Yeah, right
This will go over about as well as a request to ask someone to hit themselves in the head repeatedly with a hammer:
The Tennessee Department of Revenue is encouraging online retailers to begin collecting sales tax for the state two years ahead of the deadline for them to do so.
The state delayed implementation of the streamlined sales tax initiative until 2007 after retailers complained about increased paperwork. Nevertheless, a multistate agreement to move to the system took effect in October, and retailers are being reminded of that.
Encouraging? Unless you’re mandating it, it’s not going to happen. No one wants to pay the tax (well, I’m sure some folks do but smart people don’t). No one wants to do the additional bookkeeping for the tax. And wasn’t there some sort of congressional deal that put a moratorium on taxing internet sales? More:
The Streamlined Sales Tax Project is an agreement by 18 states to simplify sales tax laws by establishing a uniform system to administer and collect the taxes on nearly $3.5 trillion in retail transactions annually. The idea is to collect sales taxes based on where the buyer lives, rather than on the place of sale.
Always with the hands in the pockets. Feh. And, since I’m known to pick a nit or two, this is a stupid statement that I see all the time:
University of Tennessee economist William Fox issued a recent study estimating that state and local governments will lose $18 billion in sales tax revenues this year because of online purchases.
Stupid economists. If expense is greater than revenue, that is a loss. Not collecting money that you’re not entitled to is not a loss. It’s called not collecting money you’re not entitled to.
Apparently, major retailers aren’t gearing up for it because most states haven’t agreed yet. I think a good plan of attack would be opposition to states contemplating signing the agreement.
The internet wants to be free and we should let it.
November 29th, 2005 at 1:49 pm
I should start up a company in Oregon that buys stuff for people and then ships it to them, tax free. Thpppt!
November 29th, 2005 at 3:07 pm
How do 18 states reach an agreement? I thought the feds controlled interstate commerce. And WHY would any person in ANY state agree to let these bureacrats get their claws into internet sales?
November 29th, 2005 at 5:03 pm
Robert:
Because they know that if internet sales leach an increasing amount of revenue away from traditional sales, those beureaucrats will either raise the tax on traditional sales, or raise other taxes elsewhere. Or maybe they just have a — what’s the phrase? — sense of fairness and wonder why retailer A should pay taxes but retailer B should be exempt from them just because they have a different distribution model.
Uncle:
Frankly, I’m a bit surprised you’re opposed to this (other than the optional part). I thought libertarians liked taxes on consumption…
November 29th, 2005 at 5:07 pm
I’m generally anti-tax and, until we go solely to taxes on consumption, I oppose new taxes or new means of taxation.
November 29th, 2005 at 5:22 pm
Uncle:
And would you have preferred it if Fox had said that state and local governments will “collect $18 million fewer taxes” (rather than “lose $18 million”) because of internet sales? The term “lose” has more meanings than the accounting definition, you know. By your nitpicky definition, if I stop shopping at Target and instead switch to Wal-Mart, Target didn’t “lose” a customer.
November 29th, 2005 at 5:25 pm
“I’m generally anti-tax”
*gasp* No, really? 😮 Now if you’ll just explain which money fairy is going to pay for roads, schools, the military, and a quarter-trillion-dollar war, I’ll stop accusing you of cognitive dissonance. 🙂
November 29th, 2005 at 5:30 pm
‘Target didn’t “lose” a customer’
They lost a customer but they didn’t lose $x in revenue. They never got it to begin with.
Money fairy? Isn’t that the federal government? I mean, they just print the stuff, right? No, I kid.
Well, let’s see, maybe by cutting spending elsewhere?
November 29th, 2005 at 6:06 pm
Aha! Progress. Now if you just (1) make the numbers work, i.e. cut enough other spending to balance out the tax cuts / decrease in revenues collected / deficit / whatever; and (2) get the electorate to actually sign off on those tax cuts, you’ll really be getting somewhere.
Of course, you know as well as I do that this isn’t going to happen. Because the only way to make it work is to eliminate social security, medicare, or both, and the electorate simply won’t accept that. Made all the worse by the GOP’s supply-side fairy tale in which tax cuts don’t require matching spending cuts, which was bought into by an embarrassingly large cross-section of the American population (aka, Reagan and Bush voters).
