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    Senate Republicans Push for Internet Sales Taxes

    Despite their lip service to cutting taxes, a handful of Republican senators are pushing for a sales tax on Internet purchases. Senator Mike Enzi of Wyoming has introduced the so-called Marketplace Fairness Act that would create a new national online tax that would take away more of our money and freedom. The Republican cosponsors of S. 1832 are Sens. Lamar Alexander, Roy Blunt, John Boozman, and Bob Corker. These Internet sales tax schemes are nothing new but greedy politicians seem more determined than ever to pass it this year.

    As it currently stands, you are not required to pay any state taxes if you are purchasing a product on the Internet from a store or a person in another state. States can only impose taxes on businesses within their borders. But that could all change if a handful of Democratic and Republican Senators get their way.

    Senator Lamar Alexander of Tennessee told the Wall Street Journal that an online sales tax “is going to happen – if not this year, then definitely by next year.” (P.S. he’s up for reelection in 2014.)

    Thankfully, there are still principled conservatives in the Senate who are standing firmly against a national online sales tax. Senator Jim DeMint of South Carolina wrote an outstanding Wall Street Journal op-ed citing his opposition to the Marketplace Fairness Act. Here’s a clip:

    At its core, this is a nationally mandated Internet sales tax on businesses. Once a single state demands these sales tax collections under the new law, businesses in every other state would be forced to comply with that state's tax laws. Dozens of states are eagerly waiting to raise those taxes, as soon as Washington opens the floodgates.

    The burden on Internet entrepreneurs could be staggering. There are already nearly 10,000 state, local and municipal tax jurisdictions to navigate nationwide.

    Just complying with a single state's tax laws costs small businesses disproportionately more than larger firms that can afford accounting and technology teams to help them work through these arcane laws. A 2006 PricewaterhouseCoopers study found that tax-compliance costs for small businesses (those having $1 million to $10 million in annual sales) are nearly 2.5 times greater than those of larger firms. For businesses under $1 million in sales, those costs explode to 16 cents on every dollar of revenue.

    (The whole op-ed is worth reading here.)

    Congress should be focused on cutting spending—not dreaming up new ways to take away even more money from families trying to make ends meet in this troubled economy. Sign the FreedomWorks’ petition to stop the online sales tax today.

    5 comments
    George Doughty
    08/20/2012

    Sten: Wouldn't it make more sense to get rid of the other taxes you refer to, those being evaded? Yes it's much more difficult to do but it's better than raising more taxes that will just be wasted. Warren Buffet pays a lower rate than his secretary but I have yet to hear anyone say "lower the secretary's rate to make it equal". Occam's razor. Simplify.

    danaknight1984
    08/22/2012

    Mr. Sten Wilson's comments are inaccurate at best.

    1. what is true is that many businesses are required to collect point of destination sales taxes - usually as a consequence of agreements between the State and the retailer. These rules are unfair protectionism, and should be held constitutional, as they represent an interference with interstate commerce by local authorities. a few jurisdictions have imposed such laws to support rural counties, where people already drive out of county to go to Walmart, since there is no local retailer anymore of even a brick and mortar variety.

    2. the reason these agreements are individualized is that the states are selectively infringing on interstate commerce - collecting a sales tax from a business not located within the jurisdiction of the tax collecting authority. Taxation between a diversity of parties is now complex. thank you govt. but originally states were prohibited from taxation between parties - this is the basis of interstate commerce; it is the reason for the interstate commerce clause; and prevents protectionism.

    3. this is not a new issue - the 1935 law was coughed up by the New Dealers to attack interstate commerce, and particularly mail order catalog retailers and consumers who used mail order.

    4. The 1935 law to which Wilson refers is not good law. think about it, if it were, don't you think you'd be paying that tax? duh. even the "marketplace fairness dipsticks admit this. Intervening case law has gutted this unfair law: see

    http://marketplacefairness.org/what-is-the-marketplace-fairness-act/.

    5. this will not help small business; the marketplace fairness is a front for a group of techie-leftists at TaxCloud; see:

    https://taxcloud.net/about/team/

    See anyone on that list who supports or represents "small" business? These are no doubt merely puppets of even larger interests which are RENT SEEKING. They want protectionism to subsidize jurisdictions that are irresponsible; and they want a piece of the action. TaxCloud is hoping to do for sales taxes what red light camera operator do for local communities who sign contracts. But first they have to get the law changed. If there was any such law as Wilson claims - they would not be forced to harass the big retailers into "greenmail" agreements to collect sales taxes.

    6. Like all Leftists - the supporters ignore the rather obvious fact that the transaction is between entities in different locations. Traditionally, the consumer, or business buyer, pays the sales tax at the point of sale which is the location of the seller. The issue of who collects the sales tax for transactions between parties in different states is one of the key reasons the founding fathers scuttled the Articles of Confederation and created the Constitution. They wanted to prevent protectionism, and stop the creation and imposition of taxes designed to protect local retailers or punish foreign retailers.

    7. For the consumer, the idea that you should pay a sales tax on every transaction locally, or that you are evading taxes (not supporting firefighters) by making a purchase in another jurisdiction, is fundamentally immoral. We should not fall for such nonsense; no matter how "sensible" it may sound.

