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"Main Street Fairness Act" to be attempted
Act would end longtime ecommerce tax exemption
bw100

5+ Year Member



 
Msg#: 4325213 posted 3:02 pm on Jun 12, 2011 (gmt 0)

Senate Majority Whip Dick Durbin (D-Ill.) says he plans to introduce a bill, called the Main Street Fairness Act, mandating that all businesses collect the sales tax in the state where the consumer resides.
[businessweek.com ]

This is where the ongoing tax battle between Amazon and the individual state governments is going ...

Here is one CPA's review and analysis of the history and issues, for any who might wish to dig into the background and issues a bit more deeply.
[nationallawforum.com ]

 

Edge

WebmasterWorld Senior Member 10+ Year Member



 
Msg#: 4325213 posted 12:52 am on Jun 15, 2011 (gmt 0)

Amazon will rejoice when half of US online businesses close because of the bureaucracy involved.


That's my thought - I already file and pay local taxes on sales within my state monthly.

Am I going to have to file and pay monthly tax forms in fifty states?

I don't see how this helps local B&M's. This looks, smells and tastes like a tax revenue source for states and localilies not smart enough to get thier tax spending under control.

greenleaves

10+ Year Member



 
Msg#: 4325213 posted 1:06 am on Jun 15, 2011 (gmt 0)

Yay! Just what we needed to fix the economy.

More BIG government red tape for everyone minus the banksters. Those get the cash transferred direct, @ 0-1% interest rates.

After all, we all know how it was ecommerce that got us into this mess. And the politicians are the most apt people for determining how it should be handled. Surely their intervention will improve the world. :/

Webwork

WebmasterWorld Administrator webwork us a WebmasterWorld Top Contributor of All Time 10+ Year Member



 
Msg#: 4325213 posted 1:07 am on Jun 15, 2011 (gmt 0)

Once a national law is passed credit/debit card companies will quickly step into the role of tax calculator/collector/forwarder . . . for a small fee.

tangor

WebmasterWorld Senior Member tangor us a WebmasterWorld Top Contributor of All Time 5+ Year Member Top Contributors Of The Month



 
Msg#: 4325213 posted 1:12 am on Jun 15, 2011 (gmt 0)

This has been around since Sears Mail Order Catalogs first appeared in the 1880s... Taxes are collected in the BUYER'S location... thus mail order escaped that, though it was AND EVER HAS BEEN, the buyer's responsibility to disclose any purchases made out of State and brought into the State: and pay the appropriate sales tax. Internet has just made this "loophole" even bigger (billions per year) and the BUYERS have YET to be honest citizens within their individual States. So... here we are. No matter how this is decided, it will be a mess.

diberry

WebmasterWorld Senior Member



 
Msg#: 4325213 posted 4:11 am on Jun 15, 2011 (gmt 0)

[wired.com...]

“It was supported by big-box retailers, most of which are based outside Connecticut, that seek to harm the affiliate advertising programs of their competitors. Similar legislation in other states has led to job and income losses, and little, if any, new tax revenue.”


Amazon seems to think it's strictly Walmart & pals trying to wreck the Amazon affiliate program. That's how it seems to me, too, because after 7 states they should have noticed that's been the only result of what they're doing. But what I'm not clear on is, why? How would this benefit them? Just by lowering Amazon's revenues? If so, that's a predatory practice, and there are some (fairly vague) laws against that.

This whole thing is so illegal, it's not even funny.

Sgt_Kickaxe

WebmasterWorld Senior Member sgt_kickaxe us a WebmasterWorld Top Contributor of All Time



 
Msg#: 4325213 posted 8:47 am on Jun 15, 2011 (gmt 0)

Hold the phones, affiliates.

Does this mean it won't matter where the OWNER of a WEBSITE lives, it will be based solely on where the buyer lives?

If that's the case Amazon can stop dumping affiliates if they happen to live in the wrong state?

I hope so. Website owners and affiliates were becoming fodder between Amazon and the gov. I won't pretend not to know that gov will start looking into affiliate taxes afterwards, even though affiliates already pay taxes, but hey. It's nice to know you won't get terminated for something out of your control.

