New York to Implement an 'Amazon Tax' 411
theodp writes "NY Governor David Paterson is expected to sign a bill requiring online retailers to collect sales taxes on purchases shipped to the state, even if they have no operations or employees working there. The so-called 'Amazon tax', which applies to Internet retailers who derive sales through affiliate programs, would end what for many New Yorkers had been tax-free shopping and generate an estimated $50M in revenue this fiscal year. Experts predict that other states could follow suit with similar provisions."
they can pass it all they want... (Score:5, Insightful)
Re:they can pass it all they want... (Score:5, Informative)
Re:they can pass it all they want... (Score:5, Informative)
But, almost every state that has a sales tax also has an excise tax for people who import goods from out of state. For example, in most states if you import a car into the state then you pay the sales tax on the car even if you bought it in a state with no sales tax.
New York can very constitutionally tax goods that are used in New York. And it can reach Amazon to enforce it because Amazon has "purposefully availed" itself of the New York market by advertising there and shipping orders there. See the case Asahi Metal.
Re:they can pass it all they want... (Score:5, Insightful)
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For a lot of small retailers, the answer is simple. Stop selling to New York.
Re:they can pass it all they want... (Score:5, Informative)
* note that a key fact in the Asahi case was that Asahi was the manufacturer of the product in question.
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Re:they can pass it all they want... (Score:5, Informative)
The terms "import" and "export" in the Constitution refer to imports and exports from other countries. See the treatise here [justia.com]: "Only articles imported from or exported to a foreign country, or âoea place over which the Constitution has not extended its commands with respect to imports and their taxation,â are comprehended by the terms âoeimportsâ and âoeexports."
Case: Hooven & Allison Co. v. Evatt, 324 U.S. 652, 673 (1945) [findlaw.com], holding that "These provisions were intended to confer on the national government the exclusive power to tax importations of goods into the United States."
Last I checked, Amazon shipped from within the US, so it doesn't apply at all.
Re:they can pass it all they want... (Score:4, Funny)
what the fuck are you doing here on
hehehe, nice work.
- FJM
Nonsense (Score:4, Insightful)
Re:Nonsense (Score:4, Interesting)
This may have been true (not having been there, it would be difficult to say one way or the other) but realistically irrelevant in many ways. At the time the Constitution was ratified, we didn't have the internet, shipping methods or many things that have altered the world we live in. The job of our courts is to interpret the Constitution's intent and apply it to modern-day situations, which it was obviously not equipped to deal with since it had no knowledge of the changes that would occur. So to say that this is unConstitutional simply because the founders of our country could never have conceived of the ease of internet shopping is a bit silly. And, in our country, the courts are correct until overturned. That is the way our legal system works. So if you feel the ruling is unConstitutional, your recourse would be to sue the state of New York and take it up to the Supreme Court who could then make a direct ruling on whether or not their bill is unConstitutional or not.
Until then, it is a Constitutional as any of the rest of our laws that are drafted to deal with realities that a document written in 1787 couldn't possibly have conceived of.
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Re:they can pass it all they want... (Score:5, Funny)
If we don't pass this law, then terrorists will be able to buy books and other goods tax-free. It is highly probable that terrorist cells operating in New York will need to order books and electronics from online vendors. Taxing these sales means that it will now cost terrorists 8.4% more each time they order terrorism-related materials from Amazon, dealing a serious blow to Al Qaeda's finances. Imagine how furious Bin Laden will be when he sees that his sleeper cells have gone over their budget.
Re:they can pass it all they want... (Score:5, Insightful)
Relevant sections of the constitution state:
"The Congress shall have Power To
"No Tax or Duty shall be laid on Articles exported from any State."
