May 6, 2013

"A bipartisan coalition in the Senate easily passed legislation Monday to force Internet retailers to collect sales taxes..."

"... for state and local governments, sending the issue to the House, where antitax forces have vowed to kill it."
But the 69-to-27 vote in the Senate will give the measure significant momentum....

The Internet sales tax bill – dubbed the Marketplace Fairness Act – is a rarity in Washington these days, a significant tax measure that has split antitax groups in Washington from reliably Republican Main Street businesses outside the capital....

The legislation would allow states to force online retailers with more than $1 million in annual sales to collect sales taxes from all customers and remit those taxes back to state and local governments. States would have to provide software to help calculate the taxes for thousands of jurisdictions....

The Senate Internet tax debate revolved around advocates’ arguments that applying sales taxes online is only fair, since traditional brick-and-mortar retailers must levy such taxes already. Supporters said the bill was not a tax increase but a guarantee that taxes already owed would actually be paid....
We've already been talking about this tax over in today's Amazon thread

67 comments:

Brennan said...

Why isn't the Senate making it a criminal act to dodge state Use taxes?

Buyers are supposed to pay them.

St. George said...

Interesting when you read the NYT article there's no mention about what this tax money will be used for.

Just more...government...stuff.

Gotta have it.

I'm reading David Stockman's 600-page stem-winding Jeremiad against the government's corruption of the financial markets.

Just think about the phrase "Too Big to Fail."

Titanic, anyone?

Freeman Hunt said...
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ndspinelli said...

You should highlight the Beatles song, Tax Man, on your next Amazon shill post.

The Drill SGT said...

a job Killer. Or at least a start-up killer

tim maguire said...

I've been paying sales tax on internet purchases for years so it's all nuts to me. But I find it remarkable, given the fact that this has been pushed as fairness for brick and mortar rather than revenue enhancement, that there was no discussion of reducing sales tax on brick and mortar. After all, that would acheive the same objective without further damaging the economy. (Pffft, just kidding! Of course it's about the money and they've repeatedly shown they don't care about the economy.)

CEO-MMP said...

Tim, most of us have been saying that. Limbaugh has been saying that. I'm not sure where you arrived at the idea that there's been no discussion of it.

But you're correct. It's all about the money--and insinuating governmental tentacles into yet more of the daily lives of Americans.

And Althouse loves it, judging by her posts in the other threads.

Rusty said...

There goes internet retailing.
It was fun while it lasted.

AprilApple said...

DC needs more of our money, while we all grow poorer.

edutcher said...

The Demos and their RINO enablers ride again.

Methadras said...

Well, when should we start a countdown of when the house will reject this bill? Or when it will see SCOTUS.

Methadras said...
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Methadras said...
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Ann Althouse said...

I just think the objections are specious. As someone who pays the tax, I feel ripped off that so many others don't. It's collectible now, so what's the big deal? It's not a new tax. It's a new method of collection. It's putting retailers on an equal plane. It doesn't impose requirements on those who sell less than $1 million annually.

Seems to me it's basic fairness and not a new tax, just closing a means of tax evasion.

I think the objections are histrionic and manipulative.

Jay said...

It's not a new tax.

Well, since I currently am not paying it, but would be in the future, yes it is.

I also love this contradiction:

It doesn't impose requirements on those who sell less than $1 million annually.

Seems to me it's basic fairness and not a new tax, just closing a means of tax evasion.


Because of course nothing measures "fairness" like an unequally applied tax.

Palladian said...

I think the objections are histrionic and manipulative.

And there'll be none of that sort of nonsense around here!

Michelle Dulak Thomson said...

Brennan,

Why isn't the Senate making it a criminal act to dodge state Use taxes?

Buyers are supposed to pay them.


They aren't doing it because it's already a criminal act in states that have use taxes.

Palladian said...

There goes internet retailing.
It was fun while it lasted.


The internet is the last hope for human freedom. The powers that be know this, so they'll do what they can to cripple it.

Michelle Dulak Thomson said...

Ann,

I just think the objections are specious. As someone who pays the tax, I feel ripped off that so many others don't.

