Senate Passes Bill Letting States Tax Online Sales

[Purveyor]

Source: Associated Press

WASHINGTON (AP) -- The Senate has passed a bill that could end tax-free shopping on the Internet for many shoppers.

The Senate voted 69 to 27 Monday to pass the bill, sending it to the House where it faces opposition from some lawmakers who regard it as a tax increase.

The bill would empower states to require businesses with more than $1 million in out-of-state sales to collect taxes for products they sell on the Internet, in catalogs and through radio and TV ads. Under the legislation, the sales taxes would be sent to the states where a shopper lives.

Read more: http://hosted.ap.org/dynamic/stories/U/US_INTERNET_SALES_TAX?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2013-05-06-19-01-25

[illegaloperation]

1. I like it!

This will help brick-and-motar stores

[graham4anything]

2. Good. Sellers on the internet were in effect getting a freebee they didn't deserve.

and no mom and pop on the net makes one million dollars

[Alan M]

12. It is gross sales not profits based

Last edited Mon May 6, 2013, 09:21 PM - Edit history (1)

It is based on gross sales not profits and that will sweep most mom and pops in including at lot of eBay sellers. It will even sweep in a lot of non profits/public interest type sites selling tee shirts and such for fundraisers.

[whopis01]

29. I know it soundsl like that on the surface - but in reality, that statement is wrong in so many ways

"no mom and pop on the net makes one million dollars"


The bill refers to one million dollars in sales, not profit. Unless your profit margins are very high, it is going to be difficult to run any business with more than a couple employees and not have more than a million dollars a year in revenue. If you are making 15% margins at the end of the day, you are doing very well in a lot of businesses. That would give you $150,000 left out of that million. That won't go a long ways if you have salaries to cover out of it.


Sellers on the internet were in effect getting a freebee they didn't deserve.

There are a couple ways to look at this one. That implies that it is the seller who is going to get hit with the additional costs. Let's say it was a 5% sales tax (just for sake of argument). That comes off the sale price, so that would reduce the margin of 15% down to 10%, cutting the income of the company down from $150k down to $100k.

But that isn't the way it happens - and I think rightfully so - it is going to be passed on to the buyers. So a more correct statement would be that "buyers on the internet were in effect getting a freebee they didn't deserve".

The reason that I say "rightfully so" is not because I believe that the buyer should be the one to pay taxes instead of the company - but rather because of where the taxes are going. Taxes collected by a state are going to be used to pay for services offered by that state. Thus if I sit here and buy something from a store in another state instead of one here in my state (whether it is over the internet or not does not matter), I end up not paying sales tax, but still benefiting from the services provided by my state of residence.

I guess you end up with the question of why are sales taxes charged at all? It could be answered by saying it is there to provide the state with a revenue stream to conduct its operations - and that would be fine. But I tend to think of taxes as having a logical path to them. For example, school taxes based on property taxes - if you own property (either that you live in, or that you rent to others to live in) you benefit by having a better educated population in that area, therefore the school taxes that you pay are benefiting you. So with sales tax, I would think that the logical path of the purpose of that tax is that if a business is operating in a location, they should should cover some of the tax cost of providing services to that location.

And that's what the current laws seem to indicate - a business that has some presence in a state has to pay sales tax to that state for any of its operations there. That's why Amazon has to charge sales tax in certain states already.

I guess it would make more sense to me if the business had to pay the sales tax to the states in which they reside. Although I can see where that would lead to problems and loopholes for business that operate in several states - arguing over where the sale actually takes places and such.

[high density]

3. Wheee! Gotta make sure we max out the taxes we're collecting on the little guy.

It appears there's ample bipartisan support in the Beltway for increasing taxes as long as the 1% doesn't feel it.

[Hugabear]

4. Little guy?

I don't think Amazon counts as the "little guy"

That's who this legislation is primarily aimed at, the large online retailers who collect absolutely no sales tax.

[Merlot]

6. It's the purchaser who pays the tax, not Amazon.

That's who the "little guy" is, the purchaser.

[earthside]

11. Sales taxes are R-E-G-R-E-S-S-I-V-E!

I just don't understand how liberals, progressives and Democrats can be in favor of taxes that percentage-wise sock it hardest to the poor, the struggling working/middle class and seniors on fixed incomes.

Frankly, I'd like to see sales taxes repealed everywhere except on luxury goods.

This is one time where I hope the anti-tax Repuglican House of Representatives vote down this tax increase.

[Merlot]

13. Hey, don't yell at me, I agree! :)

I don't mind small sales taxes, but they are getting very high. In order to repeal them, we'd need to have a new source of revenue...those corporations who don't pay taxes are a good place to start.

[humbled_opinion]

19. yes revenue from the 1 percent

but of course you must implement some type of controls to stop them from passing on those taxes as cost increases by raising the costs of their products because if they do then the only people that are actually paying their tax increases are the consumers...that is just a terrible cycle where the poor get poorer still...

[freshwest]

14. Regressive generally, except not doing it is unfair to locals and states.

States finance their operations with sales taxes unless they have a state income tax. Many don't. Those sales tax monies pay their share of social safety net costs.

