Senators Vow To Renew Bid For State Taxes On Remote Internet Sales 268
jfruh writes "A bipartisan group of U.S. Senators are working hard to make it legal for U.S. states to collect sales tax on any sales made to their residents, even if the sellers live elsewhere. They tried to add an amendment making the change to an unrelated defense appropriations bill, but the attempt was defeated. They have vowed to try again."
Um... (Score:5, Insightful)
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is that like in california where the people are always voting in new spending via ballot initiatives but then vote on laws to limit property tax increases?
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I don't really understand this argument. Spending does not match revenue, that is the only problem we have. "We the People" can raise and lower taxes and spending at will. There is no "right" answer, so I'm not sure where you are going with this argument.
There are very good arguments to reduce the size of government, but there are also good arguments to boost revenue. I propose a compromise:
1. Raise taxes (rates, loopholes, whatever - it really only matters to partisans) to cover our debt service.
2. Freeze
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Re:Um... (Score:5, Insightful)
I keep looking at all these projections of if we increase taxes on the wealthy how it will generate at most 20% of the revenue we need to close the fiscal gap. That tells me we aren't taxing our way out of this mess and while the increased taxes may help some, it's not going to be nearly enough. Spending needs an across the board massive cut on everything from defense to social spending. That's the ugly truth nobody wants to discuss.
If I didn't know better I'd think both sides wants this fiscal cliff to happen. It's the only way I think they can actually enact the needed cuts and tax increases while both sides blame each other...
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Increase by how much?
Certainly they should be much higher, given that we immediately put ten+ years of two wars and the bailouts of failed companies on the public debt. And here we have Goldman Sachs' CEO demanding that the average person "expect less" of their retirement. While he, undoubtedly, will live the high life daily.
So what? (Score:2)
Even taking this article of faith seriously, that's not argument against replacing more-expensive-to-collect use taxes with less-expensive-to-collect sales taxes on internet retail transactions.
Re:Um... (Score:5, Insightful)
Right. Instead of spending locally
I live in the capital of California. A few months ago, I spent an entire day looking for an alarm clock. Note: Not a limited class Mercedes. Note: Not a one of a kind Van Gogh. A fucking alarm clock. The only alarm clocks to be found were shoddy, cheap pieces of crap without a brand name. The majority of them were ridiculous 'phone docks'.
Amazon? Ten minutes of searching, done.
Instead of spending locally? You know why we're not spending locally? Because brick and mortar stores are fucking clueless.
Aww, is da widdle Best Buy gonna close?
Fuck off. We live in a global economy. I've no duty to support your failed business.
Re:Um... (Score:5, Funny)
I live in the capital of California. I've no duty to support your failed business.
And a lot of us believe that we have no duty to support your failed state.
Re:Um... (Score:5, Informative)
Try again, loser. CA pays the feds quite a bit more than it gets back. *WE* are paying to support *YOUR* failed state.
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If that's a reason, then internet retailers will continue to thrive even without a de facto tax subsidy from the fact that their transactions are taxed via impractical-to-enforce use taxes rather than simpler-to-enforce sales taxes. So that's no reason to oppose this bill.
Re:Um... (Score:4, Interesting)
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Since increasing spending without regard for the consequences isn't really a problem, right?
Let's not forget one thing - when our repesentatives are largely categorized in only two ways, that is 1) those who keep increasing spending by all means possible without regard for consequunces, and 2) those who keep decreasing revenue AND increasing spending by all means possible without regard for consequunces, then we have a problem. The problem is our representatives actions. The solution? Obvious.
And no, sadl
Re:Um... (Score:5, Interesting)
You mean the last fifteen years where spending has gone from 1.6 trillion to 3.7 trillion? Where total tax revenue is still at the highest it's ever been? Where we would have an instant surplus if we could simply bring the federal budget down to where it was in 2004?
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So the fact that the spending of the Federal government and most of the states vastly exceeds their ability is not a problem, but people undertaking voluntary exchanges of money they earned from working for things made by corporations are a problem? Well, Uncle Joe, you sure showed us. Time to go full Communist and shut down these wreckers and looters!
