The so called free-ride is over. Online purchases will likely be taxed next year.
This may be the last holiday season to enjoy tax-free Internet shopping, thanks to new legislation in the U.S. Congress.
Two bills introduced Wednesday propose sweeping changes to how Americans are taxed for online and mail order purchases. Businesses initially would be required to collect sales taxes on purchases shipped to roughly half of the country, and that percentage is expected to rapidly increase.
Where’s the ACLU when you need it? The US Constitution clearly prohibits taxing interstate commerce, but there’s no uproar about these sort of bills. I predict that within a few years each state will have their own border patrols collecting their “use” taxes.
The simple way to do this is to make internet retailers charge taxes from the state the item is being shipped from. E.g., if you live in New York, buy from Amazon, and it ships from California. California’s tax would be added.
Clearly if I drove to California and bought something, I’d have to pay California’s taxes. It should be the same if I have FedEx pick it up for me.
The problem with this approach is that states would be able to compete. For example, Nevada could decide to become the nation’s shipping state and charge no state taxes on out of state purchases. Retailers would build warehouses there and the other states would either “lose” money or be forced to compete. They don’t want that. States want their money with no impediment.
Got news for you, some states have been requiring tax filers to list the amount of out of state purchases on their tax returns. NJ for one. Now its just manditory. Don’t count on the ACLU to help you, they are too busy chasing schools that celebrate Christmas and the plege of alegience, you know real important things.
We all knew it was coming. The last frontier. The Internet the most robust entertainment for the buck will be over.
It was never of question of If, but When.
Payment of sales tax on all out of state purchases has been a legal requirement in California for many years. You are required to enter any such purchases on your state tax return. Of course, EVERYONE complies with that requirement (wink, wink)…
Oh god. I don’t even want to think about this. The logistics of 50 different states to collect tax for is going to be a nightmare. Just doing New York was a pain, since many counties also levy a tax. You have to base it on zip code, and then try to figure out the state and local taxes. Charge them, keep track of them, and send them (with the appropriate forms of course) to each.
There’s got to be a better way.
A central database (based on zip code) that my server could query (just like I can query UPS & Fed-ex for shipping now) would help. But I suppose that’s asking to much of the Federal govt.
“Main Street retailers collect sales taxes, while many online and catalog retailers are exempt from collecting the same taxes,” said a statement published by Sen. Mike Enzi, a Wyoming Republican. “This is costing states and localities billions in lost revenue.”
I thought “republicans” were supposed to be the free market people – ya know, eliminate/reduce taxes, let me keep more of my own money, cuz I can spend it better than the government can (to paraphrase George W)?
I agree. I would never expect this from a Republican. But then again it was a Democrat (Dorgan of N. Dakota) who authored the bill in the first place.
“We all knew it was coming. The last frontier. The Internet the most robust entertainment for the buck will be over.”
Damn shame too, The internet was the best place for deals that no normal store would ever sell some stuff for, places to find old crap that no one wants and pawn shops don’t even carry.
Yes, there is a better way: Federalize all State taxes and run the money through the machine in Washington where they can keep tabs on everyone. It would stop terrorism!!
I’m rather suprised it hasn’t happened already. However, we could take a page from the lobbyist’s in Washington, DC and form a power bloc that strives to accomplish what its members see fit.
The member list should include top Internet retailers like
Ebay
Amazon
and other retailers that have the same power-weilding abilities.
things like that…
I’ll believe it when I see it. There are many things which Congress wants to do. As for there not being an uproar, that’s because the little guys haven’t gotten the memo yet. They’re about to. Then we’ll see where this goes.
Interesting stats from my state of Michigan which signed onto this proposal. Supposedly, the state of Michigan is losing a ton of money in sales taxes to that big bad internets! This is sales tax collected by year, in millions of dollars:
1993 – $2,963.7
1994 – 3,671.4
1995 – 4,874.0
1996 – 5,189.6
1997 – 5,375.7
1998 – 5,365.9
1999 – 5,918.1
2000 – 6,240.8
2001 – 6,364.6
2002 – 6,492.5
2003 – 6,408.5
2004 – 6,458.6
It seems to have stagnated a little bit, but certainly no horrendous losses here. Even if losses existed, how can you prove the internet is killing sales tax revenue? Couldn’t it be, say, the ailing economy?
Perhaps if they are facing a revenue shortfall, they should curtail spending a bit.
Where’s the ACLU when you need it? Great question. They’re working on bigger issues than this. It seems there is some town calling the tree in front of city hall a Christmas tree, which could become a Supreme Court case for the ages. We have some church lady putting a nativity display in a county park, so I imagine they will be busy with that also. The old folks home gets federal funding and the old ladies can’t put a Christmas wreath on the door. Word is that this could end up in court.
I guess if you have legal talent, you are with a law firm getting 6 figures. The hacks end up fighting the important Christmas cases pro bono with the ACLU. You’re a mean one Mr. Grinch.
The Dvorak Commies continue to amaze me. They want it all, but are never willing to pay for it.
Your local sales tax helps pay for the maintenance of the roads in front of your house…. you know the road that the UPS truck bearing your out of state non-taxed purchases is riding on.
As Internet commerce grows, the sales tax exemption will help the electronics dealers in other places, and hurt your local dealer’s sales. And when/if your local dealer can’t compete anymore, there will be no place for your kids to work, no place to actually see the LCD screen you want to buy, etc. etc. etc. And, hey, your road outside may not get the potholes fixed quite as fast either.
Hey, I’m the capitalist/libertarian around here, so fine with me, but at least I’m realistic about things.
Lastly, on a side note, I hope there is a special place in hell for people who select products by going to local retail outlets, and then buying it over the internet to just to save paying the sales tax.
>As Internet commerce grows, the sales tax exemption will help the >electronics dealers in other places,
UPS hires people too. They pay taxes, including gas taxes. Who’s to say there aren’t such companies locally, selling online?
Alas, you can’t reliably use the zip code system to assign sales tax. The UNITED STATES Post Office routinely delivers mail across state borders. Some Michigan residents have Toledo OH listed on their driver’s licenses as a result.
Most states have a blank on their tax forms for reporting purchases made “out of state” but most people are either unaware of it or ignore it.
Finally, our founding fathers created this “tax dodge” out of fear that states (like mine) would be tempted to levy punitive sales taxes on out-of-state purchases in order to boost the local economy, much like a tariff. Their fear of states creating punitive tax policies against each other would devastate commerce, the economy, and the union. Are our politicians wise enough to prevent this from happening?
Be thankful that online shopping is at a point where it will survive despite this tax.
So what happened with this tax thing by the way?