Pretty much sounds like states can't make me pay a tax when passing goods from one state to another, right? Yet states have somehow subverted this by declaring it a 'use' tax, not a 'sales' tax. They claim that they are not taxing the sale of the item, but rather, the use of the item in their state. This would almost be a plausible argument, except for two tiny problems:
1. The use tax rate is the exact same as the sales tax rate.
2. The use tax only applies to all items used in a state, but ONLY items brought in from another state.
If this were a REAL use tax, every item 'used' in the state would be subject to it. The use tax is so obviously nothing more than an interstate tax by a different name. And the courts, almighty protectors of our constitutional rights, have gone along with this bullshit argument.
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Re:they can pass it all they want... (Score:5, Informative)
There's a big historic difference between the two.
New York's tax is, for all practical purposes, an import tax.
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Re:they can pass it all they want... (Score:5, Interesting)
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Re:they can pass it all they want... (Score:4, Insightful)
Yes. If we place any value on the rule of law, amending the constitution is the proper response, not ignoring (or reinterpreting) it.
Do you think they ever conceived that people would be able to buy everything they needed, easily from another state?
This has always been feasible for people who live near the borders. Not so much for others.
It's already the law in Iowa (Score:2)
Re:It's already the law in Iowa (Score:5, Informative)
Why does NY want this new tax if they already have use tax? For two reasons:
Quite frankly, don't be surprised if new taxes like these appear all over the place. The plummeting economy and rapid devaluation of the dollar means that even states have to collect money where they can.
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Yup. And if Amazon had the smallest operation in the state of NY they would have to collect and pay NY taxes. But they don't so I'll be blown if I can see how the State of NY will be able to force a CA business to collect a NY tax, do all that bookkeeping and forward the money to NY. If they succeed it will destroy the last fig leaf of Federalism.
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The Constitution has nothing to do with this. The founding fathers never envisioned that a person in California (did not even exist yet) and another person in New York could so easily create a sales transaction between them, AND within such a reasonable period of time, deliver the products. I don't think that they thought, or understood, that it could become such an EFFECTIVE loophole to bypass taxes. I don't understand the logical arguments behind interstate
Oh please (Score:3, Interesting)
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I did not know the pilgrims ordered their canned cranberries from catalogs from outside of their "states".
You learn something new everyday I guess....
Seeing though, as we are talking about interstate commerce, can we keep the arguments to AFTER the signing of the Declaration of Independence and the ratification of the Constitution?
Or we could do it your way and talk about the Odin Express (TM) and Thor's Mighty Catalogue of Sharp and
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By the time the Constitution was drafted, there were already colonies with independent economies and even separate currencies. Trade between colonies was without a doubt a very common thing. Just because it didn't take place over thousands of miles doesn't make it any different, and just because it took days instead of minutes doesn't make it any different.
For the record, online sales are probably STILL going to be cheaper from many retailers if
Re:Oh please (Score:5, Informative)
Mail ordering has continued since then. In the late 1800's, many people ordered kit houses from the Sears catalog. Until the 1940's, if you didn't live in a city, you basically had to mail order many products.
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The Constitution is protecting the behavior right now, but it did n
TAXED TO DEATH (Score:2)
1) INCOME TAX (Both Personal and Corporate)
2) SALES TAX
3) $$$ GAS TAX $$$
4) Assorted 'Fees', 'Service Charges' and 'Fines'.
If they were doing their job right they'd only need to tax income only tax sales. Clearly the system is busted because its got its hand out to you on payday, grocery day, garbage/recycling day, even the day you die (Estate Taxes) etc... It is precisely because rich p
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That being said, I do wholeheartedly agree with you. "If they were doing their job right they'd only need to tax income only tax sales."
If you mean to say there should be only ONE tax in the the whole country and that is all we will ever pay, then AMEN BROTHER, AMEN.
If we obliterated the IRS, and sent a bill to every single state for it's portion of
US States are sovereign (Score:4, Informative)
It's really best to think of the US Constitution as a treaty between the states that allows for the creation of a strong federal government but with limited powers. Thus, the commerce clause argument that both left and right wingers always have.
