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Monday, May 6, 2013

US Senate Approves Internet Sales Tax

Posted by on Mon, May 6, 2013 at 4:22 PM

As expected, the US Senate passed the Marketplace Fairness Act by a 69-27 margin today, allowing states to collect sales tax on Internet and other out-of-state sales. And as expected, the bill faces stiff opposition in the US House, where the Republican majority pretty much opposes anything that could possibly be labeled a tax increase. (Of course, it's not really a tax increase; it just makes online retailers collect the "use tax" that customers already owe, but 99 percent don't pay.)

At stake is over half a billion dollars a year in revenue for Washington State, money that sure would make writing the next budget a little easier.

 

Comments (51) RSS

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Matt the Engineer 1
Sorry if this is a dumb question, but won't this just chase all online retailers to states like Oregon without sales taxes?
Posted by Matt the Engineer on May 6, 2013 at 4:37 PM · Report this
Goldy 2
@1 You got it backwards. States will be able to collect their local sales tax on goods shipped into the state. I order a product from Oregon, and I pay the Washington State sales tax. The company in Oregon then remits the payment to Washington.
Posted by Goldy on May 6, 2013 at 4:42 PM · Report this
fletc3her 3
I think it's well past time that something like this was passed. Fifteen years ago I recall a notion that the budding ecommerce market shouldn't be squelched by taxes, but given the demise of brick and mortar retailers like CompUSA, Best Buy, Borders, etc. that hardly seems like a concern.

Plus, computers! If you're selling online you can make tax collection happen. Most people will have this problem solved by Amazon, Yahoo, eBay, or one of the other shopping cart companies. For the rest it's a programming challenge for a rainy day.
Posted by fletc3her on May 6, 2013 at 4:51 PM · Report this
Fnarf 4
@1, unless I'm mistaken, this is collecting tax in the shopper's state, not the seller's. That's the whole point; WA shoppers are getting a free ride by (illegally) ignoring use tax, whether the seller is in OR or any other state.

I suppose it could drive sales overseas, except for the astronomical increases in shipping costs lately.

What it could do is throw a life preserver to local retail, which really needs it. Functioning shops are a boon to everyone in a community, not just the people who buy there, and streets without shops are slums, or will be soon.
Posted by Fnarf http://www.facebook.com/fnarf on May 6, 2013 at 4:52 PM · Report this
Matt the Engineer 5
@2 Cool. How about international purchaces? I already get a few dirt cheap products from China via Amazon (though shipping takes forever). Will a closer country be able to step in as the tax-free option? Or does some home business in China have to figure out how to collect WA taxes on my button batteries?
Posted by Matt the Engineer on May 6, 2013 at 4:54 PM · Report this
raindrop 6
I'm for it. I'm against excessive taxation, but am for fair taxation.
Posted by raindrop on May 6, 2013 at 5:08 PM · Report this
tainte 7
fuck that shit. i shop around for an item online until i find it with no tax and free shipping.
Posted by tainte on May 6, 2013 at 5:10 PM · Report this
Supreme Ruler Of The Universe 8

I wonder if it could spawn an aftermarket in tax free reselling.

So, take a low or no sales tax state like Oklahoma.

You place your order via the 3rd party. Amazon ships it there, and then they reship it to you.

Could it be cost effective? As long as the 10% they charge in Washington is more than the re-shipping cost.
Posted by Supreme Ruler Of The Universe http://www.you-read-it-here-first.com on May 6, 2013 at 5:17 PM · Report this
seandr 9
I'm not anti-tax, but I am strongly against this law. Computing and remitting sales tax separately to all 50 states? That's fucking ridiculous. And frankly, so is sales tax in general.

If states want to generate revenue, they should tax income.
Posted by seandr on May 6, 2013 at 5:18 PM · Report this
TheMisanthrope 10
Go expansion of regressive taxation! Stretch that motherfucking jacked-as-shit system.
Posted by TheMisanthrope on May 6, 2013 at 5:32 PM · Report this
11
@9: An income tax would be more fair, and of course more progressive to be sure, but it's unlikely that Washington State will have one any time soon, so we should at least collect the taxes that are already lawfully owed. Collection will be less of a problem than you imagine, there is already software that will do the work for you.
Posted by Merchant Seaman on May 6, 2013 at 5:34 PM · Report this
Fnarf 12
@9, in the real world, an income tax isn't going to happen in your lifetime or mine. In the meantime, we have a state to run.
Posted by Fnarf http://www.facebook.com/fnarf on May 6, 2013 at 5:42 PM · Report this
Will in Seattle 13
Basically, it forces the ultra-rich in King County and Seattle to pay taxes too.

