The internet sales tax bill

The old complaint was that big corporate retailers like Wal-Mart and Borders were putting the local mom ‘n’ pop stores out of business.  But now buying on the internet is making even the big box stores obsolete, as people from every corner of the nation are buying what they need  online without the need of any local stores.

Not only that, the online retailers have a big price advantage.  Part of that comes from not having to charge sales tax, which can add upwards of 10% to the cost of a product.  Local stores report how they are being reduced to showrooms for online companies, as customers go to actual stores to check out the merchandise and then buy it online.  Sometimes they do so on their smart phones while they are still in the store.

Now states, desperate for revenue, and local businesses are pushing for internet operations to charge sales tax.   More and more states are passing laws to this effect.  Now the federal government is getting into the act.  A bill before Congress, with lots of bipartisan approach, would make it easier for collecting sales tax to become routine across the internet.

The latest federal proposal — the Marketplace Fairness Act — has strong bipartisan support and appears to be moving forward. . . .

The bill proposes that a state can decide whether to enforce collection of its sales tax. If the state chooses to, then it should simplify its tax system according to conditions outlined in the bill.

Sales tax rates generally range from 5 to 10 percent, depending on the type of product as well as the jurisdiction (cities and counties can impose their own taxes on top of state rates). In Maryland and the District, many items are taxed at 6 percent, while in Virginia, the sales tax generally hovers around 5 percent.

Traditional retailers with an online presence, such as Barnes & Noble, Wal-Mart and Target, also support the bill, as do groups such as the National Retail Federation and the Retail Industry Leaders Association.

On the other side is Net­Choice, the trade association of e-commerce companies. Net­Choice has opposed sales tax collection and overturning the physical-presence ruling by the Supreme Court. Its argument, which Amazon has used in the past, is that tax calculation for thousands of jurisdictions country­wide is an impossibly complicated task.

“The burden falls disproportionately on a small business,” said Steve DelBianco, executive director of NetChoice. “It has no accounting or IT staff to keep track of tax rules and holidays.”

The new bill exempts online businesses making less than $500,000 a year from collecting sales tax. NetChoice says that threshold is too low. It also notes that the amount states will gain from online sales taxes is less than 1 percent of total state tax revenue.

The measure, sponsored by Sens. Mike Enzi (R-Wyo.), Richard J. Durbin (D-Ill.) and 12 others, was introduced in November. The House Judiciary Committee is set to hold a hearing on it July 24.

via States, Congress rallying for an e-sales tax – The Washington Post.

What do you think about this?  Can you formulate an argument why this is not a good idea on grounds other than just not wanting to pay more?

About Gene Veith

Professor of Literature at Patrick Henry College, the Director of the Cranach Institute at Concordia Theological Seminary, a columnist for World Magazine and TableTalk, and the author of 18 books on different facets of Christianity & Culture.

  • SKPeterson

    It is, at its very heart, an anti-competition measure clothed in the guise of “tax fairness.” If states truly wanted to preserve the mom-and-pop stores they could exempt those stores from charging sales tax on the first $1 million in sales. Instead, this allows the big stores to maintain both physical locations (perhaps at the expense of the local mom-and-pops) and an internet presence (at the expense of the smaller internet companies) and use the tax policy as a means to restrict competition. I am not arguing that this will lead to higher prices; my guess is that on-line margins are pretty thin and won’t increase substantially, but it will serve to reduce the spread of internet-generated revenues to larger organizations that can more easily comply with the new regulations. Our pocketbooks may not suffer too much, but our range of choice and service options may.

  • SKPeterson

    It is, at its very heart, an anti-competition measure clothed in the guise of “tax fairness.” If states truly wanted to preserve the mom-and-pop stores they could exempt those stores from charging sales tax on the first $1 million in sales. Instead, this allows the big stores to maintain both physical locations (perhaps at the expense of the local mom-and-pops) and an internet presence (at the expense of the smaller internet companies) and use the tax policy as a means to restrict competition. I am not arguing that this will lead to higher prices; my guess is that on-line margins are pretty thin and won’t increase substantially, but it will serve to reduce the spread of internet-generated revenues to larger organizations that can more easily comply with the new regulations. Our pocketbooks may not suffer too much, but our range of choice and service options may.

  • http://enterthevein.wordpress.com J. Dean

    I really wish proponents of bills like this would honestly come out and state their real intent behind bills like this: “We’re greedy and want more money.”

  • http://enterthevein.wordpress.com J. Dean

    I really wish proponents of bills like this would honestly come out and state their real intent behind bills like this: “We’re greedy and want more money.”

  • rlewer

    Why shouldn’t all businesses pay the same tax?

    If you want to give a bread to small businesses, why not to all small businesses?

  • rlewer

    Why shouldn’t all businesses pay the same tax?

    If you want to give a bread to small businesses, why not to all small businesses?

  • Robert Eggers

    If state sales taxes are for the maintenance of fire, police, utilities, roads, etc. then there is no reason to charge sales tax unless there is a physical presence of the company in that state that would require such services be provided to that company. Otherwise it’s just a money hungry state budget grab. Kind of like casino revenue supposedly being used for education but then the state lowers their budgeted amount for education accordingly and keeps the overall educational spending the same. Don’t trust them.

  • Robert Eggers

    If state sales taxes are for the maintenance of fire, police, utilities, roads, etc. then there is no reason to charge sales tax unless there is a physical presence of the company in that state that would require such services be provided to that company. Otherwise it’s just a money hungry state budget grab. Kind of like casino revenue supposedly being used for education but then the state lowers their budgeted amount for education accordingly and keeps the overall educational spending the same. Don’t trust them.

  • MarkB

    I agree with @4. Also though what will end up happening is you will put a lot of small businesses out of operation on the Internet. However, they will soon be replaced by others that are outside of the juridiction of the federal law. In other words the companies will shift overseas. So the taxes the states, cities and counties expect to gain will not be there and some small businesses will be gone or move overseas.

  • MarkB

    I agree with @4. Also though what will end up happening is you will put a lot of small businesses out of operation on the Internet. However, they will soon be replaced by others that are outside of the juridiction of the federal law. In other words the companies will shift overseas. So the taxes the states, cities and counties expect to gain will not be there and some small businesses will be gone or move overseas.

  • http://www.biblegateway.com/versions/Contemporary-English-Version-CEV-Bible/ sg

    Is shipping every purchase one little package at a time more environmentally friendly than shipping merchandise that may never sell to local retailers? I can see arguments both ways.

    I would be for the retail sales tax if it goes to the states where customers live but not if it goes to the federal government. States provide many services to their residents. The federal government really does provide you with much of anything until and if you retire.

  • http://www.biblegateway.com/versions/Contemporary-English-Version-CEV-Bible/ sg

    Is shipping every purchase one little package at a time more environmentally friendly than shipping merchandise that may never sell to local retailers? I can see arguments both ways.

    I would be for the retail sales tax if it goes to the states where customers live but not if it goes to the federal government. States provide many services to their residents. The federal government really does provide you with much of anything until and if you retire.

  • http://www.biblegateway.com/versions/Contemporary-English-Version-CEV-Bible/ sg

    oops, should be

    The federal government really does not provide you with much of anything until and if you retire.

  • http://www.biblegateway.com/versions/Contemporary-English-Version-CEV-Bible/ sg

    oops, should be

    The federal government really does not provide you with much of anything until and if you retire.

