Senators Pushing To Tax E-Commerce

from the lost-revenue? dept

This issue comes up every few months or so and has for years, but it looks like some Senators are seriously looking at forcing online retailers to collect sales tax, even in states where they don’t have a presence. In most cases, people are supposed to be honest about things and ‘fess up in their tax returns, but almost no one does. One of the arguments against such taxes is that it would hinder e-commerce adoption, but that seems unlikely at this point. However, the annoying thing about supporters of adding an online sales tax is they talk about how it’s need to make up for “lost revenue.” Lost revenue isn’t a very good reason for a tax. The purpose of a sales tax is generally to support the local infrastructure needed for commerce — but that reasoning becomes trickier to support with e-commerce. Perhaps you could argue that all those FedEx and UPS trucks require more investment in roads, but it seems like a stretch — especially for digital goods. Of course, last year it was shown that the huge “tax revenue loss” numbers that the states kept trotting out were not at all accurate. The researchers who had done the studies admitted they were wrong, and that the actual “losses” were much smaller. So, any states thinking that any new law will somehow help their cash crunch may be in for a surprise.

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Comments on “Senators Pushing To Tax E-Commerce”

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ZOMG CENSORED (user link) says:

Tax Shmax!

What if the e-commerce server happens to be in, let’s say… The Principality of Sealand… But operates primarily in the US. Should they be taxed as well despite the fact that the main place of business happens to be way the hell overseas (In the English Channel in this case)?

I find it rather a bit odd that they would try to tax something as intangible as e-commerce, seeing as it’s very easy to move the business out of the jurisdiction of this tax.

(Or am I missing something here?)

Ralph S. says:

Questions Raised

When they say taxation, would that apply to businesses based in the usa that target customers outside the usa?

When they say taxation, would that apply to businesses based outside the usa that target customers inside the usa?

When they say taxation, would that apply to businesses based in one state but target customers from out of state?

How exactly would it work?

How much would the tax be?

In each of the above scenarios, which state would collect the tax?

Would it be a state tax or would it be a federal tax?

Isn’t it already covered on income tax?

Wouldn’t it be better to push harder on people to pay their income tax than to worry about a e-commerce tax?

Andrew Strasser (user link) says:

Re: Re: Questions Raised

worst part is that one was Illegal too. I think they dumped some tea in a harbor over that one hehe… I have no qualms with taxes I believe in paying taxes. I think it is our duty as citizens to pay our taxes. I think that if they would just legalize drugs and charge one of them nifty sin taxes on em our country would be rich. The downside is that our law enforcement would have no budget at all.

Moogle says:

Re: Re: Questions Raised

How about we call the Fair Tax the Child Porn Tax? Both names are about equally accurate. A straight income tax is definitely a more ‘fair’ way to go about it.
The ‘Fair’ Tax calls itself fair based on the false assumption that consumption increase proportionatly to wealth. All it would end up doing is allowing the wealthy to import all their goods and forcing everyone else to pay most of the taxes, as well as creating massive black markets for everything, which would further allow the sale of any and all illegal materials, including child pornography.
A straight income tax system is more enforcable, and scales more accurately to all income brackets. The idea that a millionare or billionare would have incentive to work harder and create jobs if they had to pay less taxes is simply idiotic, and it’s failed every time.
Sorry this got off topic, but I’m tired of the stupid naming schemes like ‘Fair’ Tax and Patriot Act. They just make people worry more about supporting the name without thinking about the contents.

Anonymous Patriot (user link) says:

Re: Re: Re: Questions Raised

?All it would end up doing is … creating massive black markets for everything … including child pornography.?

Wait a minute, Muggle, did you really just suggest that getting rid of the absurd, regressive, and wasteful income tax would lead to a proliferation of child porn?

You have to be bloody kidding me.

I would like to see the way THAT connection is made.

You HONESTLY think that the only thing preventing people from being sexually attracted to children is income tax? THINK OF THE CHILDREN!!!

Me thinks you might be engaging in some sort of absurd propaganda of your own. Maybe try invoking Hitler next time?

You are just trying to make ?people worry more about supporting the name without thinking about the contents.?

Oh ? and for the record ? there is nothing fair or wise about an income tax, except that that it allows congress hide the true amount of tax that they are forcing upon the American people ? and when you think about it ? that is not very fair either.

