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Senate Passes Internet Tax, But House Might Not

From the Associated Press:

Internet sales tax bill faces tough sell in House

By STEPHEN OHLEMACHER | May 7, 2013

WASHINGTON (AP) — Traditional retailers and cash-strapped states face a tough sell in the House as they lobby Congress to limit tax-free shopping on the Internet.

To which we say, ‘thank God for the House.’

The Senate voted 69 to 27 Monday to pass a bill that empowers states to collect sales taxes from Internet purchases. Under the bill, states could require out-of-state retailers to collect sales taxes when they sell products over the Internet, in catalogs, and through radio and TV ads. The sales taxes would be sent to the states where a shopper lives…

Which will turn every mom and pop internet site into a tax collector for the IRS. And also put them under the thumb of the IRS.

That means big retailers with stores all over the country like Wal-Mart, Best Buy and Target collect sales taxes when they sell goods over the Internet. But online retailers like eBay and Amazon don’t have to collect sales taxes, except in states where they have offices or distribution centers…

eBay is violently opposed to this idea, since they have no real competition. But Amazon loves it, since they know it will kill off the small fry.

The bill got bipartisan support in the Senate but faces opposition in the House, where some lawmakers regard it as a tax increase…

Probably because it is a tax increase.

Supporters say the bill is not a tax increase. In many states, shoppers are required to pay unpaid sales tax when they file their state tax returns. However, states complain that few taxpayers comply…

So it is a tax increase.

Rep. Bob Goodlatte, R-Va., chairman of the House Judiciary Committee, which would have jurisdiction over the bill, has cited problems with the legislation but not rejected it outright.

"While it attempts to make tax collection simpler, it still has a long way to go," Goodlatte said in a statement. Without more uniformity in the bill, he said, "businesses would still be forced to wade through potentially hundreds of tax rates and a host of different tax codes and definitions." …

As we have previously noted, there are 9,600 separate tax jurisdictions in the country. The only way to simply this would be to impose a national sales tax. And, have no fear, that is what this is really all about.

Internet giant eBay led the fight against the bill in the Senate, along with lawmakers from states with no sales tax and several prominent anti-tax groups. The bill’s opponents say it would put an expensive obligation on small businesses because they are not as equipped as national merchandisers to collect and remit sales taxes at the multitude of state rates.

Businesses with less than $1 million in online sales would be exempt…

Notice that is not profit, but just sales. A lot of small internet sites could have $1 million in sales.

Some states have sales taxes as high as 7 percent, plus city and county taxes that can push the combined rate even higher…

But, remember, this is not a tax increase.

States lost a total of $23 billion last year because they couldn’t collect taxes on out-of-state sales, according to a study done for the National Conference of State Legislatures, which has lobbied for the bill. About half of that was lost from Internet sales; half from purchases made through catalogs, mail orders and telephone orders, the study said.

Who will use this $23 billion better? State legislatures or the private sector? Which will help the economy grow? Provide real jobs?

Supporters say the bill makes it relatively easy for Internet retailers to comply. States must provide free computer software to help retailers calculate sales taxes, based on where shoppers live. States must also establish a single entity to receive Internet sales tax revenue, so retailers don’t have to send it to individual counties or cities.

What could possibly go wrong with software provided by state employees from fifty different states?

Opponents worry the bill would give states too much power to reach across state lines to enforce their tax laws. States could audit out-of-state businesses, impose liens on their property and, ultimately, sue them in state court.

Oh, and this tax would also be un-constitutional.

This article was posted by Steve Gilbert on Tuesday, May 7th, 2013. Comments are currently closed.

One Response to “Senate Passes Internet Tax, But House Might Not”

  1. T%ed Cruz ” … tax-hungry politicians view the Internet as yet another source of revenue to bail out their big-spending governments,” Mr. Cruz wrote in an op-ed article for Real Clear Politics. “The misleadingly titled ‘Marketplace Fairness Act’ is a job-killing tax hike, plain and simple. It is, in effect, a national Internet sales tax, which would hammer the little guy and benefit giant corporations.”




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