  • Tom Hering

    “In other words the companies will shift overseas.”

    Nah. International shipping rates would raise the total cost of a product more than taxes would.

  • Tom Hering

    “In other words the companies will shift overseas.”

    Nah. International shipping rates would raise the total cost of a product more than taxes would.

  • Dr. Luther in the 21st Century

    Illinois already has the look the other way tax. Where they in not so many words say claim at least x amount in internet purchases or we will audit you. Seems the Illinois government has learned its lessons well from its crime bosses.

    I am against any tax increase purely on principle. The government for the most part is a waste of money and I don’t like wasting money.

    It would also be nice if for once the politicos were honest and said we are raising taxes because we are incapable of streamlining the government and you the voter is so pampered by “free” government services you’ll kick us out if we do anything that cuts “free” government services.

  • Dr. Luther in the 21st Century

    Illinois already has the look the other way tax. Where they in not so many words say claim at least x amount in internet purchases or we will audit you. Seems the Illinois government has learned its lessons well from its crime bosses.

    I am against any tax increase purely on principle. The government for the most part is a waste of money and I don’t like wasting money.

    It would also be nice if for once the politicos were honest and said we are raising taxes because we are incapable of streamlining the government and you the voter is so pampered by “free” government services you’ll kick us out if we do anything that cuts “free” government services.

  • WebMonk

    Of course states and federal governments want more revenue, and taxes are how they typically do it. There are larger questions of how big should the governments be and thus how much money they should bring in through taxes. But, the basic ability to levy taxes on sales made to a person in a state, whether that person makes the purchase over the Internet or in person, is a perfectly possible method for governments to use to collect money.

    Wise != possible, though.

    Taxes are used to encourage or hinder almost as much as they are to raise funds. To create an economically even situation, at least as far as sales taxes go, then sales tax should be applied to Internet sales just like they are for in-person sales.

    The governments, along with raising funds, are also trying to encourage or discourage things for all sorts of reasons, only a few of which are economic reasons. Social and political reasons are a big influence.

    For economic reasons, there’s no fundamental reason why sales made over the Internet shouldn’t be taxed like sales made in person. For sociopolitical reasons …. whole ‘nother can of worms.

  • WebMonk

    Of course states and federal governments want more revenue, and taxes are how they typically do it. There are larger questions of how big should the governments be and thus how much money they should bring in through taxes. But, the basic ability to levy taxes on sales made to a person in a state, whether that person makes the purchase over the Internet or in person, is a perfectly possible method for governments to use to collect money.

    Wise != possible, though.

    Taxes are used to encourage or hinder almost as much as they are to raise funds. To create an economically even situation, at least as far as sales taxes go, then sales tax should be applied to Internet sales just like they are for in-person sales.

    The governments, along with raising funds, are also trying to encourage or discourage things for all sorts of reasons, only a few of which are economic reasons. Social and political reasons are a big influence.

    For economic reasons, there’s no fundamental reason why sales made over the Internet shouldn’t be taxed like sales made in person. For sociopolitical reasons …. whole ‘nother can of worms.

  • Cincinnatus

    Like Dr. Luther, I observe my late grandfather’s counsel: “Never vote for higher taxes.” I oppose this bill, more or less on principle.

    Contrary to those wishing the government would just admit that they want more money, I wish they would admit that they’ve been listening to lobbyists from Wal-Mart who want the government to step in to keep Amazon.com from eating their lunch. I.e., as SKPeterson pointed out, this is a blatantly anti-competitive policy conceived by special interests.

  • Cincinnatus

    Like Dr. Luther, I observe my late grandfather’s counsel: “Never vote for higher taxes.” I oppose this bill, more or less on principle.

    Contrary to those wishing the government would just admit that they want more money, I wish they would admit that they’ve been listening to lobbyists from Wal-Mart who want the government to step in to keep Amazon.com from eating their lunch. I.e., as SKPeterson pointed out, this is a blatantly anti-competitive policy conceived by special interests.

  • Dr. Luther in the 21st Century

    If enough people refused to pay would the government finally listen?

  • Dr. Luther in the 21st Century

    If enough people refused to pay would the government finally listen?

  • http://www.biblegateway.com/versions/Contemporary-English-Version-CEV-Bible/ sg

    “If enough people refused to pay would the government finally listen?”

    A huge fraction aren’t paying now, and that is by political design.

  • http://www.biblegateway.com/versions/Contemporary-English-Version-CEV-Bible/ sg

    “If enough people refused to pay would the government finally listen?”

    A huge fraction aren’t paying now, and that is by political design.

  • Dr. Luther in the 21st Century

    @#13 Let me rephrase, If enough people who have to pay taxes refused to pay…?”

  • Dr. Luther in the 21st Century

    @#13 Let me rephrase, If enough people who have to pay taxes refused to pay…?”

  • http://www.facebook.com/mesamike Mike Westfall

    The controversy regarding collecting sales taxes on mail-ordered items has been going on since long before the Internet existed. The general reasoning has been that the buyer doesn’t have to pay the sales tax imposed by the state where the seller is located because that would be “taxation without representation,” and that the buyer’s state can’t force an out of state business to collect sales taxes on its behalf either, so sales taxes on interstate mail-ordered items just don’t get collected.

    Some states (like California, fer example) have re-imagined the sales tax as a “use tax” when the item is bought out of state, and try to impose the tax on the buyer. That doesn’t seem to work that well either, since the state really has no way to determine when its citizens have bought something in a different state.

    The federal government really has no business inserting itself into this issue either, since it is state (not federal) sales taxes that are at issue. Congress could levy a federal sales tax on items of interstate commerce I suppose, but I don’t imagine that would go over very well.

    States might make agreements with each other to collect each others’ sales taxes, but I think that is precluded by the US Constitution’s prohibition of compacts between the states (or it would have already been done).

    It seems to me that the secret to collecting a sales tax is to impose it on the seller when he makes a sale in the state in which the sale is made , rather than on the buyer when he makes a purchase. Why is it that just about everywhere where there is a sales tax, the tax is imposed upon the buyer rather than the seller?

  • http://www.facebook.com/mesamike Mike Westfall

    The controversy regarding collecting sales taxes on mail-ordered items has been going on since long before the Internet existed. The general reasoning has been that the buyer doesn’t have to pay the sales tax imposed by the state where the seller is located because that would be “taxation without representation,” and that the buyer’s state can’t force an out of state business to collect sales taxes on its behalf either, so sales taxes on interstate mail-ordered items just don’t get collected.

    Some states (like California, fer example) have re-imagined the sales tax as a “use tax” when the item is bought out of state, and try to impose the tax on the buyer. That doesn’t seem to work that well either, since the state really has no way to determine when its citizens have bought something in a different state.

    The federal government really has no business inserting itself into this issue either, since it is state (not federal) sales taxes that are at issue. Congress could levy a federal sales tax on items of interstate commerce I suppose, but I don’t imagine that would go over very well.

    States might make agreements with each other to collect each others’ sales taxes, but I think that is precluded by the US Constitution’s prohibition of compacts between the states (or it would have already been done).

    It seems to me that the secret to collecting a sales tax is to impose it on the seller when he makes a sale in the state in which the sale is made , rather than on the buyer when he makes a purchase. Why is it that just about everywhere where there is a sales tax, the tax is imposed upon the buyer rather than the seller?