As far as encouraging the GOP or thinking they will tax luxury items like yachts, GOP states have done the exact opposite and waived all luxury taxes as incentives to manufacturers.

Some states exempt essentials such as groceries from sales taxes, but GOP states have even gone there, too.

States have seen their citizens' monies go out of state to buy online goods that they recieve no revenue from to keep up the roads and other infrastructure that the online companies still get the advantage of.

I too, wish all sales taxes were repealed, but if we want to get fair taxes we have to vote the GOP out of office as they have been the most aggressive in their desire to punish the poor. The Democrats are trying to finance government for all.

This started with Reagan and it's not stopping. Most blue states are still half red at best.

[liberalmike27]

18. Then

We should lower local sales taxes, and find better ways to fund local, and State taxes, not raise the taxes on the Internet.

I agree with the earlier guy, people are all for it when Republicans want to keep the rich from paying higher taxes, at least way more people than should feel that way. But let them con you with an argument, and you're screaming, tax-me, tax-me.

It is absurd. We finally get a break, a way around paying sales taxes, and now you guys are all supporting them raising the taxes.

Democrats, and their sense of "fairness." We should be digging in and scraping against this tax, and trying to get them to lower regular brick and mortar sales taxes. Besides that, if the business actually has a location in the State, they already do collect taxes.

[freshwest]

21. We have no state income tax here. We have only sales, property taxes. No one wants to pay.

What is your concrete solution to funding state social services?

Not a libertarian, 'don't tax me bro' solution, but a real one?

Before you speak dismissively of what is trying to be done, state how it is to be done. You said other means. What means?

I have been involved with groups going to the legislature in budget fights. We tried to get Bill Gates, Sr.'s income tax plan passed. It was shut down by the voters. So were other attempts to raise revenue. We are about half red and blue.

People's healthcare, housing, food, schools, public services, transportation and other needs are dependent on the state, who funds them from a variety of taxes. We can't wait for perfect solutions.

Where do you think the money will come from in the real world?

[Art_from_Ark]

25. And some poor states, like Arkansas, have up to a 9% sales tax

It might be higher in other states/locations.

Exemption of interstate commerce from state sales taxes is nothing new. I made my first mail-order purchases back in 1968 or so and there was no sales tax because the companies were located in another state.

[humbled_opinion]

15. I definately agree with you...

Some people don't really understand the issue because you are so right this hurts us the worse because we are the ones shopping online looking for the best deal and bargains possible, I wish people would think before being over zealous to support a massive regressive tax.

[Fearless]

24. +100000!

[illegaloperation]

5. No

"The law would only apply to online sellers that have sales of at least $1 million in states where they don't have physical operations, like a store or a warehouse. "

[high density]

7. People buying the stuff are paying the tax, not the retailer. NM

[Beartracks]

10. That's my take on it. It's SALES tax, not income tax.

You, the buyer, will pay the tax. The big corporate Amazon folks will just collect it and send it to the state where you live.

================

[freshwest]

26. Some people think sending it to the state in which you live is unfair, though.

[Rubysox]

8. Paying taxes and shipping costs

Will make a lot of internet shopping undesirable, they still go after the little person (me the shopper) and not the wealthy. I NEED A TAX BREAK TOO!!!!

[Alan M]

9. I hope Republicans in the House stop it.

Close one of the only tax loopholes we have for middle class and lower income classes but keep the tax loopholes for large corporations diverting their made in the U.S. earnings to overseas tax havens? It makes no sense to me.
It is hard for me to accept that a Democratic president is the one screwing us over so bad. Add this to the chained CPI, the requirement to buy insurance from for profit corporations and it is just one more sacrifice the 98% are asked to make so the top 2% can have low tax rates.

[Skeeter Barnes]

16. I agree. Repubs, Dems whoever

They need to tax GE and Goldman Sachs. The working class doesn't deserve all this.

[humbled_opinion]

17. Stop it right there....

your making too much sense and heads may explode on this site.... LOL...

[Ter]

23. I stand with the farthest right-wing tea baggers on this

Ef those moderate commie Republicans who voted for this bill.

[LiberalElite]

20. Here's what USA Today has to say -

http://www.usatoday.com/story/money/business/2013/05/06/winners-losers-online-sales-tax/2139681/

Major retailers and local stores will be the big winners if the House follows the Senate and requires Internet retailers to collect sales taxes on online purchases.

National and regional chains are tired of being showrooms for shoppers who then search their smartphones for lower prices and buy online. The chains say they are at a 5% to 10% price disadvantage by having to charge sales tax.

[Ter]

22. Republicans who voted for this are gonna get badly tea bagged in their primaries

And this time, they will deserve to lose.

[CountAllVotes]

27. This will do online shoppers and stores no good at all

A very poor idea.

I know I'll be stopping.

Many places are now charging the tax w/shipping as well. And then if you have to return, could be as much as another $10.00 or more.

It will discourage people from shopping online which will be very BAD for the economy.

Those brick and mortar stores are all gone now and the ones left sell China clothes for lots of money.

So, yes, I think it is a poor idea at best.

[fasttense]

28. This will increase the cost of most of what you buy

on the internet. So, of course it is a TAX INCREASE to the majority of people. But the 1% wont mind because they really don't spend most of what they make.