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The Almighty Buck

Evolution Of The Online Tax Debate 211

Posted by Hemos from the money-money-money dept.
rhwalker22 writes "Last November, the Streamlined Sales Tax Project drafted a plan to make it easier for states to cooperate in collecting sales taxes on products sold over the Internet. That plan is now headed to governors and state legislatures for debate. While that debate begins, the sales tax group is moving into new territory, debating how to apply sales taxes to digital services, like music and software downloads, and IP telephony. Most states participating in the sales tax project have sent representatives to Tampa, Fla., this week to take up this subject, according to a report by washingtonpost.com."
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Evolution Of The Online Tax Debate More

Evolution Of The Online Tax Debate

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  • I'm pretty sure this is what our government is doing with our hard earned tax dollars:

    cd /pub
    less tequila
    more beer
    dd if=/dev/conciousness of=/dev/null

    --g33k

  • VAT while across the ocean (Score:5, Interesting)

    by ostone ( 156892 ) <ostone*your pants*@ostone.net> on Friday January 24, 2003 @05:45AM (#5149688) Homepage Journal
    When I went over to London I got told about VAT refunds. If you are a tourist in Britain you can get back most sales tax (Value added tax) if you save the recipts and it is over some base cost. The reason I heard for this is that a visiter recives no benefit for the tax and therefor has no logical reason to pay it. This seems to be the case with internet shopping... I don't live in North Dakota so why should I pay for kids to go to school there while not contributing to my state... now if the tax was being proposed from the originating state it makes a little more sense, but is still a streach. The long and short seems to be that the states are strapped for cash and trying to collect more taxes without making new taxes.
    • By that logic, people who do not have kids should not pay taxes for schools. People who do not drive, should not pay taxes that support the building of roads. There's a million other examples I could give.

      • Re:VAT while across the ocean (Score:5, Insightful)

        by vrai ( 521708 ) on Friday January 24, 2003 @08:17AM (#5149848)
        That would be the point. What's wrong with private schools and toll-roads? What's the betting that they'd be both better and cheaper than the current state provisioned systems.

        • Re:VAT while across the ocean (Score:5, Insightful)

          by prichardson ( 603676 ) on Friday January 24, 2003 @08:53AM (#5149927) Journal

          The state budgets are trashed because they spend too fscking much on prisons. We need to retool our legal system (especially the drug laws) so that we dont fill our prisons with people who got cought with a tiny bag of weed. I'm not suggesting legalization, though that would be nice. I'm suggesting maybe first offenders get community service, a big fine and probation.

          Also, toll ways are bad. They were designed to allow the roads to be built, but when the road is paid off they still charge you. They keep charging you because the beurocracy of the toll way doesn't want to lose its' jobs.

          Moderators: This is my opinion and I don't care If I get modded down for it; I've hit the Karma cap.
          • I understand that once roads are built, that's a huge one time cost that may never happen again at one time.

            However, I would think that maintenance of said road would still be expensive. Especially with large semi trucks etc. The roads can't take care of themselves.....
        • I don't care so much about roads, but for "equal opportunity" to mean _anything_, good schools need to be available for everyone - not just the people who can afford it. Without a widely-available societal mechanism to allow people to haul themselves out of the gutter, you're going to end up with a society that has a frozen class structure with massive inequity.
        • That would be the point. What's wrong with private schools? What's the betting that they'd be both better and cheaper than the current state provisioned systems.

          What's wrong with private schools? Well, it depends. It can be great to have independently run schools, provided they're publicly funded. But if you have to pay for your private school, then only wealthy (or smart & organised) parents will be able to get their kids into decent schools.

          The more education is privatised, the more the population of poorly educated, alienated people grows. The kids who get the dregs of a market-based school system have a hard enough start in life as it is.

          Note: the United States has further complications in its school system, if I understand it correctly, because public funding for schools comes from local government, and thus the value of your property determines the quality of your local school...

      • it's not quite an extension of that l9ogic.....you pay taxes for kids to go to school becauseyou benefit by having a higher skilled workface, that can afford to pay more tax and [in theory] perhaps lower your contributions. same with central roadss etc. now you don't pay contributions to other countries tax bills [directly!] as you WOULDN'T recieve such benefits, so the VAT back is a sensible item
      • Money to pay for roads should come from a fuel tax. People who use them more should pay more. The cost of shipping goods would be rolled into the product anyway, so someone without a car would still pay their share.

        As far as the school payments go, I tend to agree with that also. Why should I pay for someone else's kids? It's bad enough they get a tax break, so I'm paying some of their share anyway. My taxes are higher to cover the portion they don't pay, simply because I have no kids.

        Why am I being penalized for remembering to wrap my willie?

        • "I don't have anything worth stealing, so why should my taxes pay for the police? If don't drink milk, why am I paying for dairy farmer subsidies? I never go hiking, why should my money go towards national parks?" It's called a social contract. Even the childless benefit indirectly from public education, so we've decided that everyone should contribute. You're paying for the right to utilize public schools; whether you choose to exercise that right is your business.

          More to the topic at hand, the issue with interstate taxation is that monies you pay to another state do not grant you any representation, privileges, or benefits. If I, a New York resident, pay sales tax to the state of Maine when I order something from Land's End, what am I getting out of it? Conversely, if Land's End is saddled with collecting taxes for New York State, what's in it for them? All they're doing is shipping a package here, so it amounts to an unconstitutional interstate tariff.

