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The Almighty Buck Businesses Government Republicans The Internet United States

Internet Sales Tax Bill Dead In Congress 257

jfruh writes: Last year, a bipartisan coalition helped get the Main Street Fairness Act approved by the U.S. Senate. The bill would have allowed state and local governments to collect sales taxes on Internet sales by companies in different jurisdictions. But House Speaker John Boehner, a longtime opponent of Internet taxes, won't bring the matter to a vote in the House before the end of the year, which should kill it for the immediate future.
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Internet Sales Tax Bill Dead In Congress

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  • I already have to pay in-state sales taxes on purchased from Newegg & Amazon, so the big ones are covered. Oh, and if you are just purchasing from the online arm of a brick & mortar store, they've been taking sales tax for a long long time anyway.

    • Only if you live in one of the states in which they have a physical presence. This refers to someone like me, who pays no sales tax to Newegg because they don't have a presence in my state.

      • Re: (Score:3, Informative)

        Technically, you still have to pay state sales tax on purchases made over the Internet. You just exploit the fact that the states can't force Internet retailers to collect those taxes and send them to the state as a way to skip out on paying your taxes.
        • Re:Meh (Score:5, Informative)

          by russotto ( 537200 ) on Wednesday November 12, 2014 @02:12PM (#48371429) Journal

          Technically, you still have to pay state sales tax on purchases made over the Internet. You just exploit the fact that the states can't force Internet retailers to collect those taxes and send them to the state as a way to skip out on paying your taxes.

          There's no state sales tax on out of state purchases; that would be an unconstitutional tax on interstate transactions. There is a use tax on out of state purchases that you didn't pay sales tax on. I consider this "use tax" to be a transparently obvious evasion of the restriction on states taxing interstate commerce, and therefore invalid. Then I exploit the fact that the states can't force Internet retailers to collect those taxes to avoid getting into a dispute with the state over whether they are actually invalid.

          • Re:Meh (Score:4, Informative)

            by Jane Q. Public ( 1010737 ) on Wednesday November 12, 2014 @02:35PM (#48371711)
            I don't think this gets emphasized enough:

            There's no state sales tax on out of state purchases; that would be an unconstitutional tax on interstate transactions.

            Actually, it isn't even that... it would be an unconstitutional attempt by one state to tax a transaction that takes place in another state. Not an "interstate" transaction at all. And allowing such taxation would open up a can of worms the size of China.

            If one state can tax a transaction in other state -- for ANY reason -- what's next? Wisconsin taxing your grocery purchases in Los Angeles? It's easy to see how absurd that concept is.

            BUT... there is also this fact, which is uncomfortable to lawmakers: the ONLY way to effectively have online transactions is to consider the purchase made in the state of the seller. This is very much old hat, as it was hashed out in the courts to a VERY definite conclusion more than 150 years ago, when mail order became common. That's why the company having a "physical presence" in your state makes a difference... only then can the sale be considered to be in your state.

            And... internet sales are mail order. The ONLY differences are how the payments are made, and how you view the catalog. You're still getting your product by mail.

            When you add all these things up, the inescapable conclusion is that an internet sales tax is unconstitutional, since it is de facto an absurd tax on transactions made in other states. (Except, of course, when the company has a presence in your own state.)

            • by Sigmon ( 323109 )
              What you say is correct ONLY as it pertains to forcing the RETAILER to collect/pay the tax. The sales point must have what is legally referred to as 'nexus'. As I mentioned in another comment above, we always refer to it as a 'sales tax' but you'll note if you look into the legal-ease of the state codes it's actually a 'sales and use tax'. And, oh yes they can enforce a tax on purchases made in another state. Want proof? Try this: If you live in a state with a sales tax... go to a state without one an
            • When you add all these things up, the inescapable conclusion is that an internet sales tax is unconstitutional, since it is de facto an absurd tax on transactions made in other states. (Except, of course, when the company has a presence in your own state.)

              A small nitpick - a state enacted Internet sales tax is unconstitutional.

              However, it is within the federal government's constitutional scope of authority to regulate interstate transactions, such as collecting an internet sales tax.

