|Florida Lawmakers target online sales|
Sales Tax issues
|TALLAHASSEE -- Bought a book or a computer online? You might not have paid sales taxes. Lynn, R-Ormond Beach, and Rep. Michelle Rehwinkel Vasilinda, D-Tallahassee, announced Thursday they have filed proposals that could potentially lead to collecting billions of dollars in sales taxes from Internet retailers. |
Backed by a coalition that includes major business groups, education organizations and labor unions, Lynn and Rehwinkel Vasilinda said the proposals could provide money for schools and other programs that are seeing deep budget cuts.
Supporters say untaxed online purchases are unfair to Florida retailers that collect sales taxes in stores. Also, they argue the proposals would not create new taxes.
Politicians will NEVER miss an opportunity to tax someone for something. We probably all new this was coming 4 years ago. The states have been working overtime to figure how to soak people for the sales taxes online and now with so many of these states facing critical budget problems they will be trying even harder.
Never underestimate politicians' greed when it comes to finding ways to reach in your pocket and take money.
The laws have always said that a person buying something online or mail-order should remit the appropriate amount of sales tax. Virtually no one does, since the states don't enforce it and don't make it easy anyway. The few exceptions are items that need to be registered, like cars. I have purchased vehicles out of state and you pay the tax everytime.
I agree with Fortune Hunter about the critical budget problems - this will be the last straw in making internet/mail-order taxation a reality.
If you read the comments on news-journalonline one of the very smart citizens noted that all us ecommerce people are getting rich because we don't have overhead like the brick-and-mortar operations. Ha!
The fact that many online transactions manage not to be taxed is a serious justice issue for brick and mortar stores who are forced to charge taxes.
in the US, out-of-state mailorder transactions with brick-and-mortar stores also typically bypass tax collection.
and in many cases, even the online vendor will be paying taxes on inventory and/or gross receipts.
i would argue the virtual transactions are a reduced burden on the services provided by a state or municipality.
If an online store or mail-order operation can serve customers more affordably because they can run a more efficient business operation, that's all well and good.
But the present situation creates an artificial disadvantage for brick and mortar stores selling the same products. The more expensive the product, the greater their disadvantage.
|virtual transactions are a reduced burden on the services provided by a state or municipality |
Sorry, Phranque, I don't grasp the logic there. How does making it artificially more difficult for local people to run sustainable businesses (and pay taxes accordingly) reduce anyone's burdens?
the taxes are collected to pay for facilities provided and services rendered by governmental entities.
if you purchase by mail, you won't be using the streets and traffic control devices of that state, province or municipality, for example, so why should you pay for them at the same rate as the customer who is adding to traffic and wear-and-tear on the roads?
that's not what i said.
i was referring to the burden on the governmental entity for which taxes are being collected.
if that government's taxes place an undue burden on the business, that business is free to move to a more profitable location - perhaps a location where the government provides fewer services or provides them more efficiently.
|if you purchase by mail, you won't be using the streets and traffic control devices of that state, province or municipality |
The burden you create on governmental entities does not disappear just because you shop online or by mail order. The trucks/transportation that bring you your goodies will still be using those streets, traffic control devices etc. on your behalf. And FWIW big trucks cause disproportionate wear and tear on road systems compared to smaller vehicles.
|that business is free to move to a more profitable location |
That might be true for some kinds of businesses, but it's certainly not true for all. Some businesses simply fold, leaving local shoppers with fewer choices than before (to name only one way in which local communities are made poorer).
Why should only some businesses be placed at a competitive disadvantage by being forced to collect sales taxes? What's fair about that?
If sales taxes were charged EVERY time goods were sold, then taxes would be just an equal fact of life, not an issue that creates artificial advantages or disadvantages for anyone in particular.
|If sales taxes were charged EVERY time goods were sold... |
sales is not the only tax issue.
you could make the same argument about gross receipts taxes, taxes on inventory, income taxes, payroll taxes, import duties, etc.
for that matter, tax shelters, "free enterprise zones", tax havens, etc are "unfair".
This thread is about sales taxes, which are totally visible to consumers. My concern here is not an objection to sales taxes in general, it is the unfairness created by the present inconsistencies in how they are charged and collected.
The businesses whose pain I am seeing over this issue are located in your town and mine, providing goods and services for local people. Moving their business somewhere else is rarely an option, and even if it were this problem would just move with them.
Until this gets sorted out, so that online or mail order transactions are taxed in in a way that is comparable to how local brick and mortar purchases are taxed, local merchants are saddled with an impediment reduces their ability to compete in today's marketplace.
It's like expecting someone to compete in a marathon with a weight strapped to their back that other runners are not required to carry.
|it is the unfairness created by the present inconsistencies in how they are charged and collected. |
I can appreciate this view, but lets remember it is politicians who made it so unfair in the first place. Sales taxes can be difficult to assess properly (depending on your business) and every county has their own sales tax amount they can charge on top of the state rate.
Largely this unfairness went unnoticed because if you did business in one or two counties you only had to remember a couple of rates and sets of rules. If you sell pizza you probably only have to understand your current county.
The problem surfaces when the Internet creates companies that can sell in every state (and country) and hence has to create a system that can somehow understand and keep updated all the various tax rates and rules for every state and county in the country. That would be a massive database and keeping it updated would be almost impossible. If politicians want their cut of the operation then they should create a system that is easy to manage and understand across all states and counties. If they persist in keeping the current system and putting the burden on small businesses to program and keep current all the variations of the taxes then that is also unfair.
To be honest I already find it unfair that I have to do the government's dirty work by collecting taxes for them in my business and paying a bookkeeper to come and fill out the paperwork, cut the checks, and keep my butt out of hot water. They certainly don't make it easy to do this and if I make a mistake I get a hefty fine to remind me how careful I need to be. All of this simply to own and operate a business and have the government as my business partner even if I don't want them and they contribute nothing to the business, but serve only as a drain.
