located? At my ISP, at my house, where? I have and will pay local sales taxes to my local state of residence on sales I make of taxable items to within my state, but gang, this is an open invatation to a massive non-compliance by many, many of the smaller dealers...

  • (1) Somes stores add a surcharge for paying with credit cards.

    I keep thinking for some reason that this is illegal. Can anybody confirm or deny this?

    ---
    cat /dev/random > /dev/hda3
  • Cutting through a lot of the hogwash that's thrown about on this issue.... there's one very simple reason that states can't charge tax on out-of-state sales. They don't have the jurisdiction to enforce it! If a state passed a law saying that out-of-state companies had to collect sales tax, and some company violated it, how could the state enforce that law, unless the company had an office or something in the state?

    And that's the crux of the matter, and between that issue and the Constitutional restrictions against interstate trade barriers, proposals like this don't stand a chance. And they shouldn't.

    And I'm tired of hearing how states "lose" revenue just because the don't have the power to tax everything they want to tax. They don't lose any money, no money leaves the state coffers. Yes, they take less from the consumer when it's an out-of-state sale, but that's quite different from "losing" money. This speaks to the issue that money doesn't belong to the state, it belongs to the people. New Hampshire doesn't have any sales tax. Do they lose anything when a NH resident buys out of state? Of course not. Nor does California or Massachusetts or any of the other greedy legislatures who think they have some entitlement to a portion of everything we spend.

  • While I agree with you, I hope that it is based on the buyer's home state (I live in Oregon and we don't have a sales tax)

    Personally, I would prefer that it were based on the seller's home state, and not just because my home state (Utah) has sales tax. Business operations are fairly easy to move if there's an incentive to do so, and basing the tax on on-line sales on the seller's state would incent them to move to states that have no tax, which would, in turn, incent states to eliminate or reduce sales taxes wherever possible. I like the notion of state governments having to compete with one another for residents and businesses.

    However, I don't think there's any question about the fact that the buyer's tax would apply. The issue at hand is how to arrange things legally and logistically so that it's feasible for sellers to collect the taxes and disburse them back to the appropriate states.

  • Remember, not all states have sales taxes. Montana, Arizona(?), and Vermont or Oregon don't have sales taxes so they wouldn't participate in this.

    Speaking of this...we should be examining why some states rely upon a sales tax, an income tax, and property tax where other states just use an income tax and property tax.

  • Makes mailorder less attractive (Score:3)

    by fishbowl ( 7759 ) on Saturday December 23, 2000 @06:17AM (#542208)
    One of the big benefits of no tax on mailorder
    sales is that you have a built-in discount that
    is usually negated by the "shipping" and "handling" charges. With sales tax added, mail
    order will cost more than local retail stores,
    and local stores will be able to provide instant
    gratification. If I had to pay sales tax on the
    boox I order from fatbrain, I'd start buying them
    at a local bookstore instead, since the tax represents the discount.

  • Re:Unconstitutional (Score:3)

    by NMerriam ( 15122 ) <NMerriam@artboy.org> on Saturday December 23, 2000 @08:34AM (#542209) Homepage
    Oh, great, another Sovereign Citizen.

    http://www.militia-watchdog.org/suss2.htm#sovere ig n

    How many times do judges have to say "Petitioner's arguments are no more than stale tax protester contentions long dismissed summarily by this court and all other courts which have heard such contentions." before you guys stop spending $39.95 for TOP-SECRET INFORMATION on how the SUPER-WEALTHY avoid paying taxes!!! Call now, only REALLY SMART PEOPLE (like yo!) can do this!

    ---------------------------------------------

  • Re:Isn't it illegal for states to collude like thi (Score:3)

    by Mr. X ( 17716 ) on Saturday December 23, 2000 @02:06PM (#542210)
    US Constitution, Article I, Section 10:

    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.

    Looks like you're right.

  • Re:My take (Score:3)

    by KingJawa ( 65904 ) on Saturday December 23, 2000 @07:17AM (#542211) Homepage
    Did you quote his post and not read on? The original poster shows where government gets money for things like streets, municipal services, etc. He referenced the gas tax, property tax, and could have included tolls.

    Also, things like "Microsoft Highway" do exist. They are called "Adopt a Highway" programs; corporations and organizations can fund highway cleanup, repairs, or whatnot and get a little sign on the side of the road saying how nice they are. Many states run this program.

    Many municipalities -- especially in suburbia -- allow private citizens to buy the roads on which they live. This basically allows for gated communities, but it also means the town doesn't pay for repairs or snow removal.

  • "use tax", some states still try to get you (Score:3)

    by dkh ( 125857 ) on Saturday December 23, 2000 @06:07AM (#542212)
    Can't collect sales tax? Then go for something called "use tax". Didn't keep your reciepts? Thats ok, based on your income you can use this handy little table to decide what ammount of self reported use tax you should pay us.