          • The California tax return has a box for Internet sales taxes. I usually skip this box as I don't keep receipts of Internet purchase I've made during the course of a year. Most of those I pay sales tax on anyway for Amazon and Newegg.
        • You mean, exploit the fact that the state decided not to enforce collection of those taxes. We have examples to follow regarding not choosing to enforce the laws....
        • Re: (Score:2, Interesting)

          by jittles ( 1613415 )

          Technically, you still have to pay state sales tax on purchases made over the Internet. You just exploit the fact that the states can't force Internet retailers to collect those taxes and send them to the state as a way to skip out on paying your taxes.

          You are completely incorrect. The interstate commerce clause specifically forbids a state from charging sales tax on interstate commerce. States that want to tax interstate commerce charge a "use tax [ca.gov]". Whether such a tax is legal, I don't know. The argument in favor of a use tax is that it puts the tax burden on the buyer instead of the seller, and therefore does not impede interstate commerce. But you are definitely not charged sales tax on interstate purchases entirely because the federal government

          • Use Taxes (Score:2, Informative)

            by ZipK ( 1051658 )

            The interstate commerce clause specifically forbids a state from charging sales tax on interstate commerce. States that want to tax interstate commerce charge a "use tax [ca.gov]". Whether such a tax is legal, I don't know.

            The commerce clause (Article 1, Section 8 of the U.S. Constitution) restricts interstate tariffs to those that do not create an "undue burden." Court decisions (e.g., Quill v. North Dakota [wikipedia.org]) have established that placing a collection burden on an out-of-state business that has no physical in-state presence creates such an undue burden; hence the arguments around whether or not Amazon (and others) can be compelled to collect and remit tax for states in which it claims to have no nexus. Requiring customers to

      • Amazon collects tax in 20 states, covering roughly 190 million residents (as of July 2013 pop. estimates), or a little over 60% of US residents. That's a pretty significant amount.

    • thanks to sales tax I can get the same thing (most of the time) cheaper from elsewhere (like NY) (although I've also had serious issues with both Amazon and Newegg's business practices/customer service - personally).

  • ...dunno how long the streak will last, but at least they got this one concept correct.
    • by Qzukk ( 229616 ) on Wednesday November 12, 2014 @02:01PM (#48371303) Journal

      We'll just have to see. The Republicans are in charge of congress now, so we'll see if they're actually going to shrink the size of government or spend the next two years repeatedly trying to repeal obamacare another 40 times.

      I doubt they're going to try and end the war on [insert everything here] or roll back IRS harassment powers or end civil forfeiture or rein in the NSA or anything else that I'd really like the government to stop doing.

      • well, repealing obamacare would in fact be a reduction in government. so thats not really a good argument
      • by CaptainLard ( 1902452 ) on Wednesday November 12, 2014 @02:33PM (#48371685)

        roll back IRS harassment powers

        If they were smart they would increase IRS funding since it results in something like a 10:1 return rate. You know where the extra money would come from? Tax cheats! People who don't pay their taxes aren't your heros, they are your parasites. While I'm being wistful about things that will never happen, increased funding might even give us more streamlined processes and overcome the turbotax lobby...which for years has been lobbying against simpler taxes that you can do yourself on the IRS website, reducing errors and thus the likelihood the IRS would want to talk to you.

        • Let's completely ignore the fact that the Obama administration unabashedly used the IRS to persecute its political enemies, the Tea Party.

          Hey, let's play a game! Are you totally OK with the fact that this happened? You win a prize! It's called, "more criminal than Nixon". Seriously, you have to really try to achieve this goal. Even Richard Nixon wasn't as criminal as Nixon. All he did was burglarize Democratic Party headquarters. What Obama's IRS did was much, much worse.

          At least Nixon had the s

        • by jafiwam ( 310805 )

          roll back IRS harassment powers

          If they were smart they would increase IRS funding since it results in something like a 10:1 return rate. You know where the extra money would come from? Tax cheats! People who don't pay their taxes aren't your heros, they are your parasites. While I'm being wistful about things that will never happen, increased funding might even give us more streamlined processes and overcome the turbotax lobby...which for years has been lobbying against simpler taxes that you can do yourself on the IRS website, reducing errors and thus the likelihood the IRS would want to talk to you.

          No. The extra money would come from harassing politically "undesirable" non-profits out of existence.

          How is LESS complication going to COST MORE? By your standards, someone putting more money into developing a better snow blower would end up with a shovel. Your ideas of how the world works are ass backwards.