Oh, do you? I thought the authoritative NYT said that absolutely no one does.

Palladian said...

Anything done by a "bipartisan coalition" is guaranteed to be a giant piece of shit.

sydney said...

Our Ohio government (Republican) decided they are going to enforce our Use Tax, but only for businesses, not for the populace. It burns my buns every quarter when I have to go online and report my purchases, knowing that so many other people DON'T just because they aren't business owners or self-employed. It's such a pain in the ass for me, I go out of my way to avoid purchasing things from suppliers who don't apply the sales tax. So, if this law applies to everyone equally, and gets rid of my quarterly use tax busywork, then I am for it.

The Drill SGT said...

It's ok Althouse, it won't impact your sales more than 10 or 20%

edutcher said...

Ann Althouse said...

I just think the objections are specious. As someone who pays the tax, I feel ripped off that so many others don't. It's collectible now, so what's the big deal? It's not a new tax. It's a new method of collection. It's putting retailers on an equal plane. It doesn't impose requirements on those who sell less than $1 million annually.

Seems to me it's basic fairness and not a new tax, just closing a means of tax evasion.

I think the objections are histrionic and manipulative.


Baloney.

The (Dis)Honorables have been lusting after the wealth of Internet commerce for years. Now they're going after it.

If anything, the Feds don't need more money. They should be made to live within their means.

Without an income tax.

And the FICA taxes should be for Medicare and Social Security (if we have to have them) only, none of this general fund nonsense.

Patrick said...

To balance rhings out, we ought to talk about breasts in this thread.

elkh1 said...

The unFairness Act is unfair to small vendors who have no ways or money to spend on figuring out and collecting taxes for 900 taxing authorities in the country. It kills micro-entrepreneurs, one-man bands who sell their homemade wares and resell low volume low price hard to find items on their web sites.

Fr Martin Fox said...

This new tax seems to be a solution without a problem.

It's not at all clear to me why each state cannot, right now, tell businesses operating within their jurisdictions to charge sales tax on internet purchases?

I buy from Lands End periodically--that's in Maine, right? Then let Lands End charge Maine sales tax on every sale.

What keeps the states from doing this?

Only that they don't want to. They may lose a business to another state that chooses not to do the same.

So it's a choice on the part of each state.

rcocean said...

The US Senate is in the pocket of rich lobbyists. Except for McCain - who doesn't have to be bribed.

ampersand said...

Why shouldn't this be considered a state tariff ,which is unconstitutional?
The out of state company derives no benefits from the tax.

The citizen is just relegated to a tax slave.

Methadras said...

Ann Althouse said...

I just think the objections are specious. As someone who pays the tax, I feel ripped off that so many others don't. It's collectible now, so what's the big deal? It's not a new tax. It's a new method of collection. It's putting retailers on an equal plane. It doesn't impose requirements on those who sell less than $1 million annually.

Seems to me it's basic fairness and not a new tax, just closing a means of tax evasion.

I think the objections are histrionic and manipulative.


I just bought some stuff off of ebay with no tax. If there was tax, I most likely wouldn't have bought them. Why? Not because I see a tax as inherently unfair, but because the price was attractive enough without the tax to make want to pay it. Since you aren't doing the collection of those taxes, Althouse, how much money do you think these companies will now be saddled with in order to accomodate this 'new' method of taxation and pass it on to us. It's a double whammy. First we normally don't pay a tax, then we now have to pay the tax, have it collected by the seller, then have them process it and increase the cost of their goods to cover the extra work they will now have to comply with. And you call it 'basic fairness' only because of the $1 million annual sales threshold? You can't be serious and frankly, I don't believe you are serious.

Please just go back to your class and just teach law. Leave commerce to those that care. The real world in this regard eludes you.

Methadras said...

If this is allowed to become law and pass both houses. I'm basically done shopping on the internet or will go to other countries for my goods. I'm frankly done being a sucker. I am now going to basically hide as much money as I can and try to keep it out of the hands of government. I've had enough. This money is nothing more than a windfall to congress to spend more into infinity. That institution is now as hopeless as it has become lawless. Lawless in the respect that they simply do not care to listen to or promote the liberties of the people that put them there. They are systematically and increasingly and incrementally dismantling this country to continue their infinite legislative and executive branch slush fund and we are Daddy Warbucks to them. I'm done.

elkh1 said...

edutcher said...
"If anything, the Feds don't need more money."

