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Internet sales tax bill quietly being rushed through the Senate

Old 04-23-13, 07:04 AM
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Internet sales tax bill quietly being rushed through the Senate

The Internet Sales Tax Rush
Harry Reid and Wal-Mart hope nobody will notice their online revenue raid.

Every time Congress has taken a serious look at proposals to boost Internet sales taxes, it has rejected them. That's probably why pro-tax Senators are trying to rush through an online tax hike with as little consideration as possible.

As early as Monday, the Senate will vote on a bill that was introduced only last Tuesday. The text of this legislation, which would fundamentally change interstate commerce, only became available on the Library of Congress website over the weekend. And you thought ObamaCare was jammed through Nancy Pelosi's Democratic House in a hurry.

For Senators curious about what they're voting on, it is the same flawed proposal that Mike Enzi (R., Wyo.) introduced in February. It has been repackaged to qualify for a Senate rule that allows Majority Leader Harry Reid to bypass committee debate and bring it straight to the floor.

Mr. Enzi's Marketplace Fairness Act discriminates against Internet-based businesses by imposing burdens that it does not apply to brick-and-mortar companies. For the first time, online merchants would be forced to collect sales taxes for all of America's estimated 9,600 state and local taxing authorities.

New Hampshire, for example, has no sales tax, but a Granite State Web merchant would be forced to collect and remit sales taxes to all the governments that do. Small online sellers will therefore have to comply with tax laws created by distant governments in which they have no representation, and in places where they consume no local services.

Meanwhile, New Hampshire's brick-and-mortar retailers will bear no such burden. They will not be required to collect taxes on the many customers who drive across the Maine and Massachusetts borders to shop in New Hampshire. Bill sponsors say it would be too big a hassle to force traditional retailers to ask every walk-in customer where they live, but these Senators are happy to impose new obligations online.

The Enzi plan would require a centralized tax collector for each state or for a group of states that would gather both state and local levies from the online merchants. His office concedes that could still mean 27 or more different auditors of a Web-based business—which is better than 9,600 but hardly qualifies as simplicity.

The drivers of this rush to tax are Wal-Mart WMT -0.41% and other big retailers that can more easily absorb the costs of collection than can smaller competitors. Also supporting the bill is Internet giant Amazon, which coincidentally now sells its own tax compliance service to other merchants.
Adding to the lobbying muscle are state and local governments. The politicians believe they'll collect tens of billions of dollars in taxes that are already owed by shoppers on remote sales but rarely paid.

So big business and big government are uniting to pursue their mutual interest in sticking it to the little guy. Any Internet seller with more than $1 million in annual sales would be forced to serve all of the nation's tax collectors. It's true that many small brick-and-mortar retailers in states with sales taxes support the Enzi bill. They say they're at a disadvantage as customers examine products in their showrooms and then go home to buy them tax-free. On the other hand, some customers use retail websites for research before buying at a local store.

But even if the goal is to "level the playing field" in favor of Main Street, it won't happen. Mr. Enzi cannot possibly force all the world's Internet businesses to collect local U.S. taxes. So instead of shifting sales from online to bricks-and-mortar, he might succeed in shifting them from U.S. online merchants to foreign ones.

This rush to tax is an attempt to overturn the Supreme Court's 1992 decision in Quill v. North Dakota that forcing businesses to collect and remit taxes to jurisdictions where they have no physical presence was too big a burden. Though that ruling applied to catalogs in the pre-Internet age, it established an important principle of cross-state tax accountability.

Congress does have the power to write new rules for interstate commerce. But for years even politicians who wanted to force remote sellers to collect taxes conceded that it would only work if states and localities dramatically simplified their tax systems. That has never happened.
So now the tax collectors promise that software will figure out how every item is taxed in every town in America.

Perhaps software will flawlessly determine, for example, what is classified as candy for tax purposes and what is considered food in each jurisdiction. But the legislation itself contemplates confusion, as it spells out when a merchant is liable for errors and when a software vendor takes the blame. The way governments work, they'll penalize both merchants and the software vendors for mistakes.