  • http://www.biblegateway.com/versions/Contemporary-English-Version-CEV-Bible/ sg

    “Let me rephrase, If enough people who have to pay taxes refused to pay…?”

    Do you mean racists? Because any white folks trying that tack would be labeled racists.

  • http://www.biblegateway.com/versions/Contemporary-English-Version-CEV-Bible/ sg

    “Let me rephrase, If enough people who have to pay taxes refused to pay…?”

    Do you mean racists? Because any white folks trying that tack would be labeled racists.

  • http://www.biblegateway.com/versions/Contemporary-English-Version-CEV-Bible/ sg

    “Why is it that just about everywhere where there is a sales tax, the tax is imposed upon the buyer rather than the seller?”

    I don’t think sellers pay any taxes ever. All costs are passed on to the customer. If it would make you feel better, they could just not show you the amount of the tax by just showing the total. You pay it either way.

  • http://www.biblegateway.com/versions/Contemporary-English-Version-CEV-Bible/ sg

    “Why is it that just about everywhere where there is a sales tax, the tax is imposed upon the buyer rather than the seller?”

    I don’t think sellers pay any taxes ever. All costs are passed on to the customer. If it would make you feel better, they could just not show you the amount of the tax by just showing the total. You pay it either way.

  • DonS

    If the bill required uniform sales tax rates and rules for every state that wished to participate, then it would be OK. I don’t think it goes that far however, and thus will greatly increase the compliance burden on businesses engaging in multi-state e-commerce. Also, I am entirely opposed to giving some businesses unfair cost advantages over others. It is up to the states to clean up their sales tax systems — the burden should be on them to do that. Our default should always be to make regulatory compliance as easy and uniform as possible for our businesses.

    In the long run, both the states and feds should move away from invasive income taxes toward consumption taxes — broad rates applied to all goods and services. Keep the rules very simple, and make the compliance job easy for businesses. Of course, that’s no fun for politicians because they can’t demagogue and grant special favors for their friends and supporters.

  • DonS

    If the bill required uniform sales tax rates and rules for every state that wished to participate, then it would be OK. I don’t think it goes that far however, and thus will greatly increase the compliance burden on businesses engaging in multi-state e-commerce. Also, I am entirely opposed to giving some businesses unfair cost advantages over others. It is up to the states to clean up their sales tax systems — the burden should be on them to do that. Our default should always be to make regulatory compliance as easy and uniform as possible for our businesses.

    In the long run, both the states and feds should move away from invasive income taxes toward consumption taxes — broad rates applied to all goods and services. Keep the rules very simple, and make the compliance job easy for businesses. Of course, that’s no fun for politicians because they can’t demagogue and grant special favors for their friends and supporters.

  • SW

    My wife and I own and operate a small online business benefitting greatly from technological innovation and scalability made possible by Cloud Computing. Until recently we were struggling with legacy tax procedures in our home state. The administrative burdens and expenses complying with States’ tax laws became onerous forcing me to search the Internet for a solution. What I found seems, to many, unbelievable.

    My company now employs free technology hosted on Amazon’s Ec2 cloud infrastructure enabling my company to easily calculate, collect and remit sales tax for any jurisdiction in any state. TaxCloud seamlessly integrates with multiple payment platforms and shopping carts eliminating unnecessary administrative burdens. Now my tax processes are automated and efficient.

    3dcart CEO Gonzalo Gil states:

    “As another building block in our effort to ease the management process for online store owners, TaxCloud is the kind of efficiency application that is practical now and helps you plan for the future….this represents another way that automation is saving time and money for online retailers.”

    Technology now freely available to any size business easily handles sales tax processing for any jurisdiction in any state. As Mr. Shay from the NRF points out it is now easier for businesses to process over 10,000 different tax jurisdictions than deal with the multiple complexities involved with shipping. Furthermore, the ICSC has discovered an average of 90% of Internet consumers desire to have sales tax collected by merchants at points of purchase instead of having to track and remit use tax individually. Governments also realize sales tax automation ensures more of every tax dollar funds intended programs.

    I strongly support and urge Congress to immediately pass S.1832 the Marketplace Fairness Act granting states the choice to efficiently enforce their existing sales and use tax laws. Individuals, businesses and government will all benefit tremendously utilizing the efficiencies made possible by new technologies coupled with the power and scalability of Cloud Computing.

  • SW

    My wife and I own and operate a small online business benefitting greatly from technological innovation and scalability made possible by Cloud Computing. Until recently we were struggling with legacy tax procedures in our home state. The administrative burdens and expenses complying with States’ tax laws became onerous forcing me to search the Internet for a solution. What I found seems, to many, unbelievable.

    My company now employs free technology hosted on Amazon’s Ec2 cloud infrastructure enabling my company to easily calculate, collect and remit sales tax for any jurisdiction in any state. TaxCloud seamlessly integrates with multiple payment platforms and shopping carts eliminating unnecessary administrative burdens. Now my tax processes are automated and efficient.

    3dcart CEO Gonzalo Gil states:

    “As another building block in our effort to ease the management process for online store owners, TaxCloud is the kind of efficiency application that is practical now and helps you plan for the future….this represents another way that automation is saving time and money for online retailers.”

    Technology now freely available to any size business easily handles sales tax processing for any jurisdiction in any state. As Mr. Shay from the NRF points out it is now easier for businesses to process over 10,000 different tax jurisdictions than deal with the multiple complexities involved with shipping. Furthermore, the ICSC has discovered an average of 90% of Internet consumers desire to have sales tax collected by merchants at points of purchase instead of having to track and remit use tax individually. Governments also realize sales tax automation ensures more of every tax dollar funds intended programs.

    I strongly support and urge Congress to immediately pass S.1832 the Marketplace Fairness Act granting states the choice to efficiently enforce their existing sales and use tax laws. Individuals, businesses and government will all benefit tremendously utilizing the efficiencies made possible by new technologies coupled with the power and scalability of Cloud Computing.

  • http://www.facebook.com/mesamike Mike Westfall

    Sorry SW, but you seem like a drive-by rent-seeking shill for whatever company it is that is selling the technology you’re touting.

  • http://www.facebook.com/mesamike Mike Westfall

    Sorry SW, but you seem like a drive-by rent-seeking shill for whatever company it is that is selling the technology you’re touting.

  • WebMonk

    Hmmm, any bets as to whether or not SW there was a bot posting? It seemed to have a lot of shilling in it.

  • WebMonk

    Hmmm, any bets as to whether or not SW there was a bot posting? It seemed to have a lot of shilling in it.

  • WebMonk

    Hey SW, if one were to take the sum of six point 5 and three pnt fve, what would be the result?

  • WebMonk

    Hey SW, if one were to take the sum of six point 5 and three pnt fve, what would be the result?

  • http://www.facebook.com/mesamike Mike Westfall

    And furthermore, I don’t support any bill that has the word “fairness” in the title.

  • http://www.facebook.com/mesamike Mike Westfall

    And furthermore, I don’t support any bill that has the word “fairness” in the title.

  • SW

    I agree with you in most cases, however you leave out one important aspect in your argument. For over fifty years states, except for five with 0% sales tax, maintain a use tax to be honorably remitted by residents on all out of state purchases to fund the many educational, infrastructure, medicare, police and fire services they continue demand on their ballot initiatives. We all seem to want astroturf playing fields and new school busses for our children but fail to recognize sales and use taxes are their primary source of funding. With many residents both knowingly and unknowingly evading their legal tax obligations states have been forced to raise existing and create new tax schemes to fund the programs their residents demand. Several counties in NY this year were forced to enact higher property taxes. Coincidentally the rate increase is strikingly similar to the percentage rate of the county sales tax. So now NY residents are effectively paying sales tax on their homes. Landlords simply pass the increase onto tenants leaving struggling families facing unforeseen circumstances. Interestingly should a resident evade property tax they can lose their house.