          (The way some states have been getting around that problem with things like automobile purchases is by dint of a mutual agreement, a bargain you'd have a hard time striking with any no-sales-tax state.)

    • This only applies if you're from outside the EU.

      Equally it should apply in this case if you're outside the US

    • Not just overseas! (Score:3, Informative)

      by Surak ( 18578 )
      I live near Detroit. I'm about 15 minutes from the Canadian border and I can tell you that Canada has a similar law -- you buy stuff in Canada and if you save your receipts for items over some base cost, you can send them to the Canadian government and they'll cut you a refund check for the GST taxes (Goods and Services Tax).

      • Yes, you get GST back which is a federal tax, but not PST which is a provincial tax.

        IIRC (and I'm no expert), VAT is a federal (country-wide) tax as well...
        • Yes, you get GST back which is a federal tax, but not PST which is a provincial tax.

          I dunno about the PST...someone told me that you can get it back, but I think they're confused by the fact that you can write off 100% of all you pay in PST in Canada on your U.S. federal income tax (which I don't think you can do with the GST, because you're expected to get that back from Canada).

    • Your wrong about a couple points, what they want to do is collect from you taxes you owe your own state. If you buy from a website in North Dakota and live in South Dakota, so South Dakota wants the website in ND to collect from you for the sale/use of goods for use in SD for them. Previously there was no way for SD to compell the website in ND to comply. Very likely you owe your state use taxes on the goods you bought in London, but are using in your home state. There is nothing that I'm aware of that keeps SD and ND from passing laws requiring retailers in their states from collecting and paying to the states their use taxes.

      Actualy most sale/use tax laws are difficult for businesses to completely understand, add in how the courts have interperated many cases, its means a mom and pop operation on the internet, or telephone sales, or mail-order would have to hire 50 laywers in the 50 some States and territories. If they manage to clean up the mess of laws in the various states, and come up with a easy reporting system, it's likely to happen.

  • Dice Finance (Score:1)

    by Anonymous Coward

    Well with their homes in hock and health insurance premiums soaring, Americans are filing for bankruptcy protection in record numbers.

    Personal bankruptcy filings in the third quarter jumped to 391,873, up 12% from a year ago. That puts filings on track to surpass last year's record high of 1.45 million. The surge continues a trend that started in the mid-'90s. But the nature of the debt woes has changed.

    "The amount of borrowing has been rising faster than incomes," says Stuart Feldstein, president of SMR Research. In addition to credit card debt and steep medical bills, many consumers now are bingeing on mortgage debt and home equity loans, putting their homes at risk.

    They are buying homes with smaller down payments, financing 90% or more of the loan amount. And old rules limiting the amount a home buyer could borrow have largely gone by the wayside.

    "Lenders are flush with cash," says Keith Gumbinger, at mortgage tracker HSH Associates. "The debt-to-income ratios used to be cast in iron, but now they're just guidelines."

    Low interest rates also have spurred homeowners to consolidate credit card debt and other bills onto home equity loans and lines of credit. That often provides only a temporary reprieve.

    "They have so darn much debt that even at low rates, it's hard to pay," Feldstein says.

    Mortgage delinquencies are on the rise, and the number of homes going into foreclosure is at the highest rate in 30 years, according to the Mortgage Bankers Association of America.

    Compounding the problem: Stock investments have lost ground. Savings rates are barely keeping pace with inflation. Many workers have been downsized out of jobs and into lower-paying ones.

    Medical debt also weighs on consumers, playing a role in about half of all filings. Last year, the number of Americans with no health insurance increased by 1.4 million, to 41.2 million, according to the Census Bureau.

    Faced with rising bankruptcies, creditors have pressed Congress to tighten the law. They say many debtors load up on credit card debt and use bankruptcy to escape bills. That legislation has yet to be enacted. "Another national record in personal bankruptcy filings at the end of this year could help fuel renewed calls for changes," says Samuel Gerdano at the American Bankruptcy Institute.

    so a bit of online tax is the least of your troubles, there is a queue of people outside USA who want paying back cos you spent it
  • how is the tax gonna work for ppl in other countries? (there are other places than the USA you know)
    • They would have been purchasing something worth the S&H in the first place. If they come for a visit and make a purchase, they pay tax don't they?
    • how is the tax gonna work for ppl in other countries?

      Simple. We stop ordering things from the USA. and go elsewhere.

      It's your econemy, do what you want! ;-) I suggest you try to explain to your leaders how e-commerce works. It's of no relevance to me where I order things from.

  • Why tax? (Score:5, Insightful)

    by dytin ( 517293 ) on Friday January 24, 2003 @05:47AM (#5149697) Homepage
    Why even tax the internet? After about 5 years of e-commerce being popular, we have seen the market take off. It started off with some bumps, but after the bubble burst, and all of the stupid dot-com companies died out, we were left with many legitimate e-commerce sites that were pulling in a large profit. Rather than law-makers seeing this as a sign that maybe low taxes are good, they see this as an opportunity to tax further. If law-makers truly believe that internet commerce is hindering their states because it is so cheap, then they should lower taxes in their state rather than trying to levy taxes on the internet.

    It's kind of like two kids. One is very gifted and one is just regular intelligence. If you want to help the regular kid, you should spend extra time with him and help him. You should not try to force the gifted kid to act dumb.

