Proposal Related to Taxing Internet Sales

[articulatedgeared01]

Tues 5-22-18 7:32 p.m.

Americans have been voicing their objections to tax issues since (and before) the Boston Tea party which led a group of "patriots" to dump English Tea into Boston Harbor.  Some affluent early Americans around the time that the Constitution was drafted (circa 1789) thought they shouldn't have to pay any taxes at all.  Our good friend Benjamin Franklin advocated for taxes.  Why?  Because America was in need of a Federal military to protect itself and there were Public Works projects which needed to be implemented.  (Note: Keep in mind that Benjamin Franklin worked to eliminate problems like dumping raw sewage into the streets of Philadelphia.  America also needed roads to prosper.)  Ameicans have demonstated that they will pay taxes if there is a comensurate benefit; however, they do not like tax burdens which lead to frivolous investments.

With that said, the Supreme Court is working on the issue of taxing internet sales.  One side of the argument indicates that States will benefit from the additional income.  On the other side of the argument, smaller home-based sellers (such as those on e-bay) are going to have to deal with collecting the taxes and the new software which addresses different tax laws in different States.

I learned long ago to look for other alternatives when there is gridlock.  The States are the big player here because they will benefit from the taxation revenues.  So if the States want this money so badly, let them have the revenues - with a  caveate.  The States can roll their Gross Receipts Tax levels back from the current 8% to the 4% rate they used to collect in the 1960's.  I remember this rate because my allowance was a quarter a week and I could only purchase 4 each 5 cent candy bars at the 7-11 because I had to come up with a penny tax.  This still left me with 4 cents which I could spend on penny candy such as buble gum.  However, bubble gum is not a candy bar by any stretch of the imagination (at least the bubbles stretched).

The youngsters in our Nation should pay attention to this little argument of mine.  When they get to be old codgers, they are going to have to deal with Gross Receipts Tax Rates of 16%.  Of course, America may no longer provide the world-wide exchange currency in dollars (Note: We inherited this honor from the British before their currency tanked and was devalued.).  We may have to look to China for a new world-wide exchange currency 50 to 60 years (or sooner) from now.

If you look at the Gross Receipt Tax rate of 8% in most States, you will not see any relationship which is affected by partisan politics.  It appears that what is good for one State is good for another.  

The shock of reducing the Gross Receipts Tax overnight from 8% to 4% may be too much.  However, it would help to start heading in that direction now instead of going the other way toward 16%.  

Keep in mind that manufacturers want the consumer to be increasingly illiterate about fixing things (Aack! Some assembly required).  Items are also designed to be more complex and throw-away in nature.  Have you looked at all the sensors underneath the hood of your car lately?  Manufacturer's are bound by law to make the highest return on investement they can for their stockholders.  No one wants to drive big truck rigs, so transportation costs are going up soon.  All of this (in addition to higher taxes) is going to create quite a bit of pressure on the typical American.  No problem, psychological help is available for $200 an hour.

I am neutral about the internet tax issue (beyond my control).  I have written to e-bay and indicated that if the internet companies are taxed, I am out of the e-bay market.  I have so many hands in my shallow pockets now that there is not enough room to grab the nickel which is in there someplace.

I will close with the words of Thomas Jefferson (one of America's founding fathers), "A little revolution every now and then is a good thing."  

[kathieskorner]

Considering the fiscal problems of both our federal government and many of our states - I favor a national sales tax on all internet sales not subject to state sales tax - of 6%.  It could be collected by the payment processor and paid to the federal government with 4% going to the state and 2% to the federal government.    Even if small sellers had to remit it - it would be only two payments - one for any state sales tax collected - the other for the national sales tax. 

[slippinjimmy]

Along those lines but not possible under the current constitution.

Most of the world has a National Value Added Tax of one sort or another (there are many variations) some as the sole sales tax and some where rates differ between states/provinces. The USA is the only major economy that doesn't

The benefits are clear:

Business friendly

Easy to administer

Single collection/reporting agency

Raises substantial revenues (shared between State & Federal Government)

Fair to all merchants

[richard1rst]

The voice of the opposition:

I am generally against ANY sales tax, state or federal. In almost every state (Nevada and New Hampshire are exceptions that come to mind) you are taxed when you earn the money and then taxed again when you spend it.

NOPE

Don’t agree.

Worse, due to the inheritance tax you run the risk of having your money taxed again when you pass it to your heirs.

How many bloody times do they need to tax the same dollar?

The OP references the Boston Tea Party. (I am curious as to why he put patriots in quotation marks). They did not object to taxes in general, they objected because they had no say in how that money was spent (especially since it was all hauled back to England). Surely you have heard the phrase “Taxation without representation”. That was their objection.

You don’t really think you have any say in how tax money is spent do you? TWR again.

I have no objection to funding the legitimate functions of government. But far too often they knuckle under to the special interest groups and “buy” their votes through useless phony programs that accomplish nothing and then raise our taxes to pay for them.

THAT should be the focus of our/your complaints.

[laughingravy21]

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@kathieskorner wrote:

Considering the fiscal problems of both our federal government and many of our states - I favor a national sales tax on all internet sales not subject to state sales tax - of 6%.  It could be collected by the payment processor and paid to the federal government with 4% going to the state and 2% to the federal government.    Even if small sellers had to remit it - it would be only two payments - one for any state sales tax collected - the other for the national sales tax. 

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A better idea would be for the states and federal government to stop throwing it away.  The problem with any "new" tax is that it never turns out to be enough.  It might start at 6% but after a few years , they'll want 8%, so on and so on.  Then when they don't get it, they'll start tugging at the heartstrings by threatening basic services such as schools, police and fire.  It never stops.