        • I always wonder how much of that income from tax enforcement though is actual taxes that were owed and crazy penalties. My Mother in law made some foolish tax mistakes when she got her divorce settlement, most of it was 401k money. It's one of those cases where she made an honest mistake and the penalties are pretty punitive. I'm all for collecting owed taxes and even assessing punitive fines when necessary but as it stands now intent doesn't seem to matter at all.

      • if they're actually going to shrink the size of government or spend the next two years repeatedly trying to repeal obamacare another 40 times.

        That would shrink the size of government so I'm all for it. Forcing me to hand over money to a private company is way beyond anything considered Constitutional.
      • We'll just have to see. The Republicans are in charge of congress now, so we'll see if they're actually going to shrink the size of government or spend the next two years repeatedly trying to repeal obamacare another 40 times.

        I doubt they're going to try and end the war on [insert everything here] or roll back IRS harassment powers or end civil forfeiture or rein in the NSA or anything else that I'd really like the government to stop doing.

        John McCain has already said that while he thinks it's a waste of time to try to repeal Obamacare that so many new members of Congress promised to do it that they have to pass such a bill, wait for the President to veto it, and then get on with the serious business at hand so the new members can claim at re-election time that they tried to repeal it, but gosh darn it, just didn't have the votes to override the veto. He said he'd rather the time be spent trying to accomplish something like removing the medi

        • So according to this website [realclearmarkets.com], the device tax will bring in $29 Billion over the next 10 years.

          So are they going to pass another tax to offset that missing revenue? Probably not. Any calls for repealing any revenue generating aspect of the ACA must be offset with revenue from somewhere else. As crappy as the ACA may or may not be, it is one of the few programs passed by Congress that have built in funding mechanisms.

          That is why the ACA will work to some degree. But its still benefiting a particular

          • by geekoid ( 135745 )

            10% off the top is good, and it's why the insurance increase has been less then projected prior to ACA.

            I do agree, the insurance companies need to be eliminated, or the government needs to have an insurance program.
            I said tha when aut insurance became mandatory: The government needs to offer a program for the basic mandatory requirements.

      • by Holi ( 250190 )

        The IRS actually did not do anything wrong until they were shamed into letting the groups keep their 501(c)(3) status.

      • "I doubt they're going to try and end the war on [insert everything here] or roll back IRS harassment powers or end civil forfeiture or rein in the NSA or anything else that I'd really like the government to stop doing."

        -Actually, thats exactly what they should do, expecting it all to be veto'd by the president. Then they can say say they are all for progress, but that we need a republican president to do it.

        -Then when there is a republican president, and the republicans will have the opportunity to do what

      • by geekoid ( 135745 )

        As soon as they got majority, Mitch was asked about repealing the Affordable Care Act. He is already back peddling from it.
        Saying it's too difficult. Underscoring what we all knew: They just used it as an excuse to obstruct the government and then blame Obama for
        getting nothing done'.

        " roll back IRS harassment powers "
        what harassment powers? DO you mean the fact the when they get a large influx of a type of non profit request the scrutinize it more becasue there is an increase of people applying when they s

    • by ShanghaiBill ( 739463 ) on Wednesday November 12, 2014 @02:13PM (#48371443)

      but at least they got this one concept correct.

      No, they got this one wrong. Taxes should be sensible, fair, and enforceable. The current system of "use taxes" is not sensible, not fair, and not enforced at all (~98% cheat). Almost everyone evades the tax, and many don't even know they are cheating. That penalizes the small number of people that are both informed and honest. It also unfairly penalizes local merchants over internet merchants that thrive (partly) because of the tax evasion by their customers.

      This was a sensible reform, and it is a shame to see it blocked.

      • The current system of "use taxes" is not fair because it's unconstitutional. The answer isn't to allow the unconstitutional tax, the answer is to not allow the "use" tax.
        • by ZipK ( 1051658 )

          The current system of "use taxes" is not fair because it's unconstitutional. The answer isn't to allow the unconstitutional tax, the answer is to not allow the "use" tax.

          Which part of the constitution does a state use tax violate? The export clause has long been consigned to governing only international commerce. The commerce clause is the subject of court precedents that prevent its application in situations that impose an "undue burden." But the common case of "undue burden" is an out-of-state retailer with no in-state nexus; individual customers being held responsible for tracking, reporting and paying their own use tax hasn't been held to be an "undue burden."

