Internet Sales Tax. Opinions?

[bgsengine]

While this post *may* be construed as political (in a way it is) , it's more bi-partisan - nothing to do with political affiliation, but a whole lot to do with your pocketbook.

You may have heard that Congress is considering an Internet sales tax bill called the "Marketplace Fairness Act" that is anything but "fair" for small online businesses.

Earlier this year, the Senate passed a bill now being considered by the House of Representatives. The good news is that hundreds of thousands of consumers and small business owners contacted Capitol Hill to express their concerns. This public outpouring has resulted in the House taking time to ask much-needed questions about how this bill will impact e-commerce and small businesses like ours.

Despite this positive development, the bill's supporters and their Washington lobbyists still want to get the bill through Congress by attaching it to important pieces of legislation that Congress must pass, such as the government funding and debt ceiling bills.

Basically, it means for any small business (like some of us that sell online parts or on eBay) that has sales exceeding the threshold, they have to collect sales tax for *every sale* to *every state and jurisdiction* that they ship to.
While a $1 million threshold might seem like "Oh, they can afford it" , that isn't true - Considering that most shops have a net margin (before taxes) of around 8% , that translates to $80K a year that a small business might be able to call "take home" pay - that's not a whole lot, after you take out the taxes (with Social Security taking double what you might have taken out of your paycheck), which runs about 30% or net (in all the taxes we must pay) Considering the long hours a small business owner might put in, that $50K take-home paycheck does not amount to a whole lot (barely minimum wage if you figure time and a half overtime) (and consider, most small shops are darn lucky if they gross even 100K in a year, though they do tend to have a better margin with lower cost of business... that still makes a $30K salary working for someone else look pretty durn juicy! )

On the other side of the coin, it means that buyers (how many buy parts online?) would have to pay your state sales tax on every purchase... (Technically, you are *supposed to* anyway - most states have laws on the books regarding what they call a "Use tax" - if you didn't pay sales tax on something, you're supposed to figure it, report it, and remit it, to your state (and/or local) tax collector. Most people don't, and it is rarely, if ever, enforced... which is exactly WHY they are trying to make an internet sales tax! )

If that sounds like something you'd be happy with, by all means do nothing... but if that concerns you, as a business owner especially, make sure and let your congress person know how you feel about this.

[fixer5000]

for what its worth amazon just started collecting sales tax for all shipments to massachusetts...the tax state lol. thank god i live very close to new hampshire:)

[RoyM]

It does place an extra administrative burden on the on line seller to be sure but how is it unfair? How does the high overhead brick and mortar dealer down the street compete with the merchandise delivered right to the door with an additional price advantage? Or does the online seller collect for the state he/she is shipping from and pass it on to the buyer? Does an Oregon buyer pay Massachusetts sales tax under the present system?

[bobodu]

Anything with "fairness" in the name just screams (rhymes with Postalism).....Every single thing coming down the pike these days is the furthest thing from "fair" that I have ever witnessed in my life. A brick and mortar store is not prevented from selling online by any law that I am aware of...Anyone who has a big brother learns how to compete..Big Brother kills competition. Time for the FairTax and be done with it.

[56Chevy]

Anything with "fairness" in the name just screams (rhymes with Postalism).....Every single thing coming down the pike these days is the furthest thing from "fair" that I have ever witnessed in my life. A brick and mortar store is not prevented from selling online by any law that I am aware of...Anyone who has a big brother learns how to compete..Big Brother kills competition. Time for the FairTax and be done with it.

I'm not sure what you are referring to by Fair Tax but it screams as loud as tax fairness. The only true fairness is NO tax.

[bobodu]

The FairTax in it's simplest form is a flat tax on EVERY NEW SALE, usually placed at around 18%. The INCOME tax is eliminated...but everyone gets a check per month to offset the basic necessities.

[bgsengine]

I would be all for a fair tax for internet sales *IF* they made it a national tax paid in to the IRS which was then distributed to states based on total dollar amount sold into that state - That way , online sellers only have to collect ONE tax , and only need to track by state their dollar volume - most all accounting software (and e-commerce software) is easily capable of tracking that for a quick and easy "print report, enter up to 50-60 (counting US territories and DC) values , and file return with ONE PAYMENT to ONE tax authority - I could live with that, and I am sure most other online sellers would have no problem with it, either.
I would call THAT a fair tax.
(There have been taxes since Civilization was invented! One way or another - anywhere that groups of people, even neanderthals gather together as a civilization of sorts, there would be some means of distributing their collective "wealth" I.E. Food, skins, and so on - Communism, socialism, you name it.. which amounts, for all intents and purposes, to a Tax. )

That way, states (and sellers in those states) can continue to collect THEIR sales taxes (with that state being exempt from collecting the internet tax) from in-state sales, and yet the other states where online sellers ship to, can get their piece of the pie. (even states with no sales tax!)

I'd have no problem with such an idea. the problem comes in when you have to track , and account for a hundred different tax rates, taxing authorities, and tax rules (Some places they charge tax on clothing, other places it is tax exempt, and so on!)
- The complexity and accounting required for something like that would put most small (under $5M sales) sellers out of business - would have to hire 2 or 3 full time people JUST to track that crap.
- an internet sales tax would resolve the "fairness" issue vs. brick-n-mortar stores that don't sell online (and indeed, for some states, making buying local MORE attractive if that state had a lower tax rate than the internet tax) , while allowing online sellers to have a *considerably* smaller burden to bear, manpower-wise.

[56Chevy]

The FairTax in it's simplest form is a flat tax on EVERY NEW SALE, usually placed at around 18%. The INCOME tax is eliminated...but everyone gets a check per month to offset the basic necessities.

Lovely. I would be almost exempt from direct taxation! Much of my stuff is old, salvaged or home built.

I can see just how long the plan would last. All too soon back would come the personal income tax because certainly someone would say such and such doesn't need that check.

It's interesting to observe how readily people will submit to new and ever higher taxes in all its forms. From almost no taxes to what? It must now be over 75% total taxes in the short span of one lengthy lifetime. And still the budgets are not balanced and the debt continues to pile up. When do we reach the breaking point? There's little talk reducing spending and taxes. Just change their composition. And we wonder why America is losing all it's industrial production and jobs to foreign locations.