Explain to Me How Taxing the Internet is NOT Raising Taxes on the Little Guy

Explain to me how taxing the internet is not raising taxes on the little guy because, frankly, I don’t get it.

In my simple little mind, I think that a federal intervention that allows the states to slap a sales tax on the things we buy on Amazon and Ebay is, well, slapping a national sales tax on mom, pop, you and me.

One thing I’ve always admired about Republican tax policy is that they don’t make any bones about the fact that they want to tax everybody but the rich and give to nobody but the rich. They are right out front with their intention to use the national treasure as a piggy bank for corporations and anybody else in the top 5% who wants some. 

The Democrats, on the other hand, try to be more fair, or at least they do part of the time. Out of all the deficit-enhancing tax cuts that Congress has passed in the last 13 years, only one showed up in my paycheck. That was the temporary reformulation that President Obama used to try to stimulate us out of fiscal armageddon when he first took office in ’08. 

I believe he promised something about not raising taxes on us working stiffs. It went something like this:

“I can make a firm pledge. Under my plan no family making less than $250,000 a year will see any form of tax increase. Not your income tax, not your payroll tax, not your capital gains tax, not any of your taxes.”

That sounds fairly comprehensive to me. However, nothing that anybody in Washington says to we the people appears to matter all that much to them. In fact, I’m beginning to get the feeling that they tell us stuff so that we will believe it, so that they can do the opposite. 

The President’s no-tax-on-the not-rich is a case in point. It appears that he didn’t mean that he wouldn’t tax gouge the little guy when taxes are “unfair.” What is an “unfair” tax? It appears that a tax is “unfair” when the Chamber of Commerce says that it’s unfair. 

In the effort to achieve “tax fairness” the United States Senate has pushed a measure that would require consumers to start paying sales tax on internet purchases. They claim, however, that this is not a tax increase. It will take money out of your pocket and put it in the government’s pocket, true. But it’s still not a tax increase and only the addlepated and simple-minded think that it is. 

Personally, I don’t think anybody believes that. I do think that hired guns who lobby Congress for Wal Mart, et al, and the Congressmen who get campaign donations from the same, will recite this claptrap until their noses grow out and sprout leaves. But they don’t believe it. They’re just hoping that the American people will be passive and dumb enough to let them get away with it. 

They are calling this “tax fairness,” as if any missed tax gouge on the American people was somehow a breach of morals. I love that. I hear the same kind of nonsense every time a bill that will hurt the people gets tossed at us in the Oklahoma House. “Tax fairness” means that if this thing passes, you and I are going to get a tax hike ranging from 9 or 15% on the things we buy on the internet. 

Wal Mart is the main proponent of this kind of legislation in Oklahoma, just as they are in Congress. Personally, I think it’s kind of hilarious, hearing a Wal Mart hired gun tell me that all Wal Mart wants is a level playing field. I know people who had small businesses before Wal Mart came into their neighborhood. I’ve heard the way these guys negotiated with them. 

This is about limiting competition. A Reuters article on this subject said that “Prospects for the bi-partisan measure are murkier in the Republican-controlled House of Representatives, where some Republicans view it as a tax increase.” 

Well, duhhhhh. 

Since we are dealing with Puppet people congressmen, anything can happen. If the pressure goes up, we might very well see some evolving door Republicans on taxes as well as social issues. 

In meantime, would somebody really, really smart please explain to me again how this is not a tax increase?

I’m just too simple to get it. 

From Reuters:

(Reuters) – A measure to empower U.S. states to require out-of-state retailers to collect online sales tax cleared a legislative hurdle in the Senate on Monday, after earlier winning official backing from President Barack Obama.

Seventy-four senators voted to limit debate and move forward with a final vote on the proposed legislation in the Democratic-controlled Senate, likely on Wednesday.

“You have businesses all around America on Main Streets and shopping malls collecting sales tax on the things that they sell, competing with Internet retailers who do not,” said Democratic co-sponsor Senator Richard Durbin.

Supporters of the measure include brick-and-mortar retailers such as Wal-Mart Stores Inc and Best Buy Co Inc and cash-strapped state governments, along with Amazon.com Inc, which hopes to simplify its U.S. state retail tax situation. Opponents include many online merchants, including eBay Inc and Overstock.com Inc.

Prospects for the bipartisan measure are murkier in the Republican-controlled House of Representatives, where some Republicans view it as a tax increase.