Oh, really, how do we minions properly reward our betters such as joker Biden who sacrifices his whole life lording over us? Where the hell do our masters find the money to reward their sugar daddies? Don't tell me Buffett, Soros, Kaisers, and their ilk actually have to take losses on their investments without our tax money to bail them out.

Methadras said...

I think the republicans that have gone for this are going to suffer and democrats are laughing their asses off right now. They now have a democrat lite party in the senate. Win win.

edutcher said...

Patrick said...

To balance rhings out, we ought to talk about breasts in this thread.

OK, that means a left and a right both.

None of this Moshe Dayan one cup only business.

CEO-MMP said...

I have yet to see Ann address any actual concerns. Like--why do I as an internet only business (just say) suddenly have to become an agent of every other state, opened up to liability of all sorts...etc.

Jalanl said...

As someone who pays the tax, I feel ripped off that so many others don't.

So just to be clear, when you are on vacation in another state you keep track of all your purchases and submit the 5% sales tax to the state of Wisconsin?

It's putting retailers on an equal plane.

Not really - it only requires internet based companies to collect sales taxes based on the legal residence of the purchaser. So to be totally fair shouldn't every business have to ask for the zip code of every customer so they can collect the proper sales taxes. Of course, Wisconsin would lose a lot of revenue in Door County from all the Chicago residents but wouldn't that make it totally fair?

CEO-MMP said...

Land's End is based in WI.
L.L. Bean is in Maine.

LilyBart said...
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LilyBart said...


This isn't about 'fairness' - its about government getting more money.

Also - its big business using government to disadvantage its smaller competition.

Amazon won't have trouble following this law - but a smaller business using the internet to grow revenues will.

LilyBart said...



"Beware the greedy hand of government, thrusting itself into every corner and crevice of industry." — Thomas Paine

Hagar said...

Anytime you see proposed legislation with the word "fair" in the title, you know somebody is trying to get a decidely unfair advantage.

Do the online retailers get to deduct the shipping costs?

More to the point perhaps, sales taxes are collected at the point of sale, wherever the store is.

Rusty said...

Palladian said...
There goes internet retailing.
It was fun while it lasted.

The internet is the last hope for human freedom. The powers that be know this, so they'll do what they can to cripple it.

It is. Free wheeling. Wide open. Anything goes and the savings are passed on to the customer.
Thank you Senator Durban. For a minute there I was having fun.

John Maynard Keynes said...

If the average tax is 5%, the result will be that 5% of all the money used to purchase goods on the internet will be diverted from consumer spending (which has a multiplier) to government spending (which does not).
Also, since the tax raises prices, it will reduce the marginal propensity to consume.

CEO-MMP said...

What Heritage says

CEO-MMP said...

I imagine more commerce will head to the the dark web. Paypal is apparently discussing how to implement bitcoin--that's a dagger right there.


You can only push a people so far.

MCD said...

As I understand it, the rationale for sales taxes is that the company doing the selling benefits from local services -- police, fire, snow removal, whatever.
Sellers over the internet benefit from those services in the communities where they are located, where they have buildings and employees and a need for local services.
Buyers over the internet do not benefit from those services -- sure UPS delivers the packages over the roads, but gas taxes pay for roads.
So, if we are going to apply sales taxes to internet commerce, why not apply the tax rates that apply in the communities in which the sellers operate? This would make tax collection much easier -- one tax rate for the bricks-and-mortar location operated by the selling company.
Seems fair to me.

Freeman Hunt said...
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Unknown said...

Ann and the rest in favor of this, let me try and put this in context and give you specific arguments as to how this really hurts new businesses.

We own a business in Louisiana, which has 64 parishes (counties everywhere else). They all have varying sales tax rates. Depending on how frequently you sell in each parish, you can report and pay weekly, monthly or quarterly.

