This relates to an old proposal on taxes that no longer exists.

“Currently, 45 states have a sales tax and a complementary use tax. Under current law, retailers that sell to consumers in a state in which they have a physical presence – called nexus – are required to collect and remit sales taxes. Businesses that sell to consumers in states in which they do not have nexus, the U.S. Supreme Court has ruled, are not required to collect and remit use taxes. In this case, though, consumers still have the legal responsibility to calculate and pay the use tax directly to their own state. Under the streamlined approach, businesses would assume that responsibility.

The National Governors Association supports state efforts to pursue, through negotiations, the courts, and federal legislation, provisions that would require large out-of-state mail order firms to collect sales and use taxes from their customers. Such action is necessary to restore fairness to competition between local retail store purchases and out-of-state mail transactions and to provide a means for the states to collect taxes that are owed under existing law.”

-Proposal EC-12, National Governor’s Association

So, moving the taxes into the hands of businesses and out of the citizens control is a good thing for consumers, right? Wrong. Consumers will purchase tax free until forced. The state is looking to cash in. I admit that having a simplified tax code is a nice idea, but with this bill comes taxing of internet sales. This not only creates limits on interstate commerce, but it puts even more control into the hands of the corporations. Read: restriction of free trade.

It smacks of payroll tax deductions. By taking the tax out of the individual’s control, and giving no option to buy items without tax, we take the tax as a normal cost of doing business. If we are forced to pay the tax outright, we would be a lot more outraged. Americans would be up in arms if they had to write a check for a third of their salary at the end of the year, rather than being gently bled throughout the year.

As far as sales tax goes, you are being taxed on your income, and then being taxed on your purchases. You are being doubly taxed. You are supposed to be able to remit receipts at tax time to have the sales tax deducted from your income tax, but I don’t know of anyone who does this. Given the volume of purchases throughout the year, and the small nature of purchases, the government knows that most people will never do this. So, you get taxed twice.

Now, with the rise of the internet came tax free purchases from companies that do not have a physical presence (a nexus) in your state. This drives you to buy out of state from smaller companies, at the expense of your local business and the larger national corporations. You pay no tax, you deduct no tax, you’ve encouraged interstate trade, and the little guy gets a break. What about the little guy in your town, though? He’s getting rooked, right? Wrong. If I’m buying from Nebraska, then common sense dictates that some Nebraskans will be buying from my local vendor. What about the guy without a website? He’s getting screwed. No, not really. Most people look at the online price and then add in the shipping. If the shipping costs are higher than the tax cost for a similarly priced item, the consumer will buy locally. The consumer will also buy locally if there is a need for immediate gratification. With geeks, there usually is. No way will I wait a week for something unless I am getting a major break on price. Major breaks come from high priced items, where there is a ton of markup, anyway. Who loses, now? The little guy? Or the big guy?

If you said the big guy, you’d be right. The major corporations have a nexus in most states. For online sales, they have to charge the consumer sales tax. The little guy in Nebraska doesn’t. “Unfair! Unfair!” shout the big guys, even though their predatory pricing, volume discounts and tax breaks allow them to price their products far below the little guy. “Everyone should have to charge taxes, not just us. The playing field needs to be ‘leveled’ more towards us, Mr. Lobby. Call the governor”.

Oh, and according to estimates, states are losing billions in revenue needed for helicopter rides and haircuts.

If you disagree with EC-12, E-mail your governor. For MA folks it’s GOffice@state.ma.us Put your name, and your address (sometimes they discard the mail without these) and say you are in opposition to internet taxation as proposed in Policy EC-12. Streamlining State Sales Tax Systems Policy. It takes 15 seconds. Blog it. E-mail it. Get the word out.

Posted in Anger