Me thinks what is far more likely is that you work for the IRS and fear for your job. That is fine, it is about time IRS agents learn what fear is.

Darkflame says:

Re: Re: Re:2 Questions Raised

It seems, “Anonymous Patriot”, that you don’t understand the definition of a regressive tax. A regressive tax is one that has a heavier effect on people with lower incomes than people with higher incomes. If the income tax were regressive, it would be people making $15,000 a year who were paying 39% of their income in federal income tax and people making $500,000 a year paying 15% of their income in federal income tax, rather than the other way around.
Sales taxes, on the other hand, are currently only applied to goods bought in brick-and-mortar stores. People with more money are more likely to buy things online, due to greater access to the Internet (and more spending on the sorts of things that are bought online, as opposed to groceries and other necessities that are rarely bought online), so they are more likely to avoid sales tax. Hence, the lack of Internet sales tax makes sales taxes regressive.
“Regressive” is a term for a particular type of taxation, not a generic pejorative (which is how you seem to be using it). You, sir, need to be more careful with your language. “Worry more about supporting the name without thinking about the contents,” indeed.
I don’t know whether Moogle (whose handle you, unsurprisingly, misspelled) works for the IRS, but, for what it’s worth, I don’t. (I just wanted to make that clear in case you accuse me of being an IRS agent too.) However, I know exactly what I pay in taxes, no matter how much the oh-so-wicked, wicked IRS and Congress may try to pull the wool over my eyes; I have the rudimentary mathematical knowledge (and the W-2 forms) to be able to figure that out. If you don’t, I’m sorry about that.
The U.S., by the way, has a considerably LOWER tax burden than that of many other countries. My German aunt would love to be paying IRS tax rates instead. And, by the way, in case you accuse me of being – gasp! – a foreigner, I am an American (as someone more astute may be able to tell from my mention of my W-2 forms).

Format c: l:Taxes /q says:

UPS and FedEx

Aren’t all those UPS and Fedex trucks already individually taxed? They seems to have plates on them like every other vehicle in town. If you want to go after a currior that isn’t paying its share of taxes to the local DOT, we ought to be looking at the USPS.

We spend all this time talking about greedy corporations. But what about the government? At least if you don’t like something about a corporation, you can just refuse to do business with them. If you did the same with the government, you would be tossed into jail.

David Tigue (user link) says:

Look at the bright side!

This may just force sales tax competition between states. If a state lowers their sales tax and invites e-tailers to move to their state to compete other states may be forced to do the same. It reminds me of the tax free zones in many municipalites. If you remember they gave businesses tax free for set number of years to build their business there but once the time was up they abandoned the area and moved to another tax free zone somewhere else. Hopefully this will hurt them in the long run. Our goverment is crumbling anyway. Might as well put the last nails in the coffin

MoMospy says:

Enjoy the criticism while you can...

Please keep in mind that this comment is coming from an avid fairtax supporter…

Enjoy your ability to openly comment on and criticize the FairTax while it lasts…AFFT wants to take that right away from you…

The Americans For Fair Taxation ( are on a mission to squash out any public criticism of the FairTax plan and are attempting to exploit the federal trademark system for the ADMITTED purpose of being able to shut down anti-FairTax websites during the upcoming elections. They have an open application to obtain a service mark for the word “FairTax.” Genie Hayes, the communications director for AFFT, openly admitted that the goal of AFFT is to get this service mark and be able to yank any anti-FairTax websites as well as to have total control over any shirts, bumper stickers, or anything of that nature that is printed with the word FairTax. They are attempting to get the strong arm of the federal government to back them up in hindering free speech and open/honest debate.

The FairTax is promising to become a rather prominent issue in the upcoming Congressional elections–and if AFFT succeeds in obtaining this service mark, they are going to be in an excellent position to keep people from criticizing the FairTax Act.

The time for opposition to their application is fast approaching. I know that an application for a service mark can’t be opposed just because the applicant’s motive is unethical. However, I do believe that there is a very STRONG case that AFFT doesn’t meet the legal requirements for obtaining a service mark. The strongest argument is all around us–the phrase “Fairtax” is SYNONYMOUS with H.R. 25 and the Fair Tax Plan.

Unfortunately, as it stands right now, I think they’ll win their service mark and they’ll be on the road to having the power to tell people that they cannot participate in public debate regarding H.R. 25. Perhaps, at least, the public will be informed of this attempt to filter open and honest critiques.

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