Saturday, August 11, 2012

Demint: Internet sales taxes a bad idea

South Carolina Senator Jim Demint thinks internet sales taxes are a bad idea and said so recently in the Wall Street Journal:

"Our nation was born from the idea of "no taxation without representation" —that citizens should not be taxed by governments in which they have no political voice. Yet now lawmakers in Washington want to overturn that bedrock principle in order to extract more revenues from American consumers.

The Marketplace Fairness Act recently introduced in the Senate would require online retailers to collect and pay sales taxes to states where they have no physical presence or democratic recourse. Overstock.com, eBay and the like could have to pay sales taxes to any state from which an Internet user placed an order, even if the company's headquarters, warehouses and sales staff are located entirely in other states.

Such online sales tax proposals are taxation without representation. The proposed federal law tells businesses that there is no escape from the clutches of tax-hungry politicians. That concept is antithetical to our federalist system, which promotes competition among our states for the best economic policies.

The Supreme Court ruled (in Quill Corp. v. North Dakota, 1992) that retailers can be required to collect sales taxes only in states where they have a physical presence. The proposal before Congress, however, would give a federal blessing for states to chase revenues far outside their borders.

Consider the absurdity of such a law. When a customer buys a product in a store, does the cashier ask for the customer's home address? Of course not. The store simply charges the state and local sales taxes applicable for its physical location, no questions asked.

The proposed law would hold online sellers to an entirely different standard. Websites would have to add taxes to a sale based on the shipping destination of the product, which may be a state in which neither the seller nor the buyer resides. We would never ask mom-and-pop store owners to do such a thing.....

The burden on Internet entrepreneurs could be staggering. There are already nearly 10,000 state, local and municipal tax jurisdictions to navigate nationwide.

Just complying with a single state's tax laws costs small businesses disproportionately more than larger firms that can afford accounting and technology teams to help them work through these arcane laws. A 2006 PricewaterhouseCoopers study found that tax-compliance costs for small businesses (those having $1 million to $10 million in annual sales) are nearly 2.5 times greater than those of larger firms. For businesses under $1 million in sales, those costs explode to 16 cents on every dollar of revenue.

And woe to online sellers if they have a dispute with one of the many states that will be unleashed to tax them. A small business owner in South Carolina could face simultaneous audits from California, New Jersey and Hawaii, with no political recourse.

Who would want to do business in this environment? That's a problem that the Senate bill's authors implicitly acknowledge, since they included an exemption for companies with less than $500,000 in annual sales. But that is a very low threshold to cross. Businesses will be discouraged from growing, encouraged to locate overseas, or even regulated out of business.

Nor would these new Internet taxes satisfy tax-hungry politicians. Already Maryland Gov. Martin O'Malley, a Democrat, has called for a 6% tax on all downloads—music, movies, e-books and more—from vendors like iTunes. It probably wouldn't be long before the burdens of complying with myriad state sales tax laws led to talk of a streamlined national sales tax to replace it, with Washington taking a cut and destroying our nation's healthy tradition of state tax competition...
." Rest of essay

17 comments:

Shadowfax said...

Most will agree with him. We can also look for this in our future: On any air flight, the states whose air space we cross through will be due a percentage of the ticket cost as their tax on your flight. When pricing tickets and considering travel time, we will then consider which layover spots are in states with the higher tax rates and avoid those flight legs. Then we may actually find it desirous to connect in Atlanta rather than DFW or Cincinnati may be less expensive than both.

Anonymous said...

If they sell a product to someone in Mississippi, they have a presence.
Either the state OR federal government should collect sales tax on internet sales.
People want a free ride for everything these days.
Lazy do nothings.

Jatidom said...

11:55 you are a moron. You clearly don't understand the impact this could have on small business, the main driving force of our economy.

I have a small Internet sales website. If this were to pass, I would take the site down. It would not be worth my time or the expense.

Also, how would this effect online sellers who drop ship merchandise? How many hands would be in the pie on drop ship transactions?

Anonymous said...