    Technology today makes tax processing easier and more cost efficient providing consumers, businesses and governments providing efficiencies enabling the elimination of many administrative burdens. In a recent ICSC study 86% of online consumers surveyed support having sales tax collected at the time of purchase eliminating the burden of having to self track and remit. As an online retailer I would be foolish not to provide what 86% of the marketplace demands, especially when the process will yield greater efficiency and elimination of pesky legacy sales and use tax burdens for all parties involved.

    Currently twenty four states utilize one simplified automated e-file remittance procedure. Any merchant utilizing any Certified Service Provider approved by (Streamlined Sales and Use Tax Agreement) SSUTA receives full indemnification and audit defense. Any state wishing to be granted collection authority will have to undergo the same or similar simplification standards prior to being granted collection authority. Utilizing TaxCloud’s free technology companies of any size are easily enabled, as mine is, to calculate collect and remit sales tax for any jurisdiction in any state. It’s actually simpler than processing and dealing with the complexities involved with shipping. Companies will easily eliminate legacy administrative burdens replacing them with automated efficient processes.

    In a perfect world in which all taxpayers were honorably remitting tax legally required this conversation would be extremely different. Today, if we remove the the fact that we would like to be remembered as “the tax evading generation,” small businesses and consumers are still concerned about the administrative burdens based upon the legacy standards so many desire to defend maintaining their misrepresented ta free pricing advantage just a little longer.

    The fact is modern technology freely available on the internet easily enables any business to easily provide the honorable 86% of consumers their wish requesting sales tax collection at the point of purchase. Simultaneously, businesses eliminate legacy tax burdens and associated inefficiencies. In addition governments realize automating tax processing ensuring a greater percentage of every tax dollar honored funds intended programs and services.

    Passage of S.1832 will guarantee small businesses, such as mine, will longer be burdened by audit defense, or be burdened with the remedial task of sales tax calculation and remittance and will in turn will eliminate unnecessary legacy administrative burdens ultimately allowing all businesses to focus on expansion and innovation. Progressive employment of modern technology is currently saving thousands of businesses from burdens cast prior to 1992 and the advent modern technology. After all, did anyone ever imagine in 1992 that consumers and merchants would be able to complete transactions from virtually anywhere utilizing a pocket device known as the smartphone?

    Human ingenuity transports man to the moon, creates weapons of unimaginable capabilities, destroys life threatening viruses, creates technology that transforms sunlight into energy, now we drive efficient electric vehicles never imagined possible, designs aircraft (SR-71) capable of crossing the North American continent in less than 67 minutes, designs computer processors that fit in the palm of your hand capable of computing power and capabilities once requiring entire buildings to accommodate. Man and his ingenuity are capable of almost anything. Calculating sales and use tax for a mere 10,000 tax jurisdiction is child’s play compared to man’s list of recent impressive technological achievements.

    We need technological innovation and efficiencies in our economy. Automating tax calculation and remittance procedures is not only simple, it will encourage innovation and efficiencies eliminating so many costly and unnecessary bureaucracies currently restricting economic expansion.

    I strongly support and urge Congress to immediately pass S.1832 the Marketplace Fairness Act.

  • SW

    I agree with you in most cases, however you leave out one important aspect in your argument. For over fifty years states, except for five with 0% sales tax, maintain a use tax to be honorably remitted by residents on all out of state purchases to fund the many educational, infrastructure, medicare, police and fire services they continue demand on their ballot initiatives. We all seem to want astroturf playing fields and new school busses for our children but fail to recognize sales and use taxes are their primary source of funding. With many residents both knowingly and unknowingly evading their legal tax obligations states have been forced to raise existing and create new tax schemes to fund the programs their residents demand. Several counties in NY this year were forced to enact higher property taxes. Coincidentally the rate increase is strikingly similar to the percentage rate of the county sales tax. So now NY residents are effectively paying sales tax on their homes. Landlords simply pass the increase onto tenants leaving struggling families facing unforeseen circumstances. Interestingly should a resident evade property tax they can lose their house.

    Technology today makes tax processing easier and more cost efficient providing consumers, businesses and governments providing efficiencies enabling the elimination of many administrative burdens. In a recent ICSC study 86% of online consumers surveyed support having sales tax collected at the time of purchase eliminating the burden of having to self track and remit. As an online retailer I would be foolish not to provide what 86% of the marketplace demands, especially when the process will yield greater efficiency and elimination of pesky legacy sales and use tax burdens for all parties involved.

    Currently twenty four states utilize one simplified automated e-file remittance procedure. Any merchant utilizing any Certified Service Provider approved by (Streamlined Sales and Use Tax Agreement) SSUTA receives full indemnification and audit defense. Any state wishing to be granted collection authority will have to undergo the same or similar simplification standards prior to being granted collection authority. Utilizing TaxCloud’s free technology companies of any size are easily enabled, as mine is, to calculate collect and remit sales tax for any jurisdiction in any state. It’s actually simpler than processing and dealing with the complexities involved with shipping. Companies will easily eliminate legacy administrative burdens replacing them with automated efficient processes.

    In a perfect world in which all taxpayers were honorably remitting tax legally required this conversation would be extremely different. Today, if we remove the the fact that we would like to be remembered as “the tax evading generation,” small businesses and consumers are still concerned about the administrative burdens based upon the legacy standards so many desire to defend maintaining their misrepresented ta free pricing advantage just a little longer.

    The fact is modern technology freely available on the internet easily enables any business to easily provide the honorable 86% of consumers their wish requesting sales tax collection at the point of purchase. Simultaneously, businesses eliminate legacy tax burdens and associated inefficiencies. In addition governments realize automating tax processing ensuring a greater percentage of every tax dollar honored funds intended programs and services.

    Passage of S.1832 will guarantee small businesses, such as mine, will longer be burdened by audit defense, or be burdened with the remedial task of sales tax calculation and remittance and will in turn will eliminate unnecessary legacy administrative burdens ultimately allowing all businesses to focus on expansion and innovation. Progressive employment of modern technology is currently saving thousands of businesses from burdens cast prior to 1992 and the advent modern technology. After all, did anyone ever imagine in 1992 that consumers and merchants would be able to complete transactions from virtually anywhere utilizing a pocket device known as the smartphone?

    Human ingenuity transports man to the moon, creates weapons of unimaginable capabilities, destroys life threatening viruses, creates technology that transforms sunlight into energy, now we drive efficient electric vehicles never imagined possible, designs aircraft (SR-71) capable of crossing the North American continent in less than 67 minutes, designs computer processors that fit in the palm of your hand capable of computing power and capabilities once requiring entire buildings to accommodate. Man and his ingenuity are capable of almost anything. Calculating sales and use tax for a mere 10,000 tax jurisdiction is child’s play compared to man’s list of recent impressive technological achievements.

    We need technological innovation and efficiencies in our economy. Automating tax calculation and remittance procedures is not only simple, it will encourage innovation and efficiencies eliminating so many costly and unnecessary bureaucracies currently restricting economic expansion.