The only reason that the USA wound up with a strong federal government was because the previous "federal" government, the Articles of Confederation, was an abject failure and almost doomed the USA to perpetual inter-state bickering. The US Constitution changed all that, and eventually, the EU will most likely evolved into something like it.
Re:TAXED TO DEATH (Score:5, Insightful)
No, it is precisely because the government spends way too much money. If our government spent less, there would be less need for taxes.
As a practical matter, it is always going to be difficult as a matter of practicality to tax the rich, or the corporations for their "fair share", as the more you raise taxes, the more profitable using offshore tax havens, etc. become.
Corporations, for example, must be able to deduct business expenses. If you don't, any business with razor-thin profit margins (a good thing, competition) would be bankrupt. A 5% flat tax would be wonderful for my software company with 95%+ margins, but "unfair" (and lethal) to someone making 1-5% doing manufacturing. They would have to raise their rates, making it difficult to compete with imports, requiring more taxation on imported goods to maintain a "level" playing field.
So, it's relatively easy for modern businesses to structure relationships with other companies (not in the US) by licensing technology (for a hefty fee), borrowing money, etc. Payments can go into trust funds, foundations, etc. outside US jurisdiction. To stop these kinds of games, you would need to ban:
- owning, managing, and receiving payments from foreign corporations
- banking by private citizens using banks located outside the United States
- ownership of US corporations by foreign corporations and vice-versa
- prior approval by the US government for all business transactions between US companies and foreign companies, in order to ensure that all contracts are "fair", and not allowing money to be funneled outside the US
- use of foreign-based prepaid debit cards/gift cards, and purchase of us-based cards by foreign nationals and corporations
Even if all this did happen, unscrupulous people would simply conspire with those outside the United States to act fronts. Long story short - the more you attempt to raise taxes on these people, the more profitable it is to be a "tax cheat", and the less revenue you actually bring in.
Besides, I don't know about you, but I'd rather not live in a world like that. On the other hand, reducing spending by the government would go a long way towards fixing budget problems. How about starting with the illegal/unconstitutional ones?
That being said, the simpler and easier the tax code is, the harder it is to dodge taxes. The problem isn't the rich, it's the insane inefficiency and incredible waste of government. A simple straightforward sales tax applied to imports and domestic sales (with a prebate to avoid screwing over the poor) would eliminate most loopholes, practically eliminate the need for the IRS (saving a decent amount of money), and save so much time and effort it's scary.
No "tax day", as your taxes are always paid. No itemization, no deductions, no worrying about whether this is an acceptable business expense.
Then change the constitution (Score:2)
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How so?
It's basically two things: a use tax, and a scheme to collect it.
The Supreme Court cases on State use taxes are clear: they are Constitutional.
So that just leaves their scheme to collect. The obvious problem here is the Quill case, but they seem to have found a somewhat plausible argument to distinguish from that, so I could see this go either way on that.
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I suppose that since others have committed murder before, It's okay if I go out and kill someone.
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How does this work? (Score:3, Interesting)
I'm not an American, so I don't know how the system works.
My guess is a sales tax is charged (we have GST - Goods and Services Tax - here in New Zealand) on goods sold within the state. Now I presume the purpose of this consumption tax is to pay for goods and services beneficial to the residents of that state.
Hence I guess the argument lies with whether the burden of payment for this tax (and reaping the benefits of such) comes down to those producing said goods and services, or consuming them.
Anyone care to clue us non-Americans in on how this is supposed to work?
Re:How does this work? (Score:5, Informative)
Re:How does this work? (Score:5, Informative)
Courts have determined that when you buy something through the mail, the sale takes place at the seller's location not the buyer's location. Hence, when a NY resident buys something from Amazon, the sale takes place where Amazon is based--in WA. The exception is if the seller has a "substantial business presence" in the buyer's state, in which case the sale is considered to have taken place there.
It's not even a question of the seller not being obliged to collect the tax. In the example, NY has no authority to tax sales completed in WA.