Excellent!
Posted by Will in Seattle http://www.facebook.com/WillSeattle on May 6, 2013 at 5:42 PM · Report this
Supreme Ruler Of The Universe 14
@11

No raising property taxes would be more fair.

All the growth states right now are low sales, no income tax and high property tax states, like Texas.

Top Cities for Jobs (guess which is not on it):

http://www.forbes.com/pictures/edgl45fed…

Posted by Supreme Ruler Of The Universe http://www.you-read-it-here-first.com on May 6, 2013 at 5:59 PM · Report this
Fnarf 15
@14, god DAMN you are stupid. Your characterization of why Texas cities are doing well is positively inane. And I think you're holding that chart upside down; #1 on the list is SF. With an income tax, and artificially low property taxes. #2 is Nashville, with an income tax. Six of the ten cities on the list are in income tax states.

Dallas and Fort Worth are doing well because of the explosion of shipping as an economic engine; many companies now ship directly from China to DFW, bypassing the disaster of LAX, which is a short flight or drive to everywhere else in the country.
Posted by Fnarf http://www.facebook.com/fnarf on May 6, 2013 at 6:55 PM · Report this
16
Repealing some of the $96 billion in state tax giveaways would help, too, but we can't have state corporations paying anything close to a fair share, that wouldn't be right.

http://dor.wa.gov/content/aboutus/statis…
Posted by TechBear on May 6, 2013 at 6:57 PM · Report this
Dr. Z 17
Why do I have the feeling we're about to witness the Law of Unintended Consequences in action?
Posted by Dr. Z on May 6, 2013 at 6:58 PM · Report this
18
I guess I'll just have my big purchases fro,m J&R in NYC sent to my brother in Portland and then forwarded. On a $2500 laptop, you're still saving $$$.
Posted by Tax my Ass on May 6, 2013 at 7:03 PM · Report this
19
@18: how will your brother get to PDX? Drive down a taxpayer funded road? Ride Taxpayer funded Amtrak? Fly between taxpayer funded airports?

Who will keep your brother from being carjacked on his way home? The taxpayer funded State Patrol?

Where will you get power for your new laptop? Taxpayer funded Bonnyville...
Posted by Merchant Seaman on May 6, 2013 at 7:15 PM · Report this
lauramae 20
It wouldn't be difficult at all to implement a collection of sales tax for each state that has sales tax (it isn't 50, by the way). It would be no more complicated that calculating the shipping cost. In fact it would be easier. The code linking the appropriate sales tax would simply be tied to the zip you enter on the billing address. Just a quick google search and I came up with taxrates.com. I'm sure there are others. My guess is that private companies that keep track of this provide merchants with a way to keep up to date on the current tax rates for any area.

As for making sure the tax collected gets to the states, it wouldn't be hard for a company to keep track of the amount of quarterly sales to each zip. It wouldn't be hard for the IRS to verify the dollar amount collected and whether what is collected gets to the proper state's revenue departments.

All of that would be much simpler and quicker than the republicans in the House actually doing their goddamned jobs.
Posted by lauramae on May 6, 2013 at 7:28 PM · Report this
21
"how will your brother get to PDX? Drive down a taxpayer funded road? Ride Taxpayer funded Amtrak? Fly between taxpayer funded airports?"

Hmmmm, pretty sure he pays income and property taxes in Oregon, probably far more than the average moocher.
Posted by Tax my Ass on May 6, 2013 at 7:33 PM · Report this
22
Fnarf, I think @14 has a point. No I mean other then the one on his head. Seriously his suggestion that we tax property has merit. Provided that the definition of property includes all equities.

*rolls eyes, sighs*

Yeah I know.
Posted by Machiavelli was framed on May 6, 2013 at 7:49 PM · Report this
Supreme Ruler Of The Universe 23
#15

Big, Hot, Cheap, and Right: What America Can Learn from the Strange Genius of Texas

From the reader reviews:

...Grieder also takes a fair and balanced view of explaining how much of Texas' storied growth is genuine. Liberals, who tend to be critical of Texas' low tax and small government orientation, often seek to debunk the "Texas Miracle."

They often seek to portray the state's job and population growth as resulting from the immigration of impoverished Mexicans and poor Americans from other states who are desperate to work at minimum wage jobs in "low tech" or "dirty" industries like ranching and oil drilling.