Hey 11:55, I will pay the sales tax if you pay for the shipping. If all the retailers didn't sell the same Chinese crap, online sales wouldn't be booming. Furthermore, Mississippi doesn't deserve this tax, because we have the highest food sales tax in the country!

Anonymous said...

All purchases on the internet are supposed to pay taxes under "Use Tax." No one ever reports them.

Its kind of like having speed limit signs and no police officers around. Everyone is going to speed. This is the easiest way to enforce already existing laws.

Jatidom, sorry but for every "small internet business" affected by it, it probably helps five small brick and mortor businesses.

Why make our local businesses be at a 7% disadvantage right when they open their doors? Just look around town at all the vacant retail spaces. I would bet a lot of the old businesses there had a hard time with this. That's property tax revenue, payroll tax revenue, and sales tax revenue, all lost. We should be helping them out.

Amazon already announced it was going to start collecting it in certain areas. They know its coming. What Mississippi ought to do to help our businesses out, is to follow the footsteps of states like Oregon. There is no sales tax. Think about how places like, Vicksburg, the Coast, Meridian, Southhaven and Batesville, would all benefit with people coming from the bordering states to shop.

Anonymous said...

I buy books form beterworldbooks.com

No sales tax and free shipping!

Shadowfax said...

Why should a state collect taxes for a sale that in no way involves the state? And how could a sales tax benefit a local brick and mortar business that makes no profit on the sale.

The 'nexus' rule is stupid to begin with. No entity should collect a tax on a transaction in which it has absolutely no involvement.

But, as creative as Feel Bryant has proven himself to be, I'm sure he is working on a way to tax all the states whose shit downflows the Mississippi River through our state.

Anonymous said...

No one wants to pay more in taxes (well, almost everyone), including me, but explain to me how it is fair for brick and mortar businesses that pay rent, pay salaries, and support the local community to collect sales tax but "internet" companies are exempt? If you want to buy on-line, that is your business. I try not to. However, how hard can it be to collect the correct sales tax based on the ship to address? Heck, we can land a rover on Mars, and we can't design a computer program to figure the sales tax for each locale? In my opinion, all that does is level the playing field for the brick and mortar stores.

JimAtTheRez

Anonymous said...

So we are 'trusting' that the company that collects the sales tax will automatically report their sales in our state? Bet they don't have a program for that one. How can anyone prove what the online companies actually owe to the state? Take their word for it while the publice is getting hosed? Don't think so.

Anonymous said...

The brick and mortar stores don't lose business because of sales taxes. They gouge. Their markups are unreasonable.

Anonymous said...

Brick and Mortar stores are a thing of the past. People that talk about "leveling the playing field" and "helping the brick and mortar shops" sound a lot like Obama in '08. Yeah, slap a sales tax on online transactions. Guess who is going to pay for it? I can tell you one thing, it won't be the business owner. People that talk about "use" tax for Mississippi online retailers are ignorant also, as sales taxes are only due on items within the jurisdiction in which they are consumed (ie. not in Mississippi). If you re re's have a problem with Mississippi online retailers bringing in non Mississippi Dollars and not having to pay sales tax because of the law, then you either A) haven't looked at our rankings in a while or B) Just want the state to remain poor. Know your facts and what you are saying before your outdated education makes you look....

KaptKangaroo said...

Tax the internet? Good luck.

Anyone that stands in the way of progressive thinking like the internet and no taxes is a fool.

Anonymous said...

Shadowfax,

1. You are already required to pay taxes on itmes purchased online. It's called a use tax. But most people don't self-report these purchases, and state tax commissions don't have the resources to enforce it. This legislation allows the state to collect this existing tax at the point of sale rather than requiring people to self-report the purchase (which they almost never do).

2. The person who claimed he'd shut down his website must not be familiar with the two proposed bills that have a chance of passing. Both would exempt "small sellers" with $500,000 or $1,000,000 in annual gross receipts.

3. Requiring bricks-and-mortar retailers to collect sales tax at the point of sale but not online retailers is unfair. I understand the "it's the law" response, but that's why we change laws, to fix some gap in the system. Online retailers don't have the showrooming problem either. An online retailer should get a sale because of a) lower retail price or b) the convenience, not because they get a 7% advantage because of the government.

