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Now's the Time for an Internet Sales Tax
Posted Jun 03, 2009 08:34am EDT by Joe Weisenthal in Investing, Internet, Media, Products and TrendsFrom The Business Insider, June 3, 2009:
For years the internet has enjoyed its status as a relative haven from taxation, much to the chagrin of sales-tax reliant states. But with the fiscal situation growing more and more dire across all levels of government, and internet commerce continuing to eat into traditional forms of business, the lack of internet taxation sticks out like a sore thumb.
Indeed, the National Taxpayers Union, a libertarian anti-tax group says big tax hikes are definitely on the way.
Congressional sources say that introduction of federal legislation to implement the “Streamlined Sales Tax Project” (SSTP) could happen as early as this week. This comes in response to ongoing deliberation surrounding the issue of tax policy toward the Internet and the SSTP, a campaign that would allow states to collect sales taxes on transactions made by residents beyond their borders. States need Congress’s blessing for SSTP because of previous court rulings that governments cannot force firms within their jurisdiction to collect taxes on sales made to out-of-state customers.
“It is unfathomable that lawmakers, in good conscience, would place yet another tax burden on American families given our current economic climate,” said NTU Director of Government Affairs Andrew Moylan. “Passage of SSTP legislation would shovel more money into the coffers of states that don’t deserve it, while resulting in even more economic pain for hard-working taxpayers who have suffered enough.”
While the legal issues are certainly tricky -- particularly as it pertains to inter-state transactions -- the NTU is wrong on this one. It's time to start bringing the internet into tax parity with traditional forms of commerce.
First of all, the government needs the money. Yes, politicians could cut spending instead (and that may be preferable) but as long as citizens continue to support pro-spending measures, they need to be paid for.
Second, a big argument in favor of not taxing the internet is that such taxation would slow down innovation online, something we've been (smartly) eager to nurture over the years. But at some point that argument starts to lose its resonance as the internet grows more mature (if anything, perhaps it's physical commerce that really needs the help with innovation these days, given how miserable going to a store can be). What's more, to the extent that internet commerce innovates based on the protection of being tax-free, it may not be particularly desirable.
What's more -- and it's somewhat surprising that this doesn't get more play -- it's regressive to tax physical commerce and not tax electronic commerce, the latter of which is more popular with the affluent. There's no particularly compelling reason to offer a tax-haven to those who are more likely to be shopping online.
So yes, it's coming as the NTU says, due to economic reasons. And it's a good thing.
For more coverage, see The Business Insider:
Yahoo! Finance User - Wednesday June 03, 2009 09:38AM EDT
bshirley1968 - There were 500,000 more people who voted for Gore than Bush in 2000. Don't it suck to be on the short end of the stick for a change?
Kevin - Wednesday June 03, 2009 09:39AM EDT
The premise of this article is correct. From a fairness point of view why should internet merchants be able to undercut brick and mortar shops by 5-8% simply because congress decided to exempt them from paying taxes? It is no fair. Having said that I will never support anything that increases the federal tax base because they never cut spending and are corrupt, greedy, and power hungry douchebags. Vote out everyone who disagrees with a balanced budget, paying down of our debt, or decreasing the bloated size of our present government.
Yahoo! Finance User - Wednesday June 03, 2009 09:39AM EDT
Beavis - Wednesday June 03, 2009 08:44AM EDT Don't forget he's half honky.
Yahoo! Finance User - Wednesday June 03, 2009 09:40AM EDT
I've been running an internet business for over 10 years and every price increase (wholesale, fees, post office, etc.) ultimately gets passed on to the consumer -- the profit margins are slimmer with no "volume" to make up the difference -- I pay both ends of Social Security (self-employment tax) and of course not eligible for unemployment. I need more buyers/consumers and taxing the net will effectively chase many of the existing consumers away. Since payments are made electronically and there are fees involved in collecting those payments I have to yet again raise my prices to cover the cost of collecting the taxes -- not to mention the associated nightmare of trying to figure out who gets what and when. Looks like I will be headed for Wally World for a job -- I suppose I could stock shelves (chuckle)
Yahoo! Finance User - Wednesday June 03, 2009 09:40AM EDT
If I reside in NJ and purchase a latte in Manhattan, I pay sales tax to Manhattan, not NJ. If I live in California and purchase in Texas, I should pay sales tax to Texas, not California. If Texas decides not to charge California residents a sales tax, that should be ok.
S - Wednesday June 03, 2009 09:43AM EDT
I have cut back spending, my family has cut back spending, many people i know have cut back spending. When does the GOV'T cut back spending??? Hey 0bama...How about a little "shared sacrifice" here??
Yahoo! Finance User - Wednesday June 03, 2009 09:47AM EDT
If an additional 6% or whatever is the margin between something being affordable and not affordable for you, you probably shouldn't be buying it in the first place. They're gonna get it one way or the other, might as well not let it raise your blood pressure.
Dennybro - Wednesday June 03, 2009 09:48AM EDT
Washington dug its own hole and I'm for doing anything to make sure they suffer for it!! Internet sales have just been wiped out of my future. LET THEIR RICH BAILOUT BUDDIES PAY FOR IT!!!! They are the only ones that have benefited from it!! Americans are hurting out here. I just heard that the Chinese bailout has caused car sales there to go up 47%---That is because they bailed out the consumer-gave the money to the people that BUY THINGS!!---Trillions spent by the gov and STILL people can't afford to buy goods or pay their mortgage. The banks are sitting on tons of money, but we'never see it.Just try to get a loan-Just try!!