To get around this, many states have so-called use taxes that are typically equal to their sales tax rates. Use tax is collected when a resident brings a good bought out of state back into their state of residence. The rationale is that the use of the item is being taxed, not the sale of the item. In practice, states only routinely collect use taxes on cars, because it's typically part of the process of registering and titling a car in a new state.
Personally, I can't see how NY is going to be able to enforce this law. They can't compel businesses outside of their jurisdiction to collect and remit these taxes without some sort of federal law.Re: (Score:2)
Courts have determined that when you buy something through the mail, the sale takes place at the seller's location not the buyer's location.
Not quite that simple -- the seller doesn't have to pay taxes on out of state sales, which is different from brick and mortar stores. If you travel out of state to buy something from a brick and mortar, you pay that store's tax. If you travel via the web to an out of state web site, you don't pay taxes based on where the web site is, you simply don't pay any taxes.
Re:How does this work? (Score:4, Informative)
If you look at most state personal income tax forms you'll generally see an area for calculating tax on goods purchased from other states or over the internet. I know off the top of my head that Wisconsin, Illinois, Colorado, Ohio and Utah all have some type of line for calculating Use tax on their personal income tax forms.
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the consumer has to declare it when filing for state taxes. I guess they have noticed that not many people declare their purchases to pay tax on them...
NY State, Income Tax form IT-201 (the main tax form, like a federal 1040):
.0361% of income (.000361) or $200, whichever is smaller
Line 59: Sales or use tax Do not leave line 59 blank:
Now... you can either keep track of all of your out of state purchases and pay the exact amount or you can just go by the income range table:
up to $15,000: $5
$15,001-30k: $15
$30k-$50k: $21
$50k-$75k: $27
$75k-$100k: $40
$100k-$150k: $56
$150k-$200k: $72
$200k+:
If you don't fill in the line or enter a 0, you're basic
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In the US an interstate sale legally occurs in the seller's state (unless the seller has a "presence" in the buyer's state). US states are Constitutionally not allowed to create laws regulating interstate commerce, so for example if someone in New York buys something from a company in California, the state of New York can't force the California company to collect sales tax.
To answer your question - the burd
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If you have a brick and mortar store, it stays put and your sales taxes don't change from one sale to the next, only when th
It's actually a very deep issue (Score:2)
To belabor the point... (sorry!)
This also relates to the state vs. federal rights which declares that federal law overrides state law,
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Re:How does this work? (Score:4, Informative)
Typically Federal is funded by Income, Medicare, Social Security, Capital Gaines, Fed Fuel tax, import/export tarrif, drug seisures.
State is typically funded by a State Income taxes (not all states have income tax), State sales tax (3-9%), State fuel tax, fees (license & permit). State funds typcially tend to pay for local infrastructure (roads, water, power, bridges), education, health care, arts, wild life reserves, etc. It's hard to say that the only ones that pay for those things because there is so much overlap from the cities and federal government.
County/Parish/City is typically funded by property tax (usually just land/house, though things like cars, boats, aircraft can be taxed as property), permit fees/licenses (building, business, etc), services fees (water, sewer, fire dept)
While I personally love no sales tax on the internet, it does bleed the State budgets of money, which of course creates new opportunities for the Federal Gov't to come in and pay the bills. Congress is never shy about using that money to blackmail the States in to doing what they want, by threating to withhold the funds. Federal highway funds have been used for years to push varies issues such as polution regs and drinking age limits.
Most people forget that the US is actually 50 different countries bound together by the Constitution. Each State in turn has its own Constitution which all are similar, but there are some differences. There has been a constant fight between State & Federal government over who is in control of what, generally who is in charge of the money. The Federal Government has been slowly creeping into what traditionally is State territory, sales tax just being the latest. Basically the only thing the Feds are supposed to do is protect the borders, raise a national army, print money, and regulate commerce nationally & internationally, and treaties.