[chrysylys]

Considering the damage internet sales are doing to businesses, in particular, smaller, local businesses, I support this 'tax' IF it goes to help those businesses who are suffereing.

[michael_atw]

The "revolution" being the internet being on the same ground as B&M for the first time in history.  Your downtown is disappearing directly because of policies which favor internet corps. 

[laughingravy21]

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@chrysylys wrote:

Considering the damage internet sales are doing to businesses, in particular, smaller, local businesses, I support this 'tax' IF it goes to help those businesses who are suffereing.

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Yes, but internet sales are not much different than catalog sales except the market is much more extensive and affordable to break into and maintain.  Catalog sales were always exempt from collecting out of state taxes because it's unconstitutional which I think is also the issue with internet sales.  I would also say such taxes are immoral, meaning that just because states like CA and IL have fiscal problems doesn't give them a right to force you or me to become their unpaid tax collectors.

A lot of your old B&M shops have also faced decades of excessive taxation and regulation from their local municipalities, which is fine except those would be the same local governments who, at first, were ecstaticly overjoyed at extending billions of dollars in tax incentives for mall developers and, later, Walmart.  Around here, it was Walmart that killed most of the locals and as soon as the long term tax breaks are gone, Walmart will just move 25 miles up the road to the next locality offering them the tax-free incentives.

I guess it's easy to go along with it because it only seems fair... but be careful what you wish for.  We won't only be required to collect the tax, but we'll also be paying the extra associated costs that go along with it, as well as decreased sales because internet sales will lose the edge it now enjoys.   I suspect a majority of small and mid-sized sellers wouldn't last a year if such a scheme ever manages to pass.

[kim_y_buran]

So you want States to collect internet sales tax from the customers and at the same time slash corporate tax rate in half?   I never knew Paul Ryan did grassroot.

[goodluckselling]

The law will not require small sellers to submit different tax amounts to every county in the US.  In stead they will require the marketplace to collect and submit this tax on behalf of it members.

Also I think it is Penn. and Wash DC already require taxes be collected and Amazon does this right now on behalf of its sellers.

Good Luck Selling!

[phono_0490xxxxxx]

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@kim_y_buran wrote:

So you want States to collect internet sales tax from the customers and at the same time slash corporate tax rate in half?   I never knew Paul Ryan did grassroot.

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I was going to put it another way...

What about forcing the Corporations who don't pay tax now do so, and back off trying to collect it from private citizens trying to scrape by?

These VAT's [or as we have at 10% GST] have a higher impact on those at the bottom of the economy and little impact on those at the top end.

Why? It's not applied progressively according to income earned.

Because someone trying to live on a minimum wage has little, if any, discretionary funds after essential costs are paid... but not so the likes of CEO's who cook up the tax minimisation/avoidance rorts that rob your society as a whole.

Re. this internet sales tax proposal - Is there a threshold to determine when it applies [total sales per annum] or is it everyone/anything, regardless of hobby or business status?

And, would this VAT apply to International sales of second hand items?

[phono_0490xxxxxx]

There is no VAT payable on sales made in the UK exporting to me in Australia.

Import duty is only payable on goods valued above AU $1,000 shipped to me from anywhere.

[percgrabbe-0]

If you favor our USA sales being USA state taxed you arent very smart as other country sellers wont have to pay said tax. 

[laughingravy21]

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@goodluckselling wrote:

The law will not require small sellers to submit different tax amounts to every county in the US.  In stead they will require the marketplace to collect and submit this tax on behalf of it members.

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And the marketplace will be doing this for free or will there be a corresponding increase in fees related to selling on those marketplaces?

[goodluckselling]

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@laughingravy21 wrote:

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@goodluckselling wrote:

The law will not require small sellers to submit different tax amounts to every county in the US.  In stead they will require the marketplace to collect and submit this tax on behalf of it members.

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And the marketplace will be doing this for free or will there be a corresponding increase in fees related to selling on those marketplaces?

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It is hard to say? 

On one hand sellers will not be able to do this effective when you consider 1000's of different taxing districts throughout the US so it will destroy online selling for small sellers like myself and on the other hand it would benefit eBay in many way to handle this for it's sellers. 

Keep in mind if this tax goes into place it is about collecting tax for an online purchase which is really about the buyer not the seller.   Buyers are responsible to make sure they pay the tax due.  It makes sense for sellers to do this but not if it is 1000+ different taxing districts so that is why the only real solution is to have the marketplace collect and submit this tax for it's user base.

Presumable the Govt will have some software available for download that will make this easier for seller should it come to sellers having to do this.

eBay's resistance in this area might be that they will now have to define clearly if they are service or product?  Products are taxable so any revenue eBay makes of off it's product I assume is taxable at the state and district levels?  After all eBay tells sellers we are their valuable customers as well as the buyers.

Another idea in this area is a flat rate tax that is acceptable to all US territories.  Maybe something like 5% Internet purchase tax that is submitted via one payment to the Govt outlined in the software sellers will have to monitor and keep up to date?  Let's hope this is not the path as now every seller will be on record as having made profits from selling something which could become a problem for those not submitting this income at tax time.

International sellers using US addresses as ship from locations.  Those sellers would need to collect and submit the tax as well.  How do you control the fraud in this area?

These ideas are why I think it will eventually happen where the venue (eBay marketplace) will hold back from the payment the (Internet sales tax) amount for each transaction and submit it for its user base.   If this is the case then I wonder if they are submitting it for themselves or for 25 million different sellers individually?  How do they handle verified registered businesses that already collect and submit for the states they currently operate in?

See how difficult this will probably become for everyone?

Good Luck Selling!