      • It also unfairly penalizes local merchants over internet merchants that thrive (partly) because of the tax evasion by their customers.

        States with sales taxes are the ones "penalizing" local merchants with their sales taxes. Not all states are penalizing their local merchants, so put the blame where it belongs.

        It is not tax evasion by the consumer to buy cheaper products - by that measure, it's tax evasion to buy US-made products over foreign ones that are subject to tariffs.

        Why are you evading tariffs by buying US products? For that matter, have you maximized your income? Because if you're not, you've evaded income taxes by the s

      • by mpercy ( 1085347 )

        The issue boils down to: Can a state force a retailer based in another state, with no point-of-presence in the taxing state, to act as a proxy tax collector?

        Imagine for one moment a shopping mall full of retailers. These stores sit just across the border from you in another state, but since your house is only a few minutes drive, easily accessible. Further, the neighboring state has a *much* lower sales tax than yours--let's even say they have zero sales tax (as a few states do).

        Your state is frustrated tha

      • by mpercy ( 1085347 )

        Also, on creating a "level playing field"...

        What this law would have done is to make online retailers subject to *different* rules than a physical store.

        It would make an online retailer demand information about the buyer so that the online retailer can act as a remote proxy tax collector based on where the items are shipped, not where the seller is physically located.

        A B&M one in another state is not going to be forced to do the same thing when visitors from some other state make a purchase (which they

    • by dywolf ( 2673597 )

      No they didnt.
      Its a loophole that allows the avoidance of a tax people would otherwise have to pay.

      This avoidance of taxes also hurts your local businesses and is another reason they have trouble competing with big online retailers.
      Closing the loophole across the board nationwide helps level that playing field again and helps more money in the local economy and keep your local civic needs funded.

      Assuming you like roads and schools and such.

      • by Vermifax ( 3687 )

        Its not a loophole. Its explicitly prohibited.

        The loophole is that states try to end run the prohibition by charging you a use tax.

        They're not trying to close a loophole, they are trying to overturn existing law.

        • by ZipK ( 1051658 )

          Its not a loophole. Its explicitly prohibited.

          Which law(s) prohibit use taxes? Not the export or commerce clauses of the Constitution, at least not as they have been interpreted so far in court precedents.

    • If they were serious about protecting the constitution they'd outlaw the bogus concept of use taxes.

      • by geekoid ( 135745 )

        I like how you told everyone that you don't know the constitution or what a use tax is in one easy sentence.

    • I came here to make this joke but found it already made. Thanks!
    • by jfengel ( 409917 )

      This is very much a stopped-clock kind of "right". It's Congress doing nothing, by default, as per usual. Even if the bill were a good idea, there's no chance of it getting serious consideration. It's always in somebody's best interest to make sure something doesn't happen, and it's just not hard to find people to support you on that.

      The only way to pass legislation now requires half the House PLUS 60% of the Senate PLUS the President, and then it has to find 56% of the Supreme Court to keep it from being o

    • by geekoid ( 135745 )

      Except it isn't right.

  • 1. It helps small/startup internet merchants. (big ones like Amazon got dragged into paying money to individual states)

    2. It helps poor(er) people. Rich obviously do not benefit much from the few meager dollars saved buying stuff on ebay, and the very poor don't do online shopping. So the main beneficiary are lower middle-class people.

    • by Holi ( 250190 )

      And the main losers are the states and their residents since they lose out a a large part of their revenue and thus have to make it up in other ways. So the trade off is pay the sales and use tax or pay higher property and income taxes. It's not like the roads get fixed for free.

  • Comment removed based on user account deletion
    • by Jhon ( 241832 )

      "Real federalism was pretty much dead before the War of 1812 anyway so why maintain the facade of empowered states"

      First, it's not really "dead", but very much weakened. Second, and most important, the reason WHY we should maintain "empowered" states is for the various reasons it was set up in the first place. We are not a homogenous nation. We are spread over a huge area, of various races, faiths, cultures and economic interests and yet we haven't torn ourselves apart (came close in the 1860s).

      The str

      • Comment removed based on user account deletion
        • The US is nowhere near as heterogenous as you think.

          I've lived in three regions so far -- east coast, west coast, and midwest. All three are very different places. Actually, I spent a few months in the south, too, and THAT is a significantly different place from the other three.

