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The End of Tax-Free Internet Shopping? 784

Mordok-DestroyerOfWo writes "If a little-known but influential alliance of state politicians, large retailers, and tax collectors have their way, the days of tax-free Internet shopping may be nearly over. A bill expected to be introduced in the US Congress as early as Monday would rewrite the ground rules for mail order and Internet sales by eliminating what its supporters view as a 'loophole' that, in many cases, allows Americans to shop over the Internet without paying sales taxes."
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The End of Tax-Free Internet Shopping?

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  • which state(s)? (Score:5, Interesting)

    by pak9rabid ( 1011935 ) on Thursday April 16, 2009 @01:57PM (#27600153) which state will the taxes be going to? The state in which the business operates out of, or the state in which the purchase was made in, or both?
  • Oh thank goodness (Score:5, Interesting)

    by Deosyne ( 92713 ) on Thursday April 16, 2009 @02:01PM (#27600203)

    I was beginning to worry that I might actually be able to spend the remainder of the money that that the government lets me keep each payday without having them take more from me. I'm so glad that they're working hard to prevent that from happening.

  • by janeuner ( 815461 ) on Thursday April 16, 2009 @02:02PM (#27600211)

    The difference?
    Price Tag: $2.99
    Total: $3.15

    - versus -

    Price Tag: $3.15
    Total: $3.15

  • by Yvan256 ( 722131 ) on Thursday April 16, 2009 @02:05PM (#27600237) Homepage Journal

    If someone from Canada buys something, does he pay the state taxes? That would be stupid.

    And if a company in Canada sells something to someone in the USA, does he have to collect the state taxes? Good luck with that.

    The only sane way to do this is charge taxes based on the shipping address, from sales within the USA only.

  • Re:which state(s)? (Score:3, Interesting)

    by The Grim Reefer2 ( 1195989 ) on Thursday April 16, 2009 @02:07PM (#27600279) which state will the taxes be going to? The state in which the business operates out of, or the state in which the purchase was made in, or both?

    That's a good question. If it's the state of the purchaser, then I suspect that Delaware could end up becoming a popular place to live, or at least claim residence. Oregon would be a more interesting question since the sales tax is set on a local level rather than by the state. If it's the state of the seller, then there could be incentive to set up call centers to receive orders in either of those states, or perhaps even Montana as it probably has the lowest sales tax of states that have it.

  • by ArcherB ( 796902 ) on Thursday April 16, 2009 @02:09PM (#27600317) Journal

      "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 taxes, not any of your taxes."

    "You will not see any of your taxes increase one single dime."
    -- Barack Obama

  • It's All Greed (Score:5, Interesting)

    by Nom du Keyboard ( 633989 ) on Thursday April 16, 2009 @02:10PM (#27600323)
    It's all about greed. The internet company operating outside the state (if they're in the state they're already paying taxes) isn't using any of the infrastructure that the taxes pay for. If anything, they should be paying taxes in the state where they do the business, but then you have customers in other states paying out-of-state sales taxes which don't benefit them and aren't fair either.

    The current system has worked well for many years. What hasn't worked well over that time is politicians controlling their spending of other people's money in their attempts to buy their way into continued future paychecks. Now they're out trying to steal even more from you.

    If we threw out these politicians trying to vote this in as just yet more Big Taxers and Spenders then this stupid and unfair idea might actually go away for a while.

    And it goes without mentioning the problems any Internet company would face in computing the proper state, county, city, and even borough taxes properly and paying them to all the proper taxing authorities. This is MANY TIMES the burden any local business faces. Talk about an attempt to kill internet companies - you couldn't have come up with a better scheme.

    And think of the companies (FedEx, UPS...) which depend of them for a large chunk of their business. Raise prices, kill off companies, are you really trying to make this recession worse!
  • by watermodem ( 714738 ) on Thursday April 16, 2009 @02:11PM (#27600333)

    What is the justification for sales tax on an internet purchase?
    Did the state or county provide some service or infrastructure that supported the internet sale?
    Did the state or county or city bring anything to the table?