Lobbyists on both sides are working to make their case in Congress. Several new wrinkles emerged on Monday, a key one being that the Obama administration for the first time officially backed the measure.

White House spokesman Jay Carney said the bill “will level the playing field for local small business retailers who are undercut every day by out-of-state on-line companies.” (Read the rest here.)

  • Dale

    Rebecca, I am not real smart, so may be wrong. But my understanding is that this is not a national sales tax. Rather, it would require that online retailers collect the state sales tax which already exists in a purchaser’s home address.

    • Rebecca Hamilton

      Did I say it was a national sales tax? I know better than that. I’ll correct it. Thanks for the save!

    • Dale

      Correction: A re-reading of the article makes me think that the proposal merely allows states to require that their sales tax be collected by online retailers. States which do not pass a law making this requirement would still allow tax-free online purchases.

      Is that a mis-reading of the article?

      • Rebecca Hamilton

        Dale, I’ll pull the bill and read through it tonight. However, I’m probably going to need to do more than that to tell you what it means exactly. Tax law is really complex.

        I’ll try to get you some answers by Monday, if I can.

  • Helen

    The question I have is the effect on yet another type of small, very small business. This poses a huge challenge to anyone setting up an online business. To be required to know the sales tax rate of not only every state but every location. At least in my state, towns have added an cent or percentage of a cent to the state sales rate. My town adds .75 to the state rate. This is a discouraging hurdle to small business, not so much for online giants like Amazon.

  • Zeke

    As a public official, who we would expect to be somewhat familiar with these things, wouldn’t it be appropriate to research the facts that we, the public, cannot access as easy as you before posting such questions? But that’s besides the point. Does closing a loophole that avoids tax on internet purchases, which every other company in the state has to collect and remit, a tax increase? Is it unfair? Rant all you want about “hired guns who lobby Congress for Wal Mart”, the loophole that avoids sales tax buy purchasing via internets hurts little guys as well as corporate giants.

    • Rebecca Hamilton

      Zeke, there has been at least one bill on this topic in the Oklahoma legislature every year for quite a while now. Some of them reference a planned change to the federal laws. There are so many bills that I need to go back and untangle the strands of the spider’s web to explain it here.

      The merits — or lack thereof — of the proposed tax increase do not in any way alter the fact that it IS a tax increase, and that it is a tax increase that will fall mostly on people who make less than $250,000/year. Sales taxes are always regressive, which means they always fall harder on those least able to pay.

      That means President Obama has broken his very explicit campaign promise in this regard. It also means that Republicans who vote for this and who have pledged no new taxes are breaking their promises, as well. This business of lying to the voters in such a cavalier manner is important; far more important than the merits of any piece of legislation.

      • http://abb3w.livejournal.com/ abb3w

        Is it still “a tax increase” if the taxes are already owed under the law, but most people are cheating on their state taxes by not paying them?

        • Rebecca Hamilton

          Most people are not cheating on their taxes by not paying them. That is absurd. I need to look it up to make sure, but I think I remember that the law you cited earlier is meant to apply to retailers and not individuals. I don’t know which chamber of commerce clone in the Oklahoma legislature you’ve been talking to, but I do wonder how his/her constituents would feel if they knew he/she was calling all of them tax cheats.

    • http://www.xcergy.com Keith Yockey

      Closing a loophole? Your State has laws on the books now to collect tax, so THERE IS NO LOOPHOLE. I read all the time how citizens are unaware of the law, and I have to ask, just why is that? Is your State DOR not doing their JOB? It seems so. If you have the law, educate the public of same. If it is the law. enforce it. If it does not work, then scrap it before deciding to write new, bad law.

      • Rebecca Hamilton

        Who are you with? The chamber o Commerce? Wal Mart?

  • http://www.patheos.com Amy

    Helen, the powers that create apps will certainly have an app for sales tax rates for every location. If they are going to tax internet sales, then it is the individual’s choice to decide to buy online, by locally, support businesses that honor God, (amazon doesn’t along with a host of other businesses that
    I stay away from.) Engaging in local buying and selling has a personal, human touch. If the store doesn’t have what you absolutely need, then they can order it for you. Sometimes, the old ways were better.

  • http://www.xcergy.com Keith Yockey

    The author is missing an important point. Almost all States require a Use Tax to be paid in case the retailer does not charge Sales Tax. It’s a law on the books since the 1930s. It’s a line item on most tax forms, and failure to pay makes the buyer A LAWBREAKER. More money out of you pocket? Not if you had been paying what the law states all along. Fact is, if all paid their tax due, States could lower the tax rate by 1-1.5 points.

