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
    Idobek (profile), 24 Feb 2011 @ 5:07am

    Re: Re:

    Under your plan, Amazon/New Egg/etc could just set up a small "shipping office" in Delaware and charge the local sales tax from there -- which is nothing.

    Yes, it's is known as tax competition.

    According to the story, that's how much the State of Texas is getting paid already. If this is the problem, I don't think you've solved it.

    The problem is that the tax code is so complicated that the is a dispute over what is owed by whom.

    Texas doesn't get the $600M it thinks it's owed, and Delaware doesn't really gain anything either, except for whatever small, indirect boost there might be from having that single, skeleton-staffed shipping office operate in the state.

    Lots of the indirect boosts off lots of shipping offices. Texans get to pay less tax and (shock-horror) spend that money on what they think is important. Delaware gets a lot of shipping offices, lots of tuckers travelling through, more use out of its airfields etc etc. Focusing only on a shipping office is short sighted - those indirect benefits soon add up.

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