    Why then they should bug off!

  • Re:which state(s)? (Score:3, Interesting)

    by flitty ( 981864 ) on Thursday April 16, 2009 @02:23PM (#27600527)
    I have a sneaking feeling that Shipping costs are going to drop approximately 7% of the entire cost on a lot of purchases. We all know that those shipping costs have built in wiggle room, now we'll start seeing retailers reduce them as to not cause sticker shock.
  • by maxume ( 22995 ) on Thursday April 16, 2009 @02:24PM (#27600549)

    In Michigan, the use tax (which is the sales tax companion here) is (roughly) 0.04% of AGI for the sum of purchases of less than $1,000 (the purchases can optionally be itemized, but that only makes sense if you have high income and low purchases). So someone earning $100,000 and purchasing, say, $2,000 of online goods, would go from paying $44 of use tax to paying $120 of sales tax.

    So I agree that it won't destroy the businesses, but it isn't quite the case that consumers should have already been paying the same amount of tax.

  • Re:which state(s)? (Score:5, Interesting)

    by plague3106 ( 71849 ) on Thursday April 16, 2009 @02:26PM (#27600595)

    Heh... the company I work for sells products. If we send the invoice to CA, but the product anywhere else, we pay CA tax. If we ship the product to CA, we pay CA tax. If the person that made the order is in CA, but it's being billed and shipped elsewhere.. we pay CA.

    We also had NY make us pay sales tax because we DROVE THROUGH NY to delivery products ourselves to PA.

  • by Beat The Odds ( 1109173 ) on Thursday April 16, 2009 @02:28PM (#27600641)
    So you think that MORE than 50% of OUR income should go to GOVERNMENT.

    It's retarded ideas like that that are destroyed the wealth of the entire world.

    I'm moving to Mars or Jupiter.

  • by networkBoy ( 774728 ) on Thursday April 16, 2009 @02:29PM (#27600661) Journal

    fine then I want less services.
    Specifically I don't want services not enumerated in the US or state constitution.

  • Re:Use tax (Score:1, Interesting)

    by Anonymous Coward on Thursday April 16, 2009 @02:30PM (#27600671)

    Yep, we have that in California too. Since Amazon is the only tax-free site I order from, I just total up my orders from them (minus shipping) at tax time. Yeah, I'm probably the only sucker in the state who doesn't just put 0 in that box. Whatever. I like being honest. $71 this year, big fucking deal.

  • Re:Use tax (Score:3, Interesting)

    by JPLemme ( 106723 ) on Thursday April 16, 2009 @02:32PM (#27600697)

    That's impressive in its evil efficiency. Next they can just assume you didn't *report* a certain percentage of your income, and tax you on *that*.

    I gives a new meaning to "Adjusted Gross".

  • by Asmor ( 775910 ) on Thursday April 16, 2009 @02:33PM (#27600737) Homepage

    I don't mind paying taxes, but I wish the US did something like VAT in Europe.

    Basically, the prices you see advertised already include the tax in them. No trying to figure out 8% of some number, no more $2.99 item being just a hair over $3 and filling your pockets with loose change.

  • by hellfire ( 86129 ) <> on Thursday April 16, 2009 @02:35PM (#27600767) Homepage

    Yeah I know it's a troll but I'll bite.

    I've paid taxes on internet purchases. It all depends on which merchant you deal with. Most often I've seen it where if you are in the same state as the merchant, to avoid pissing someone off in the state IRS, they charge that tax, but not out of state tax.

    And for the record, the progressive left wing of the party finds almost all sales tax to be unfair and regressive. I could go into the details of why we see this, but progressives and liberals find and are far more willing to pay Income tax, not sales tax, because our feeling is income tax is better and in truth fairer for society as a whole. Not all taxes are made equal.

    If you want to debate the difference, feel free to follow up and start a whole new flaming thread.

