Nationally, Both Parties Pander to eBay and Amazon and Punish Bricks & Mortar Businesses, State & Local Taxpayers

The House of Representatives voted to extend the Internet tax moratorium. By a vote of 405-2 the House voted to prevent states and local governments from applying their sales tax powers to Internet sales. This of course gives a considerable advantage to such sales over companies that operate out of a bricks and mortar building. House Votes to Renew Internet Tax Block:

The bill to extend the tax break fell short of the permanent exemption that many lawmakers favor. A bill to make the moratorium permanent has 238 House co-sponsors, more than a majority.

So when you order that book from a seller that does not have a nexus to your state, every book dealer in your state is disadvantaged.

It means that the Internet purchase you make on eBay not only places your local merchant at a disadvantage, but that you and that merchant have to make up for the billions of dollars in lost sales tax revenues.

This is nothing short of special treatment, and violates the first principle of taxation: make sure the tax is fair and applies equally to all those similarly situated.

Probably the only good thing about the House vote is that they stood up to the powerful tech industry and did not make the ban permanent.

The scurrilous argument is that the Internet needs this break in its infancy to survive. What nonsense. There are reasonable solutions. There can be a uniform national tax so sellers do not need to calculate different rates for every state and municipality. That federal government can collect it and return it to each state. The states can make their own decisions on how to return the money to the municipalities.

Comments

[Anon]

I think the internet has prompted the retailers to provide more sales...people I know tend to go to stores to make there purchases...there is something about hands on that you don't have on the interenet...the only reason we buy (seldom) on the internet is for this saving and isn't something we have to have right now.

[deermouse]

Many states (including WI) have a mechanism for collecting tax due on Internet purchases. Hint: it's on the Income Tax forms. Is our household the only one that ponies up? (I am shocked!) As to letting the states make their own choices about distribution to municipalities from funds collected by the Feds, don't hold your breath. (How much of a cut would the Corporate Subcontractors take?)

Like Anon, we use the Internet to research major purchases which we then get from bricks and mortar stores. Very, very good to have one's decisions made before the sales personnel come over to blind one with chatter.

Agree that Internet retail is no longer in its infancy and needing this break to survive, but the states should do more to remind taxpayers about their legal obligation to keep those purchase records and fork over the funds by mid-April.

[Troy Thiel]

Good comments on an issue that is getting worse. Clearly, by all indications, internet purchases are getting larger and larger and that means more damage to municaplities and their tax receipts. We are paying for the lost revenue in the end through higher property taxes, user fees and increased sales taxes as we speak do to the loss and lessening of the sales tax revenue stream.

Here's an idea...how about a 1-2% sales tax, federal, on ALL internet purchases (getting rid of that state tax conundrum) that is immediately put in our Education funding from the feds...the internet was a product of huge tax subsidy creation from the get go, continued subsidy by tax perks ad infinitum....and its the best example of the technology driven new economies...how about it playing it's part in funding our schools to better compete....sustainability anyone?

[somewhere in the middle]

I agree with Anon. Sites like NewEgg can be cheaper than say BestBuy or Circuit City. {Haven't bought anything from the aforementioned brick-and-mortar stores in awhile, although I've been to a BestBuy only to look (and be bothered by 3 salesmen to buy an HDTV...)}

Unlike deermouse I don't think it will hurt the community as far as revenue. It's on the shoulders of the brick-and-mortar stores; they can compete if they lower their prices to compete - eg, sales tax is fairly close to the cost of shipping at most sites. Get the price close and the brick-and-mortar are now competitive.

And there are many who still refuse to buy online...

[somewhere in the middle]

Pardon my error, deermouse should be "Troy Theil"

[Ross Odom]

Mr. Thiel forgets that the internet is used to buy AND sell. I would guess that from his state there is about as much money spent for goods from other states, as there are consumers from other states buying goods from his state. Much of this commerce would not happen without the internet. As sellers generate income and wealth, they are better able to buy more local goods and services and pay more sales taxes that go along with them. Free markets are what sustains.