Some of our conservative friends are backing this Internet tax raid as a way to raise revenue to avoid more state income-tax increases. More likely the new revenues will merely fund larger government. Republicans who are realists about government would be wiser to join Senators Ron Wyden (D., Ore.) and Kelly Ayotte (R., N.H.), who are leading the opposition.
http://online.wsj.com/article_email/...TEyNDEyWj.html

And I'm shocked - SHOCKED - that the White House supports a new tax:

White House Endorses Internet Sales Tax
3:26 PM, Apr 22, 2013 • By DANIEL HALPER

The White House today endorsed the Marketplace Fairness Act, which would be a tax hike for purchases made over the Internet. The White House claims the tax would "level playing field for local retailers."

"The Administration strongly supports S. 743, which will level the playing field for local small business retailers that are in competition every day with large out-of-state online companies," reads the Obama administration's statement on the policy.

Although States presently have the authority to tax the sale of goods or services sold from out-of-state vendors, they are prevented under current law from requiring the collection of such duly-enacted taxes. As a consequence, while local small business retailers follow the law and collect sales taxes from customers who make purchases in their stores, many big business online and catalog retailers do not collect the same taxes. Because these out-of-state companies are able to play by a different set of rules, this disparity undermines the ability of cities and States to invest in K-12 education, police and fire protection, access to affordable health care, and funding for roads and bridges. This bill would eliminate the unfair advantage currently enjoyed by big out-of-state online companies over local neighborhood-based small businesses.

In recent years, collection technologies have improved and States have made significant strides to cut red tape and simplify their tax systems. At the same time, Internet-facilitated sales continue to grow as a share of total transactions, contributing to ongoing State budget pressures. In recognition of these developments, a broad and growing group of bipartisan State and Federal leaders — including governors, mayors, business and labor groups, and members of Congress from both parties — has called for commonsense Federal legislation to make the system more fair.

The Administration strongly supports provisions in S. 743 that would directly address those concerns by granting only those States and localities that have simplified their sales tax systems the option to require all retailers, including those located out-of-state, to collect sales and use taxes already owed under law. The Administration also is pleased that S. 743 provides an exception for small online businesses and requires States to make available, at no cost to retailers, software that helps calculate the State sales tax on remote transactions, as well as administrative services.

The Administration looks forward to working with the Congress on this bipartisan legislation to support State and local priorities and promote a level playing field for local retailers.

The legislation is being considered in the Senate:
http://www.weeklystandard.com/blogs/...ax_718208.html

I do most of my online shopping through Amazon and we're going to be subject to VA sales tax later on this year anyway, but I also shop at much smaller stores and through ebay sellers. (Who may or may not have the $1 million in sales to qualify.) And Amazon has a physical presence in my state through distribution centers. It would've been nice for this to at least get a debate - and the public awareness that accompanies that - rather than have the bill rushed through.

I guess there's consolation in the fact that this is a bipartisan bad idea. The Marketplace Fairness Act - - yeah, for Amazon and Walmart. Don't be fooled that only one party is beholden to big business.
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Old 04-23-13, 08:11 AM
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Re: Internet sales tax bill quietly being rushed through the Senate

it was only a matter of time before this happens. states are hurting for revenue and this is an obvious source of it
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Old 04-23-13, 08:17 AM
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Re: Internet sales tax bill quietly being rushed through the Senate

Not since The Affordable Care Act has a bill been so wonderfully named.
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Old 04-23-13, 08:39 AM
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Re: Internet sales tax bill quietly being rushed through the Senate

Tax amnesty for online retail was to allow internet commerce to blossom. It's in full bloom. Time to level the playing field for the brick and mortars.
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Old 04-23-13, 09:12 AM
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Re: Internet sales tax bill quietly being rushed through the Senate

Originally Posted by DJLinus View Post
I guess there's consolation in the fact that this is a bipartisan bad idea. The Marketplace Fairness Act - - yeah, for Amazon and Walmart. Don't be fooled that only one party is beholden to big business.


I'm confused by this. Do you think that Amazon desires losing the sales tax loophole?
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Old 04-23-13, 09:16 AM
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Re: Internet sales tax bill quietly being rushed through the Senate

Saw this yesterday and it is relevant here:

Why Amazon Supports An Online Sales-Tax Bill

Reason #1

Collecting state and local sales tax all around the country would require a fair bit of effort on the part of online retailers, because sales tax rules vary from state to state. That's not a huge deal for a giant company like Amazon, but it would be more of a burden for smaller online retailers. From Amazon's point of view, that's a good thing — it makes life harder for Amazon's smaller competitors.