    - consider the meaning of this type of argument.
    - that your local jurisdiction, which already collects more taxes than it needs to sustain a plethora of luxuries for your govt, has a moral right to take your livelihood and squander it on their special projects, privileges, and perks. Nonsense, they would not exist if our forefathers had been taxed as they tax us; and if we let them increase and squander more wealth, they will be responsible for destroying the engine which creates a larger economy.
    - If you are buying a product from a lower cost jurisdiction, the foreign retailer must collect the sales tax for FAIRNESS.
    - Fairness? What happens to those retailers who can escape the requirements to collect the tax? Or in the alternative chooses to move to China or other lower cost location, to establish a lower base cost?
    - So if you choose not to buy a product locally are you disloyal? Really? What if the local producers have been driven out of business or out of state by the local leftists? Many products cannot be purchased locally anymore; and those that are - are often imported, if not from China, they are imported from another state or nation.
    - In the reverse - Can you force your neighbors to support you? Think about it. Most conservatives are not the kind that believe in enslaving their neighbors, we tend to be generous. But think about this: If you are forced to subsidize your local govt on the basis of "fairness" - are they forced to subsidize you?
    - Mr. Wilson is disingenuous or an idiot at this point - because obviously Govt is the ENEMY OF ALMOST ALL SMALL BUSINESS. These people don't support you. If they did, they would be protecting you from govt Excess, Overreach, Over-regulation, Over-criminalization, and Actual Discrimination. Instead, as in Texas, my small business complies with a host of laws and taxes - while working side by side with foreign businesses, illegal aliens, and MBE/DBE's subsidized by my taxes. I don't want these people to get more advantages. If these people had to put up with the rules, taxes and costs we pay - they would go away!

    8. The one truth to Mr. Wilson's comment - that Destination sales taxes are easy to track; is of such limited value as to be irrelevant. The reason the Leftists want to remove the existing prohibitions against collecting sales taxes on interstate transactions - which have been applied to internet transactions - is to control and manage commerce and transactions to punish political enemies and reward their friends. Hint; the $500k cap. Why do you think they are proposing such a cap? Because they know that without a high threshold, the public would immediately see what they are up to. The cost of remitting sales tax to several dozen jurisdictions alone would swamp many mom and pop retailers.

    - The difficulty here is in the compliance and remittances. What is not stated is that sales taxes in many locations are subject to numerous exemptions depending on the product, the point of sale, the type of producer, and the type of consumer. Are they tracking all of these compliance requirements, including total sales to any one entity, or total sales within a jurisdiction? Very unlikely. Pull up your own local rules, and if you are not blown away with the exceptions - your reading the wrong rules.
    - this means every retailer becomes a "mark" - think Gibson Guitars. Since everyone will be violating the rules, they can "selectively enforce" the rules and pick who becomes an "example" and who won't.
    - the tracking and remittance software to which Wilson refers has issues - i.e. what if you want to sell or are forced to sell through a NON-Gigantic Internet Market Maker such as Ebay or Amazon... are you following me? This software only functions if you are going through a third party. Think about it - are you filling out the sales tax forms in NY, CA, DE, WA, DC, TX, ... etc. Oh, wait, if you are not - then shut your trap. Obviously, the independent retailer will have to go through the third party - or cut their own forms - just as you do if you earn income in multiple states. Can you imagine doing taxes for thousands of communities?
    - Remember the mortgage securities crisis? How did they get around the rules against fraudulently bundling the mortgages? They lied. And then when the fertilizer hit the fan, they counted on their connections and power to protect them. The "bundlers" at TaxCloud are selling a fraud - every tax paid in every jurisdiction by every entity requires a tax filing. Hello? Who do you think will be responsible when the Libtards in Californication send a SWAT team to collect your forms on the $83.00 you were supposed to collect and remit?
    - Speaking of Income. ... As of right now, many retailers pay an additional franchise or excise or blahbleedeeblah tax on their gross sales or some variation of sales. There's a lulu of names for this gibberish - but essentially it's an income tax in addition to the collected consumer sales tax. Giving Wilson the benefit of the doubt - maybe he is in one of the few districts where such taxes don't apply - though I doubt it. What is the point? Once these taxes are authorized, jurisdictions will begin demanding a fraction of these taxes - at least on sales in their jurisdictions. Many states already require these taxes. Does Mr. Wilson pay them? The difference is that once the nose of the camel is in the tent - then each retailer will be selling into markets where they will be responsible for an additional remittance on total sales - which will come out of the retailer's income. This is not on the table now... I wonder why ... eye roll. Of course this will come down the pike - AND - it will not affect international foreigners.