They often portray the state as a sort of a gigantic trailer park filled with poverty-stricken, welfare-receiving, crime-ridden populations of mal-educated Whites and poor Hispanics. There are of course plenty of people like that in Texas, just as there are in every other state, but how true to real-life proportions IS the Liberal critique?


http://www.amazon.com/Big-Hot-Cheap-Righ…
Posted by Supreme Ruler Of The Universe http://www.you-read-it-here-first.com on May 6, 2013 at 8:28 PM · Report this
24
@23 nice cut and paste job but those three paragraphs don't actually say anything that addresses what 15 wrote.

Still I must admit I'm a bit surprised you know where to buy a book. Alas that can't be taken as evidence that you know what to do with one and how to do it once you have bought it. So the jury must wait.
Posted by Machiavelli was framed on May 6, 2013 at 9:14 PM · Report this
seandr 25
@12: In the real world, this sales tax bill isn't going to pass the House. So I guess that means I win?

Posted by seandr on May 6, 2013 at 9:21 PM · Report this
26
And it's good to know that the increased revenue for the state will be wisely spent in ways that benefit the people who need it most.
Posted by LJM on May 6, 2013 at 9:25 PM · Report this
Ballard Pimp 27
Would somebody tell Will in Seattle (#13) where the rich people in Washington State do live? It sure as shit isn't Seattle.
Posted by Ballard Pimp on May 6, 2013 at 9:53 PM · Report this
28
@20 The post office and the shipping companies make it easy to calculate shipping costs, and most of them base it on zip code. They provide their own databases and software to generate quotes, and if they quote you the wrong price, they usually stand by it. Nobody goes to jail for making an error on a shipping label.

There are about 10,000 sales tax jurisdictions in the country, and they do not line up with zip codes. There are databases that will convert an address to a jurisdiction, but these are made by third parties, not the government, and they sometimes make mistakes.

Even if you have a perfect geographic database, you have to figure out whether there are special higher or lower rates that apply to particular product categories, and the exact definition of those categories in each jurisdiction. This requires human judgement and is hard to automate.

Finally, you have to be prepared to be audited by any of the 45 states that collect sales tax. When this happens, you'd better have an accountant or attorney who knows that state's laws.

I'm willing to believe that it is reasonable for a $1 million business to deal with all of this, but please do not go on thinking it is trivial.
Posted by Asbel on May 6, 2013 at 10:28 PM · Report this
29
As a small business owner, damn straight I want Internet businesses to collect sales taxes!
Posted by Agent99 on May 6, 2013 at 10:36 PM · Report this
30
@Fnarf

Nashville does NOT have an individual income tax. In TN, the mere discussion of the topic may be viewed as treason. The state stands in resolute opposition to an individual income tax. Tennesseans have occupied the state capitol and summarily voted politicians out of office for just the suggestion of an individual income tax.

And, if you're referring to the 1929 income tax on bonds, notes and dividends from stock, take a closer look at who pays, when they pay and whether any Tennesseans actually pay the tax in the manner that the politicians of The Great Depression may have intended.

Again, Nashvillians don't pay income taxes.

Nashville and TN are primarily funded by property and sales taxes.
Posted by Fnarf, Income Tax Is TREASON in TN on May 6, 2013 at 10:47 PM · Report this
Fnarf 31
@23, so you're telling me that a Fox-News-watching reviewer on Amazon thinks that something is so? Well, I guess it's settled then.

Except that most of the jibber-jabber you hear about various tax rates is pure mythology. Both TX and CA, for instance, have the same statewide sales tax rate, with the difference made up in local add-ons. Some municipalities in TX, including some very successful ones, have CA-like rates overall.

Property tax? The rate doesn't tell you anything by itself, because it doesn't tell you what the real estate valuations are. 1% of a million bucks is a lot more than 2% of $200,000, even though "the rate is twice as high". TX has some of the cheapest houses in the country.

Business taxes? Looking again at CA, we see a pretty high corporate rate -- but we also see a whole raft of credits and exemptions that don't pertain to other states, like TX. TX taxes oil extraction, CA doesn't. All told, TX takes a slightly larger bite out of business than CA -- 4.9% vs. 4.7%. Both right around the national average. That's not the narrative you hear from Texans, though -- or from Orange County Republicans looking to shrink their burden even further.

http://articles.latimes.com/2010/oct/24/…

And, as I outlined earlier, there is a hell of a lot more to job growth than tax rates, including the logistics of air freight -- which is how something like 85% of the value of trade goods enters the country. LAX is a clusterfuck, maxed out and hemmed in by neighbors who don't want expansion and neighbors of other regional airports that don't want expansion either. Meanwhile, DFW is many, many times larger. Note that the only airport in the country that's larger is in Denver, another of the cities on that list of yours.