That's why big businesses, despite what they may say, often like regulations. They make life harder for small, would-be competitors. But in the case of Amazon, this argument is less compelling: Amazon spent years doing everything it could to avoid charging sales tax.

Reason #2

Under current law, Internet retailers have to charge sales tax in states where they have a significant physical presence — like, say, a big warehouse. For a long time, Amazon kept warehouses out of big states so it could avoid charging sales tax in those states.

Brick-and-mortar retailers didn't like this, and started lobbying state governments to push for Amazon to charge sales tax. So Amazon changed its strategy. The company agreed to start paying sales tax in more states — and it started building huge warehouses near major metropolitan areas in those states.

The warehouses meant the company had to start charging sales tax. But having warehouses closer to big cities also allowed Amazon to start offering same-day delivery to millions of customers.

As the FT reported last year, the brick-and-mortar stores got the level playing field they wanted for sales tax. But they also got a new level of competition from Amazon. If the company can make cheap, same-day delivery work, it will eliminate one of the last advantages of physical stores.
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Old 04-23-13, 09:21 AM
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Re: Internet sales tax bill quietly being rushed through the Senate

Of course Amazon would support it - that means more people will be using Amazon's payment system if they can automate the process.

Tax wouldn't deter me from ordering online, though I may only order from places with free shipping in the future (ie - Amazon), and maybe get a PO box in New Hampshire.
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Old 04-23-13, 09:21 AM
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Re: Internet sales tax bill quietly being rushed through the Senate

Originally Posted by jfoobar View Post
Saw this yesterday and it is relevant here:

Why Amazon Supports An Online Sales-Tax Bill
Truth. If you get same day service from Amazon in these Metro areas, it defeats the purpose of going to an actual brick and mortar store. I'm okay with that, because brick and mortar stores generally suck.
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Old 04-23-13, 09:27 AM
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Originally Posted by Tracer Bullet View Post



I'm confused by this. Do you think that Amazon desires losing the sales tax loophole?
Losing sales because of the tax? No. Preventing any smaller merchants from threatening their market share? Yes. They probably see it as a trade off.

Plus, in the article I posted it says that Amazon is selling its own tax compliance software, so that will bring in some money for them in this deal.
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Old 04-23-13, 09:29 AM
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Re: Internet sales tax bill quietly being rushed through the Senate

Originally Posted by DJLinus View Post
And I'm shocked - SHOCKED - that the White House supports a new tax:
This is to collect state and local taxes. Whether you like it or not, I don't know how you blame the Federal government or big business. I've seen businesses on both sides of this issue.
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Old 04-23-13, 09:45 AM
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Re: Internet sales tax bill quietly being rushed through the Senate

Surely it's a coincidence that they're trying to pass this while most of America, and all of the media, is tied up with the Boston tragedy. Surely.
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Old 04-23-13, 09:55 AM
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Re: Internet sales tax bill quietly being rushed through the Senate

I don't why anyone would be shocked the White House supports this. It's democrats that are talking about a VAT coming and increasing the gas tax.

Here in Tenn we don't have a income tax but the sales tax is around 9% when coupled with local taxes. I tend to buy online because it costs more for us to drive to the local mall and back. People are looking at any way to save nickles & dimes...even a few dollars saved can mean a day of driving or a meal.
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Old 04-23-13, 10:04 AM
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Re: Internet sales tax bill quietly being rushed through the Senate

Originally Posted by K&AJones View Post
I don't why anyone would be shocked the White House supports this. It's democrats that are talking about a VAT coming and increasing the gas tax.

Here in Tenn we don't have a income tax but the sales tax is around 9% when coupled with local taxes. I tend to buy online because it costs more for us to drive to the local mall and back. People are looking at any way to save nickles & dimes...even a few dollars saved can mean a day of driving or a meal.
Post a legit source saying that that's what the Democrats want, because the only thing I found that says anything remotely similar to what you're talking about are in the those rightwing whackjob sites.
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Old 04-23-13, 10:36 AM
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Re: Internet sales tax bill quietly being rushed through the Senate

Thankfully, the republican controlled house won't pass a new tax.