    • Re:Why tax? (Score:2, Insightful)

      by Hittite Creosote ( 535397 )
      You're missing the point - governments tax so they can spend it on things. Whether it is to educate kids or buy new shiny bombs, or give it back to their friends, governments just love getting their hands on money. They'd tax the internet because they think they can.

    • Rebirth of digital cash.. (Score:4, Interesting)

      by MikeFM ( 12491 ) on Friday January 24, 2003 @08:15AM (#5149846) Homepage Journal
      I think they'll just encourage people to use digital cash. The lack of taxes has allowed credit cards and even checks to become the common method of payment online. If the government begins taxing these sales it'll encourage people to use digital cash. If there are people willing to use digital cash there will be people that will supply it. Sure most will suck and the rest will battle but eventually one or a couple will become the new defacto standards.

      Why would a company provide the framework of digital cash without charging any fees? Simple! You get people to pay you in real money and you give them digital money. You don't have to offer to convert digital money back into real money if you have enough customers that it is practical to buy and sell everything in digital money. Other people would step in to convert currencies if there was enough demand. Therefore you suddenly have a money funnel filling your own bank accounts. Invest that money in land, gold, precious gems, or whatever is pretty stable and you have a fortune and your fortune makes your digital money more valuable thus creating a nice cycle. Just issue yourself whatever paychecks you want and live like kings.

      Think of the EBay/PayPal marriage. If they moved their operation out of the US and issued their own currency that was easy and cheap for everyone on EBay to use and made it available to other sites to use as easy as they already use PayPal.. well you see where that goes. It's not that far fetched.
      • extremely interesting idea indeed!

        first, the governement is taxing too many different things all over the place. most likely so the population doesn't realize the exact amount they're actually paying. don't charge the poor income tax, charge them sales tax. middle income families, they get double wacked. upper income, well, they get a slight hit in the income tax, but they're able to save a lot and can find ways around some taxes. pick one thing uncle sam and tax it all across the board!. i've got 3 different governments wanting sales tax on my income, plus some old-age governement-created-quasi-retirement system that needs to be completely eliminated or at the very least optional.

        now, back on the topic of the poster. a company will definately see taxing internet purchases as an opportunity to act as an offshore clearing house for internet sales. the sale will actually occur offshore and no taxes will be incured. or some such. however it's implemented, there's a technical problem that people will be paying internet taxes (the state gov't are in too big a pinch these days and are all looking for revenue from places mostly from overspending during the .bomb era). there will be a technical solution that will be implemented probably first by some h4ck0r, then by a reputable company.

        during the late 90's most people didn't mind paying their taxes. but now that the gov't can do what most normal people do and live within their means, they're raping people for more and more when people have less and less to give. my governor (OH-Bob Taft) just proposed raising taxes again on cigaretts and alcohol to cover part of their lack of income. i'm sure the legislature will approve what he wants.

        • ...the population doesn't realize the exact amount they're actually paying.

          An accountant I know says that most people don't realize it, but they pay about 60% of their income in taxes. Think about all the other taxes, besides the obvious, that you pay for (this varies by locality, of course):

          • gas tax at somewhere at $0.30 - $0.40 per gallon,
          • sales tax
          • food tax
          • cigarette and liquor tax

          Anyone think of more?

          • Food tax? Where do you live? Everywhere I've been, groceries (unprepared food) are exempt from standard sales tax. Some things that are considered either luxery or prepared foods (things like soda or microwave dinners, I think) are still taxes at the standard sales tax rate.

            But you're right, there are a lot of taxes. And another poster mentioned the taxes you don't directly see because your employer pays them for you. So whatever is taken out of your paycheck in taxes, double that is your real income tax burden.

            It's amazing that the government is not only able to spend that much money, but is actually able to spend _more_ than what it takes in. Of course, it does do a lot of good things with that money, but it's still amazing. Especially since I still clip coupons to save 25 cents on food (and by that, I mean I'm cheap -- I know there are people who need to just to get by)

      • Re:Rebirth of digital cash.. (Score:4, Insightful)

        by Idarubicin ( 579475 ) on Friday January 24, 2003 @10:12AM (#5150315) Journal
        Why would a company provide the framework of digital cash without charging any fees? Simple! You get people to pay you in real money and you give them digital money. You don't have to offer to convert digital money back into real money if you have enough customers that it is practical to buy and sell everything in digital money. Other people would step in to convert currencies if there was enough demand. Therefore you suddenly have a money funnel filling your own bank accounts. Invest that money in land, gold, precious gems, or whatever is pretty stable and you have a fortune and your fortune makes your digital money more valuable thus creating a nice cycle. Just issue yourself whatever paychecks you want and live like kings.

        Wow! This was tried in many nations--including the United States--in the nineteenth century. Some countries still use a similar system, wherein banks are allowed to issue currency. Very tight regulation is required, or else you end up with problems--similar to those in the United States--where organizations issue currency without assets to back it up, make it difficult to redeem their "cash" for real dollars, or just the money and run, leaving customers with worthless paper.

        In the United States between 1837 and 1863 roughly five thousand different types of bills were issued by more than a thousand different banks. Counterfeiting, fraud, and just plain bad customer service ran rampant. Of course, none of a bank's holdings were insured by the federal government as they are today (FDIC in the U.S., CDIC in Canada; similar bodies in other developed countries.)