    9. What of the rights of the Local Tax collector where the internet retailer is located? Hello? If an internet retailer must collect a foreign sales tax (foreign=another state, not country), how long will it be before the same "fairness" argument is made against the internet retailer. See the discussion of franchise taxes in point 8. if all of your business is interstate - don't you use the same services? There's no savings on property taxes, or local income taxes, or other taxes, because govt NEVER lowers taxes or cuts spending to offset other revenue streams. Instead, additional revenue streams always lead to MORE spending. Like a Drunken Sailor or a Bipolar Spouse, govt uses more revenue to increase the minimum payment on the taxpayer's credit card. So what will happen if Destination Sales Taxes are legalized in violation of the spirit of the constitution and the interstate commerce clause as written? Local authorities WILL use the new stream of revenue as a justification to add additional local taxes on internet retailers who earn income out of state. Duh! They will see that you sold $600 out of state - and they will want a piece of that in addition to the existing income taxes. See franchise taxes above.

    10. Point of clarification; for now we are not being asked to pay out-of-state sales taxes. In case it is not obvious - Obviously this is temporary. If you have to pay point of destination sales taxes, the framework to collect and pay such taxes - as you now do on Amazon transaction, enables the taxing authorities to demand a tax equivalent to such an out-of-state sales tax which the retailer must pass on to customers or eat. Either way, this amounts to doubling the tax bill on the transaction.

    - Moreover, as a matter of principle, yes you are paying an out-of-state tax.
    - Clearly my concern is with small business, but as a consumer, if I pay a sales tax for point of destination, that is the same as paying an out-of-state sales tax on the out-of-state transaction.

    To understand this; consider the following:

    You travel to Californication. You pay all of the local taxes. They ask you where you live. They collect the Destination Tax - the sales taxes for your local jurisdiction. This is the ACTUAL OPERATION OF THE FAIRNESS TAX if it were applied EQUALLY TO THE LOCAL BRICK AND MORTAR BUSINESS.
    - My point is not that this is not fair. Obviously it is not fair to the police or firefighters in either jurisdiction - since the Destination Neighbors are being penalized and can spend less locally, since you were docked twice - and the Travel Neighbors are penalized - since you won't make that mistake twice.
    - My point is that WHERE ARE YOU WHEN YOU MAKE THE TRANSACTION! Hello?! Anybody out there? You are NOT at "home" or at your "destination" when the transaction is made.
    - Do you pay sales tax now when you get home? No? Hello Mr. Wilson?
    - There is no difference between being virtually in a location to make a purchase and making a purchase physically, is there?

    * Actually there is; the goal here is to tax everyone globally - Think about it - do you think some Chinese Billionaire whose dad was a mass murderer for Mao, so he got a few million slaves back in 81 will have to comply with these rules? But if you travel, they will want to tax your income and your consumption at both the point of consumption, and the point of destination, doubling the taxation rate... unless you're a terrorist... or a diplomat... or a drug dealer... or any of the other favored sons.

    - and privacy be darned.

    Think what this means. If your Avatar can be taxed as it moves across the board, and tracked by govt., what will they do with your Body? How will you VOTE WITH YOUR FEET to escape discriminatory taxation?

    If you MOVE from New York to Texas, how long will they be able to collect? I know this is not on the table now... but where do you think this is going? Why do you think the Founding Fathers hated this? This means passports, and laws regarding what you can buy, where, and when, specific to your address. Now you have to go through import/export for foreign transactions - but we are talking a new level - one involving your residence location at all times AND your physical location at all times.

    Hello? None dare call it a conspiracy...

    11. For the benefit of our children we must starve the beast and oppose all new taxes. And to the extent interstate commerce taxes already exist - we should oppose those taxes. States should be required to balance their budgets on their own local resources and not look to others to pay for their mistakes.

    I could go on... but there seems to be no point. Apparently we have a well funded organization dedicated to reducing the country to their little banana republic and the rest of us be darned.

    Trust me - this is just what's obvious. This can of worms is far worse than it seems. And I forgive the author for confusing the point-of destination for point-of sale; it is a distinction which only exists for the one purpose of continuing the breakdown of our hallowed tradition of stopping protectionism. Forgive me for not breaking this all out, but I'm not a troll - just an actual small business guy. I comply through Amazon - and other 3d parties - for internet sales, and I do my local taxes myself - as I mention above - there is no way I could comply if I had to comply with every jurisdiction out there. The time to read all the forms alone would be an impossible exercise - you could take a CPA and an LLM in tax for all that. If Mr. Wilson uses Amazon, as I do - he is oblivious to the potential problems and hazards of this beast. If not ... then he must be a shill, or he is not complying with the law himself. It is odd, he mentions TaxCloud - yet he seems unaware of what they say on their own website - a website loaded with Lefty propaganda and distorted statements.

    Just sayin...

    jyb's picture
    John W
    08/18/2012

    There is nothing FAIR about this, it will kill thousands of small businesses and make it easier for businesses like Wal Mart, Sears, Home Depot, etc. etc, etc. to take more of your dollars while taking them from small business.

    Ralyn Speerly Schraceo
    09/24/2012

    Sorry, Sten - but you're full of crap. I am a small business owner that is struggling to even break even because of fees and taxes that are already pushed on us.

    2012Mitt
    08/18/2012

    Stop the spending! Stop the insanity! Scrap the code and replace it with a Flat Tax now!
    http://mittromneyinternetcampaign.com/12-for-12-the-freedomplatform/

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