California lawmaker pushes to tax online sales
latimes.com
latimes.com
In Australia there was a big push by a coalition of major retailers to force international internet sales to be taxed at the National Goods and Services Tax, which is 10% - or to exempt them from sales taxes for items under $1000. This backfired as everyone laughed at them, pointing out most people purchased on the internet for savings of 50% or more, and then asked how they were going to track every shipment into the country and collect tax on it. As a double insult, the major retailers actually paid for a campaign to advertise that people can make big savings shopping at their online competitors. You couldn't make this stuff up.
The only law that I think should change in California with relation to sales tax is that it should be illegal to advertise a price without sales tax included - in other words, all advertised prices should be inclusive of sales tax. It's a nightmare trying to work out how much something is when you have to know the tax laws yourself.
I think all such comments should be left outside of HN, and people should concentrate on following the guidelines of the site owner and provider. Add value where you can, be civil and constructive. Don't simply complain, but offer information where possible, and corrections where necessary.
In short, play nice.
There's simply no basis for such a tax, and to be blunt, California can blow me if they think I'm going to remit a penny for things purchased out of state. Amazon doesn't use state resources, there's no logical justification to pay state sales or "use" taxes, period.
[1] Article 1, Section 8
The short, minimally accurate version goes like this: The analysis under the due process clause and the commerce clause looks very similar—they both deal with fairness and the connection ("nexus") the taxpayer has to the state. There is older precedent, Bellas Hess, that required a physical presence for nexus under both the due process and commerce clause. In the 67 years after Bellas Hess, the due process doctrine changed a lot, so courts around the country began to wonder if Bellas Hess was still relevant. North Dakota jumped the gun, and tried to overrule Bellas Hess for the Supreme Court. The Court was not pleased. So Quill holds that the nexus requirement is different under the due process and commerce clause. Due process does not require physical presence, but the Bellas Hess physical presence test is still the law under the commerce clause.
There are some state court decisions applying Quill every which way.
Why does this all matter? The due process limit is unavoidable, by the courts, the federal government, and the states.
The commerce clause, on the other hand, is a limit on states, but it is within congress's powers to redraw. For example, Congress clarified the state's power to tax income in P.L. 86-272.
I think states are losing revenue that is rightly theirs. Amazon has basically built a business model around avoiding sales tax. I like buying cheap stuffs on Amazon as much as anyone, but I also like having state-funded universities, decent roads, and the rest of the goods that sales/use taxes fund. States shouldn't have to suffer because so much of their economy is moving online. As long as states mind the ruptured, tangled mess left of Quill, and follow any rules thrown down by congress, I think states can get theirs without any constitutional problems.
[0] The dormant commerce clause is like the shadow of Article 1, Section 8. Congress has the power to regulate interstate commerce, so even where Congress has yet to regulate (such as use tax land), states are still prohibited from certain actions. See http://en.wikipedia.org/wiki/Dormant_Commerce_Clause
[1] http://bulk.resource.org/courts.gov/c/US/504/504.US.298.91-1...
Note, the government doesn't tax all foreign income, only citizens and residents. There are even deductions available to citizens living abroad.
Of course modern legal thought would approach this issue by reasoning that interstate commerce can be reached by the states if it exerts a substantial economic effect on intrastate commerce.
States can and do collect tax on interstate purchases, they just do it by compelling the individual taxpayer to report and pay tax on those transactions. The problem is, without any way of auditing those transactions, there's basically no way to enforce this rule.
If you have numbers on actual spending, year over year, then I'd love to be proven wrong on this, but I've not seen cuts anywhere in the sense of spending decreasing every year for four years.
I agree, though, that something has to be done to make the information load tractable, such as a single tax rate for the whole state, or else an easily accessible online database.
This totally won't harm business, and is easy to implement.
[To non-residents of our state: California's legislature is pretty disfuntional, and frequently gridlocked over even simple issues. For example, our budget is often months late, tax returns came back as IOUs one year, and the huge chunk of funding appropriated to build prisons due to severe overcrowding that has had us in trouble with the federal government for years hasn't resulted in one new prison.
So don't worry too much over every idea that floats through our Assembly. We're a somewhat pathological case.]
If each increase in expenses were immediately covered by an increase in taxes, it would make the public much more aware of the costs of political promises.
Another option is to charge the tax based on where the company is based, or better yet tax based on the district that the warehouse or store that the item is shipped from is located. I.E. if you buy something from amazon.com and they ship it from their warehouse in Madison WI (not sure if there is one there, just an example) then your purchase is taxed as if you drove to Madison and bought it. This is still relatively complicated but I believe that it is the best solution, especially since it's closest to what would happen if you drove to a store. However I haven't put much thought into it so please let me know about any problems you see or better ideas.
It's not just variation by geography, but variation by product.
Different things are subject to sales tax in different jurisdictions.
http://www.amazon.com/gp/help/customer/display.html?nodeId=4...
I can't imagine it makes the online shoppers happy, though.
If all of the sales tax goes to where the customer buys, who pays those costs?