What's funny these days the Fed's are a little on the broke side so many States are looking to go there own way again. Internet sales tax, education reform, polution, fire arm regulation (the federal government has very little actual say in this, though you wouldn't think so by what you see in the news), and drinking age being the hot topics of the day.
So that should make it clear as mud for you. If you did understand it all then there are many very high paying jobs waiting for you in the US.
but I repeat myself (Score:5, Insightful)
Re:but I repeat myself (Score:5, Informative)
However, the out-of-state business is not obligated to automatically collect it - that's the interstate commerce part. You are supposed to self-declare it. How many people do you suppose keep detailed enough records to calculate this on their state income tax form? Or bother to declare any of it?
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Re:but I repeat myself (Score:4, Insightful)
No, seriously. The EU is the ironically more successful implementation of the ideals laid out by our founders. It's missing as firm a constitutional backing, which I imagine will be rectified eventually, but cooperation through the EU combined with shared defense forces through NATO has basically given the exact situation the founders wanted the US to become. A large number of varied states with different philosophies under a shared infrastructure for commerce and dealing with legal issues, with minimal overhead over those member states. And the EU "federal government" is tiny, indeed.
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This is a problem, what New York is doing. I don't think they have the legal authority to do this. I'd guess this could potentially reach SCOTUS.
From what I understand, a commission is like paying someone for hawking their product. But the key difference is this. Unlike a sales person earning a commission for selling cars at a car lot, these people who are earning a commission aren't located at/employed by Amazon.com.
I think affiliates are more like people who would be paid t
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I'm afraid rational reactions don't apply to the internet.
Paterson can't see a problem with that. (Score:2, Funny)
As much as I hate taxes . . . (Score:5, Insightful)
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Let NY do what Mass does, Says if your income is $ X, then pay $ Y as an assumed sales tax (usually much less than what I've purchased out of state).
It gives them their money and I still save money over all.
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Re:As much as I hate taxes . . . (Score:5, Interesting)
I have a problem with governments being able to reach beyond their jurisdiction to demand out of state / out of city companies collect their taxes for them.
I sell things online, and I don't want to be liable for collecting taxes for 30 states and maybe hundreds of cities. I've heard that the big internet retailers are fine with these taxes, because it's a burden they can easily absorb while hurting smaller internet retailers.
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Re:As much as I hate taxes . . . (Score:5, Informative)
There is little in the law that is "fair" when multiple separate legal entities all have sovereignty within their respective borders. Particular states are always able to compete for the dollars of other people by creating more favorable business environments.
I'm usually not in favor of defending federal control of something, but in the case of interstate commerce it makes a lot of sense to prevent individual states from denying access to their citizens of all the benefits of living in a confederation. If people go outside New York to shop, maybe it shows there's something wrong with the priorities of the New York legislature, rather than being "unfair" to local businesses.
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In fact, in a place like New York, you might bring in more revenue with a lower sales tax, more people staying local for big-ticket purchases instead of hopping over t
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And then the dickheads who liked the tax will go crying to government goons to "stop the evil outsourcing"... and the government will yet tax them even MORE to be able to hire more worthless, unproductive bureaucrats to shuffle papers and "prevent the evil outsourcing".
And who's to blame? Well obviously t
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It WILL be considerably less than that.
Because once you tax, people start buying lesser.
I don't know about other states (Score:3, Interesting)
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Comment removed (Score:5, Interesting)
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They could call it Borders.
Sounds like an extension of existing policies (Score:3, Interesting)
Re:Sounds like an extension of existing policies (Score:4, Interesting)
INIAL, and I may be woefully incorrect about all of this, but, IIRC, the supreme court has ruled in the past that an interstate commerce tax is unconstitutional if it fails to violate either of the following:
1) must be compensating for an identifiable a tax burden. Decreased revenues due to 'lost sales' in other states do not count - clearly the NY interstate book tax would fail here.
2) The inter-and-intrastate taxes must be approximately equal. (You can't jack up the taxes for interstate commerce beyond what you demand of your own intrastate commerce. NY is probably okay here.)