        You're asking us to cavalierly give thousands or millions of dollars to essentially anonymous individuals on the internet and endow them with the powers of what amounts to a central bank, while letting unfettered free market forces work things out? Go ahead--Ask Slashdot: Is everyone happy with the PayPal customer service department?* Don't think so.

        If it walks like a bank and quacks like a bank, it damn well ought to be regulated and insured like a bank. Until then, credit cards will reign.

        *Trick question: it's already been addressed on /. The answer is 'no'.

        • You didn't read my whole suggestion. I did suggest that a smart company would poor all such income into assets that would remain halfway stable such as gold.

          Do you actually think the US has their currency fully backed by gold or anything more than paper and a pipe dream? Besides that what is backing up the value of gold other than it's shiny and humans have the intellegence of raccoons (they'll die to hold onto something shiny)? The real value of a currency is in maintaining flow between users of that currency so products and services keep coming. Digital cash has some major benefits in that it flows easier than outdated paper money. The stock market is more similar to digital money than is a national currency.

          Also your assuming that because 5% of the population actually thinks that banks and the US government know how to manage money that the rest of the people of the world wouldn't use digital cash. Checks, gift certificates, credit cards, etc are all forms of currency. The only difference between those and full digital cash is that those things aren't easily transferable between individuals (they have a merchant-customer relation).

          And yes a good many digital cash companies would probably be swindles and/or bomb but like any merchant those who do the best job at convincing customers in the long term will survive. In this age corporations are often more stable than many nations.

          Don't think people would use it? Look at how many people send money (a lot of money) to total strangers on EBay without any proof that they'll get anything back. Look at how many customers do use PayPal and similar services. People will use it if it is easy and free. People don't care about stable, secure, insured, etc. Look how many people use Windows.

          I've transfered thousands of dollars back and forth using PayPal since their inception and have had no major problems and they answered my questions far better than most of the banks I've had. Most of the complaints I've seen has been because of PayPal's growing pains or stupid shit like "I used my name for my password and someone stole my money.". They are easier to use, more reliable, and deliver higher interest payments than any of the banks I've used. I've used banks all over this country and for the most part they've all been pains in the ass and all managed to rip me off or lose my money at some point. Something PayPal has yet to do. My ony real complaint with PayPal is that I have to keep another bank account in order to cash my paychecks and transfer the funds to PayPal. Simply because my current employer's accountant didn't feel comfortable sending paychecks with PayPal.

  • Ridiculous! What about the US Consititution!? (Score:4, Interesting)

    by Anonymous Coward on Friday January 24, 2003 @05:48AM (#5149702)
    Ridiculous! What about the US Consititution!?

    When state Governors are sworn in they USUALLY take an oathe to uphold the US Constitution and to defend it.

    They are not if they keep trying to fight it with ridiculous crap like this. Some states have no sales tax for example like the wonderful state of Washington.

    As everyone knows it is unconstitutional to tax interstate commerce or subject levies and tariffs.

    The only exception to taxing telephone purchases or internet prurchases between two states is when the company collecting the sales tax HAS PHYSICAL BUSINESS PRESENCE in both states.

    I hope people see this at 4:49am EST and put his thread to rest.

    The whole idea is UNCONSTITUTIONAL. And ammednig the constitution is a dangerous action, once it starts the constitution is open for modification until closed and ANYTHING can happen during the debate.

    This stuff makes me sick. California and New York should be ashamed for their socialist spending practices.

    • Washington has a sales tax. Over 8% I think.

    • Re:Ridiculous! What about the US Consititution!? (Score:5, Insightful)

      by kahei ( 466208 ) on Friday January 24, 2003 @05:55AM (#5149723) Homepage

      Hmm, good point.

      After all, if it were possible to create unconstitutional legislation, we'd have suspects being indefinitely detained without trial, copyrights that last forever... why, it doesn't bear thinking about!
    • When state Governors are sworn in they USUALLY take an oathe to uphold the US Constitution and to defend it.

      Hmm, do they? I believe they swear to uphold the State Constitution.
    • When state Governors are sworn in they USUALLY take an oathe to uphold the US Constitution and to defend it.

      *snip*

      The whole idea is UNCONSTITUTIONAL. And ammednig the constitution is a dangerous action, once it starts the constitution is open for modification until closed and ANYTHING can happen during the debate.

      Right, because it would be inappropriate for a Governor to urge constitutional change if he or she felt it in the best interests of his or her people. If we let that sort of thing happen, Congress could do something really dumb, like abolish slavery, or protect people from self-incrimination, or worse.

      Operating within the Constitution includes making suggestions that it be changed--not through violent revolution, but through the mechanisms that were built into the document for that very purpose.

      Whether or not the taxation considered is unconstitutional (IANAL), and if it is, whether or not the hassle of an amendment should be pursued (IMHO not), are side issues. Politicians should be free to urge changes that are (on their face) unconstitutional, if they are prepared to follow through with an amendment. If a question falls into a gray area, that is a matter for the courts--that's why the judiciary exists.

    • When you think of unconsitutional, you are probably thinking of two parts:

      Article I, Section 8, Clause 3: "[Congress has the power] To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes;

      Article I, Section 9, Clause 6: "No Preference shall be given by any Regulation of Commerce or Revenue to the Ports of one State over those of another: nor shall Vessels bound to, or from, one State, be obliged to enter, clear, or pay Duties in another."