          Americans broadly expect things to work the same everywhere,

          Half of all Americans are below average intelligence. Many Americans expected radio signals from a device they're holding in their hand that are transmitted in the clear to a receiver miles away would be secret and private. Many Americans expected those same transmissions to become

          • by geekoid ( 135745 )

            "Half of all Americans are below average intelligence. "
            thanks for letting us know you don't know what average means.

            if I have 9 people with an IQ of 120 and one person with an IQ of 80, are you saying half of them are below the average of those numbers?

        • by Jhon ( 241832 )

          "The US is nowhere near as heterogenous as you think. "

          And I think you underestimate how important those differences are or how unevenly they are distributed. I've traveled the US numerous times. I've been to every state in the union (except alaska) numerous times and have lived long stretches (3 or more years) in 5 of them. Trust me, while we have more in common than different, those differences can become QUITE important. Particularly when we paint differences of political and economic philosophy in

      • by devman ( 1163205 )

        The gay marraige issue isn't a States rights issue no matter how much supporters wish it was. The federal government doesn't issue or dissolve marriage licenses it is completely the domain of the States. All the Federal courts have said is that if the states wish to have a legal institution of marriage that it must be compatible with the 14th amendment, and States which do not allow gays to marry do not meet that requirement.

        The federal courts are not infringing on states rights, they are protecting indivi

        • by Jhon ( 241832 )

          "All the Federal courts have said is that if the states wish to have a legal institution of marriage that it must be compatible with the 14th amendment, and States which do not allow gays to marry do not meet that requirement."

          That statement is profoundly inaccurate. There have been federal courts that have decided on both sides and SCOTUS has yet to make a final decision. Hell, Prop 8 (California) was tossed out because the SCOTUS found the petitioners had "no standing". That was honestly a poor decisio

      • by geekoid ( 135745 )

        ". States should be allowed to ban gay marriage"
        Ban on gay marriage is unconstitutional. It's forcing one person religious beliefs on another.
        Banning gay marriage is no different then banning a religion.

        We aren't that heterogeneous any more.
        Drive around the country. Same strip malls, same gas stations, people watch the same set of entertainment.
        Hell, do to TV, regional accents aren't as strong as they used to be.

        Also, thats not why it was set up that way.

    • How about we go the other direction and get rid of federal level income taxation. Let states charge income tax, potentially actually make living in one state notably different than living in another, you know, so you can choose. Let the feds ask the states for funds instead of the other way around.
  • Bill Naming (Score:3, Interesting)

    by ilparatzo ( 3627897 ) on Wednesday November 12, 2014 @02:17PM (#48371501)
    I love how government goes about naming bills to make them sound a certain way so that voting against them appears evil. I suppose the makers of the bill would argue that they are coming up with a short name that defines the "essence" of the bill. But when you get into the details, it just makes them seem like they are trying to hide something from you ... aka: being politicians.

    "Main Street Fairness Act" - It's simply a bill to apply fairness. You don't like fairness?
    "Affordable Care Act" - It's just making care affordable. You don't want care to be affordable?

    You could have a lot of fun with this actually. Increased NSA surveillance? "Terrorist Identification Act". Or even better "Protecting our Children from Terror Act". Free cars for all politicians? "Political Accessibility Act".
    • by dywolf ( 2673597 )

      It was simply a bill to enable fairness for local stores.
      And the other was a bill to expand affordable insurance to more people, hence the subsidies.

      No, the example you want is the Patriot Act.

  • ...between online and brick & mortar stores, all a state has to do is abolish its own sales tax. Regressive taxes ought to be illegal, anyway.

    • by judoguy ( 534886 )
      You are correct sir! I'm astonished by the number of people that look at ANY situation and that stock response is "Raise taxes somewhere", never lower them somewhere for equity.

      I'm old enough to remember when we didn't sales tax in my home town. I was just a kid but I was flabbergasted when the stores started adding extra money to the cost of things over and above the tagged price. Now the bastards have gone berserk. There must be 4 or 5 separate tax districts in the town I live in now. I had to write tax

  • So, a completely unelected position has total control over which bills get put up for a vote??

  • If a state wants to actually help their local retail businesses, then they should eliminate sales tax.

I THINK THEY SHOULD CONTINUE the policy of not giving a Nobel Prize for paneling. -- Jack Handley, The New Mexican, 1988.

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