The Use Taxes on vehicles
The Power to Tax (Score:3, Interesting)
Rhode Island gets around it by having what they call a Use Tax. Ask me if I've ever paid it. I haven't. I don't think anyone ever has.
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Let your government know what you want (Score:2, Insightful)
Did you ask to be taxed more? No? Well, your politicians seem to be confused. Please set them straight.
Remember, they are supposed to represent you. It's not as if the government should do whatever it wants to do and you have no say in the situation. It's only that way when you keep quiet.
Lenovo anyone? (Score:2)
I live in Arizona and any time I've ordered anything online (including Amazon), I've never been charged tax.
Even with the tax, they were cheaper than everything else, but calling something "tax" when they are obviously not paying the taxman seems crappy to me.
I wonder if anyone else has seen Lenovo do this in their state?
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Arizona has a transaction privilege tax (TPT) that differs from a "true" sales tax in that the tax is levied on the gross receipts of the vendor and is not a liability of the consumer. (As explained in Arizona Administrative Code rule R15-5-2202, vendors are permitted to pass the amount of the tax on to the consumer, but remain the liable parties for the tax to the state.)
And Lenovo does have an office in Phoenix, so...
washington state residents have always paid (Score:2)
Since you already have to pay for goods shipped in from other states at traditional storefronts, it only makes sense to allow Amazon to be taxed.
That said, I'm generally opposed to sales t
More info, thoughts of an internet retailer (me) (Score:3)
As it should. I, as an internet merchant, ship my products "FOB here", which means that from the moment the article is delivered to the carrier, it belongs to the buyer. The transaction legally happened here, not in New York. If New York can get away with an import tax, fine... not my problem.
We've had this for a while... (Score:2)
Now, does anyone actually volunteer to pay those taxes? That's a different story...
For all of you IANAL types... (Score:2)
How to simplify the sales tax collection process (Score:2)
Collecting sales tax is horribly complicated. It's not just a simple percentage for each state. There have been some attempts to simplify it, but they have so far failed (to come up with something basically simple). Even if they did simplify things enough to have a known percentage for each state or zip code of delivery, what about electronic delivery (stuff you pay for then get to download)? I once suggested states be required to standardize tax rates based on zip code (or just one percentage for the w
Free Lunch is Over? (Score:4, Insightful)
I don't believe it's right to tax us this way however, nor do I think it's truly enforceable at this time since tax rates in various states are so complicated and if this actually passes it will be a big precedent for other states and local governments the follow suit, further complicating the situation.
It will be interesting to watch this play out. Sadly, the American people are gonna have to start paying taxes from somewhere. We have a huge debt and a lot of immediate things the government simply needs to take care of.
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Do you honestly believe, even for a moment, that one cent of this additional revenue will go towards debt?
No, it will go to fund new programs, which will then incur even more debt, of course. It will pad and line the pockets of industries that do not exist yet, further complicating the problem.
States are facing dropping tax revenue (Score:2, Insightful)
Mailbox (Score:2)
If you live close enough to make it economical, get a mailbox out of state.
Didn't we do this already? (Score:2)
I've lived in both Virginia and Massachusetts - certainly opposite states with respect to economic policy. At the dawn of the Internet, buying things online was a great way to avoid sales tax. But over the years, more and more companies had to collect sales tax from me; I can't remember the last time I bought something online and paid no tax.
I thought I remembered this exact controversy happening, nationwide, a few years back; online retailers were go
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Such parcel delivery services sound very promising indeed.
Care to join me in such a venture, jcr?
Re:If I was a Online retailer (Score:4, Interesting)
I'm looking forward to the unimaginable degree of whining we're going to hear from this industry once the San Andreas Fault has its next big slip.
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They couldn't even do that. Congress regulates interstate commerce, not the individual states. Since you have no presence in the state, and they can't apply state laws to you out of the state, there's really nothing they can do but ask politely for you to voluntarily pay these "taxes."