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Businesses The Almighty Buck United States Your Rights Online

DMA Disputes "Lost Taxes" Numbers 23

Posted by timothy
from the all-in-the-counting dept.
DaveAtFraud writes "The Direct Marketing association (DMA) has released a study (PDF only) showing that the amount of tax revenue supposedly 'lost' by the states due to on-line sales has been significantly overstated. Proponents of online taxes quote several University of Tennessee studies which found states missed out on $13.3 billion in 2001 collections. In contrast to UT's claim, the DMA's study says the figure was closer to $1.9 billion. And while UT finds states could be stiffed by $55 billion in 2011, the DMA claims it's more like $4.5 billion. You get the picture (I wonder where UT gets its funding? It wouldn't be the state of Tennessee by any chance would it?). The DMA study points out flawed growth assumptions and outright falsehoods (e.g., counting certain business-to-business transactions that actually did create tax revenue for the state in its count of missed taxes) in the UT studies that cast a shadow of doubt on the UT studies' validity."
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DMA Disputes "Lost Taxes" Numbers

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  • hmmm... (Score:3, Funny)

    by Tumbleweed (3706) on Saturday March 15, 2003 @04:46PM (#5520858)
    ...looks like somebunny's been going to the RIAA School of Accounting and Business Ethics.
  • Bias (Score:3, Informative)

    by _Splat (22170) on Saturday March 15, 2003 @04:54PM (#5520898)
    For all the claims of UT being biased, realize that the DMA has a significant interest in there NOT being taxes on out-of-state sales.
    • Re:Bias (Score:3, Insightful)

      by sweetooth (21075)
      True, but the number is possibly somewhere in the middle which seems much more reasonable.
  • by rudy_wayne (414635) on Saturday March 15, 2003 @05:13PM (#5520978)
    The amount of tax revenue lost by the states is exactly zero.

    1. You can't lose something you never had.
    2. There is no legitimate reason to collect these taxes.

    The clamor for these taxes is merely another attempt by greedy politicians to shove their hands deeper into the pockets of consumers. With the economy the way it is, and many states facing multi-billion dollar budget deficits, the states will tell whatever lies are necessry to raise new revenues.
    • > The amount of tax revenue lost by the states is exactly zero.

      > 1. You can't lose something you never had.

      Sorry, but that's entirely wrong.

      Opportunity Cost (definitions: 1 [investorwords.com], 2 [msn.com]) is essentially the issue here. The cost of something also includes the opportunity that is given up, even though it was never actually posessed. Assuming that consumers would buy the same goods whether online or in stores, every purchase online deprives the states of the otherwise-available opportunity to tax that purchas

      • by unitron (5733) on Saturday March 15, 2003 @07:11PM (#5521380) Homepage Journal
        ". Assuming that consumers would buy the same goods whether online or in stores,..."

        Yeah, right. I can go right down the street and get it right away for about the same total expenditure but I'd rather buy it online and wait a week or so for delivery. Uh-hu. Sure.

        • Funny, I was halfway anticpating more of the opposite response - that online purchases shouldn't be compared to store purchases because the convenience of shopping from home and the lack of sales tax makes online sales more attractive to some people, particularly when buying large-ticket items (such as electronics) where sales tax is a bigger concern, so the online sales numbers would be inflated compared to what you could expect from traditional sales.

          I think both are valid arguments depending on individ

          • Sales tax and having to drive to and from the store usually adds up to about the same as the extra you pay for shipping when buying online so often the deciding factors are whether the online price is lower enough to induce you to wait several days for delivery, whether being able to inspect the merchandise in person before purchase matters, and, the one that seems to happen most often, whether the item is available online but not locally or available locally but not online.
        • "Assuming that consumers would buy the same goods whether online or in stores..."

          Come to think of it, I can see how that statement could be misread. Put another way, this is assuming that a given consumer will buy certain products they want/need no matter what, and the variable is how much is bought online versus how much is bought in local stores. This as opposed to the idea that people on average are spending more money overall because of online sales.

          Sorry if that wasn't clear.

      • Except you forgot to read the constitution.

        The goods an services of one state may not be
        taxed by another state.

        Even if such tax bills were passed they would
        be overturned.
        • >Except you forgot to read the constitution.

          >The goods an services of one state may not be taxed by another state.

          >Even if such tax bills were passed they would be overturned.

          As I said before, "I make no judgement on taxing online purchases here." The fact that tax money is being lost does not imply any belief that states have a legal right to regain that money.

          Please read posts in their entirety before replying.

        • Constitution? When was the last time that got in the way of lawmakers?
      • Opportunity cost would be a valid concept if

        1. No one lived in a rural area. Out in the sticks, you might have to drive an hour to even get to a retailer who has the item you want, if it's high-tech or some other specialty.
        2. I could count sales lost to my competitor on my taxes as a business loss. Every sale that could have been mine but went to a competitor must be a loss as well!

        • Opportunity cost would be a valid concept if

          1. No one lived in a rural area. Out in the sticks, you might have to drive an hour to even get to a retailer who has the item you want, if it's high-tech or some other specialty.

          First off, that is not an argument against the validity of the concept of opportunity cost. Opportunity cost is a very simple idea - if you go to college instead of taking a job, the cost of college isn't just tuition etc. but also the money you didn't make by taking that job for the

    • Having returned to relatively socialist Canada from the (surprisingly still quite free market, despite the corporatism (i.e. business buying law) going on) U.S.A., I can only say...

      <warning: rant>

      Those who support taxation deserve to have their heads cleaved from thier bodies, in the most painful way possible, and their corpses recycled to nourish the plants that are harvested to produce the grains that feed the pigs who's processed flesh in the form of ham or bacon I'm occasionally given to consu

      • I'd add to your rant, but your arguments kick enough ass to stand on their own.

        There aren't enough people like you in the US; it's a miracle that thing aren't as fucked up here as over there or in red China.
  • Sales made online and shipped to customers is just another flavor of mail order, and keeping these sales "tax free" will not last much longer.
    The idea Internet as a tax free zone was accepted during the dot-com boom only because those businesses had the funding to "buy politicians off" on rules for taxation.
    If online sales outlets don't get wise and jump on existing rules for mail order taxation the States will end up taxing them even more than conventional mail order sales are taxed today.
  • by 0x0d0a (568518) on Saturday March 15, 2003 @09:18PM (#5521788) Journal
    The Internet under attack from the state governments, and the Direct Marketing Association riding to its rescue?

    Yeesh.
  • My Mail Order Bride from Russia?

    No I will not sink to the level of 'In Soviet Union online taxes you'

    Gasp, I just did it. Ouch.

  • Ooooooo! It's the internet! It's different! We need new different laws! Ooooooo!

    More bullshit. The internet is irrelevant. States do not get to tax inter-state commerce. Period. It doesn't matter if it is catalog sales, phone sales, or this new fancy shmancy magic inna-web-thingy.

    The fact that it involves the internet is irrelevant. What we need is a law that says laws cannot contain the word internet.

    -

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