Wait a second, this is all wrong anyway, law exists prohibiting the collection of taxes from out of state. The "main street fairness act" is proposing something illegal.

tangor

WebmasterWorld Senior Member tangor us a WebmasterWorld Top Contributor of All Time 5+ Year Member Top Contributors Of The Month



 
Msg#: 4325213 posted 9:08 am on Jun 15, 2011 (gmt 0)

The "main street fairness act" is proposing something illegal.


Don't think so... what it proposes (and we don't have clear language on it yet, is that BUYERS PAY THE TAX AS THEY ARE SUPPOSED TO, but the DIFFERENCE is that any INTERNET SELLER, REGARDLESS OF THEIR LOCATION, has to collect, report, and DELIVER that tax to the taxing authority wherein the BUYER RESIDES. And that, kiddies, the real bugaboo. Oh, and along the way the Federal Government gets a Taste, Too... (don't that just chap your ...)

jecasc

WebmasterWorld Senior Member 10+ Year Member



 
Msg#: 4325213 posted 10:13 am on Jun 15, 2011 (gmt 0)

that any INTERNET SELLER, REGARDLESS OF THEIR LOCATION, has to collect, report, and DELIVER that tax to the taxing authority wherein the BUYER RESIDES.


You have to see the positive. At least you could file all those tax reports in english and not in 23 different languages like here in the EU.

StoutFiles

WebmasterWorld Senior Member 5+ Year Member



 
Msg#: 4325213 posted 12:24 pm on Jun 15, 2011 (gmt 0)

Once a national law is passed credit/debit card companies will quickly step into the role of tax calculator/collector/forwarder . . . for a small fee.


I forsee this as well. It was nice while it lasted, but the govt. wants their money.

Leosghost

WebmasterWorld Senior Member leosghost us a WebmasterWorld Top Contributor of All Time 10+ Year Member



 
Msg#: 4325213 posted 12:49 pm on Jun 15, 2011 (gmt 0)

<slightly OT>
At least you could file all those tax reports in english and not in 23 different languages like here in the EU.
</slightly OT >
This I don't understand, IME here in Europe , we only file VAT returns in our own language, even when we sell cross border within the EU ..Maybe your country ? chooses to make your lives difficult re TAX returns and calculations, but not the one(s) I've lived in or live in ..</slightly OT>

Now, back to the other side of the pond, who's tax laws ( and their unwillingness to pay any ) are currently IMO nonsensical, and hold back their national economy, creating the equivalent of Andorra and Monaco for some and the UK and Denmark for others.

jecasc

WebmasterWorld Senior Member 10+ Year Member



 
Msg#: 4325213 posted 1:01 pm on Jun 15, 2011 (gmt 0)

This I don't understand, IME here in Europe , we only file VAT returns in our own language, even when we sell cross border within the EU

If you sell cross border and exceed certain thresholds you have to register for VAT in the country of destination.

[ec.europa.eu...]

Leosghost

WebmasterWorld Senior Member leosghost us a WebmasterWorld Top Contributor of All Time 10+ Year Member



 
Msg#: 4325213 posted 1:15 pm on Jun 15, 2011 (gmt 0)

Distance selling means that a supplier sells goods to private individuals or customers established in another Member State who do not apply VAT to their intra-Community acquisitions of goods.

My customers all do apply it ,I ask them at time of sale to prove B2B..thus..they do their own paperwork..I do mine ..both in the UK and France..private individuls cant buy enough of what I sell to take me over the limits without them registering as businesses in their own country IMO you let yourself get "snaggled" by your customers ..

I've been working this way for decades..

But I'm also primarily B2B..the public are in general more hassle to me than they are worth..

Anyway ..its not our thread so , each to their own way of running it :)

rogerd

WebmasterWorld Administrator rogerd us a WebmasterWorld Top Contributor of All Time 10+ Year Member



 
Msg#: 4325213 posted 2:11 pm on Jun 15, 2011 (gmt 0)

>>you could file all those tax reports in english and not in 23 different languages like here in the EU.

But there are thousands of taxing jurisdictions in the US - it can happen at the state and even city level.

The only solution is some kind of national clearinghouse and, preferably, a uniform Internet/mail order tax rate for each state. State sale taxes are remitted monthly, and small sellers can't afford to do that much paperwork.

diberry

WebmasterWorld Senior Member



 
Msg#: 4325213 posted 3:01 pm on Jun 15, 2011 (gmt 0)

I've seen some reporting on the MSFA which claims it's also proposing to somehow SIMPLIFY the calculation and collection of this sales tax for businesses so that the accounting and administrative costs wouldn't be costly enough to wipe out some small online sellers. That's the version Jeff Bezos favors, and it makes a lot of sense.