      1) The obvious: Of course the federal government is the only power that can regulate commerce "among the several states". Duh. That means that State C cannot do anything out of the ordinary (i.e. charge special tolls) for vessels going between States A and B that happen to pass through State C.

      2) Amendment X states that any powers neither reserved by the federal government, nor prohibited to the states, the states are allowed to have. That means that unless it says "No state", or Congress retains the power for itself, then the state may do it. That means the feds can pass no law giving preference to the "ports" of one state over another, but that does not limit what the states may do in any way. When the founding fathers meant to restrict states, it was explicitly called out. (i.e. Art. I, Sec. 10)

      3) State A cannot compel State B to collect tax for State A. However, State B is perfectly allowed to voluntarily do so, and pass the revenue along. They can do this because Art I, Sec. 9, Cls. 6 does not limit states, only the federal government. That means that Amd. X lets that power default to the states.

      4) But that is regulating Interstate Commerce, you say! A power explicitly reserved for Congress! Nope. State A may tax businesses within State A more or less however it pleases. Just because the money comes from out of state matters not. Right now, it is perfecly constitutional for State B to make residents pay tax on goods purchased from State A. (This is the case in most states, actually.) This is becasuse State B has the power to tax it's own residents.

      SirWired

  • So much for online sales (Score:3, Insightful)

    by visualight ( 468005 ) on Friday January 24, 2003 @05:49AM (#5149704) Homepage
    Why buy online and pay tax AND shipping?

  • Is there an import tax on things being shipped by a single-package shipping company? Like, if I buy something mail-order from Japan, is there a tax the US imposes on the postal service to bring the box across the border?

    Because if not, it seems that all this does is put US e-retailers at a disadvantage to sell to the best market (US consumers) in the world in an increasingly competitive time.

    I mean, why not sell to the US from Toronto, and to Canada from New York?

    • I mean, why not sell to the US from Toronto, and to Canada from New York?


      Because of the import tax? The one you should technically have been paying already, but which isn't normally levied on small packages -- yet? I imagine they'll start enforcing it if and when they implement a domestic sales tax.

      Incidentally, here in lovely socialist England I am likely to pay 20% tax plus another 15% or so in tax-like handling charges on every single thing I mail order from the US -- which is a lot, since you can't buy clothes here unless you're a dwarf who loves terrible clothes. Luckily, the money is spent on a worthwhile cause, i.e. huge subsidies to companies that spend it on executive pay, share dividends, and disastrous foreign speculation. The locals love this state of affairs because hey, that's socialism!

      (Prepares to lose all his karma to righteously indignant English people who think giving away your economy is morally virtuous and that the world is grateful to them, but heroically does not click the 'anonymous' button!)
      • As an American living in Canada I also have to deal with customs fees when I buy things from outside Canada. What annoys me is that my Canadian co-workers all say "why not buy locally?" as if I was doing it to screw the Canadian economy and not because the books, CDs,and computer equipment I order just can't be had locally. Incidentally, I don't believe the US has such fees -- I'm a fan of German music and never had any problem shipping CDs from Germany to the US when I lived there.
      • I am likely to pay 20% tax plus another 15% or so in tax-like handling charges on every single thing I mail order from the US

        That's pretty unlucky. I've been importing DVDs etc for years, and I've only be taxed once or twice. Some things to know:

        • You are only taxed when the goods sum total is over a certain threshold
        • Big carriers like FedEx always charge tax because they have an agreement with customs on this. It enables them to get their packages through customs quicker

        Keep your packages small, and take by-land delivery, and you will mostly be tax free.

        you can't buy clothes here unless you're a dwarf who loves terrible clothes

        Your placing US clothing above European? Wow. Never seen that done before. What on Earth do you like wearing? ;-)

  • Let states compete on low cost of doing business! (Score:5, Insightful)

    by aquarian ( 134728 ) on Friday January 24, 2003 @05:54AM (#5149720)
    To keep governments honest in delivering value to their constituents, states should be forced to compete in offering low cost of doing business. If taxes climb too high, then the goverment isn't doing it's job well, businesses leave, the economy suffers, and the people vote the government out of office. This is the best mechanism we have for keeping governments accountable to the people -- just as companies have to offer value to their customers, and to their shareholders.

    Taxing across state borders is unjust and just plain stupid. We have enough barriers to trade around the world. Let's not start *within* our own country.
    • Surely you'd be in favour then? If a State has low costs for doing business, you as a shopper anywhere in the US can decide to conduct your business with firms in that State. They then have a competitive advantage, firms in other states complain and their business taxes are held low or are reduced to maintain their commercial opportunity.

      If, however, the tax is to be collected by the State local to the purchaser, you have the opportunity to vote your representatives out of office if you don't like their taxation policies. If your fellow electorate disagree with you and keep them in office, you have the right to move to a different state.

  • Re: need to pay more TAX (Score:2, Insightful)

    by Anonymous Coward


    i Agree, at some point we need to pay more TAX because of this financial wizard problem [google.com] when we start to pay it back is anyones guess, but im worried about the kids now,turning them into wage slaves (working for big corp) to pay our previous excessive dues doesnt seem to be fair somehow

  • Taxation w/o representation (Score:3, Informative)

    by natron 2.0 ( 615149 ) <ndpeters79@gm[ ].com ['ail' in gap]> on Friday January 24, 2003 @06:08AM (#5149748) Homepage Journal
    I am currently living in South Korea, serving a remote tour for the US Air Force. I do not pay taxes on base. When I purchase stuff online and it has to be sent to my APO address I get taxed with the outrageously high California tax, just because my APO address begins there and is then shipped over here. I am not a resident of the state of California, so there for I am not represented by the government there, which leads to the reason this country was founded on "Taxation without representation". Why should I support a state that I have nothing to do with? I have never even visited California, and probably never will until they change thier smoking laws. Of course this is just my uneducated opinion, but I am sure the bureaucrats see it differently and only care about the money coming in.