    I strongly support and urge Congress to immediately pass S.1832 the Marketplace Fairness Act.

  • Dr. Luther in the 21st Century

    @sg Are you suggesting only white people pay taxes?

  • Dr. Luther in the 21st Century

    @sg Are you suggesting only white people pay taxes?

  • SW

    A sale is a sale. Sales/use tax has been the honorable obligation of the consumer in most states since 1935. This is in no way a new tax. Bipartisan legislation to simplify existing tax schemes benefiting all businesses, local governments and consumers is excellent, much needed and long overdue. Whether tennis balls are bought online or locally they are taxable in the jurisdiction of use no matter their origin or place of production. All retailers whether online, brick and mortar, or catalogue should be grateful to their consumers doing everything possible ensuring the highest quality product, fairest price, highest level of customer service including the simple collection and remittance of sales tax due. Removing the pesky task of use tax tracking and remittance from individual returns, and returning sales and use tax proceeds back to their consumers’ jurisdictions funding education, local medicare, infrastructure and so much more should be a top priority of all businesses.

    States also strongly desire to undue harmful tax schemes and and increases resulting from their constituents tax evasion over the past years. Higher property taxes are forcing rent increases challenging families ability to stay in homes. West Virginia favors eliminating existing harmful tax on groceries favoring being enabled to efficiently collect use tax already due. Other states wish to remove harmful estates taxes. Tennessee has no desire to impose an income tax on residents, but may have to as local businesses close, jobs are lost and sales and use tax continue to be evaded by residents and uncollected by Internet merchants. Connecticut residents are now enduring the highest tax increase in State history to compensate for evaded sales and use tax revenue.

    Technology freely available on the Internet makes tax processing simpler than processing shipping for any business. I strongly support and urge Congress to immediately pass S.1832 the Marketplace Fairness Act, and ask that all state legislators do the same.

    Cite as: 504 U. S. 298 (1992) 333
    Opinion of White, J.

    Although Congress can and should address itself to this
    area of law, we should not adhere to a decision, however right
    it was at the time, that by reason of later cases and economic
    reality can no longer be rationally justified. The Commerce
    Clause aspect of Bellas Hess, along with its due process holding, should be overruled.

  • SW

    A sale is a sale. Sales/use tax has been the honorable obligation of the consumer in most states since 1935. This is in no way a new tax. Bipartisan legislation to simplify existing tax schemes benefiting all businesses, local governments and consumers is excellent, much needed and long overdue. Whether tennis balls are bought online or locally they are taxable in the jurisdiction of use no matter their origin or place of production. All retailers whether online, brick and mortar, or catalogue should be grateful to their consumers doing everything possible ensuring the highest quality product, fairest price, highest level of customer service including the simple collection and remittance of sales tax due. Removing the pesky task of use tax tracking and remittance from individual returns, and returning sales and use tax proceeds back to their consumers’ jurisdictions funding education, local medicare, infrastructure and so much more should be a top priority of all businesses.

    States also strongly desire to undue harmful tax schemes and and increases resulting from their constituents tax evasion over the past years. Higher property taxes are forcing rent increases challenging families ability to stay in homes. West Virginia favors eliminating existing harmful tax on groceries favoring being enabled to efficiently collect use tax already due. Other states wish to remove harmful estates taxes. Tennessee has no desire to impose an income tax on residents, but may have to as local businesses close, jobs are lost and sales and use tax continue to be evaded by residents and uncollected by Internet merchants. Connecticut residents are now enduring the highest tax increase in State history to compensate for evaded sales and use tax revenue.

    Technology freely available on the Internet makes tax processing simpler than processing shipping for any business. I strongly support and urge Congress to immediately pass S.1832 the Marketplace Fairness Act, and ask that all state legislators do the same.

    Cite as: 504 U. S. 298 (1992) 333
    Opinion of White, J.

    Although Congress can and should address itself to this
    area of law, we should not adhere to a decision, however right
    it was at the time, that by reason of later cases and economic
    reality can no longer be rationally justified. The Commerce
    Clause aspect of Bellas Hess, along with its due process holding, should be overruled.

  • DonS

    SW, you sound suspiciously like a lobbyist. We do have an obligation to pay our taxes, but our governments also have an obligation to ensure that tax systems are fair (meaning evenly applicable to everyone) and of low complexity. They also have an obligation to to be scrupulous stewards of hard-earned taxpayer dollars. Instead, in most of our jurisdictions, particularly because of their comity with public employee unions, they have committed excessive tax dollars to legacy costs for supposed civil servants. It is ridiculous in an era where 40% of GDP is spent by government to claim that we are collectively tax evaders. Make the system simple and fair, and ensure that you are stewarding tax dollars with utmost integrity, and we will almost all gladly pay our taxes.

    When governments come hat in hand demanding access to additional taxpayer money, as is the case with this legislation, there is nothing wrong with using that opportunity to extract concessions from those same governments in exchange for acquiescing to those demands. More tax money won’t resolve the problems state and local governments have created for themselves unless they reform their legacy costs and levels of service.

  • DonS

    SW, you sound suspiciously like a lobbyist. We do have an obligation to pay our taxes, but our governments also have an obligation to ensure that tax systems are fair (meaning evenly applicable to everyone) and of low complexity. They also have an obligation to to be scrupulous stewards of hard-earned taxpayer dollars. Instead, in most of our jurisdictions, particularly because of their comity with public employee unions, they have committed excessive tax dollars to legacy costs for supposed civil servants. It is ridiculous in an era where 40% of GDP is spent by government to claim that we are collectively tax evaders. Make the system simple and fair, and ensure that you are stewarding tax dollars with utmost integrity, and we will almost all gladly pay our taxes.

    When governments come hat in hand demanding access to additional taxpayer money, as is the case with this legislation, there is nothing wrong with using that opportunity to extract concessions from those same governments in exchange for acquiescing to those demands. More tax money won’t resolve the problems state and local governments have created for themselves unless they reform their legacy costs and levels of service.

  • http://www.geneveith.com Gene Veith

    We have been discussing the tax side of the question, the state’s desire for more money. But what about the other issue of the lack of sales tax giving online businesses a permanent, structural price advantage over local businesses? Do we need to do anything to protect small local businesses against competition from big online businesses that are operating on an unlevel playing field? Or should we just let the local companies go under as casualties of the new economy? (That one business is taxed and the other isn’t doesn’t seem to be one of the price mechanisms of the free market, in which supply and demand are supposed to set prices, rather than government favoritism.)

  • http://www.geneveith.com Gene Veith

    We have been discussing the tax side of the question, the state’s desire for more money. But what about the other issue of the lack of sales tax giving online businesses a permanent, structural price advantage over local businesses? Do we need to do anything to protect small local businesses against competition from big online businesses that are operating on an unlevel playing field? Or should we just let the local companies go under as casualties of the new economy? (That one business is taxed and the other isn’t doesn’t seem to be one of the price mechanisms of the free market, in which supply and demand are supposed to set prices, rather than government favoritism.)

  • Cincinnatus

    Dr. Veith@28:

    That’s a valid question, and perhaps a valid point.

    But I’m not sure it washes. Sure, when I buy from Amazon–which I do, frequently–I don’t always have to pay the 5% state sales tax (sometimes I do, and I often have to pay the tax when purchasing from other vendors).