There really isn't a lot of evidence that business relocation and growth decisions are made on the basis of tax rates, especially the kind of bullshit tax rates that you have cited, or not cited, rather. In fact, your argument is about as powerful as a ten-watt refrigerator bulb. Not everything you read in Forbes is true, especially when the article in Forbes doesn't say what you think it says because you don't know how to read.
More...
Posted by Fnarf http://www.facebook.com/fnarf on May 6, 2013 at 11:05 PM · Report this
JonnoN 32
@23 quoted an Amazon review. LOL *facepalm*
Posted by JonnoN http://www.backnine.org/ on May 6, 2013 at 11:40 PM · Report this
Trotineta 33
that's one stupid tax!
Posted by Trotineta http://www.neobytesolutions.com/ on May 7, 2013 at 1:31 AM · Report this
TheMisanthrope 34
@11, and 12, and Goldy

Summed up.

"Our tax system is fucked. We know it. We can't fix it. Sorry everybody, you get fucked in the ass but we got a state to run!"

Maybe I'm being idealistic, but that's a fucked position to take.
Posted by TheMisanthrope on May 7, 2013 at 7:04 AM · Report this
35
Man, I still don't get how you guys have a regressive sales tax and no income tax, and think that's just peachy.
Posted by clashfan on May 7, 2013 at 7:36 AM · Report this
Matt from Denver 36
@ 34, many times the pragmatic solution is fucked up from an idealistic perspective.

Long term, you can work to educate people about the nature of taxation and what's fair and what isn't (realizing that the antitax zealots, run as they are by the wealthy who continue to grow wealthier, are going to make it an uphill battle the entire way), in the hope that someday, by some miracle, the citizens of Washington will wise up and really reform the tax code.

But in the meantime... you have a state to run. So, what are you gonna do?

(I miss many things about Seattle, but there are a lot of things I don't, and your sales taxes are high up on that list.)
Posted by Matt from Denver on May 7, 2013 at 7:53 AM · Report this
TheMisanthrope 37
@36 You know what would be a better way? A lawsuit by some politicians, challenging the original ruling that income tax cannot be levied.

After all, they had the gall to challenge no-tax laws invoked by the public. How about challenging some old rulings by the court?

That would take balls though.

...

Or, in the meantime, how about closing some of the MS loopholes they opened up before moving their tax haven to Phoenix?
Posted by TheMisanthrope on May 7, 2013 at 8:13 AM · Report this
seandr 38
I'll add that as an internet business owner, it's going to cost me more money to pay these taxes than the actual tax itself. When every $1 in tax costs me $2 to pay, you know you have a retarded system on your hands.

E-commerce has made the concept of sales tax obsolete. Let it die, we'll all be better off for it in the long term anyway as states are forced to take up income tax to finance themselves.
Posted by seandr on May 7, 2013 at 8:25 AM · Report this
39
@31 When talking about the "Texas Miracle" it helps to note that DFW is the headquarters of just about all of those companies that sell gasoline in the US. Those same companies do indeed do a lot of oil and gas drilling (and fracking) but those are NOT low paying jobs. Even a low on the scale roustabout gets a much better than simply living wage while roughnecks on up do better than that. And yes roughneck and roustabout are actual job titles. They also don't hire illegals, but that is mainly because most of those don't speak english well enough to keep from getting killed on the job site. Oil drilling pays well because it is dangerous and you don't want the guy next to you not being able to either warn you or understand your warning him.

Houston is where all that oil is refined. Think of that area as the worlds largest petro-chemical plant and you get why it always has jobs. Along with one of the larger port complexes in the US also adding jobs since a lot of companies would rather not use either NY or the LA area ports.

Austin has the title of silicon valley east for a very good reason. Lots of computer related companies there. Some of which are in the actual silicon valley area also but when they needed more real estate found it was a lot cheaper to open a satellite office in Austin than to simply add on in CA.

To give you an idea of just how large the petro-chem complex in the Houston area is... Dow Chemical plants alone cover more area than the (actual) city of Seattle. That doesn't even begin to cover the space the actual refineries use up. For that matter if you toss a couple of the refineries in with Dow you can cover the entire 84 square miles of the Seattle metro area. When you have a couple of hundred square miles of petro-chemical plants it is amazing how many jobs you can have. We may be uncivilized, have a nutcase for a governor and smog that sometimes comes close to LA (amazing it doesn't surpass LA considering the draconian EPA laws in Cali and the, um, rather lax ones in Texas) but we do have jobs.
More...
Posted by Romial on May 7, 2013 at 8:48 AM · Report this
Matt from Denver 40
@ 37, I have a hard time believing that could work. Maybe you know something about tax law and the way legal challenges to it work? I'd like to hear it.