    • People who live in Washington DC pay federal income taxes, social security taxes, medicare taxes, and every other federal tax, and have no representation in Congress.
    • When I purchase stuff online and it has to be sent to my APO address I get taxed with the outrageously high California tax, just because my APO address begins there and is then shipped over here.
      I'm sure that this is wrong, not you but it's a missintreperatation of CA's law. California's and New York's laws cover their states not soldiers and sailors stationed physicaly in foriegn countries, just because the APO or NPO, Army Post Office or Navy Post Offices zip code is in CA or NY doesn't mean that those states have jurisdiction over people serviced by those zip codes. For those /.'s not aware of this, the army/navy operates a postal system for the soldiers and sailors benifit. These systems have zip code typicaly in CA or NY as hand-off points to the military systems. Several benifits to the Service Member is that the mail does not have to go through a foriegn country's sometimes less reliable mail system and as their units are physicaly move, their mail automaticaly follows. Furthermore civilians often establish a vendor agreement with the AAFES or NEX, Army/Air Force Exchange System or Navy Exchange and sell goods and services that are exempt from state sales and use taxes, because they are taking place on federal property, which is foriegn to the surrounding state. Just because a website in California isn't astute enough to recognise that they are making remote sales doesn't mean they are correct. you are probably due refunds, or at least an income tax deductions for taxes paid to a foriegn government. Technicaly many Indian reservations are foriegn to their surrounding states and sales should be exempt unless the goods or services cross the boarder back into state jurisdiction.

      Of course IANAL or CPA so check with your own pro's about this.
  • Well, tax the shareware downloads, as well as other stuff sold, as in, money actually paid.
    Kinda defensible - why should the internet be used as a sales tax shelter, particularly when people pay sales tax for fax, snail-mail and phone orders.

    But don't let them get any ideas about taxing downloads in cases where there is no money paid. Fucked if I want to go to bed after typing 'apt-get dist-upgrade' and wake up to find $25 added to my tax bill.
    • Huh? Thay don't pay for fax/phone/mail orders from companies without a nexus in the recipient's state.

      If I order via internet/fax/phone/mail from Smarthome (in CA, no Nexus in VA - where I live) I don't pay tax. If I order anything via any means from Crutchfield, I pay tax (Nexus in VA).

      Internet companies currently have the same interstate-commerce protections as mail-order houses. But the states, after binging on taxes generated by the stock market bubble of the nineties, need sustainable dollars to run their services. As internet commerce gets larger, a N% tax starts looking like real money - real money that State Legislatures are afraid to ask their populations for directly.

  • what really irritates me... (Score:5, Interesting)

    by night_flyer ( 453866 ) on Friday January 24, 2003 @07:42AM (#5149795) Homepage
    ...about this whole thing is the government, especially most of the States, dont spend the money they get wisely in the first place, so we are going to give them MORE money?

    For the last 10 years in Oklahoma the population grew at about 6%, government spending grew at about 70%, now there is a budget shortfall and the want to raise taxes!

    • Re:what really irritates me... (Score:4, Insightful)

      by ratamacue ( 593855 ) on Friday January 24, 2003 @08:46AM (#5149909)
      It is the logical nature of government to expand. The people who are most interested in gaining power are those who wish to control others -- not those who wish to mind their own business and live in peace. This is precisely why the US government is so overly complex and expensive today: Power and profit for those in control expands proportionately to the size of government (measured not just in tax dollars but liberty). You have probably heard of "political pork", i.e. government designed precisely to benefit those in power by expanding their "responsibilities". In the end, ALL government is "pork" to some degree, because it is impossible that government benefit everybody at the same time (except perhaps for government which protects against force, for example the local police responding to theft). By the reality of human nature, every person represents a unique thinking individual -- and thus a unique opinion on government.

      You have to view government as the business it really is, driven by profit and market share like any other business. Those in power are not there to benefit you -- they are there precisely to benefit themselves.

      Incidentally, this is the most important flaw in the concept of "government by the people". How can government be both "by those who wish to control others" AND "by those who wish to control themselves" at the same time? It is logically impossible.
      • The people who are most interested in gaining power are those who wish to control others

        FALSE. In the US, people run as Democrats to try to *prevent* Republicans from controlling others (Ideologically, Republicans want to do this by reducing the size of government through tax cuts even at the risk of damaging social programs that form the safety net of a moral, democratic society are undermined)

        People run as Republicans to *prevent* Democrats from controlling others (Ideologically, Democrats want to do this by regulating industries, opposing tort reform, and creating new social programs to benefit even the poorest citizen, even at the risk of stifling economic growth that can eventually raise the living standards of all.)

        At one point, Rand's objectivism had its appeal to me, but at some point you have to realize that real life is about respecting the philosophical arguments behind individualism and collectivism and then finding the right balance and working to achieve it.
  • I just bought a video card online the other day from a store in the same province I am in. They charged me tax for it and to be honest I didn't even notice.... it's been ages since I bought something online from canada so I can't remember if this is normal. Is the "no tax for online sales" in effect in canada right now too or just the US?