As he keeps pointing out, Amazon thrives in countries and states where it does collect sales tax, so it's not the sales tax per se that he's against. It's that the way the states are going about it is unconstitutional, and he feels that if the states want this tax, the least they can do is make it less costly for businesses to collect it for them. That's all.

So if the right version of this act gets adopted, maybe the states will finally ACTUALLY get the sales tax they're after, and Amazon will open the affiliate program back up to everyone. Until then, affiliates are going to be caught in the crossfire.

bakedjake

WebmasterWorld Administrator bakedjake us a WebmasterWorld Top Contributor of All Time 10+ Year Member



 
Msg#: 4325213 posted 8:18 pm on Jun 15, 2011 (gmt 0)

This already happenes in Canada, because there's a federal sales tax, and we're required to collect at a different rates (beyond the federal sales tax rate) in harmonized provinces. Tax is based on billing address of customer, and affiliates (or source of acquisition of the customer) has absolutely nothing to do with it.

What will be needed is a federal clearing house. That's the only way it will work.

But be careful what you wish for. A federal clearing house is an "easy" excuse for the federal government to implement a federal sales tax. ;-)

I don't disagree with the "spirit" of this legislation, but I do disagree with the implementation of it. Sales should be taxed on an equal playing field, and affiliates should have nothing to do with it.

the least they can do is make it less costly for businesses to collect it for them


Correct. Most businesses won't have an issue with sales tax (it's a flow through cost after all, with the money held in trust), but remittance MUST be simple.

Wait a second, this is all wrong anyway, law exists prohibiting the collection of taxes from out of state. The "main street fairness act" is proposing something illegal.


I hate taxes as much as the next guy, but retail sales tax law in the US needs to be simplified. Right now, we have states fighting over who gets a piece of the sales tax pie.

We're now seeing states making sales tax nexus claims based on:

1. User (buyer) location
2. Network endpoint location
3. Location of hosting site
4. Location of warehouse/distribution channel
5. Direct mail ending up in mailboxes
6. Trucks using state highways

etc etc etc.

It's very dumb and very confusing. At the end of the day there needs to be federal legislation on what jurisdication prevails for the collection of sales tax, and provide some way for the centralized collection (and corresponding input tax credits) for those businesses. Basically exactly what wheel said.

Otherwise, next year, the state that your webhost is in might come after you for a sales tax liability. And guess what - sales tax liabilities are one of those that can pierce the corporate veil, so you're personally on the hook.

Think you're off the hook because you're a consumer? Go look up "use tax" and see what silly lawsuits bankrupt states are bringing these days against individuals.

[edited by: bakedjake at 8:36 pm (utc) on Jun 15, 2011]

walkman



 
Msg#: 4325213 posted 8:24 pm on Jun 15, 2011 (gmt 0)

But be careful what you wish for. A federal clearing house is an "easy" excuse for the federal government to implement a federal sales tax. ;-)' "

...and to increase it from 2% to 3% to x%, at least temporarily. Like the phone tax to support the US-Spanish war [en.wikipedia.org...] ;)

bw100

5+ Year Member



 
Msg#: 4325213 posted 9:48 pm on Jun 15, 2011 (gmt 0)

@dilberry
If I'm a physical presence for Amazon, why am I not an employee?

These are two different concepts. You don't have to be an employee to establish a physical presence.
That has been defined by both your status as self-employed, and the contractual relationship with Amazon that you accepted: you agreed to "sell on commission": a 1099 contractor status.
Additionally, there is legal precedent for non-employees establishing physical presence. See below

In the 1960 U.S. Supreme Court Case Scripto v. Carson , the Supreme Court upheld a Florida court’s ruling that the difference between regular employees and independent contractors was “without constitutional significance” when it comes to nexus

Relevant caselaw: [caselaw.lp.findlaw.com ]

Then, in the 1987 case Tyler Pipe v. Washington, the U.S. Supreme Court ruled that hiring an independent representative in a state to solicit sales and conduct other activities that helped an out-of-state corporation create and maintain a market for its products was no different from having an employee in a state engaged in the same activities. The court ruled that using an independent contractor, such as a manufacturers rep, established business activity tax “nexus” for the out-of-state corporation

Relevant caselaw: [caselaw.lp.findlaw.com ]

Both legal summary attributions: [customretailer.net ]

There's a lot more related case law ... I'm guessing this qualifies as "serious content".