If you are a small fast growing business doing a couple million nationwide paying all the state and local taxes will be several full time jobs. It's not just cutting a check. You have to go to their website and report what you sold etc etc.

If you are a small fast growqing business there is absolutely nothing more important than cash and cash flow. The jackasses who passed Dodd Frank basically made it illegal for commercial banks to loan money to a company without collateral and at least 3 years of profitable financials.

Now small entrepreneurs who are already risking everything the first day they open have to overstaff and pile on overhead so Washington can get more tax revenue.

Everything that has happened in DC in the last decade has made it easier in big business and harder on small business. It's disgraceful. Y'all want to know why the employment picture sucks? New business startups are declining every year this clown Obama has been in office. Why would you start a company today?

If the govt doesn't regulate and tax you to death, and you are lucky enough to escape some personal injury lawyer just making it hurt so you settle, you get to keep less and less of what you make. This after you risked your house with a second mortgage and now your a selfish greedy bastard if you make it.

Fr Martin Fox said...

MCD:

I think you and I may be making the same point. Legally, nothing stops a state from telling companies, in their jurisdictions, charging sales taxes on online (or mail-order) sales. They can do that right now, if they want to.

If I drive over to Kentucky to buy something, I pay the sales tax I would pay if I lived there. I don't get an exemption.

Andy Freeman said...

> It's putting retailers on an equal plane.

Why should they be on an equal plane?

The whole "laboratory of democracy" thing is that different states have different policies and get different results. States should get what they want, good and hard.

Remote retailers get no services for the taxes that their customers will pay under this deal.

Which reminds me, should IL residents who drive to WI to buy stuff (cheese and fireworks I hear) pay IL taxes on their purchases? Or, should they pay WI taxes?

Or rather, why shouldn't WI retailers be forced to collect IL taxes. They can get the info from the credit card companies.

If you want an equal plane....

Synova said...

The Marketplace Fairness Act will *obviously* favor large corporations who sell on-line and who have the capacity and accounting departments to comply with the law and it will utterly destroy small businesses, the self employed, start-ups and any other potential development of competition the big guys may face in the future.

It needs to die.

etbass said...

Because of this law, I will make fewer purchases from Amazon because I will not have the savings in sales tax to offset the cost of shipping. I am now going to buy my books from the local Barnes and Noble and pay the sales tax locally but save on shipping.

If fairness is the issue, why not make it fair by just eliminating sales tax on all internet sales, even by brick and mortar companies? Then Sears can compete with LLBean through their internet sales because neither would charge sales tax.

tom scott said...

I live in Richland Wa. The sales tax is 8.3. I read in this thread that Wisconsin sales tax is 5.0.
It is terribly unfair and prejudicial that should Prof Althouse and I purchase the same item from Amazon that she will pay 3.3% less tax than I.
I demand that Wisconsin raise their sales tax to 7.3.
It's just not (sob)fair. (sob)
http://www.youtube.com/watch?v=_jN4KPDBxv8

dreams said...

It will be bad for the economy but never mind that, the politicians have to find ever more revenue so they can help people.

X said...

I haven't seen Althouse explain why the tax should apply to the buyer's location instead of the seller's. you know, to make things equal, just like a brick and mortar store. instead just histrionics. I hope she doesn't cry.

Jane said...

You know, I think this is fair, by and large, with respect to states that charge a uniform sales tax across the state. The problem lies in places like Illinois, where every county and many towns have different taxes. The state sales tax is 7%, I think, the county takes an additional 2%, and the town an additional 0.5%, or something like that (I forget the exact split). 50 sales taxes isn't that hard, and I bet there'll be vendors popping up to handle the issue, in the same way as Paypal helps small time sellers with accepting credit cards. But that should be it -- no seller should be obligated to deal with the sales tax down to the town level.

Alternately, the government could simply declare a "uniform sales tax" at a level of the lowest levies (excluding outliers). What would that be -- 5% or 6%? Then it's forwarded on to the IRS and the IRS reduces various block grants to states by an equivalent amount. Not that hard to find a middle ground.

Art said...