States have to get revenue from somewhere. Right now, people are evading sales tax by buying on the internet. I do the same thing. I buy on the internet because I hate shopping more than I hate going to the dentist, the tax evasion is just a nice cherry on top. The net effect is that the state gets significantly less revenue. The states will end up replacing that revenue somewhere. I'd rather it be replaced with sales tax that way the burden isn't only shouldered by homeowners but is instead shoulde
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No. Because for one thing, its not a fact. In fact, its not even possible for it to be a fact.
The tax is technically on the buyers... (Score:2)
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So you just pay an additional 6% of your income because it's "cheaper"? Doesn't that mean you are paying the tax twice for all of your in-state purchases or paying a tax on your mortgage, non-taxable purchases, etc?
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It's not 6% of his income, it's 6% of an amount based on his income, which is between $4-70 or 0.08% of gross income if you make more than 100k/year.
Details can be found on the actual tax form [michigan.gov] on page 3.
If you bought more stuff from out of state that cost less than $1000 each purchase than the number in the table says, yes, it actually is cheaper.
should be illegal (Score:5, Insightful)
Re:should be illegal (Score:5, Funny)
Sure it will be. Eventually someone will slip a measure making it illegal onto a budget reform bill or approval for increased shoe wax allowance for interns. Then it will exist in a paradox state where it makes itself illegal.
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Creates a near monopoly (Score:5, Insightful)
By forcing web sites to collect sales tax for all 50 states and the territories will create an accounting nightmare. The only companies that can afford to hire the people to do it would be the dominant players like Amazon. So, all the small start ups would be stifled right out of the gate. The end result will be a near monopoly and very few start ups bringing new ideas to market.
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By forcing web sites to collect sales tax for all 50 states and the territories will create an accounting nightmare. The only companies that can afford to hire the people to do it would be the dominant players like Amazon. So, all the small start ups would be stifled right out of the gate. The end result will be a near monopoly and very few start ups bringing new ideas to market.
OK, independent of the question of good or evil, wouldn't that be an opportunity for a startup which offered that service to other startups?
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these companies exist but are very expensive. Probably because it's a nightmare to figure out what to charge for which address at what time for which product.
The rules are beyond insane in one state alone for one company and one product, let alone trying to figure this out for a huge range of products. Also note that these tax zones are not split on zip code boundaries! Getting it wrong means huge liabilities...
Source: I take care of sales taxes for two states.
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"these companies exist but are very expensive. Probably because it's a nightmare to figure out what to charge for which address at what time for which product."
No, they're very expensive because it's a nightmare to create it yourself from scratch. Once it's done once, it costs nothing to reproduce the tables/software. But because they know it would take $x to create from scratch, charging 0.25 x $x is a reasonable value proposition.
The only possible positive outcome is that by requiring everyone to do it, i
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No, they're very expensive because it's a nightmare to create it yourself from scratch. Once it's done once, it costs nothing to reproduce the tables/software. But because they know it would take $x to create from scratch, charging 0.25 x $x is a reasonable value proposition.
But that's utterly, naively, massively ignorantly beside the point. "Reasonable value proposition" is lying dead under the wheels of the huge bus "What the market will bear" is driving.
The "nightmare" of creating accurate, legally via
Re:Creates a near monopoly (Score:5, Insightful)
Re:Creates a near monopoly (Score:4, Insightful)
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OK, independent of the question of good or evil, wouldn't that be an opportunity for a startup which offered that service to other startups?
It would. Many regulations are opportunities for somebody.
The net effect is that the government receives tax it once didn't receive, and the service provider receives money it didn't once receive. Don't forget that the service itself is taxed by sales tax, income tax, etc. So the government receives a relatively tiny sum more.