4. Changing the current practice would be a logistical nightmare and will be the biggest stumbling block.

Bill Dees said...

@7:03 - Amen, Brother (or Sister). It's the scofflaws who illegally evade payment of the use tax that necessitates imposition of a sales tax on internet sales. Computers make collection and remittance of these taxes quite simple.

Anonymous said...

Let's admit what this really is - a way for governments to get more revenue so they can either (1) spend more, or (2) balance budgets - while not having to directly face voters about the 'tax increase'.

Talk about the 'brick and mortar' retailers is compelling, but it doesn't face the facts of today's economy. Just as the 'government should take care of us' folks that have protected other industries. Bet many of you that are crying for the local retailers are also the same people that scream about the corporate welfare of other protectionist bills passed by our federal government (ethanol is a great example.)

If sales taxes were a national tax, then it should be collected on national sales. But it is not - so far, sales taxes have been restricted to state taxes. Therefore, states should collect them on the sales made within their states.

As to the argument that local retailers have to pay for insurance, real estate taxes, etc. don't you realize that these on-line sellers have to pay similar taxes wherever they operate their businesses? Sure, they have an advantage if someone wants to purchase only for the savings in the sales taxes. But they lose the ability to talk to a person about their purchase. Some folks want the savings while other folks want to put their hands on the product first. To each their own.

In the meantime - keep the beast from finding this additional revenue to gorge themselves on. Let them quit wasting the revenue they currently have - and anyone that questions that ANY of our levels of government aren't wasting money - let's have that discussion!

Anonymous said...

It's the scofflaws who illegally evade payment of the use tax that necessitates imposition of a sales tax on internet sales.

How much use tax did you self-report Dees? How much did August 13, 2012 7:03 AM report for that matter?

Anonymous said...

The retail sales data released was gamed to make the Kenya look good but don't expect DonnerKay and her free labor (interns) to understand any of information in the link.



Recent Comments

Search Jackson Jambalaya

Subscribe to JJ's Youtube channel

Archives

Trollfest '09

Trollfest '07 was such a success that Jackson Jambalaya will once again host Trollfest '09. Catch this great event which will leave NE Jackson & Fondren in flames. Othor Cain and his band, The Black Power Structure headline the night while Sonjay Poontang returns for an encore performance. Former Frank Melton bodyguard Marcus Wright makes his premier appearance at Trollfest singing "I'm a Sweet Transvestite" from "The Rocky Horror Picture Show." Kamikaze will sing his new hit, “How I sold out to da Man.” Robbie Bell again performs: “Mamas, don't let your babies grow up to be Bells” and “Any friend of Ed Peters is a friend of mine”. After the show, Ms. Bell will autograph copies of her mug shot photos. In a salute to “Dancing with the Stars”, Ms. Bell and Hinds County District Attorney Robert Smith will dance the Wango Tango.

Wrestling returns, except this time it will be a Battle Royal with Othor Cain, Ben Allen, Kim Wade, Haley Fisackerly, Alan Lange, and “Big Cat” Donna Ladd all in the ring at the same time. The Battle Royal will be in a steel cage, no time limit, no referee, and the losers must leave town. Marshand Crisler will be the honorary referee (as it gives him a title without actually having to do anything).


Meet KIM Waaaaaade at the Entergy Tent. For five pesos, Kim will sell you a chance to win a deed to a crack house on Ridgeway Street stuffed in the Howard Industries pinata. Don't worry if the pinata is beaten to shreds, as Mr. Wade has Jose, Emmanuel, and Carlos, all illegal immigrants, available as replacements for the it. Upon leaving the Entergy tent, fig leaves will be available in case Entergy literally takes everything you have as part of its Trollfest ticket price adjustment charge.

Donna Ladd of The Jackson Free Press will give several classes on learning how to write. Smearing, writing without factchecking, and reporting only one side of a story will be covered. A donation to pay their taxes will be accepted and she will be signing copies of their former federal tax liens. Ms. Ladd will give a dramatic reading of her two award-winning essays (They received The Jackson Free Press "Best Of" awards.) "Why everything is always about me" and "Why I cover murders better than anyone else in Jackson".

