Expand the power of the State: Time to Collect Online Sales Taxes

December 12, 2012 by tjefferson2076

States are up in arms over the loss of “revenue” with their subjects gravitating towards online retailers.  Mail order shopping has always been state tax free due to the commerce clause.  Recent rulings by the supreme court have reinforced the fact that states can only collect taxes from businesses that have an actual presence in the state and that Congress alone has the power to regulate interstate commerce. See:

http://www.infoplease.com/cig/supreme-court/sales-taxes-mail-orders.html

 

Due to the surge of internet based shopping, states have been drooling over this lost revenue.  In addition other businesses have been keen to “even the playing field” by supporting legislation at the federal level to empower the states to raise taxes on their fellow citizens.

Amazon, long an antagonist of such legislation is beginning to change their tune by changing their business model to have regional warehouses to expedite shipping. See:

http://www.policymic.com/articles/20592/amazon-tax-massachusetts-residents-will-pay-sales-tax-but-gain-convenience

“Amazon, which has been particularly choosy with the placement of its warehouses, is looking at expanding its operations nationwide in order to meet higher demands for next day shipping. Basically, they’ve given up the sales tax fight and instead, altered their business model in a way that is both beneficial to their bottom line and coveted by their customers.”

This increases the likelyhood of the Marketplace Equity Act to pass Congress:  http://www.govtrack.us/congress/bills/112/hr3179

This bill will give states the Congressional consent to collect online sales taxes.  It will allow them to pass legislation at the state level to set up a tax cartel to collect sales taxes from out of state commerce.  It does not mean that all of them will actually do so, but many will enact legislation.

Many would refer to this as a tax loop hole, but it is a loop hole open to all businesses and it serves to decrease the flow of tax revenue to the state.

I am personally sick and tired of the argument being, we need to pass this bill so all businesses pay the same tax – even the playing field if you will, with the result to funnel more revenue to greedy state governments from their subjects.

The REAL ARGUMENT should be why do we have sales tax in the first place?  If sales taxes are so high that they actually cause citizens to consider shopping “tax free” online, maybe it is time for the states to decrease sales tax rates so citizens will not consider sales tax a burden when they chose to shop online or not.  If sales taxes were low such as 2 or 3 percent or even zero, this would not be a problem.

The bottom line is all this boils down to is a Tax Cartel to force all subjects to pay their “fair share” of taxes to the state because the state refuses to do with less revenue.  We need to fight this evil at the federal and state level.

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