Because we all know republicans never raise taxes.
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Old 04-23-13, 10:41 AM
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Re: Internet sales tax bill quietly being rushed through the Senate

We all know it's coming but here in MD they're saying it would lower the increasing gas tax. What a crock of bull, they'll get this nex tax, still increase the gas tax and then next year talk about even more taxes. The local goverments are just killing us with tax increases.
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Old 04-23-13, 11:16 AM
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Re: Internet sales tax bill quietly being rushed through the Senate

Originally Posted by K&AJones View Post
Here in Tenn we don't have a income tax but the sales tax is around 9% when coupled with local taxes. I tend to buy online because it costs more for us to drive to the local mall and back. People are looking at any way to save nickles & dimes...even a few dollars saved can mean a day of driving or a meal.
In the eastern part of the state, it's just shy of 10%.
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Old 04-23-13, 12:25 PM
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Re: Internet sales tax bill quietly being rushed through the Senate

Originally Posted by Tracer Bullet View Post


I'm confused by this. Do you think that Amazon desires losing the sales tax loophole?
They already have to charge sales tax in 9 states. They need more distribution centers in other states as well as they grow, and realize that they are starting to be in the position of losing sales in many of those states to other places. They see this as leveling the playing field.

Ron Wyden is obviously against it because Oregon has no sales tax, so this is of absolutely no benefit to his state, and actually takes away an incentive to set up your internet shop in Oregon.
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Old 04-23-13, 12:26 PM
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Re: Internet sales tax bill quietly being rushed through the Senate

Originally Posted by creekdipper View Post
In the eastern part of the state, it's just shy of 10%.
In CA we have an income tax and 10% or higher sales tax and taxes on amazon and the city and state are broke...
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Old 04-23-13, 12:31 PM
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Re: Internet sales tax bill quietly being rushed through the Senate

Originally Posted by fujishig View Post
In CA we have an income tax and 10% or higher sales tax and taxes on amazon and the city and state are broke...
Sounds like you guys need some new programs. I'd also consider boosting the pensions for state workers.
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Old 04-23-13, 01:08 PM
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Re: Internet sales tax bill quietly being rushed through the Senate

The only big Internet player really fighting this bill is eBay. Amazon has a vested interest in leveling the field against the other Internet retailers by supporting the bill, now that they have capitulated in the biggest states by collecting taxes.

I still think there is a decent chance the Republicans in the House shut the bill down, to make a statement.

People do realize with our current economics that a VAT is almost inevitable, right?
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Old 04-23-13, 01:27 PM
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Re: Internet sales tax bill quietly being rushed through the Senate

When you look at the back of a book and it has a US price and a Canadian price thats a buck or two higher, you think, "man, that sucks for Canadians." And then you realize that they have universal health coverage and we don't. Who's the stooge?
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Old 04-23-13, 01:30 PM
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Re: Internet sales tax bill quietly being rushed through the Senate

Originally Posted by CRM114 View Post
When you look at the back of a book and it has a US price and a Canadian price thats a buck or two higher, you think, "man, that sucks for Canadians." And then you realize that they have universal health coverage and we don't. Who's the stooge?
Well played, sir.
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Old 04-23-13, 01:31 PM
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Re: Internet sales tax bill quietly being rushed through the Senate

Originally Posted by DJLinus View Post
Losing sales because of the tax? No. Preventing any smaller merchants from threatening their market share? Yes. They probably see it as a trade off.

Plus, in the article I posted it says that Amazon is selling its own tax compliance software, so that will bring in some money for them in this deal.
Ah, now it makes sense.
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Old 04-23-13, 01:33 PM
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Re: Internet sales tax bill quietly being rushed through the Senate

Originally Posted by kvrdave View Post
Sounds like you guys need some new programs. I'd also consider boosting the pensions for state workers.


Then again, CA is 12th largest economy in the world. Quality of life rocks over here, so there's a bit of a trade off.
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Old 04-23-13, 01:34 PM
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Re: Internet sales tax bill quietly being rushed through the Senate

Originally Posted by fujishig View Post
In CA we have an income tax and 10% or higher sales tax and taxes on amazon and the city and state are broke...


It varies, though. By city and county. I pay just under 10% in sales tax, but if I go down to Orange County its a couple of points lower.
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