    • Rebecca Hamilton

      Keith are you a lobbyist for the proponents of this tax increase? You sound like one.

    • http://www.rosariesforlife.com Dave

      Know what’s sad? Our government is getting so ridiculous that “lawbreaker” doesn’t even mean much any more. It’s kind of like a teenage boy that’s supposed to listen to and obey his dad. But when his dad starts driving drunk, cheating on his wife, and buying luxury yachts that the family can’t remotely afford, he has basically forfeited any claim to authority.

      • Rebecca Hamilton

        Dave this business of characterizing millions of Americans as “law breakers” over this tax thing is a good example of manipulation of the facts by pr firms. The face that it’s suddenly going out over various media speaks to the well-organized campaign behind it, as well as the degree to which the media is in the bag with big business. Remember who owns the media? The media is big business.

  • http://ashesfromburntroses.blogspot.com/ Manny

    “One thing I’ve always admired about Republican tax policy is that they don’t make any bones about the fact that they want to tax everybody but the rich and give to nobody but the rich. They are right out front with their intention to use the national treasure as a piggy bank for corporations and anybody else in the top 5% who wants some. ”

    Hahahahahaha, oh Rebecca you make me laugh. The rich already pay over 70% of federal taxes collected, despite being 5% of the population.

    I’m against internet taxes as i’m against all taxes. We are all over taxed. But the rationale for the internet tax is that people are by passing state and regional sales taxes, and so making it unfair to local governments and causing a disadvantage to brick and mortar stores.

    • Rebecca Hamilton

      If they want to make it “fair” maybe they should lower the taxes on the brick and mortar stores.

      As for the protect the rich tax policy, I sit and watch it all day long. These birds are controlled by and work for a small segment of the population. There is a reason why the wealthy upper percent keeps getting richer and everyone else keeps getting poorer. Government largesse to the rich, alongside doing their bidding on regulations and in every other way, is that reason.

      • http://ashesfromburntroses.blogspot.com/ Manny

        “If they want to make it “fair” maybe they should lower the taxes on the brick and mortar stores.”

        ABSOLUTELY AGREE!

    • http://www.rosariesforlife.com Dave

      I agree with you…I’m against almost all taxes. As far as federal tax, it should be limited to national defense and national infrastructure that cannot be done more efficiently by a lower level of government or private initiatives. I’m guessing that would cut federal taxes by about 75% right there. That would also help in a small way to cut federal power, though much more would need to be done.

      For charity for those in need, it should be at a local, personal level where more love AND accountability can be in play.

      However, I do agree with Rebecca that it is at least possible that the 5% who are defined as rich could be paying 70% of the tax and that would not be enough. It all depends on how much of the income that 5% is making. Also, another important way that the government favors the rich is by misregulating (note, NOT under-regulating) industry so as to favor big corporations. In many cases, the fox is guarding the henhouse.

      Somewhat on another subject, an idea I have is that those who are receiving a net monetary gain from the federal government (including and ESPECIALLY federal officials and representatives) should not be allowed to vote in a federal election (it is a conflict of interest), though I suspect you may not like that idea, Rebecca.

  • hamiltonr

    Dale, I wasn’t even aware that it had passed in the Senate. I thought it still had to go through the House after that. Am I wrong?

    I’ve tried to get the information I promised, but so far no response. I’ve been too busy myself to track it down. But I haven’t forgotten. I’m just too busy to get to it. As soon as I do, I’ll put it here.

    • Dale

      Rebecca, I owe you an apology. You are correct, it passed the Senate but has yet to be considered in the House. I just checked the Library of Congress website, which lists the current status of the bill as “held at the desk.” I guess that means it could be considered directly, without going through committee.

      However, Speaker of the House Boehner has indicated he will send the bill to the Judiciary Committee. The chair of that committee, Bob Goodlatte, issued a statement that the bill needs a lot of work.

      http://thehill.com/blogs/hillicon-valley/technology/298165-house-chairman-a-long-way-to-go-for-internet-sales-tax

      I am sorry for sending you on a wild goose chase. I need to be more careful about checking my facts before I post.

      • hamiltonr

        No apologies necessary. I mean that. I am grateful to you for all the times you’ve saved me when I made some mistake or other, including with this post.


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