It's absurd to suggest we're agents of any company we affiliate with

I would suggest that affiliates are the internet-equivalent of the "manufacturers rep" concept, modified to reflect the fact that the agent is representing a "store" instead of a manufacturer, and the presence is dual: physical location in the state, and presence on the internet. Somewhere between "outside sales" (pounding the pavement, seeing customers) and inside sales (sitting at a desk, answering the phone, working out the order details with the customer). The various aspects of internet sales relationships have not yet been defined legally. Looks like this entire brouhaha will do this.

willybfriendly

WebmasterWorld Senior Member 10+ Year Member



 
Msg#: 4325213 posted 10:40 pm on Jun 15, 2011 (gmt 0)

Living in one of the States that has no sales tax, I cringe at the thought of this.

If P1R's idea comes to be, will the "small fee" be charged to the seller or the State. Seems to me it should be the State that bears any cost of collecting its taxes which it imposes on its residents.

dpd1

WebmasterWorld Senior Member 5+ Year Member



 
Msg#: 4325213 posted 1:25 am on Jun 16, 2011 (gmt 0)

I don't care that much what they do, as long as it just affects everybody the same and doesn't add more paperwork.

diberry

WebmasterWorld Senior Member



 
Msg#: 4325213 posted 4:34 am on Jun 16, 2011 (gmt 0)

@bw100, that's some very interesting case law. Just on common sense, I still feel my relationship with companies I affiliate with is simply too casual (I can try a link for a week, decide it's not working, and never link to that company again) to establish nexus. But I can see how these precedents could apply in court, since we do get 1099s.

However, now I'm also wondering if the location of my body is the the right factor to go by. The point of establishing a physical presence in a state was, traditionally, to expand the customer base into that state. This was a reward, and the payment for it was the collection of sales tax - cost of doing business. Fair enough.

But I'm not necessarily expanding anyone's customer base into the state where I live - I'm expanding it into whatever geo-targets my website hits. That means the companies I affiliate with are not necessarily getting any of the traditional benefits of a physical presence in my state - so why should they collect sales tax?

Of course, that's just my thinking, and nothing to do with how the courts will interpret things.

RhinoFish

WebmasterWorld Senior Member 5+ Year Member



 
Msg#: 4325213 posted 2:20 pm on Jun 16, 2011 (gmt 0)

I would suggest that affiliates are the internet-equivalent of the "manufacturers rep" concept, modified to reflect the fact that the agent is representing a "store" instead of a manufacturer, and the presence is dual: physical location in the state, and presence on the internet.


What if i live in Florida, but maintain a dating website for people who live in city of Seattle? And my server's in Indiana, and the dating kits (cologne, comb, condom) I sell ship from Pennsylvania, and my site phone number goes to an order taking service in the Philippines, and I spend 85% of my time in the Bahamas, maintain dual US-Bahamas citizenship, and have two workers in my Bahamian home who help maintain the site. Would you say I constitute a nexus in Florida?

Demaestro

WebmasterWorld Senior Member demaestro us a WebmasterWorld Top Contributor of All Time 10+ Year Member



 
Msg#: 4325213 posted 2:42 pm on Jun 16, 2011 (gmt 0)

I think a simpler solution would be to create an Internet sales tax, all US citizens pay when they buy online from a US vendor, do some loose tracking of how much each state spends every year online and divide up the money that way.

aleksl



 
Msg#: 4325213 posted 1:12 am on Jun 21, 2011 (gmt 0)

I am baffled. I am speechless, how passively acceptive is the internet community.

pageoneresults: I foresee a Government Tax API that ALL ecommerce platforms will be required to use. You can't do business without it. Taxes will be collected and paid at time of purchase. Simple process. Minimal paperwork. Put the burden on the Government, not the Merchant. Just like Credit Card fees are collected at time of purchases, so will taxes. It's coming, mark my words.