All this extra cost is passed on to the buyer, so the buyer has less money to spend on other things he may need or want. This isn't quite the same as the broken window fallacy [wikipedia.org], as
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By forcing web sites to collect sales tax for all 50 states
45 States. What benefit do the residents of Alaska, Delaware, Montana, New Hampshire, and Oregon gain from expending Federal resources on enforcing particular States' tax policies? None, so this should not qualify as a Federal issue. Remember, retailers don't charge sales tax, they collect it. The taxes on delivered goods are 'owed' by the Residents of the States themselves - what the States have on their hands is a massive tax protest problem (
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It's not the calculation that's the problem. There are already several services that offer sales tax tables for the US. I know, we used one in a point of sale application at the last company I worked for and it cost us about $12,500 a year for a license (IIRC). The problem for a small business is the accounting nightmare of having to keep your books straight an ensuring each state gets paid its due. After I sold that last company I started buying vintage and antique furniture from estate sales and opene
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Alternatively, 3rd party accounting firms will spring up which specialize in solving the issue. So that many, many small business effectively pool their resources to solve the problem. On the one hand, no one wants to pay sales tax on the things they buy online. On the other, it's completely unfair to local businesses that do have to pay taxes, especially when there are players with the size and influence of Amazon that don't.
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On the other, it's completely unfair to local businesses that do have to pay taxes
Why is it unfair? The local business in Rhode Island is using local government resources -- fire, police, etc. The guy operating out of his garage in Utah selling to people in Rhode Island isn't using Rhode Island's fire, police, etc. And really, don't the local businesses in Rhode Island have the same opportunity to sell to people in Utah as the guy in Utah? So they can take advantage of the tax situation as well.
If states are looking at shortfalls because of inter-state commerce, they should use other rev
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As part of the bill, require any state that wants to participate to publish a public API that takes a dollar amount, a zip code (or address) and a product type and returns how much tax is owed. Done.
It's absurd to call this a "nightmare". It's trivially solvable.
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As if states were the only problem.
Municipalities, counties, and any number of subordinate jurisdictions will howl--very effectively--if they're left off the gravy train. And that increases the complexity of the tax calculation problem by orders of magnitude. And you know for damn sure no state will buy into a system that makes work for them. Lobbying is cheaper and more effective.
Maybe the invisible hand will provide that API, since that's already an established semi-competitive market, but that just means
Read the Bill First (Score:3)
The legislation in question requires states to create a simple sales tax compact. This means all the merchant needs to know is the state to ship to. They don't have to worry about city, county, special tax zones and all the other stuff that brick and mortar operations have to comply with.
Second, the legislation only applies to companies with large sales volumes online. It's not going to apply to some guy selling stuff on ebay.
Finally, I don't see the accounting nightmare. Most shopping carts are designe
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> sales tax for all 50 states and the territories will
> create an accounting nightmare
Oh, it's a whole lot worse than you realize. Cities, counties, multi-county "transportation districts", multi-city infrastructure districts, and like can all levy sales taxes too. Any and all of these, including the state, may chose to levy the tax only on certain goods, but not on others. They may have sales tax "holidays" certain times of the year; maybe for all goods maybe for just a few. For example, "back to
Wrong (Score:2)
Wrong. Accounting and bookkeeping is done on computers. Tax payments are automatically calculated and paid, in most cases. This kind of functionality comes with every commercial accounting/bookeeping/ecommerce package available today.
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Online retailers can easily choose to only do sell to places they are set up to collect and pay taxes for.
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But this is where the burden comes, is that it would require more research than just what does each state have as its base sales tax.
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If only it were just a 50 element array. Using Illinois as an example, each county and sometimes city have their own tax rates.
Amen to that.
A software company I used to work for had a customer in the aviation business...mostly airplane repair. When they did repairs for someone they had to charge all applicable taxes based on where the owner lived. They had a dedicated system to handle it which required regular updates. All in, it apparently handled thousands of special cases.
...and lets not forget...collecting the taxes is the easy part. Properly submitting them to the states etc for which you're collecting them with all the p
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You are SO under estimating the complexity of the requirement. There aren't 50 tax jurisdictions out there. There's about 11,000. There isn't one flat rate that covers the state. Many jurisdictions have different rates for general merchandise, food/beverage, grocery, clothing, medicine, etc. Some jurisdictions have progressive tax on some purchases, or exempt up to a particular value of the item. Add to that local county or city taxes.
