LifeinAsia - 2:11 pm on Apr 29, 2013 (gmt 0)
...however I do not pay tax on most online purchases now and I will if this passes. How is that not a tax increase?
In most states, you are still liable for paying a Use Tax on purchases made out of state. If you live in one of those states and you have not been paying the tax, you have failed to pay an existing tax.
All this does is shift the burden of compliance away from the consumers onto the business owners.
The purpose of a sales tax is supposed to be to benefit the local community where the purchase was made. In theory, if you make a purchase in Small Town, USA, you used the local roads, parking facilities, etc. to get to the store and make that purchase. So (again, in theory), the sales tax collected should be used by Small Town for maintaining the roads, building new parking, paying for police to keep the streets safe, etc.
Don't buy into the "trying to close the loophole that is hurting B&M businesses" or "Internet businesses cheating by not collecting taxes" crap. Internet businesses are playing by the same rules that have existed for decades for mail order businesses- they are not required to collect sales taxes for states where they do not have a physical presence. (But again, residents in those states are still liable for the use tax on items purchased out of state.)
A flat Internet tax is not going to fix everything (and will make things worse for many). A good portion of the money collected will be wasted to feed the bureaucracy that will administer the new tax infrastructure. Also, let's say the Internet tax is 5%. If you live in California and the local tax is 9.5%, you'll still be liable for the 4.5% difference. And for those people living in states with no sales tax? They're really going to be shafted!