Legal Issues

by Mike Masnick

Filed Under:
taxes, texas


While Texas Politicians Claim $600 Million 'Lost' In Uncollected Online Sales Tax... It Means $600 Million Texans Saved

from the that-money-doesn't-disappear dept

We've already covered the ongoing dispute between Amazon and the state of Texas over uncollected sales tax for residents there. Apparently, a state politician complained about how the state loses $600 million a year because out-of-state online retailers don't have to collect sales tax. However, as Jim Harper correctly points out, shouldn't people be pointing out that this actually means that Texans saved $600 million per year because of the government's inability to tax them on it?
What happens with the $600 million depends on what you mean by "Texas." If you mean the government of the state of Texas in Austin, why, yes, the government appears not to collect that amount, which it wants to. If by "Texas" you mean the people who live, work, and raise their families throughout the state--Texans--they actually save $600 million a year. They get to do what they want with it. After all, it's their money.

The Texas tax collector is complaining because the last thing state taxing agents want to do is collect money on in the form of use taxes, which means something like going door to door to collect money from voters based on what they bought from out-of-state. Revenuers intensely prefer to hide the process, collecting their residents' money from out-of-state companies.
A good thing to remember in these discussions.

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  1. icon
    Ima Fish (profile), 15 Feb 2011 @ 6:48am

    The solution to this tax "problem" is so simple. As we know, the Constitution bars state importation taxes. They get around that with use taxes, I personally don't see the difference. But the states want the retailers to collect that "use" information and bill the tax payers directly.

    The simple solution is this. We should pay taxes from whatever state our purchase is shipped from.

    If I leave Michigan and go to California to buy something. I have to pay California's sales tax. I do not have to pay Michigan's use tax.

    If I pay my brother to go to California to buy something, it's the same thing. I have to pay California's tax but not Michigan's.

    If I pay some dude to do it, it's the same thing.

    But for some reason, if I pay UPS or FedEX to ship what I buy from Newegg/Amazon/Etc. suddenly I do not have to pay California's tax and have to pay Michigan's tax. It makes no sense.

    Newegg/Amazon/etc. should simple collect taxes and whatever we buy based upon where it is shipped from.

    That way Newegg/Amazon/etc. can work out deals with the states or set up in states with low sales taxes. States could compete for the employment and taxes and customers could keep more of their money. It'd be win/win.

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