Take all the above and then decide which taxing authority a particu
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Small price to pay (Score:2)
And yet small companies do deal with it if they are brick-and-mortars (for there own state tax codes). Multiplying the complexity by 50 for the chance to access a market that is (on average) 50 times larger than your own state is a small price to pay. Since long before the internet, Canadian mail-order companies have had to deal with collecting both federal and provincial (state) sales taxes with a similar range o
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Canadian taxes are cleanly divided by province, as opposed to the crazy quilt of state, county, and city level taxes, each with their own exemptions that the USA has.
It's not even close to 50. There are approximately 11,000 sales tax jurisdictions in the USA. Kansas, for example, has about 700 jurisdictions who can charge taxes, meaning you need a colossal database to figure out whether a given address is in foo county or bar county and the rates and exemptions for each.
Furthermore, brick and mortar store
Democrats said, "We will not tax the Internet!" (Score:2)
Having heard, with my own ears, Democrat Senators and Congressperson tell the whole country that they would never support a tax on the Internet, I am surprised that they would so quickly change their highly proclaimed position.
Of course, they promised me that I could retire with full Social Security benefits and have changed that also--now that they have raised the retirement age.
They promised that Medicare would provide for senior health-care needs and the Democrat President is set to take $1,116,000,000,0
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It's not a tax on the internet, it's a tax on goods bought from an out of state seller. In other words, it's a tax that, from a purely legal standpoint, you're already supposed to be paying yourself every year when you file your taxes.
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Much better would be to just establish a national tax rate for cross-border sales. Distribute the tax as you see fit. Requiring out of state sellers to know the tax laws of all 50 states is not fair, IMHO.
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FTA: "Senators Dick Durbin, an Illinois Democrat, Mike Enzi, a Wyoming Republican, and Lamar Alexander, a Tennessee Republican"
Two Republican senators and one Democratic senator.
Having heard, with my own ears, Democrat Senators and Congressperson tell the whole country that they would never support a tax on the Internet...
Was that Democrat you heard with your own ears Dick Durbin? No? Then your comment makes no sense. You did not mention 2/3 of this group are Republican which makes even less sense.
I guess the cost of "Obama Phones" is more than expected.
Ahhh. Obama Derangement Syndrome. Now it makes sense.
Why is this a states issue?... (Score:3, Insightful)
Seems to me that the states shouldn't be trying to deal with the taxes on this, and instead congress should be doing it under the mantle of "Regulating Interstate Commerce". Pass a law that says all sellers must collect and report both federal and state income tax on sales as if the sale were occurring at the buyer's physical location, or the location to which the product is delivered. (Whichever is easier to make into an enforceable law).
Simple, clean, unambiguous, very few loopholes, and understandable to customers.
Re:Why is this a states issue?... (Score:5, Informative)
Seems to me that the states shouldn't be trying to deal with the taxes on this, and instead congress should be doing it under the mantle of "Regulating Interstate Commerce". Pass a law that says all sellers must collect and report both federal and state income tax on sales as if the sale were occurring at the buyer's physical location, or the location to which the product is delivered. (Whichever is easier to make into an enforceable law).
Simple, clean, unambiguous, very few loopholes, and understandable to customers.
It is anything BUT clean - it is a complete mess for businesses to try and figure out what tax to charge and who it gets sent to. It is not just 50 states, it is as you suggested the buyer's physical location, so every other tax on top also must be calculated, collected, and paid to the local parish, county, city, district, etc. And add in some audits by each of these taxing authorities. Paying local taxes is is easy when Mom and Pop hardware is selling to it's walk in customers, they pay the city, county, state and federal govt. And it is almost workable for a large corporation that pays for a top tier ERP system and adds a tool like vertex (expensive and must be maintained by a team). But your proposal just cut off any small - medium business that wants to sell beyond the physical locations they occupy. I hep you like Walmart, because they and others sized like them will be your online provider of products.