Why not start a serious fight then? Can we not create 10 thousand websites to oppose internet tax? Can we not start a viral campaign to vote socialist government officials out of offices?

COME ON, PEOPLE. WAKE THE F*** UP!


Webwork: Advances in computing and networking have provided the foundation and often easier/more efficient solutions to business process issues. ...It's about time that Main Street regain a bit of competitive . . fairness . . i.e., everyone pays their fair share of whatever the taxes are


Webwork, you are a good guy and a lawyer...so you should know. the only "fair" share of any already burdening taxation is 0.

Look at who stepped into ecommerce big time - all the big names did. Walmart, Sears, Target, Walgreens etc. They all stepped in to compete with Amazon, and with you and me. They all have retail locations everywhere and hence pay tax already. They are not "poor main street", but they understand that if they have to pay tax anywhay their ecommerce still can't compete with Amazon. So they pull their lobbyist power.

It is not good for the people. It is not good for small business. Just because big fat corporate cats call it "fairness act" - you need to read it just opposite, it is "kill small e-retailer" act.

FOLKS, WAKE UP!

HRoth

WebmasterWorld Senior Member 5+ Year Member



 
Msg#: 4325213 posted 1:43 pm on Jun 21, 2011 (gmt 0)

Why do you say it has something to do with Big Box stores? I don't understand that. Where I am at, big box stores collect sales tax but often don't have to pay it to the state. They get to keep it as a tax incentive. MalWart is famous for having a store at a particular location for the number of years the locale has determined they will be allowed to keep the sales tax they collect, and then when that time is up and they are supposed to start paying it to the state, they close the store and move to the next municipality over and start all over again. I have seen this right here where I live. So brick-and-mortar stores might not be exactly at a disadvantage re sales tax if we are talking about big box types.

votrechien



 
Msg#: 4325213 posted 2:13 pm on Jun 21, 2011 (gmt 0)


Is this going apply to B&M stores as well? If a California resident buys something in a store in Montana (no state sales tax), are they going to have to charge me almost 10% sales tax because of being a CA resident?

If so, that's yet one more reason to move outta the state...


Under most state laws, the Montana resident is still required to pay sales tax, it's just on the burden of the consumer and not the retailer. Of course, no one actually ever pays it, but that's the law nonetheless.

StoutFiles

WebmasterWorld Senior Member 5+ Year Member



 
Msg#: 4325213 posted 3:42 pm on Jun 21, 2011 (gmt 0)

It is not good for the people. It is not good for small business. Just because big fat corporate cats call it "fairness act" - you need to read it just opposite, it is "kill small e-retailer" act. [


Small businesses will die regardless, it's already happening. Unless you sell a product that's uniquely yours, a large business will move into your field and undercut you.

diberry

WebmasterWorld Senior Member



 
Msg#: 4325213 posted 4:03 pm on Jun 21, 2011 (gmt 0)

Why do you say it has something to do with Big Box stores?


Because they are who is pushing states for this legislation.

Frankly, I don't think getting Amazon to collect sales tax would save their bacon, either. Walmart put a lot of people out of business 15-20 years ago, got cities to PAY them to do it, and when little businesses complained about having their life's work trashed, the response was, "Well, Walmart had a better business plan, suck it up."

Now Amazon has a better business plan, and Walmart knows how those small businesses they destroyed were feeling. This is a super desperate attempt to fight back, and it won't help a bit with the fact that Amazon has better prices, free shipping and more selection in lots of cases.

This will ultimately only hurt the people Walmart's always been hurting: small businesses. It's mind-boggling to watch them at this. It's like their real goal has always been to destroy small business.

martinibuster

WebmasterWorld Administrator martinibuster us a WebmasterWorld Top Contributor of All Time 10+ Year Member Top Contributors Of The Month



 
Msg#: 4325213 posted 4:12 pm on Jun 21, 2011 (gmt 0)

Main Street Fairness Act is a Tax Increase on the Average American
This is yet another tax on the average American. Instead of burdening the average American with MORE taxes, Congress should focus on making the big corporations who pay little to no taxes pay their FAIR SHARE. I'm not saying we should raise taxes on lage corporations. I'm just saying we should close the loopholes that allow them to pay little to no taxes at all. The following is from Forbes.com [forbes.com]:

Some of the world's biggest, most profitable corporations enjoy a far lower tax rate than you do--that is, if they pay taxes at all.