    Do Amazon and other online vendors who don’t collect tax really have a meaningful price advantage over Wal-Mart, for example? I’m skeptical. Consider the following scenario:

    I want to buy Item X that costs $50.00 at both Wal-Mart and Amazon.com (it’s probably $70.00 at the local mom-and-pop shop, so they’ve already disqualified themselves). If I buy it at Wal-Mart, I’ll have to pay $2.50 in taxes (assuming a 5% rate). If I buy from Amazon, I probably won’t have to pay sales tax, but I will likely have to pay $8.00 (give or take) for shipping. I’ll also have to wait two or three (or more) days for the item to arrive–when I could have had it immediately from Wal-Mart. [Yes, sometimes Amazon shipping is free, but you see my point.] In my opinion, Wal-Mart has a fairly substantial price advantage on items that both Wal-Mart and Amazon actually have in stock. I’ll spend $52.50 at Wal-Mart; ~$60.00 + a few days’ wait at Amazon–for the same item.

    I thus revert to my original point: Wal-Mart and other big-box stores have little business claiming that Amazon.com puts them at a competitive disadvantage just because Amazon customers don’t have to pay sales taxes in some states. Which is probably why, unless I’m an unusual case, my motivation for shopping on Amazon has never been an attempt to avoid sales taxes. Let me know when Amazon is able to sell cars without sales and excise taxes…

  • Cincinnatus

    Dr. Veith@28:

    That’s a valid question, and perhaps a valid point.

    But I’m not sure it washes. Sure, when I buy from Amazon–which I do, frequently–I don’t always have to pay the 5% state sales tax (sometimes I do, and I often have to pay the tax when purchasing from other vendors).

    Do Amazon and other online vendors who don’t collect tax really have a meaningful price advantage over Wal-Mart, for example? I’m skeptical. Consider the following scenario:

    I want to buy Item X that costs $50.00 at both Wal-Mart and Amazon.com (it’s probably $70.00 at the local mom-and-pop shop, so they’ve already disqualified themselves). If I buy it at Wal-Mart, I’ll have to pay $2.50 in taxes (assuming a 5% rate). If I buy from Amazon, I probably won’t have to pay sales tax, but I will likely have to pay $8.00 (give or take) for shipping. I’ll also have to wait two or three (or more) days for the item to arrive–when I could have had it immediately from Wal-Mart. [Yes, sometimes Amazon shipping is free, but you see my point.] In my opinion, Wal-Mart has a fairly substantial price advantage on items that both Wal-Mart and Amazon actually have in stock. I’ll spend $52.50 at Wal-Mart; ~$60.00 + a few days’ wait at Amazon–for the same item.

    I thus revert to my original point: Wal-Mart and other big-box stores have little business claiming that Amazon.com puts them at a competitive disadvantage just because Amazon customers don’t have to pay sales taxes in some states. Which is probably why, unless I’m an unusual case, my motivation for shopping on Amazon has never been an attempt to avoid sales taxes. Let me know when Amazon is able to sell cars without sales and excise taxes…

  • DonS

    Dr. Veith, I addressed this issue — one important role of states and local governments, which they have sorely neglected, is to ensure that their tax and regulatory systems support their business communities. Businesses have come to be seen as mere sources of tax income, because governments have become tax-eaters, rather than servants of their constituencies. Sales taxes are fairly obsolete, because they do not evenly tax the economy that has developed. They typically do not apply to services, and they don’t evenly apply to goods — certain categories are typically exempt, for example.

    So let’s put it back on our state and local governments to ensure that they are not putting local businesses at a competitive disadvantage with respect to out-of-state businesses by loading them up with unfair taxes and regulatory burdens. “Fair” doesn’t always have to mean “more”, sometimes it might mean “less”. It is just as fair to even the playing field by reducing taxes on in-state businesses as it is to increase taxes on out-of-state businesses.

    As far as this specific legislation is concerned, we should insist, before it garners our support, that states can choose whether to opt in. If they do opt in, then they must be required, as a condition for forcing out-of-state businesses to collect sales taxes, to streamline their sales tax systems to ensure uniform rates with other opted-in states, with no excess local taxes on top of those state rates, and uniform application to all goods (yes, including food). It’s about time that our governments understand the compliance burdens they put on businesses, particularly small businesses, when they play favorites and other complicate things for political purposes.

  • DonS

    Dr. Veith, I addressed this issue — one important role of states and local governments, which they have sorely neglected, is to ensure that their tax and regulatory systems support their business communities. Businesses have come to be seen as mere sources of tax income, because governments have become tax-eaters, rather than servants of their constituencies. Sales taxes are fairly obsolete, because they do not evenly tax the economy that has developed. They typically do not apply to services, and they don’t evenly apply to goods — certain categories are typically exempt, for example.

    So let’s put it back on our state and local governments to ensure that they are not putting local businesses at a competitive disadvantage with respect to out-of-state businesses by loading them up with unfair taxes and regulatory burdens. “Fair” doesn’t always have to mean “more”, sometimes it might mean “less”. It is just as fair to even the playing field by reducing taxes on in-state businesses as it is to increase taxes on out-of-state businesses.

    As far as this specific legislation is concerned, we should insist, before it garners our support, that states can choose whether to opt in. If they do opt in, then they must be required, as a condition for forcing out-of-state businesses to collect sales taxes, to streamline their sales tax systems to ensure uniform rates with other opted-in states, with no excess local taxes on top of those state rates, and uniform application to all goods (yes, including food). It’s about time that our governments understand the compliance burdens they put on businesses, particularly small businesses, when they play favorites and other complicate things for political purposes.

  • http://www.geneveith.com Gene Veith

    Good point, Cincinnatus. The structural price disadvantage is partially made up because online shopping requires paying for shipping. (I got “Amazon Prime” with my Kindle, which gives me free two-day shipping, so I forgot that aspect. Of course, downloading e-books requires neither shipping nor a time lag.) I’m not so concerned with WalMart as with Mr. Nichols at Nichols Hardware, who can compete neither with the economies of scale of WalMart nor with the even greater economies of scale of Amazon (which now sells not just books but virtually EVERYTHING), and who also is exposed to all kinds of taxes on top of a small profit margin. A lot of liberals and localists complain about WalMart. It seems the WalMart effect is even greater with online commerce, but I don’t hear much complaint about that.

  • http://www.geneveith.com Gene Veith

    Good point, Cincinnatus. The structural price disadvantage is partially made up because online shopping requires paying for shipping. (I got “Amazon Prime” with my Kindle, which gives me free two-day shipping, so I forgot that aspect. Of course, downloading e-books requires neither shipping nor a time lag.) I’m not so concerned with WalMart as with Mr. Nichols at Nichols Hardware, who can compete neither with the economies of scale of WalMart nor with the even greater economies of scale of Amazon (which now sells not just books but virtually EVERYTHING), and who also is exposed to all kinds of taxes on top of a small profit margin. A lot of liberals and localists complain about WalMart. It seems the WalMart effect is even greater with online commerce, but I don’t hear much complaint about that.

  • TedCJ

    Couple of points:
    1. We are under obligation to render to Caesar. What most don’t realize (as stated above) is that the law requires you to pay sales tax for out of state purchases from vendors that do not charge sales tax. Thus, wouldn’t it be a sin to purchase online and not remit the tax with your annual sales tax? A law that required all vendors to charge sales tax would then help people avoid an unintentional sin. A good thing, right???