I imagine this is as much a philosophical as well as practical issue.
The solution is simple. Pay whatever tax the state wants, to the state where the selling business/branch/office is located.
If any state wants a bigger cut of the tax pie, they can raise their rates, or make businesses an offer they can't refuse to move to that state.
|contribute nothing to the business, but serve only as a drain |
If you have ever lived or traveled in a country where the instrastructure is poorly developed, you might feel less negative about taxes.
The fact that we have staff who already know how to read and write, laws that deter thieves, a reliable medium of exchange, and a transportation system which mostly works are just a few of the ways in which good government supports our ability to do business.
Story time: A few years ago I was involved on a church committee which sponsored a family who arrived in Manitoba as refugees from Somalia. The first time a group of us ate in a restaurant, one of the Somali sisters asked, in rudimentary English, what the extra numbers at the bottom of the bill were for (the taxes). After we tried to explain some of the things that those taxes helped to pay for, she pointed to the bill and exclaimed with excitement, "What a good idea!"
I agree with Ken_b's solution. Cut through the crazy quilt of state and local taxes, and keep things simple.
I think that this will create a nightmare for mom and pop startups. Keeping track of thousands of tax rates will be a nightmare.
The politicians see this as an easy way to grab some revenue which they in turn use to buy votes.
I can see that in the future, you will probably have to use a third party for all of your checkouts. The third party will calculate the tax due for you and your customers.
The 'Use tax" thing has been around for a while. Our state will periodically check businesses to see if they are paying use tax. (that is a tax on things that you purchased without paying sales tax - ie internet orders). If you consistently report 0, then look for an audit. However, it isn't quite as efficient to go after ordinary citizens that way. So, the easiest alternative is to have the online stores collect it.
I can't imagine having to fill out sales tax returns for all 57 states and the assorted municipalities.
Of course, if you are an ex senator going for a cabinet position, you can skip 180k of taxes.
Thousands of tax rates? Ken_b's suggestion is a lot simpler than that:
|Pay whatever tax the state wants, to the state where the selling business/branch/office is located. |
|If you have ever lived or traveled in a country where the instrastructure is poorly developed, you might feel less negative about taxes. |
I doubt that. I am very confident I can have A LOT better infrastructure then I have right now and still pay half the taxes and have a government half the size. The U.S. government is bloated and filled with totally useless programs and expenses. If you deleted those tomorrow I guarantee it wouldn't have one speck of impact on infrastructure.
|good government supports our ability to do business. |
No such thing. There is only government and all of it is too big and too intrusive. The best thing government can do to help me manage my business is stay out of it.
|Thousands of tax rates? Ken_b's suggestion is a lot simpler than that: |
|Pay whatever tax the state wants, to the state where the selling business/branch/office is located. |
It's not as simple as state by state. Here in pennsylvania, we have 4 seperate tax rates.. State tax of 6 % plus an additional 1% for Philadelphia, Lancaster and Pittsburg. So, to be in compliance just for PA, I need to determine exactly which jurisdiction the purchaser is in.
The fact that I am outside those extra areas does not matter. The tax is based on the purchaser's location.
As far as the other poster who mentioned bloated government, I agree. My wife ran for state senate. If you want to know what politics is like, try snorkeling to the bottom of a cesspool. Unless you get into it, you have no idea how much waste and how much of a kleptocracy we are dealing with.
Anyway, back to the sales tax. A lot of states have a lot more than just different tax rates. Also, every state has a different list of what is taxable. Clothes might be 6% in Pa, 7% in Philly, not taxed in ohio, 3% in Denver only... etc.
The only solution that I can see would be a third party clearing house.
Also, keep in mind, what states like Floriduh and New Yawk are saying is that they want every ecommerce site across the country to collect for them. The logistics will be a nightmare. If they get reciprocity with your Attorney General, then you can't ignore it.
Even without reciprocity, they could issue a warrant. You take the family to Disney for a vacation, get pulled over for a traffic violation and find yourself infront of a judge "You're in a heap of trouble"
NY will never be able to enforce anything like this unless they do a major overhaul to their tax system.
There are 51 different rates for sales tax and another 51 different rates if the items are clothing.
I'm sure all states could use the "lost" revenue but they would have to do some house cleaning and I believe that's the reason we don't have a sales tax system set up for on-line sales all ready.
|I'm sure all states could use the "lost" revenue but they would have to do some house cleaning and I believe that's the reason we don't have a sales tax system set up for on-line sales all ready. |
Unfortunately for all of us as online sales becomes a bigger and bigger chunk of revenue the politicians who are sitting around now and gnashing their teeth and salivating at getting their greedy hands on all of the "lost revenue" will become more and more organized and eventually they will implement the house cleaning you are talking about.
Or more likely they will simply pass a law that says you have to pay it and let the burden fall on small business to figure out how and the expense to program their sites to do this and keep it all up to date and accurate. If you fail to do this they will simply start fining you and use the heavy hand of government to force you comply. Government is notorious for simply passing on the work to small business rather than make the process easier.
Big businesses like Best Buy, for example, can afford to create the web sites and programming that will be compliant it will just be the small business that take it in the shorts, which most politicians don't care about anyway. If you don't believe me join the NFIB and see the type of laws these clowns come up with all the time the hurts small businesses much, much worse than big business. Of course I am saying they should hurt big business either. I am saying they need to stay out of all business small, big or otherwise.
Fortune hunter said
|I am saying they need to stay out of all business small, big or otherwise. |
Agreed. The power to tax is the power to destroy.