Where are they talking about a flat tax? As I understand the discussion, Congress would simply reverse the Quill v. North Dakota ruling via new legislation. This would open the gates for each state to collect sales taxes from out of state online merchants. The problem is that there are thousands of taxing jurisdictions, each with its own rule set and audit rulebook.
Compliance with each NY City sales tax - where different products are taxed at different rates by Burroughs - is whacked. California with all the special tax districts is similar. The whole setup is messed up. The taxing system was setup for stationary bricks and mortar establishments. If there was a central dataset with a firm set of rules and a clearinghouse for remitting payments, the notion of collecting a tax and remitting it would not look so daunting. As it stands now, NEXUS is also a bloody mess.
At some level, I think that e-merchants should be subjected to the same rules as bricks and mortar merchants. We’ve had an unfair advantage for more than a decade. At the end of the day, we still have the advantage because we have a lower cost structure.
I run e-commerce sites in Europe and Canada as well as the US. We’ve got it easy. PST, GST, HST… what a mess… Deep down, I hope Congress does nothing. Ya. A do nothing congress. Let’s hope they stay in gridlock.