@ 38, any time I see someone oversimplify things the way you do, it makes me wonder how much business acumen you actually possess. Show us your math and I'll buy it then.
Posted by Matt from Denver on May 7, 2013 at 9:29 AM · Report this
TheMisanthrope 41
@40 Even in a couple of Goldy's other posts, he's mentioned that if the Supreme Court were to take up the suit again today they probably would not have the same ruling.

But, you know...who am I to suggest anything progressive against such pragmatic beliefs as you seem to hold.
Posted by TheMisanthrope on May 7, 2013 at 9:58 AM · Report this
42
@6:You must not understand the definition of `fair` in the context of taxes. This one is nearly as regressive as the one you pay at your local stores.
Posted by lifner77 on May 7, 2013 at 10:10 AM · Report this
seandr 43
@40: What do you do for a living, Matt from Denver?
Posted by seandr on May 7, 2013 at 10:22 AM · Report this
Matt from Denver 44
@ 41, if that's so, then go for it. But remember: pragmatic solutions take political barometric readings of the political situation. (And I'll point out that you still have to run a state while litigation makes its way through the system.)

@ 43, what do you care? It's your living, which you brought up to bolster your opinion, that we're discussing. Being a "small businessman" doesn't equal "being an expert."
Posted by Matt from Denver on May 7, 2013 at 11:27 AM · Report this
TheMisanthrope 45
@44 By political barometric pressure, obviously you mean how the big donors feel, right?

http://i845.photobucket.com/albums/ab14/…
Posted by TheMisanthrope on May 7, 2013 at 11:40 AM · Report this
Matt from Denver 46
@ 45, is my opinion upsetting you? Maybe you should take a break.

It's a shame that people don't know the difference between "trolling," "flaming," and "disagreement" anymore.
Posted by Matt from Denver on May 7, 2013 at 11:48 AM · Report this
TheMisanthrope 47
@46 There's a difference between arguing an opposing point and stating your opposing point is right or "pragmatic" just because you have it.

And saying that politicians take political barometric readings that take their voters into account is rather asinine, especially on taxes in Washington where a group of senators decided to lawsuit away the will of the people (who voted for the same initiative three times in row in ratios of 60% in favor).
Posted by TheMisanthrope on May 7, 2013 at 12:55 PM · Report this
Matt from Denver 48
@ 47, I believe I've made a fair case for what makes this pragmatic. There is virtually no will to institute an income tax in Washington and reform the other ways your state raises direct revenue. You seem to have a budget crisis and a need for more revenues. So, if it isn't pragmatic to do it this way, how would you describe it?

You have a fair point about what some Senators have done. But they apparently have some power behind their position, whether it's out of state donations, safe seats, little respect for the total constituency of Washington, or whatever. Does your proposed lawsuit have that kind of support?
Posted by Matt from Denver on May 7, 2013 at 1:03 PM · Report this
kk in seattle 49
This is NOT a tax increase. It's just Congress finally getting the hell out of what never was their business, which is how the states finance themselves. Years ago, Congress forbade the states from taxing internet sales. (Of course, Congress never provided for any alternative source of revenue.) This simply undoes that royal and undeserved fucking-over of states that would like to tax internet sales. Whether states choose to tax internet sales, or any sales at all, should be up to them.

This is a states rights issue, which should make it a Republican natural, except that they're all hypocritical shitheads.
Posted by kk in seattle on May 7, 2013 at 1:35 PM · Report this
kk in seattle 50
@seandr: Don't be a drama queen. Does it cost $2 to pay each $1 of income tax, which is a far more complicated system? Of course not. You can buy the most complext Turbo Tax software with an audit guaranty for about $100 a year. Before the effective date of any taxation of internet sales, eBay will surely have in place for a modest fee software that automatically calculates and remits sales taxes to the proper authorities. And if they don't, then they deserve to be driven out of business.
Posted by kk in seattle on May 7, 2013 at 2:05 PM · Report this
51
I'm fine with it as long as brick and mortar businesses in Oregon and Idaho are also forced to collect WA sales tax from WA residents.

Because this is essentially what this bill does, for Internet sales.

Posted by easternwaresident on May 7, 2013 at 8:04 PM · Report this

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