Dennybro - Wednesday June 03, 2009 09:48AM EDT
Washington dug its own hole and I'm for doing anything to make sure they suffer for it!! Internet sales have just been wiped out of my future. LET THEIR RICH BAILOUT BUDDIES PAY FOR IT!!!! They are the only ones that have benefited from it!! Americans are hurting out here. I just heard that the Chinese bailout has caused car sales there to go up 47%---That is because they bailed out the consumer-gave the money to the people that BUY THINGS!!---Trillions spent by the gov and STILL people can't afford to buy goods or pay their mortgage. The banks are sitting on tons of money, but we'never see it.Just try to get a loan-Just try!!
Yahoo! Finance User - Wednesday June 03, 2009 09:50AM EDT
We need more taxes like a hole in the head. The fed and the states just waste the money. Read my lips: " NO NEW TAXES!"
AMDshortsRfools - Wednesday June 03, 2009 09:51AM EDT
kevin_dry - are you kidding me? Online retailers undercut brick and mortar shops? Shipping.. online there is shipping and trust me, those e-tailers have to pay shipping and pass that along...taxes are just going to be piled on top of that? No way that's fair. Shipping is already taxation.
AMDshortsRfools - Wednesday June 03, 2009 09:52AM EDT
How about we cut out some of these programs instead of creating more Obama???? How about you for once stop spending our money before you even have it!
Leonard K - Wednesday June 03, 2009 09:52AM EDT
Another attack on the small businesses. There are many small to large retailers who supplement their sales with internet sales. We have already been piled on and left out of stimulus. Our costs are skyrocketing. I operate out of Delaware which has NO sales tax. We pay our share in different means. We pay higher revenue taxes to compensate. To add another burden on top of our already high obligation is anti-stimulus and will in the end reduce consumer spending. Go ahead and tax the life out of us. There will be a revolt if this keeps up.
AMDshortsRfools - Wednesday June 03, 2009 09:54AM EDT
I love how these fools say yeah.. yeah bring on the taxes so we can pay for all these stimulus and bailouts. They obviously don't live in California or some high tax district. Why should we be forced to pay for something 75% of American did not even want?????
Yahoo! Finance User - Wednesday June 03, 2009 09:54AM EDT
You call people who don't go out shopping LAZY?!!! I think the real lazy ones are they who are duped by the razzle dazzle "Change we can believe in". All the evidence was there to see that this election cycle could result in a central control government. Well, here we are. In addition, all the evidence was there to see that the media was in the tank for it. Well, here we are again lazy brains.
Average Joes - Wednesday June 03, 2009 09:58AM EDT
Chibears-- So you're saying American's should get off their lazy butts and go to the stores to shop? People buy more when they are physically in the store? How the hell do you think the economy got in this position in the first place! It's from people buying more than they intended or could afford because they saw something they couldn't live without. But it was on sale? So is your house now because you cannot afford your mortgage payment and your multiple credit card payments. Besides, have you been to a mall lately? All it is is high school without the dress code!
CBW - Wednesday June 03, 2009 09:59AM EDT
So along with higher income taxes and comes higher sales taxes because "we support pro-spending measures" - My Ass. What ture conservative American citizen actually supports the out of control spending by this administration? Isn't it tru that we are at the mercy of the deadbeats in Congress who can't make a decisions wihtout asking their "constituents" - who by the way don't resemble the conservatvie Americans either. So what we have is gov. pushing agendas down the throats of the people who are sick of it! Funny that I haven't heard anything positive from the "NTU" before about their efforts to lower taxes. If so, then why are we being taxed without representation on so many fronts!
CBW - Wednesday June 03, 2009 09:59AM EDT
So along with higher income taxes and comes higher sales taxes because "we support pro-spending measures" - My Ass. What ture conservative American citizen actually supports the out of control spending by this administration? Isn't it tru that we are at the mercy of the deadbeats in Congress who can't make a decisions wihtout asking their "constituents" - who by the way don't resemble the conservatvie Americans either. So what we have is gov. pushing agendas down the throats of the people who are sick of it! Funny that I haven't heard anything positive from the "NTU" before about their efforts to lower taxes. If so, then why are we being taxed without representation on so many fronts!
CBW - Wednesday June 03, 2009 09:59AM EDT
So along with higher income taxes and comes higher sales taxes because "we support pro-spending measures" - My Ass. What ture conservative American citizen actually supports the out of control spending by this administration? Isn't it tru that we are at the mercy of the deadbeats in Congress who can't make a decisions wihtout asking their "constituents" - who by the way don't resemble the conservatvie Americans either. So what we have is gov. pushing agendas down the throats of the people who are sick of it! Funny that I haven't heard anything positive from the "NTU" before about their efforts to lower taxes. If so, then why are we being taxed without representation on so many fronts!
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AMDshortsRfools - Wednesday June 03, 2009 09:34AM EDT
Johnny Ike.. quicker to pay taxes??? They've already got electronic filing... that's quicker paying. What they want to do is make you pay MORE than you pay already. We have to pay for automobiles companies, insurance companies, banks and if Obama gets his way, we will be paying for Health Insurance for everyone "illegal immigrants as well as Americans". Once he gets that, we will be paying for green energy programs and who knows what other high cost programs he wants after that.... taxes are bad now? You haven't seen anything yet. This is what you get with an overreaching government.