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There are plenty of solutions on the market that don't require a full blown ERP or accounting packages for tax calculation and remittance. Off the top of my head I can think of Avatax but I know there are plenty of others. It really isn't THAT big of a deal.
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Here in Arizona we have multiple taxes, at state, county, and municipal level.
But calling that a 'state' tax issue is misleading. It's the localities that really hose things up. And Phoenix goes one further, and taxes food at a different rate than merchandise. Yes, they tax food. And how they did it is even more disturbing than the fact that they do, but tha;'s the topic of several pages of posts, and not for this thread.
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SCOTUS (especially the CJSCOTUS) seems to be willing to interpret the commerce clause fairly liberally. I have little hope of a solution there.
We are in a tax-it-all era. Expect your overall tax burden to grow linearly for the next decade unless some course change occurs.
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We have a model for this, one that has existed for well over 100 years dealing with catalog companies. After all really what is the difference between a catalog company and an online retailer other than dead tree vs. electronic. The law states you only have to collect taxes in the states in which you have a physical presence in. I live in Missouri and if I have an online store, incorporated in Missouri, and have all my operations in Missouri I have to collect sales tax on Missouri purchases. If I sell to
What makes it unrelated? (Score:2)
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States just want somebody else to be the bad guy. (Score:2)
What about (Score:2)
What about the interstate commerce clause in the constitution?
Anyway this sort of thing will cost jobs in this country - since companies can set up offshore and sell stuff without having to collect US state taxes - especially for non physical goods (mu7sic, videos, software, subscriptions etc.
If the States need more money, they can increase sate income tax, of have a state lottery (a tax on the mathematically challenged)
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Why wouldn't states seek additiknal revenuw from nonresidents, whenever possible? Stop thinking benevolently, and think like a bureaucrat.
Interstate sales tax needed (Score:2)
They need to impose an interstate commerce tax. This tax will be made up of three components. One is 33.3% of the tax rate of the ship to state, and the other is 33.3% of the tax rate of the shipped from state and the third is the federal tax, which is set at 3%. All states will have a single number (none of these city extra sales taxes). This interstate tax will mean each state gets tax coming and going. Sales within the state are taxed in the normal state way. The feds will collect this tax and remit each
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No, congress needs to specify that, for items where the transaction is not placed in person but originates in the US, the sale is defined as occurring in the state where the corporation is registered. (That would make for some interesting corporate jockeying, because though Delaware doesn't have a sales tax, they do have a gross receipts tax)
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That would lead to a game of musical chairs with continuances.
No the simple tax as I state is both fair and unavoidable.
Go the EU way... (Score:2)
Interstate Commerce.... (Score:2)
I like anyone else hate taxes on levied upon me, but I also understand taxes are necessary. The United States is a very large country with many governments: local, state, and federal. While I'm sick to death of our tax dollars being wasted by our leadership, I also believe that if our tax dollars weren't wasted people tax rates would be much smaller and this would be a non-issue.
If I pick up the phone and call a company and purchase a product from that business in another state other than the one I live i
Could be Simple, but Won't (Score:2)
Of course, this is the "lowest approval rating ever" Congress we're talking about. The same guys who claim to be able to fix the current fiscal mess (they created), but can't give us any details.
Expect
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This could be a very simple process - the business would charge whatever the sales tax rate is for where it is headquartered
This would just get every online business "headquarted" (with a PO box and an accountant) in Delaware, Montana, New Hampshire or Oregon. The states with no sales tax.
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Not to mention, since some random Slashdot reader thought of it, don't you think our venerable lawmakers would as well (man, that one almost hurt to say)?
Main Street vs. Wall Street (Score:2)
So let me get this straight...
If I was a financier trading millions and billions, and under the current de-regulated playfield that is Wall Street, I wouldn't have to pay one red cent to trade worldwide all those mortgages, hedge funds, CIDS, etc., but should some mook in a garage try to sell his old junk ONLINE well FRELL HIM.
