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Friday, November 30, 2012

Snowballs in Hell

Posted by on Fri, Nov 30, 2012 at 11:17 AM

Yes, the Seattle Times editorial board and I agree about something tax related. They support federal legislation that would allow states to collect sales tax from out-of-state sellers, and I support such legislation. Though it's important to note that they make no mention about the potential burden on truly small businesses, because unlike me, they apparently don't give a shit about truly small businesses.

That said, don't notch their editorial as an endorsement for raising taxes. As the editors point out, this is about collecting a tax—the existing "use tax"—that in-state customers already owe on out-of-state purchases.

So now that we're in agreement on collecting the regressive sales tax that's already in place, perhaps the Seattle Times can join me in responsibly advocating for some progressive taxation?


Comments (10) RSS

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I have a little software company and this won't effect us all that much because our volumes are quite low - the product is highly technical and expensive. So its just a little more paperwork and hassle. But it is more paperwork and hassle.

I'm against sales tax for all the standard reasons. And I'm also generally hostile to federalism because it seems like, on balance, its been a huge pain in the ass over the last couple hundred years. I mean, can anyone tell me what's the advantage of 50 different tax structures, 50 different kinds of tax forms, on and on and on? Its just a lot of b.s.

For every beneficial, federalism-originating development (recent progress in marriage equality a signal example) there is a host of malevolent ones.

Its not like I think the states are going away or anything. But, I can dream, can't I?
Posted by Alden on November 30, 2012 at 11:27 AM · Report this
Peteykins 2
I feel the same way. I asked myself, "Will paying tax on Amazon and Yoox purchases kill me?" The answer, of course, is NO.
Posted by Peteykins on November 30, 2012 at 11:31 AM · Report this
Simac 3
The burden of calculating sales tax for thousands of jurisdictions is kind of crazy; people who don't run businesses of their own would be amazed to see what all is involved to comply with such rules. I suppose software will be made available at high cost to small businesses and microbusinesses to handle this, the way there is for payroll (which is also bizarrely complex). Large companies already use such software, but it requires constant updating because tax laws change constantly in every nook and cranny of the country.

It might make sense to exempt businesses from such requirements with prior-year net proceeds under $75,000, or to apply a single national sales tax to all out-of-state transactions that states would divvy up based on some algorithm. Or to have sales tax applied at the rate where the seller is, not the buyer. Or some kind of simplification. Not sure what would work best and keep people's bonnets bee-free.
Posted by Simac on November 30, 2012 at 11:39 AM · Report this
Goldy 4
@3 Well, if you read my prior post, which I linked to in this one, you'd see that the proposed legislation exempts companies doing less than $500,000 in business during the prior year. I'm not sure this threshold is even high enough, but it certainly would have exempted my old business.

As I wrote, I never would've been able to conduct my business had I had to file in every state we sold to.
Posted by Goldy on November 30, 2012 at 11:46 AM · Report this
Pope Peabrain 5
@4 Write an app for that.
Posted by Pope Peabrain on November 30, 2012 at 12:06 PM · Report this
seandr 6
@1: So its just a little more paperwork and hassle. But it is more paperwork and hassle.

I also have a software business, and I wish I could share your sense that this is no big deal.

From what I understand, laws like this require me to collect sales tax based on my customer's location, potentially based on rates that reflect not only state sales tax, but county and city sales tax as well.

How the hell am I supposed to figure out which of the thousands of tax rates apply to a given customer? Or whether I meet that state's exemption threshold? And how many fucking tax returns does this mean I have to file every year? God I hope I'm misunderstanding something here.

To be clear, I'm fine with the idea of recouping lost sales tax revenue in some way, such as replacing sales tax with income tax, for example. But the potential complexity of this particular direction seems completely insane. What's more, it erases many of the efficiencies of the internet that have driven the growth of our economy in the last 20 years.

@Goldy I'm not sure this threshold is even high enough

It isn't, and basing it entirely on revenues without considering earnings doesn't seem right either.
Posted by seandr on November 30, 2012 at 12:12 PM · Report this
seandr 7
@5: An app? There are already entire companies who's business models are perched upon the complexities of tax computation over the internet.
Posted by seandr on November 30, 2012 at 12:20 PM · Report this
Goldy 8
@6 The current proposal is so much better than prior ones, but I totally empathize with your fears. And it could be a lot better.

Ideally, the federal government (or some other centralized organization) would act as a single collector for all the states in which you don't have physical nexus, and should provide the software/website for calculating sales tax by zip code. Requiring tax filings in 40-some states is just too onerous for small businesses.
Posted by Goldy on November 30, 2012 at 12:28 PM · Report this
What a swell idea. For some additional sales tax revenue we can decrease efficiency and fuck over a good part of the economy. I really really hope that, like all good legislation, that this is based on no data whatsoever but because someone just thinks (like me) that it's a swell idea.
Posted by BLUE on December 1, 2012 at 7:56 AM · Report this
Will in Seattle 10
Apparently, you can take MJ with you on direct flights from WA to CO or from CO to WA, according to the TSA.

But shouldn't you have to pay sales tax? I mean, it's the same thing as people buying liquor in Idaho to consume in Spokane, right?
Posted by Will in Seattle on December 1, 2012 at 1:02 PM · Report this

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