    2. As an IT guy at a small retailer with stores in three states, I can tell you the cost of sales tax compliance is very high. Years ago, I was told that mini marshmallows were taxed in over 100 different ways across the various jurisdictions in this country. That is madness.

    The way taxes are passed is also madness. I believe it is Milwaukee that passed a stadium tax based upon the distance from the stadium. Thus, I would need to geocode an address at a fairly high precision in order to properly collect the tax. A zip code will not suffice. However, our system does not support geocoding thus we rely on zip codes and have to deal with customers calling and disputing our tax calculations- another cost in customer service and accounting to rectify. MADNESS!!!

    IL has a origination, not a destination tax. If I ship from outside IL to an IL address, I only collect state sales tax. However, if I ship from within IL to another IL address, I collect sales tax based upon the address from which the goods shipped. In all other states where I collect sales tax, I collect based upon the tax at the destination of the goods. Imagine the complexities of designing systems to handle all this.

    I actually hope that I can tie into the system SW mentions. However, I sell to government agencies. State agencies in MN don’t pay local taxes, but only the state tax. I don’t see anything in the TaxCloud information that allows me to designate that a sales is to an agency in MN so as not to charge local taxes.

    Can you see what businesses face? Imagine how we could lower prices (or hire more people to provide more customer service) if we didn’t have to pay systems programmers and accountants (and tax fines when we don’t do it perfectly) to handle sales taxes.

    Sorry for the rambling post. It’s a pet pain of mine.

  • TedCJ

    Couple of points:
    1. We are under obligation to render to Caesar. What most don’t realize (as stated above) is that the law requires you to pay sales tax for out of state purchases from vendors that do not charge sales tax. Thus, wouldn’t it be a sin to purchase online and not remit the tax with your annual sales tax? A law that required all vendors to charge sales tax would then help people avoid an unintentional sin. A good thing, right???

    2. As an IT guy at a small retailer with stores in three states, I can tell you the cost of sales tax compliance is very high. Years ago, I was told that mini marshmallows were taxed in over 100 different ways across the various jurisdictions in this country. That is madness.

    The way taxes are passed is also madness. I believe it is Milwaukee that passed a stadium tax based upon the distance from the stadium. Thus, I would need to geocode an address at a fairly high precision in order to properly collect the tax. A zip code will not suffice. However, our system does not support geocoding thus we rely on zip codes and have to deal with customers calling and disputing our tax calculations- another cost in customer service and accounting to rectify. MADNESS!!!

    IL has a origination, not a destination tax. If I ship from outside IL to an IL address, I only collect state sales tax. However, if I ship from within IL to another IL address, I collect sales tax based upon the address from which the goods shipped. In all other states where I collect sales tax, I collect based upon the tax at the destination of the goods. Imagine the complexities of designing systems to handle all this.

    I actually hope that I can tie into the system SW mentions. However, I sell to government agencies. State agencies in MN don’t pay local taxes, but only the state tax. I don’t see anything in the TaxCloud information that allows me to designate that a sales is to an agency in MN so as not to charge local taxes.

    Can you see what businesses face? Imagine how we could lower prices (or hire more people to provide more customer service) if we didn’t have to pay systems programmers and accountants (and tax fines when we don’t do it perfectly) to handle sales taxes.

    Sorry for the rambling post. It’s a pet pain of mine.

  • DonS

    I don’t think the shipping issue is a factor. Brick and mortar retail stores also pay shipping for the goods to be delivered to them and have a lot of other overhead costs on-line retailers avoid by operating out of low-cost warehouses instead of retail centers.

  • DonS

    I don’t think the shipping issue is a factor. Brick and mortar retail stores also pay shipping for the goods to be delivered to them and have a lot of other overhead costs on-line retailers avoid by operating out of low-cost warehouses instead of retail centers.

  • DonS

    TedCJ @ 32 makes my point about complexity very well. The onus is on governments to assist their local businesses, not on us to once again accommodate governments by granting them yet another tax opportunity.

  • DonS

    TedCJ @ 32 makes my point about complexity very well. The onus is on governments to assist their local businesses, not on us to once again accommodate governments by granting them yet another tax opportunity.

  • SW

    Don you are absolutely correct, and that is exactly why I advocate for Federal legislation enabling States’ rights to choose enforcement of existing sales/use taxes currently being knowingly and unknowingly evaded by residents. The current system requires residents in the forty five states utilizing sales and use tax to honorably self remit use tax on all out of state purchases. The failure to so continues placing increasing tax burdens on less fortunate families in a number of ways. Not only are less fortunate families affected we are all paying higher alternative taxes enacted over the past decade to compensate for continuing tax evasion on Internet transactions.

    Less fortunate families with limited credit and access to the Internet are being compelled to pay higher taxes at the register. States. such as CT, continue to increase sales/use tax rates compensating for continuing evasion of taxes by their constituents. States such as NY have enacted increases in property tax levies in response to declining sales/ use tax remittances. Less fortunate families are now faced with difficult decisions as landlords pass the tax increases along in the form of higher rents. Some families are left with little choice except social services ultimately costing us all.

    As Internet shopping continues to grow more and more local businesses are closing their doors. Local businesses actually employ 4 people for every million dollars in annual sales, versus e-commerce merchants hiring only 1 individual.

    In 1992 when the Supreme Court last rules on this issue technology was still not up to the task of removing tax remittance burdens for merchants. The most important distinction is the Supreme Court never excused consumers from their legal obligation to self remit use tax on all out of state transactions. So the fact remains sales and use tax are legally required today on all out of state Internet purchases establishing this is in no way a new tax.

    Today freely available technology eliminates legacy burdens for consumers, merchants and governments. Merchants, such as myself, can easily employ modern technology enabling automated sales tax calculation, collection and remittance for any jurisdiction in any state. The proposed legislation requires states utilize one standard e-file remittance procedure as twenty four states are currently doing. One standard e-file remittance procedure eliminates mounds of administrative burdens. Also, states will maintain one remittance office utilizing automation also eliminating unwarranted bureaucracies. Finally, as the ICSC reveals 90% of Internet consumers surveyed prefer sales tax be collected at the time of purchase versus having to self track and remit as currently required.

    After reading my previous posts I am certain you will see this is truly a conservative issue. As a conservative I am constantly seeking ways to minimize unnecessary bureaucracies, encourage innovation and efficiencies aimed at improving the economy.

    A tax system is only fair when all citizens participate equally. Maintaining tempting loopholes ultimately saddling less fortunate families and individuals with undeserving increased tax burdens is hardly fair. Distribution of tax burdens across a larger demographic ultimately lowers each taxpayer’s liability.

  • SW

    Don you are absolutely correct, and that is exactly why I advocate for Federal legislation enabling States’ rights to choose enforcement of existing sales/use taxes currently being knowingly and unknowingly evaded by residents. The current system requires residents in the forty five states utilizing sales and use tax to honorably self remit use tax on all out of state purchases. The failure to so continues placing increasing tax burdens on less fortunate families in a number of ways. Not only are less fortunate families affected we are all paying higher alternative taxes enacted over the past decade to compensate for continuing tax evasion on Internet transactions.

    Less fortunate families with limited credit and access to the Internet are being compelled to pay higher taxes at the register. States. such as CT, continue to increase sales/use tax rates compensating for continuing evasion of taxes by their constituents. States such as NY have enacted increases in property tax levies in response to declining sales/ use tax remittances. Less fortunate families are now faced with difficult decisions as landlords pass the tax increases along in the form of higher rents. Some families are left with little choice except social services ultimately costing us all.