  • Said it before, I'll say it again (Score:5, Interesting)

    by wowbagger ( 69688 ) on Friday January 24, 2003 @08:59AM (#5149945) Homepage Journal
    ANTYTHING that increases the tax burden on the average person has a harm associated with it. It may also have a good, but there IS a harm to it as well. Remember, taxes are moneys taken from you by force if necessary and spent on items that you did not choose to spend it on.

    Back when government did as little as possible the harm taxes caused were less than the good they did. That is no longer the case, as government grows larger and starts doing things that are not in the common interest.

    It is therefor the duty of every citizen to see to it that the government gets as little tax money as legally possible.

    Giving more money to the government because they are having a budget shortfall is like buying an achoholic a drink because his glass is empty - it might seem like a charitable thing to do, but it really is harmful.

    NOTA BENE - I am not a "Business is Good/Goverment is Stupid" sort of person. I don't like big business any more than I like big government - I like small businesses and local government, because they tend to be more responsive to the individual. That is why taxing interstate commerce, be it done via the Internet, via the mail, via the telephone, or via carrier pideons is a BAD THING - it discourages local government and benefits larger governmental bodies.

  • Productivity (Score:4, Interesting)

    by seanadams.com ( 463190 ) on Friday January 24, 2003 @09:07AM (#5149976) Homepage
    It's amazing how hard people will work... if you let them keep the proceeds. I had a web designer friend who would work until about half-way through October, and then take the rest of the year off FOR NO OTHER REASON than to avoid being put in a higher tax bracket.

    Our tax code is fscking horrific. Let's just have a flat sales tax or a flat income tax, and quit the bullshit. Our country would return to incredible prosperity if we could just do that.
    • I agree, but what you are suggesting would spell obsolesence for those in power. And they are certainly not about to sacrifice their lucrative positions of power.

      As the saying goes, you can't rule a nation of innocents. The more complex and ambiguous the tax code, the more "responsibility" -- hence profit and control -- for those in power. A textbook example of this would be drug prohibition. Any rational, educated individual realizes that drug prohibition creates violent crime (from the resulting black market), requires insane tax rates and police effort, paves the way for corruption in government, destroys civil rights, and in the end, creates more problems than it solves. But again, you can't rule a nation of innocents. Imagine if drug prohibition was abolished -- business-wise, it would be the equivalant of dropping out of a profitable market. Entire government agencies (and the controlling elite) would have to be eliminated. And what business person wants to do that?

    • Your friend needs the advice of a tax attorney, or even the basest of tax books.

      A higher tax bracket only applies to that marginal income.

      If your friend worked all year, his income taxes of the first 10.5 months would stay the same, and the rate of the higher bracket would only apply to the money IN THAT BRACKET, i.e. the money he earned from months 10.5 - 12.

      Remember: tax rates apply to marginal income.

    • "FOR NO OTHER REASON than to avoid being put in a higher tax bracket"

      then he is a complete dolt.
      When you enter a new bracket,you only get tax on the money you earn IN THAT BRACKET.

      I would be nice if people who said are tax system is bad, and/or propose new system, would take the time to learn the most ELEMENTARY aspect of the tax system.

  • ...aren't you supposed to get something in return for tax? Taxes should be used for the common good, that's what democracies are about isn't it? You get roads for road tax, social security for income tax and so on. Of course the budgets get shifted around here and there, and 'the state' does get extra income out of it, but you see the point, but what would people get in return for Internet tax? More bandwidth? We're all already getting that. Not to mention that most people are probably *already* paying tax over using the Internet, by means of VAT. Now that the Internet no longer depends on US government funding for its existence, what would the US government offer the people in return to justify the tax?
  • They tried this with catalog sales too and the results were mixed. It comes down to one simple factor -- either they all have to do it or it will never work well.

    Why is this? Simple, if ten states enact Internet sales taxes and agree to cross-enforce then a company selling out of one of those states may be prosecuted by another state party to the agreement if they don't collect sales taxes for that state. But a company in a state not party to the agreement can thumb their nose at them!

    IANAL, but my understanding of the Interstate Commerce clause of the US Constitution is that a state cannot enforce laws restricting commerce between states and this applies. Only when you can get the government of the other state to act as your enforcer can you accomplish anything.

    All well and good, and perhaps lots of states will sign up to act as enforcers for each other. But all it takes is one state to hold out. Say Oregon, which has no sales tax and could use the extra business and employee income taxes if Amazon relocated south to Portland. Suddenly the states with the reciprocal agreement are not only *not* collecting sales taxes, they are also losing jobs as Internet companies move where they don't have to pay the tax. It is a loose/loose proposition and fundementally regressive.

    And, unless the consititution is changed, the US congress critters can't do anything about it either. That is, with one exception; they can enact a nationwide VAT and enforce that. But who gets those tax revenues?