The most egregious example is General Electric ( GE - news - people ). Last year the conglomerate generated $10.3 billion in pretax income, but ended up owing nothing to Uncle Sam. In fact, it recorded a tax benefit of $1.1 billion.

Avoiding taxes is nothing new for General Electric. In 2008 its effective tax rate was 5.3%; in 2007 it was 15%.


The article describes a loophole where companies transfer ownership of valuable intangible assets (like patents that earn royalties) to subsidiaries in low tax offshore countries. Thus they avoid paying taxes to the U.S. government, keeping an estimated $28 billion dollars out of the U.S. Treasury every year. That's just one loophole out of many that are exploited. The article goes on to quote an expert who states that corporations are paying lower amounts of taxes today than at any time in history.

Voodoo Economics: Thirty Years of Tax Breaks for Corporations
The president of the Tax Foundation, a lobbying group founded and supported by Big Business, is quoted as saying that increasing taxes on corporations who pay little to no taxes will only result in higher prices on the average consumer. We've had thirty years of that nonsense, it does not work. That's the reasoning Big Business has been cramming down our throats since Ronald Reagan and it has not led to increased jobs, higher wages, or a healthier economy. It is a fact that the rich have grown disproportionately richer. The quality of life for the average American has gone down not up.

GW Bush had it right when he called it Voodoo Economics. The theory was that decreasing taxes would spur the economy and that the shortfall would be made up by a more robust economy. Thirty years later it is obvious that lowering taxes on corporations does not work.

Politicians Promise Us Social Rainbows in Order to Give Corporations the Pot of Gold
In general the Republicans (and many Democrats) stand for decreasing the tax burden on big corporations and increasing it for the average American. They take a stand on social and religious issues to get voted into office in order to give away billions to the big corporations. The average Americans voting to "make American great again," voting for social issues, for mavericks to shake things up have been had. Those politicians are promising social rainbows so they can give away the pot of gold to the corporations. While many democrats are guilty of doing this as well, it is the socially conservative Republican politicians who are most guilty of this. Illegal immigration, gay marriage, anti-abortion stands, anti-tax revolutions; those are buttons they push to get elected in order to lower the taxes on big business and increase the burden on average Americans. Who do you think are the major funders of the Tea Party movement? Billionaires seeking to keep their tax loopholes. Socially conservative Americans have been conned on behalf of big business.

To the OP, thanks for the link to the National Law Forum. That's a good summation of the proposed law. Here are some interesting points:

(2) it would level the playing field between Main Street and “e-street;”


That's not correct. Main Street can and does and sell online. I buy fishing gear online from companies that are literally a Mom and a Pop sitting around the kitchen table making their products.

(3) it would help to close the enormous budget gap that is growing daily as a result of the disparity between taxes due and taxes actually collected.


What they fail to mention is that it's closing the budget gap on the backs of average Americans. That is why I oppose this tax increase and you should too.

HRoth

WebmasterWorld Senior Member 5+ Year Member



 
Msg#: 4325213 posted 6:01 pm on Jun 21, 2011 (gmt 0)

"In general the Republicans (and many Democrats) stand for decreasing the tax burden on big corporations and increasing it for the average American."

That's because the big corporations give them money and us regular slobs don't. It is all about the money and being bought off. It has nothing to do with any principles or ideas, the Constitution or American values (whatever they are), especially not the Tea Party, which is the biggest corporate scam to come down the pike in forever. Those folks might as well just stamp "Dupe" on their "Don't Tread on Me" flags. Nothing but wars, wars, wars, while they cry about how we are just so broke and have the nerve to give us sanctimonious lectures about how we can't spend more than we take in and so we can't help our own people but it's fine to throw trillions of dollars at war and its profiteers. Doing right by own our people is out because that doesn't make rich people richer. They have to sequester that oil so they can dribble it out at highest market value to China and India down the road. And if our economy crumbles to nothing as a result, it doesn't make no nevermind, because they will still have that oil and those markets abroad. We are superfluous to their plans, at MOST pawns.

I was stoopit enough to believe 1% of the hype in the last election. Never before have I been so struck by the truth of the dictum, "If voting could change anything, it would be illegal." Last time for me.

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