    As Internet shopping continues to grow more and more local businesses are closing their doors. Local businesses actually employ 4 people for every million dollars in annual sales, versus e-commerce merchants hiring only 1 individual.

    In 1992 when the Supreme Court last rules on this issue technology was still not up to the task of removing tax remittance burdens for merchants. The most important distinction is the Supreme Court never excused consumers from their legal obligation to self remit use tax on all out of state transactions. So the fact remains sales and use tax are legally required today on all out of state Internet purchases establishing this is in no way a new tax.

    Today freely available technology eliminates legacy burdens for consumers, merchants and governments. Merchants, such as myself, can easily employ modern technology enabling automated sales tax calculation, collection and remittance for any jurisdiction in any state. The proposed legislation requires states utilize one standard e-file remittance procedure as twenty four states are currently doing. One standard e-file remittance procedure eliminates mounds of administrative burdens. Also, states will maintain one remittance office utilizing automation also eliminating unwarranted bureaucracies. Finally, as the ICSC reveals 90% of Internet consumers surveyed prefer sales tax be collected at the time of purchase versus having to self track and remit as currently required.

    After reading my previous posts I am certain you will see this is truly a conservative issue. As a conservative I am constantly seeking ways to minimize unnecessary bureaucracies, encourage innovation and efficiencies aimed at improving the economy.

    A tax system is only fair when all citizens participate equally. Maintaining tempting loopholes ultimately saddling less fortunate families and individuals with undeserving increased tax burdens is hardly fair. Distribution of tax burdens across a larger demographic ultimately lowers each taxpayer’s liability.

  • SW

    Ted,

    You need to read my previous post. My small business utilizing technology freely available easily enables sales tax calculation, collection and remittance procedures for any business. Check out TaxCloud. I am still amazed at the ease of integration and continuing savings.

  • SW

    Ted,

    You need to read my previous post. My small business utilizing technology freely available easily enables sales tax calculation, collection and remittance procedures for any business. Check out TaxCloud. I am still amazed at the ease of integration and continuing savings.

  • Cincinnatus

    SW: tl;dr

  • Cincinnatus

    SW: tl;dr

  • Joe

    States do not have an obligation, legal moral or otherwise, to make their taxes the same as other states in order to make it easy on multi-state businesses. They might want to but they do not have any such obligation. And the suggestion that the Feds should be playing any role in how the State’s set their tax policy is simply wrong. If federalism doesn’t meant that the feds can’t dictate state tax policy then it means absolutely nothing.

  • Joe

    States do not have an obligation, legal moral or otherwise, to make their taxes the same as other states in order to make it easy on multi-state businesses. They might want to but they do not have any such obligation. And the suggestion that the Feds should be playing any role in how the State’s set their tax policy is simply wrong. If federalism doesn’t meant that the feds can’t dictate state tax policy then it means absolutely nothing.

  • TedCJ

    Federalism died at Appomattox.

  • TedCJ

    Federalism died at Appomattox.

  • TedCJ

    I agree the states right to tax should not be encumbered by the feds, however, the way states tax does not help businesses in general but political aims in particular. Thus they are a drag on businesses in general.

  • TedCJ

    I agree the states right to tax should not be encumbered by the feds, however, the way states tax does not help businesses in general but political aims in particular. Thus they are a drag on businesses in general.

  • http://www.facebook.com/mesamike Mike Westfall

    Let the states fix their own tax problems.
    Getting the Feds involved can only make things worse.

  • http://www.facebook.com/mesamike Mike Westfall

    Let the states fix their own tax problems.
    Getting the Feds involved can only make things worse.

  • DonS

    SW @ 35: Now you’ve convinced me you’re a lobbyist. Sheesh.

    Cincinnatus is right @37, but somehow I waded through your post anyway. You say in the first line that I am “absolutely correct”, then say absolutely nothing after that with which I agree. What am I so correct about? States have no rights to enforce their byzantine tax laws against parties in other states. The Supreme Court was very clear about that and it was absolutely right. To argue that the failure to pay use taxes amounts to tax evasion is absurd. What an unreasonable burden to place on the already beleaguered taxpayer. Using CT and NY as examples of responsible states suffering for failure to collect sales and use taxes on out-of-state sales is another absurdity. These leftist states collect more than ample tax money from their hard-pressed taxpaying citizens to run a reasonably-sized and efficient government, but they are not interested in reasonable size or efficiency. More, more, more — that is their motto. I have no sympathy for high tax blue states seeking to dig ever deeper into our rapidly emptying pockets.

    This federal legislation is an opportunity to gain concessions from runaway state governments, in exchange for granting them the right to collect sales taxes from out-of-state vendors. These types of opportunities seldom arise, and we dare not miss the chance to force them to clean up their tax codes for the sake of easing tax compliance burdens, at the very least. In this respect, at this point, the proposed legislation does not go nearly far enough.

  • DonS

    SW @ 35: Now you’ve convinced me you’re a lobbyist. Sheesh.

    Cincinnatus is right @37, but somehow I waded through your post anyway. You say in the first line that I am “absolutely correct”, then say absolutely nothing after that with which I agree. What am I so correct about? States have no rights to enforce their byzantine tax laws against parties in other states. The Supreme Court was very clear about that and it was absolutely right. To argue that the failure to pay use taxes amounts to tax evasion is absurd. What an unreasonable burden to place on the already beleaguered taxpayer. Using CT and NY as examples of responsible states suffering for failure to collect sales and use taxes on out-of-state sales is another absurdity. These leftist states collect more than ample tax money from their hard-pressed taxpaying citizens to run a reasonably-sized and efficient government, but they are not interested in reasonable size or efficiency. More, more, more — that is their motto. I have no sympathy for high tax blue states seeking to dig ever deeper into our rapidly emptying pockets.

    This federal legislation is an opportunity to gain concessions from runaway state governments, in exchange for granting them the right to collect sales taxes from out-of-state vendors. These types of opportunities seldom arise, and we dare not miss the chance to force them to clean up their tax codes for the sake of easing tax compliance burdens, at the very least. In this respect, at this point, the proposed legislation does not go nearly far enough.

  • DonS

    Joe @ 38: I’m not sure to whom your comment was addressed. I’m a federalist, to be sure, but it is my understanding that the proposed legislation is voluntary — states don’t have to participate if they don’t want to. So, the feds are not “dictating” anything. They are merely setting uniformity standards (weak as they are) for states to comply with if they want the chance to enforce their sales tax laws outside of their own borders. Such regulation of interstate commerce, since it is voluntary for the states, is surely squarely within the federal government’s purview under the Commerce Clause. I would agree with you if the feds were forcing the states to change their sales tax laws, but that is not the case, I don’t believe.

  • DonS

    Joe @ 38: I’m not sure to whom your comment was addressed. I’m a federalist, to be sure, but it is my understanding that the proposed legislation is voluntary — states don’t have to participate if they don’t want to. So, the feds are not “dictating” anything. They are merely setting uniformity standards (weak as they are) for states to comply with if they want the chance to enforce their sales tax laws outside of their own borders. Such regulation of interstate commerce, since it is voluntary for the states, is surely squarely within the federal government’s purview under the Commerce Clause. I would agree with you if the feds were forcing the states to change their sales tax laws, but that is not the case, I don’t believe.


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