  • Re:which state(s)? (Score:3, Interesting)

    by Fulcrum of Evil ( 560260 ) on Thursday April 16, 2009 @02:36PM (#27600781)
    You don't have 50 provinces with the potential for additional local taxes, do you? If you combine the state + local taxes, you can easily get above 1000 different tax situations, with changes daily.
  • Re:Going to be fun (Score:3, Interesting)

    by sunking2 ( 521698 ) on Thursday April 16, 2009 @02:44PM (#27600939)

    Do you really think that this does not exist? It's a service/software that can be bought from any number of places. This is part of what ERP systems do. I've seen services that translate an address into long/lat and then look it up that way. Though most are simply a database of State/County/City lookups. Traditional companies have dealt with it for many years before the internet, the internet doesn't make it any more complex. Any business that started out taking phone orders has had to deal with this issue already.

    Oh sure, you'll come up with the occasional nutty thing here or there. But do you really pass up tax revenue because .1% of them may not be 100% accurate? Not likely.

  • by ArcherB ( 796902 ) on Thursday April 16, 2009 @02:55PM (#27601155) Journal

    It's funny to see how pathetic the Obama-haters get in their criticism.

    Funny. I was just thing the same thing about Obama-Lovers with their defense of the indefensible.

    I didn't realize there were so many people that believed that "you will not see any of your taxes increase one single dime" somehow means "We will pass federal legislation that will make your taxes go up."

  • Re:which state(s)? (Score:5, Interesting)

    by EtherMonkey ( 705611 ) on Thursday April 16, 2009 @03:03PM (#27601309)

    I think you're incredibly naive.

    While there's plenty of examples of retailers overcharging on shipping, when you understand the overall pricing model you'll realize that the most popular retailers seldom net more than 15% and often as little as 8%, except for specialty/collector/restricted products. And this isn't considering their overhead and business expenses.

    For example, I resell computers and the spread between my distributor cost and HP's own website is 8 - 12% before considering my overhead. If I advertise my prices above HP's, nobody's going to buy from me. But if I meet my distributor's minimum order and pay immediately I get free shipping. So, to attract customers I advertise just above my cost (to not get charged with dumping or gray-marketing) and make up my overhead and profit by charging S&H. It's the only way I can stay in business.

    Anyway, if you think there's some extra 7% of profit margin hiding in today's Internet-powered, dog-eat-dog marketplace, you are about to be very disappointed. The environment is way too competitive for that. Shit, half the time I buy my components from NewEgg because its cheaper than the big distributors. Just look out for those free shipping deals.

  • Re:Screw 'em (Score:4, Interesting)

    by mikael ( 484 ) on Thursday April 16, 2009 @03:10PM (#27601455)

    When the economy was booming, many residents questioned why the city councils were maintaining "rainy day budget funds" they weren't using while they were putting up taxes. So the taxpayers forced the cities to use up these budgets before raising taxes. Now, there are massive waiting lists for council housing; asylum seekers, single parent families, immigrants who cannot find work and can't afford to go home, pensioners who lost their company pensions and the unemployed workers who were paying for everyone else.

  • by egcagrac0 ( 1410377 ) on Thursday April 16, 2009 @03:56PM (#27602211)

    Rules for Wisconsin have been in place since forever ago. If you made mail order (or similar) purchases on which you did not pay use tax for use in the State of Wisconsin, you're supposed to add that on to your income tax return. []

    That people casually ignore this put me at a competitive disadvantage when I was a retailer - they'd come in, look at my product, and then buy the identical item online, to save the price of tax (which they were convinced that by not reporting, they were not obligated to pay). Sucked, not in that business anymore.

  • by Anonymous Coward on Thursday April 16, 2009 @04:18PM (#27602603)

    Yeah, well, Ronald Reagan promised to balance the budget, and look what he did instead.

    George H. W. Bush said the deficit wasn't so bad and the way out was to grow the economy so that the deficit was tiny. That's a great idea so long as you stop deficit spending. Guess what? He didn't.

    George Bush gave the wealthy the tax cuts and invaded Iraq on a pack of lies and that by itself has cost us $660B ( plus another $186B for Afghanistan. I dunno, you take 3/4 of a trillion dollars _out_ of the economy and guess what happens?