In the spirit of helping those who are less fortunate, Trollfest '09 adopts a cause for which a portion of the proceeds and donations will be donated: Keeping Frank Melton in his home. The “Keep Frank Melton From Being Homeless” booth will sell chances for five dollars to pin the tail on the jackass. John Reeves has graciously volunteered to be the jackass for this honorable excursion into saving Frank's ass. What's an ass between two friends after all? If Mr. Reeves is unable to um, perform, Speaker Billy McCoy has also volunteered as when the word “jackass” was mentioned he immediately ran as fast as he could to sign up.


In order to help clean up the legal profession, Adam Kilgore of the Mississippi Bar will be giving away free, round-trip plane tickets to the North Pole where they keep their bar complaint forms (which are NOT available online). If you don't want to go to the North Pole, you can enjoy Brant Brantley's (of the Mississippi Commission on Judicial Performance) free guided tours of the quicksand field over by High Street where all complaints against judges disappear. If for some reason you are unable to control yourself, never fear; Judge Houston Patton will operate his jail where no lawyers are needed or allowed as you just sit there for minutes... hours.... months...years until he decides he is tired of you sitting in his jail. Do not think Judge Patton is a bad judge however as he plans to serve free Mad Dog 20/20 to all inmates.

Trollfest '09 is a pet-friendly event as well. Feel free to bring your dog with you and do not worry if your pet gets hungry, as employees of the Jackson Zoo will be on hand to provide some of their animals as food when it gets to be feeding time for your little loved one.

Relax at the Fox News Tent. Since there are only three blonde reporters in Jackson (being blonde is a requirement for working at Fox News), Megan and Kathryn from WAPT and Wendy from WLBT will be on loan to Fox. To gain admittance to the VIP section, bring either your Republican Party ID card or a Rebel Flag. Bringing both and a torn-up Obama yard sign will entitle you to free drinks served by Megan, Wendy, and Kathryn. Get your tickets now. Since this is an event for trolls, no ID is required. Just bring the hate. Bring the family, Trollfest '09 is for EVERYONE!!!

This is definitely a Beaver production.


Note: Security provided by INS.

Trollfest '07

Jackson Jambalaya is the home of Trollfest '07. Catch this great event which promises to leave NE Jackson & Fondren in flames. Sonjay Poontang and his band headline the night with a special steel cage, no time limit "loser must leave town" bout between Alan Lange and "Big Cat"Donna Ladd following afterwards. Kamikaze will perform his new song F*** Bush, he's still a _____. Did I mention there was no referee? Dr. Heddy Matthias and Lori Gregory will face off in the undercard dueling with dangling participles and other um, devices. Robbie Bell will perform Her two latest songs: My Best Friends are in the Media and Mama's, Don't Let Your Babies Grow up to be George Bell. Sid Salter of The Clarion-Ledger will host "Pin the Tail on the Trial Lawyer", sponsored by State Farm.

There will be a hugging booth where in exchange for your young son, Frank Melton will give you a loooong hug. Trollfest will have a dunking booth where Muhammed the terrorist will curse you to Allah as you try to hit a target that will drop him into a vat of pig grease. However, in the true spirit of Separate But Equal, Don Imus and someone from NE Jackson will also sit in the dunking booth for an equal amount of time. Tom Head will give a reading for two hours on why he can't figure out who the hell he is. Cliff Cargill will give lessons with his .80 caliber desert eagle, using Frank Melton photos as targets. Tackleberry will be on hand for an autograph session. KIM Waaaaaade will be passing out free titles and deeds to crackhouses formerly owned by The Wood Street Players.

If you get tired come relax at the Fox News Tent. To gain admittance to the VIP section, bring either your Republican Party ID card or a Rebel Flag. Bringing both will entitle you to free drinks.Get your tickets now. Since this is an event for trolls, no ID is required, just bring the hate. Bring the family, Trollfest '07 is for EVERYONE!!!

This is definitely a Beaver production.

Note: Security provided by INS
.