    "What? You didn't buy anything out of state? Well then you can explicitly claim 0 but we're gonna look at those closely"

    "Oh, you paid 3% sales tax to another state for the purchase? Well hmmm... we charge 5% for our sales tax so how about you pay us 2% use tax and we'll call it good."

    Sounds like sales tax to me. Sounds unconstitutional to me, anyone have deep enough pockets to fight it?

    Welcome to Maine. I understand a number of states use this same scam.

    Last time I bought a PC from Micron they charged me sales tax. They have _no_ nexus here in Maine. But they decided it was easier to cooperate with the state for some bizarre reason.

    This is all a big joke. Can't tax interstate trade? Well call it something different yet base it on the same thing. Something seriously needs to be done about this.

    Perhaps its a good thing that the internet sales are gaining a lot of attention. Perhaps its time to stop the states from collecting any kind of tax based on sales (whether you explicitly call it sales tax or not) and let the feds collec it. Then dole it out back to the states based on some formula that takes into account revenue generated and population and keep a percentage for the US Treasurey and reduce or eliminate the income tax.

  • which state gets the money? (Score:3)

    by TwP ( 149780 ) on Saturday December 23, 2000 @06:01AM (#542213) Homepage
    I'm just curious about which state will get the money? I live in Colorado and recently bought a Dell laptop (Dell is headquartered in Texas). Would the state of Colorado get the tax money or would Texas? Or maybe both states would tax the transaction at a reduced rate so they could split the revenue?

    There is no easy answer to this question. As the buyer, it would be my preference for the tax money to go to Colorado. That it would benefit the infrastructure of my state and not Texas. But I'm sure Dell and the state of Texas could make the same arguemnt.

    Then there is also the question of verifying the location of the purchaser. How are they going to do that on the internet. Shipping address would work, unless you have the item sent to a friend who lives in a state with no sales tax.

    But that is my biggest question, who gets the revenue?


    -----------------

  • I like not paying taxes as much as anyone, but I have to admit it's not fair that a local retailer gets taxes, but if I order from an Internet site, it's not taxes.

    Personally, I've always liked the idea of moving toward a national sales tax as a replacement for the income tax. It would do wonders for saving and privacy (since you would no longer be required to report income). Of course, the problem is that recent administrations (read: Democrats) wanted to add the national sales tax, which would totally suck.


    --

  • Why not? (Score:3)

    by MissingFrame ( 205666 ) on Saturday December 23, 2000 @06:00AM (#542215)
    I know this flies in the face of the general anti-tax sentiment, but there are a handful of places I do mail-order that actually have a nexus within my state (Washington). I think it's unfair for places to have to compete with out-of-state sales simply because they get around a tax loophole. By the way, I believe Washington requires state sales tax to be paid no matter where the purchase is to be made, so technically they're making it EASIER for us since the consumer burden is back on the storefront.

  • Might not be too bad a thing (Score:3)

    by osgeek ( 239988 ) on Saturday December 23, 2000 @06:10AM (#542216) Homepage Journal
    If a state is losing major revenue from online sales, it'll just try to make up the difference with higher local taxes. That disproportionately hurts poor people who don't have the access to eshopping.

    If states would look at this Internet taxation as being a way to even out their tax structures (as opposed to being a big windfall), I'd have no problem with it.

  • Isn't it illegal for states to collude like this? (Score:4)

    by root ( 1428 ) on Saturday December 23, 2000 @06:09AM (#542217) Homepage
    You know, if all the major oil refineries in the US got together and agreed to "simplify and create uniform pricing", the FTC would be preparing the gallows to bust these guys as an illegal cartel for price-fixing.

    Why is states all colluding together to fix sales taxes any different?

  • Internet sales are currently subject to taxation! (Score:5)

    by bwalling ( 195998 ) on Saturday December 23, 2000 @06:38AM (#542218) Homepage
    The consumer is the one responsible for paying sales tax. Retailers, etc have been providing the service of collecting and remitting the sales tax on behalf of the consumers. They get a discount from the states for doing so.

    On all sales on the internet, and from catalog, the consumer is still responsible for paying the sales tax. It has just become common place for retailers to not collect it because it is an enormous pain in the ass for them to keep track of all of the local taxes (there are services like Vertex that will provide this data for a fee). In these Internet sales situations, the consumer is obligated to calculate and remit the tax to their local taxing authority. This just never gets enforced.

    So, they aren't going to create any 'new' taxes, they are just going to force retailers to collect the taxes that have always applied. This will be more difficult in some industries than others. For example, with dental products (those sold to dentists, not consumers), the tax classification for each product varies from state to state.

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