    Did you whine about Reagan's broken campaign promises too or you just like whining when it's not "your guy" doing the breaking?

  • by pudge ( 3605 ) * Works for Slashdot <> on Thursday April 16, 2009 @04:34PM (#27602873) Homepage Journal

    Is there really some vast underbelly of lazy Americans glutting themselves on the hardworking taxpayer, are they the primary cause of our deficits?

    Nice straw man. No one is claiming this. No one is saying that Medicare and Social Security and other welfare recipients are lazy. But, they are vast, and they are one of the primary causes of our deficits, not just now, but into the future.

    The #1 primary cause is skyrocketing health care costs


    ... and the fact that young, healthy, individualistic types don't even want to think about, much less pay for, all the expensive health care they will involuntarily require at some point down the road after they are no longer economically viable.

    So you are explicitly arguing that the cause of our deficits is people who don't want MORE THAN HALF of their income taxed. Wow.

  • Re:which state(s)? (Score:1, Interesting)

    by Anonymous Coward on Thursday April 16, 2009 @04:35PM (#27602887)

    This happens a lot with vehicles as well. It used to be that any vehicle over 90 days old would not be taxed. This prompted a lot of purchasers to buy vehicles in Utah, park them for three months, then register them to avoid paying the higher tax rate.

    When I moved to California, they had already changed the rule, so that a vehicle must be owned for more than a year to avoid paying additional tax. Unfortunately, I had owned my car for only 10 months at the time, and had to pay the extra% over the tax I had to pay in Iowa.

  • Re:Not a problem (Score:3, Interesting)

    by shutdown -p now ( 807394 ) on Thursday April 16, 2009 @05:12PM (#27603587) Journal

    Libertarians don't promote "freedom-only-for-the-rich".

    In practice, the absence of regulations promoted by Libertarians will inevitably lead to "freedom only for the rich", 'cause that's what monopolies are all about, and their appearance is inevitable in a completely unregulated free market.

  • by Calithulu ( 1487963 ) on Thursday April 16, 2009 @06:12PM (#27604373)

    Oh, I don't know. CNN interviewed people from the TEA parties and the people that disagreed with them. FOX news was unabashedly positive. MSNBC covered them but had a definite "what the Hell are them complaining about" bent. Frankly, they covered it in a way that was exactly in line with what I expected. I think my only issue with them was that they were protesting on the day that the 2008 taxes were filed. If they had waited a year they'd be protesting on the right date.

    And, as much as I dislike anyone chastising people that question government, at least you are not a social pariah if you dare to disagree. I recall what happened in the year after the World Trade Center bombing on September 11th, 2001. Anyone, and I was included, who dared to disagree about things like the PATRIOT act was a terrorist sympathizer or Un-American. I literally had a coworker tell me I should leave the country because I thought that the powers it granted were too sweeping. Others who agreed with me were frightened of professional repercussions if they commented on it. We aren't at that level yet, so question and criticize. I'm right there with you!

  • by OFnow ( 1098151 ) on Thursday April 16, 2009 @09:33PM (#27606351)

    In a strange way we already have universal health care ( hospitals wind up treating people for free) but it's a) dishonest because it is hidden and b) self-defeating because it's impossible to treat things while still treatable (you have to wait for total collapse before you get the free treatment).

    We already pay twice (per capita) what Europeans pay for health care. If we were honest about limiting treatment (which we limit now, but only for some people some of the time) it's hard to know if it would be more or less expensive. But maybe if were honest with ourselves as a society we could make real decisions? Nah :-)

  • by prometx42 ( 1107413 ) on Thursday April 16, 2009 @11:56PM (#27607399) Homepage
    Is the middle of a drastic recession the proper time to go on a wrist-slapping mission through one of the only avenues that is propping up what little consumer spending we currently have going for us? That's not governance, that's vampirism!

MESSAGE ACKNOWLEDGED -- The Pershing II missiles have been launched.