The biggest issue still is requiring each of those companies to get seller permits in each of those states (you certainly cannot submit tax receipts without a sellers permit) which opens them up to personal jurisdiction in each of those states as well as opening them up to various demands from any of those states to appear personally with records to validate the claims made on any returns with NO COMPENSATION for the hassle and expense. This is a terrible idea.

Larry J said...

Ann Althouse said...
I just think the objections are specious. As someone who pays the tax, I feel ripped off that so many others don't. It's collectible now, so what's the big deal? It's not a new tax. It's a new method of collection. It's putting retailers on an equal plane. It doesn't impose requirements on those who sell less than $1 million annually.


You are as stupid about the technical challenges of implementing Internet sales taxes as you are to why some men wear shorts.

The Senate legislation says that states are required to provide the software to calculate the sales tax rate. That'd be wonderful if states had a good reputation with creating software. Unfortunately, they don't. Over 40 states have sales taxes. Will there be a website that consolidates all of these differing tax rules and rates or will the retailer have to install 40+ pieces of software?

Will the software also keep track of the sales and automatically create the forms that sellers need to submit to each sales taxing district? How many hours per month will the retailers have to spend on filing all those different tax forms? Who has the liability if the software has errors that result in incorrect payments? What possible benefit does a retailer in one state get in exchange for being an unpaid tax agent for thousands of taxing districts?

Rusty said...

MCD said,


Take your "fairness" and go fuck yourself.


OK. I'm just messin with ya.
You're approaching this as if taxation itself were fair. That we as consumers have a duty to support our local retailers.
Bullshit.
As consumers we have an obligation to ourselves to obtain our goods as cheaply as possible. Period.
As much as the State would like to dictate where and how we spend our money, I reserve to myself where and how I spend my money.

Jay said...

I feel ripped off that so many others don't

And nothing says good public policy like you not feeling 'ripped off'

Rusty said...

Ann Althouse said...
I just think the objections are specious. As someone who pays the tax, I feel ripped off that so many others don't.

Perhaps it's you and not them.

X said...

Althouse, when you and Meade travel, do you remit sales tax to Wisconsin for your out of state expenditures? if not, why not?

Rusty said...

X
You are paying in the state you are in.

On the internet there is no THERE there. Unless the company you buy from is located in your state you are not obligated-were not obligated to pay sales taxes.


I can see where this would be a boon to overseas sellers.

Brew Master said...

It's putting retailers on an equal plane

It is putting online retailers at a distinct disadvantage. This is not an equal plane until brick and mortar stores are required to do the same, collect taxes for the location of each of their customers.

Brew Master said...

The whole business about it not applying to anyone with less than 1 million in sales is not what it seems either.

A business that sells $1 million a year, at a 5% profit margin (online sales are very tight margins) yields a yearly net profit of $50,000.

With profit margins that tight on that level of sales, you can't even make a living with this new mandate to become tax collectors.

Poor Ann feels angry that other people cheat on their taxes. Half of the Obama administration cheats on their taxes, and probably half of the entire federal government. Where's the outrage?

...anon coward said...

Just wait until certain authorities (say NY) start to use repeated tax audits to 'punish' industries. Magpull sells one product in NY? Well then, they'd better stop all production of mags over 7 rounds nationwide or face continuous tax audits from every taxing authority in the state of NY.

Rinse and repeat for baby formula, groceries (they sell salt!), or whatever the PC cause of the day is.

Enforce the use tax. Failure to do so is just an addition that the Fed is again manufacturing a crisis.

Michelle Dulak Thomson said...

X,

I haven't seen Althouse explain why the tax should apply to the buyer's location instead of the seller's. you know, to make things equal, just like a brick and mortar store. instead just histrionics. I hope she doesn't cry.

I'm OK with that, so long as "the seller's location" means where it shipped from, not where the business is registered. I don't want to start paying WA sales tax in my sales-tax-free state, but if Amazon goods shipped within OR remain the same, that's cool.

Michelle Dulak Thomson said...

Rusty,

I can see where this would be a boon to overseas sellers.

I buy a lot overseas anyway, mostly stuff that can't be bought (or can't be bought in a particular timeframe) here. But you're right -- small overseas sales are something the US government hasn't really figured out how to tax. Yet.