Capitalism my arse.
Which State Collects??? (Score:2)
If live in Colorado and order an item from Illinois, where has the sale been made, Colorado or Illinois? I'm sure each state will argue their state is the location of the sale.
What about hosted sales sites? Let's say, I live in Idaho and order an item from a company registered in Maine, but all their internet presence is hosted in Texas. Now which state gets the taxes?
First I'm against an "internet sales tax." The only way I can see this working is for the federal government to create a single "internet s
billions and billions of corporate tax breaks (Score:2)
Don't understand the hostility... (Score:2)
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Re:Where's Grover Norquist when you need him? (Score:4, Insightful)
Or they could just not spend without restraint in exchange for votes. I know, that's not an obvious solution nowadays.
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But when they reach 0 tax rate, they have to stop.
OOhh... wait. unless you do an Earned Income Tax Credit, a negative tax rate, in other words...spending.
We have a fucking SPENDING problem.
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We don't need another fucking tax.....we got plenty.
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Enforcement on the use side is uneconomical, because (unlike the sales side) you have too big of a pool of targets, and no smaller group to mandate information collection from (its essentially equivalent to trying to the problem that the IRS would face with income tax if you got rid of mandatory reporting by employers, interest-paying banks, etc.) -- and the obvious reporters are protected by the same
Re:Where's Grover Norquist when you need him? (Score:4, Insightful)
Allowing the states to collect a tax isn't the same thing as imposing a tax. Not quite. Besides it's either that or the states will have to raise income and property taxes.
Then they should raise income or property taxes. Sales tax is about the worst tax there is -- it's regressive, so it hurts poor people disproportionally, and it depresses retail sales and services. If states really want their businesses to compete with amazon, they should abolish sales tax so that purchasing locally becomes more attractive.
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Its not a tax increase, its a change in the locus of taxation from the use side to the sales side for the same transactions, which makes the existing tax on the transaction easier to enforce, and negates a de facto tax subsidy to online business retail resulting from the difficulty of enforcing use taxes. This de facto subsidy turns the purpose
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Well, first, voting to remove a federal barrier to state taxes isn't raising a tax (it might let other people raise a tax, but that's up to those other people.) Second, quite possibly not. The influence of Norquist's idiotic pledge is declining even among Republicans in Congress, because even while the Republican Party continues to become increasingly radicalized, many of its members in office realize that the idea that you can nev
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Re:Where's Grover Norquist when you need him? (Score:4, Interesting)
They want to raise taxes on the "rich" by 1.6 trillion over 10 years. That's about 180 billion a year.
The deficit is well over a trillion a year, but let's just say it's only $1 trillion. That leaves $820 billion left to make up with cuts.
This whole argument over taxing the rich is a waste of time and a distraction. I say let the raise it to where they want and then insist that Obama cuts $840 billion a year.
If he doesn't then, we are just rearranging the deck chairs on that well known ship.
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$1.6 trillion over 10 years is $160 billion a year, not $180 billion, but that's not the real problem with your argument. The real problem is that the whole thing is a red herring.
Relevant to this proposal, "they" don't want to tax the rich at all. This is about a bill which permits states to impose sales taxes (which are paid directly by the retailer) on certain transactions which currently are usually t
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"The problem" isn't on either the taxing or the spending side, because there isn't one simple problem. The biggest problem on both the tax and spending sides isn't the total rate of taxation of the volume of spending, its the distribution of taxes and the distribution of spending. Among the distribution problems at the state level on the tax side is that, in the absence of Congressional action, the reservation of in
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Every internet business would buy server space in NH or AK with no sales tax and declare that their headquarters if it was by seller. I think it has to be on the ship-to state. A program for calculating sales tax based on street address would not be very difficult.
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Well, thank you for informing me that Texas is all about attracting online businesses, has no NASA facilities, would never even CONSIDER secession in the modern era, and has passed so many laws supporting gays and immigration. You've sure changed my views! Texas is truly a progressive, modern state and not a backwards, redneck shithole at all!