November 29th, 2005 at 7:27 pm
I realize that what needs cutting won’t get cut so I view it from teh supply-side of if we stop supplying it, they stop spending it 😉
That, of course, is a pipe dream.
November 29th, 2005 at 8:21 pm
Unfortunately, the cost of your pipe dream is that Junior 1.0 and 2.0 are likely to have to pay the price for our lack of fiscal responsibility.
November 29th, 2005 at 8:30 pm
people say that but they also said my generation would have to pay for the reagan years. Needless to say, that hasn’t happened.
Oh crap. Just realized I have to come up with another psuedonym for, uhm, junior 2.0.
November 30th, 2005 at 3:38 pm
So you seriously think we can continue at this rate forever? As it is, we’ve had to sell our collective soul to the Chinese to prop it up even this long…
November 30th, 2005 at 4:16 pm
Actually, a better question would be how did 18 states reach this agreement in light of Article I, Section 10?
November 30th, 2005 at 5:23 pm
Not at all but we can for the foreseeable future. Once SS dies (and it probably will) the rest will likely suffer.
November 30th, 2005 at 5:47 pm
Three reasons to oppose this:
1) By charging sales tax depending on the location of the buyer rather than the seller, it creates a huge burden for the businesses that are supposed to compute and collect this tax. I’ve lived in places where a brick and mortar store had to collect sales tax for three different governments – state, county, and city. Tax rates (and who they owed taxes to) were often different on one side of the street than the other. Tax rates also differed depending on what you were selling; groceries were a lower rate, most things a higher rate, and restaurant and motel charges an even higher rate. So the store’s computers would have to pick 3 out of 9 tax rates, depending on what was sold, and maintain 3 different accounts. This wasn’t an impossible burden, because the store knew where it was located and did not move. Compared to the cockamamie zoning and licensing laws, this might even be considered easy…
However, when you try to tax internet or mail order sales by the location of the customer, now you’ve got a retailer in another state trying to figure out all the local sales tax laws and even which side of the street you live on. Unless this compact mandates a drastic simplification, this will put an impossible load on the sellers.
2. Higher taxes cause lower sales. If sales are taxed according to the location of the business, then the consequences of high taxes (less business, unemployment, and a smaller tax base) falls upon the government that imposed the taxes and the people who voted for it. If sales are taxed according to the location of the customer, then many of the consequences fall upon businesses and residents of other jurisdictions.
3. There’s another reason to prefer lower taxes: what government’s do with extra money…
November 30th, 2005 at 6:31 pm
Markm:
1. These are on-line businesses we’re talking about here, not some mom-and-pop corner store. They had to overcome far more difficult problems than tax computation just to get the store on-line in the first place. While it is a legitimate problem with the proposal, it is not by itself sufficient reason to oppose the plan. Frankly, I’d rather do it for all mail-order business, because once you set aside the logistical problems, it seems more equitable. (As a buyer, I’d rather have my tax dollars support my locality rather than the one in which the business is located.)
One easy solution to the problem is to have the states themselves provide the mechanism by which sales tax is calculated. Computers are fast enough and interconnected enough that this really isn’t that complicated. Provide a city, state, and ZIP or a ZIP+4, and the tax rate is provided for you. It wouldn’t be nearly as complicated as you seem to think, and again, most retailers have far more complicated pricing problems to face.
2. While that seems intuitive, I’ve never seen any evidence that this holds true. As with income tax increases and cuts, the effect seen is temporary. Reagan raised taxes several times and spending never went down the shitter in response. Spending might drop for a short period after the increase, but would rebound to whatever level it would have been at prior to the increase. However, what would happen is that one of the incentives (tax avoidance) for mail-order and on-line shopping would be taken away; but I don’t think that would trump the convenience factor. On-line businesses wouldn’t go out of business overnight or anything like that.
3. If you’re referring to starting quarter-trillion dollar wars, I’m inclined to agree. But likely not. As mentioned above, most people actually like most government programs and don’t want them to go away. And survey after survey has shown that given a choice between lower taxes with fewer services and higher taxes with more services, most will choose the latter. That’s why the Republicans never actually cut spending when they cut taxes (except from programs Republicans generally hate), and why they perpetuate the fiction that you can have your cake (lower taxes) and eat it (government services) too.
November 30th, 2005 at 10:23 pm
I should add that even if tax computation is as complicated as you claim, this simply creates an additional market opportunity for some company willing to provide a plug-in solution.