    Once again, IANAL and might be blowing smoke. If Glenn Reynolds is reading this perhaps he can give us the real skinny...
    • The issue with catalog/phone orders is actually pretty damn simple (Squibb v someone is the relevant SC case). Technically, you're supposed to pay sales taxes on everything you buy from an out-of-state vendor. The vendor only has to _collect_ those taxes, though, if they have a presence (called nexus) in your state. If you order from the JC Penney catalog, you probably have the tax collected by JC Penney, since they almost certainly have a store in your state. If you order from LL Bean, the tax is almost certainly not collected, since their only store (AFAIK) is in Maine, and you probably don't live there. In the case of the LL Bean order, you're technically supposed to pay that "use tax" at the end of the year when you file your state tax return. Fact is, practically nobody does, which bugs the hell out of the states, and merchants, like Penney, who have in-state locations, and hence have to collect the tax, putting them at a disadvantage to companies that don't have in-state presence. Same thing applies to most Internet sales. If you live in Delaware, you're paying state sales tax on stuff you buy from Amazon, since they have a fulfillment center there, for example.

  • The reason why most people buy online is convenience. When shipping charges are added in, the total cost of most online products is around the same that a person would pay by visiting a brick and mortar store. But with online buying, a person doesn't have to deal with the inconvience and time involved with actually going to the store to make a purchase.

    So now the state governments want to start taxing internet sales. Problem is, in doing so, they are negating the price advantage for online retailers - consumers would pay both shipping charges and taxes, and online goods would cost substantially more than their brick and mortar counterparts. In tight economies, consumers are willing to forego convenience for the sake of getting a better deal.

    IMHO, the states aren't going to generate any substantial revenue from online taxation. In fact, what this will do is shake out the less profitable online companies from the business altogether, leaving a few powerful conglomerates with all control of online sales. And I think that the states will make much less money on this than they envision - online sales will shift back to the brick and mortar stores. The desired effect of this tax is to help brick and mortar stores by killing off online competition.

    • I do believe you're right -- and it would be interesting to know who exactly is backing the idea, and which gov'ts they've shopped the concept to. I'd bet there'd be a nice correlation between budget deficits in the most-interested states, merchants who are primarily B&M, and the relative enthusiasm of the pro-internet-tax lobbyists.

  • Two notions... (Score:3, Informative)

    by crashnbur ( 127738 ) on Friday January 24, 2003 @09:54AM (#5150188)
    1. Incentive. Let people keep the money they earn at work. Commissions and productivity bonuses, etc.

    2. FairTax [fairtax.org]. Flat tax rate. Let the social programs take care of people where they need to, and even keep those below the defined poverty line off of income tax rolls. Fine. But otherwise, despite that it seems like it should be okay to tax the wealthy at a higher tax rate, it violates the American principle of "equal treatment under the laws" that we fight so hard to attain. Do you ever wonder why it's so hard to get that in other aspects of the law? I don't. It's because of all the double standards. If the law isn't absolute, then where's the "law" in it, or isn't it just a theory?

  • Internet sales should be taxed the same as mail-order/catalog sales. They are the same thing for all intents and purposes. The only difference is the media of the catalog and order form, one is on paper and the other on your monitor. Why should mom & pop catalog company have their goods taxed while Amazon and Buy.com get a free ride? If mail orders are taxed, then internet orders should be taxed too. If internet sales are not taxed, then mail orders should be freed of the taxation.
  • How is buying something over the internet different from mail or phone order? If they're going to start charging sales tax for things ordered out of state, what difference does it make how it got ordered? Even if it's delivered over the internet, how is that different from being delivered UPS ground on a CD?

    Why is this an "E-Commerce Tax" and not an "Interstate Commerce" tax?

  • ...computer. It'll never work. I mean, there can't possibly be any technical solution allowing each internet retailer to keep track of the proper amount of sales tax to charge for each jurisdiction. Gee, you'd have to put a street map of the whole US on the Internet, and we all know that's impossible.

    Seriously, this can be done. I'm not sure if it's a good thing or not, but there's no technical hurdle to having an online database coupled with mapping software that will allow a retailer to get easy confirmation of the proper amount of tax for any given transaction.

    Will this kill internet commerce? No. It'll just cost more. I don't really believe that people will give up amazon.com and bn.com, etc. if their customers have to pay tax the way everyone else does.

  • I have said it before and I will say it again:

    It is against the US constitution for any state member to place tax that in any way that restricts interstate commerce. Period. End of discussion.

    Guys, this has been around for two hundred years. It would require a Constitutional Convention to change that. That sure ain't gonna happen in this day and age. If a Constitutional Convention is suggested at this political climate, the public will suggest right back radical legistlator removal from Congress come next elections. And there is only one legislator fear in the world, that is losing their incumbancy.

    This concept has been in the US Constitution since probably before the first Constitutional Convention, and was probably one of the first major reasons for the Constitutional Conventions. Colonial States were using tariffs as a source of funding for their states... screwing one over the other, and screwing overall revenues of the colonies. States can act like they can do what they want. They need to shut up. It will never happen because it screws with revenues at the federal level.

    Besides, that kind of law would allow states to fix tax rates that would effect the ENTIRE NATION. That cannot occur. That would mean that the heavy populated states would get more freeways and the ones that don't have a lot of industry would get the shaft. THINK HOW FAST THE "SMALL STATE" AND "LOW COMMERCE" MEMBERS OF THE US SENATE WOULD GO AFTER THAT PLAN. Keep in mind how the Senate works.

    Well, let them have their meetings. This is a pipe dream that will never work.
    • Unless its a federal tax, and all states tax equally.

      Besides, If your state has a state tax, you are legally obligate to pay the state tax on item you buy from out of state, right now.
      If you don't you are commeting tax fraud.

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