Right idea, wrong direction. Instead of trying (and failing) to enforce a tax on all good and services delivered across state lines, they should instead eliminate the tax on all good and services delivered within the state. Eliminating sales tax, not expanding it, ensures a fair system with no expenditures on enforcement. The loss of sales tax revenue can be balanced by an increase in income and/or property taxes.
Of course, given the flatness of incomes, the decline in property values, and the rise in the cost of goods, you'll need to increase those other taxes by a good margin in order to offset the loss of the tax that rises with inflation. And they'll also have to balance the lost income from tourists, who buy stuff but don't live or work in the state. But then again, no sales tax means more money goes to local businesses (and that's supposedly the goal), so it works out.
Tax Internet Sales -- Just Like Local Stores
Have you ever bought something online, had a problem, and tried to reach the company's customer support line? Could you even find a phone number to call? If there was a phone number to call did you reach a phone tree or a person? Were you on hold for a long time? If you ever did reach a human, was the person in the United States or did they at least speak English (or Spanish) clearly enough to be able to help you?
A local store employs people in your town, boosting the local economy. The local store either owns or pays rent for their space, which means they pay local taxes to support police and fire services and schools, etc. The local store has people who can help you when you have a problem.
But buying something from your local store usually costs a bit more. This is because they pay to have actual employees to help you, pay rent, pay to maintain a building, etc. And, finally, the goods cost a bit more because you have to pay sales taxes when you shop at your local store.
The state of California, in its wisdom, has chosen to provide a huge tax subsidy to anonymous internet businesses, at the expense of your local retailers. You pay sales taxes locally, but not online.
Shouldn't it be the other way around? Shouldn't the state want to promote local stores, local employment, local police and fire services, local schools and a prosperous local economy? Shouldn't the state be promoting a thriving local economic ecosystem? Instead the state provides a huge competitive advantage to anonymous internet businesses.
With a huge budget deficit, with the governor calling for 10% across-the-board cuts in your children's schools, police patrols, fire protection, parks, and all the other things our state government does for us, the state still hands the anonymous internet businesses a huge competitive advantage over our local retailers by letting them no charge sales taxes.
You owe it to yourself and your local community to find out if YOUR Assemblymember or Senator supports a requirement that internet companies charge the same sales taxes as your local businesses charge.
Click through to Speak Out California.
Want to reply to a comment? Hint: Click "Reply" at the bottom of the comment; after being approved your comment will appear directly underneath the comment you replied to
California already requires residents to pay use tax on out-of-state online purchases, via the state income tax return. Perhaps the State should hire a team of auditors in Washington state just to check purchases made by California residents at Amazon.com. Congress could simplify the whole problem by replacing the patch work quilt of state and local sales/use taxes with a national rate of 15% on all retail purchases and a similar tax on many services. It could split the proceeds with the states and use its portion to reduce the annual Federal deficit. Of course, it will probably never happen. Congress is too chicken and the people who pay little or no income tax to the Feds now would not want to start paying higher consumption taxes. A good tax is a tax that someone else pays. It was true when the late Senator Russell Long made the observation years ago and it is true today.
Good point about flat tax. I just believe it should stay in my hands as long as our current congress can't handle the money correctly. How about we let states decide how much of our money stays within the state. Better yet, as a tax payer, how about we let the voter decide for real. Vote!
Dave,
Your idea is a progressive and fiscally sound one, but even I [who usually finds a lot of value in your articles], can't bite the bullet on this one.
The economic noose is tightening so quickly now that we will soon be howling for any kind of relief, and I can't imagine anyone will support raising ANY tax while we are feeling that noose strangle us into cutting every expenditure possible to improve our overall economic situation.
We are not far past the beginning of this economic slide, and I fear that we are still high on the slope; when I look at our current position, I truly can't see the bottom yet, and I fear that reality of the depth of this recession--when fully realized--will rock this nation in a way that hasn't been experience in my lifetime.
Dave -
If you are having trouble contacting an internet retailer, use a different internet retailer. The good ones - the BEST ones have their contact info right there in your face on every page. And the good ones - the BEST ones have their contact centers in the USA. If you find yourself dealing with companies that make it hard to reach them, and then provide you with offshore customer service, buy from somebody else. But please don't blame your frustration on your opinion that I don't already pay enough taxes.
Your taxing argument holds no water. The internet retailers are paying huge taxes in their own jurisdictions. I recently worked many years for a "top internet retailer" and not only did we pay massive federal and state taxes, we also paid plenty of state and federal payroll taxes and kept over 500 people employed - 100% of them in Virginia.
It's not the state's responsibility to provide an artificially level playing field to make the marketplace beneficial to companies located within its borders. Let the marketplace decide who profits and who goes under. Most likely it's going to be the inefficient local guy who can't compete. That's called economics. If you can't deliver what I can get elsewhere for less, I'm going to get it elsewhere for less. It's been that way for a thousand years - don't let the fancy internet make you think that's going to change.
"The internet retailers are paying huge taxes in their own jurisdictions"
Sales taxes are not collected if you sell to someone out of state.
"It's not the state's responsibility to provide an artificially level playing field to make the marketplace beneficial to companies located within its borders."
If We, the People of the state of California decide to take care of each other, that would then be our responsibility. That is what democracy means.
Yeah, Dave, the local DSL provider who collects state taxes from me every month has the telecom center in India where "Bob" Ravichandran has taken my call. So does the business I work at to help employees with their "high tech" problems. What's the difference, besides the fact that Bob helped me while I unsatisfactorily battled for hours with my "colleaqgue?"
How would you propose to regulate this business?
I live in one of 17 states that requires I estimate sales tax on my state income tax forms for online purchases. The amount I claimed this year? Zero. That's right.
I've not had any "frustrating" experiences buying goods online, because I use reputable sellers and do my homework, so returns are few and far between.
I've tried to "buy local" as you suggest - I have two options where I live: Target and Wal-Mart. 60% of the time, items I purchase from these stores fall apart or are defective in some way. Ex: The $40 iron I bought wouldn't heat up, the room darkening curtain liners I bought were stuck together in the packaging and ripped to shreds as I removed them from their plastic packaging. All garbage produced in China. I wasted my time and gas driving BACK to the store to return said items.
Additionally, specialty items are not available where I live. The one store in town where I used to shop for an specialty item has been closed unexpectedly three times in a row when I stopped by! And I'd have to pay three times as much. already pay property taxes, 6.5% sales tax on essentials, state and federal income taxes. So you'll have to excuse me if I don't claim sales tax on the paltry 200 dollars or so of goods I bought over the internet over the past year.
Nice in theory but what would the tax rate be? Different jurisdictions charge different sales tax rates and some charge none at all. Any internet tax would have to be national, not just for California.
And to tell the truth, I often shop online not because of lack of taxes, but because online vendors usually have a better selection of merchandise than the local store. No amount of taxation would change this fact.
Wow, Dave. The breadth of your ignorance never ceases to amaze. Have you ever purchased anything on the Internet? Do you live in California? As a California resident, anything purchased online from any retailer that has any type of physical presence in California is levied with sales tax, including any retailer selling on eBay. While this doesn't cover Amazon or iTunes for the moment (which I assume are the retailers you're angry at), this covers pretty much every national retailer, and a significant chunk of Internet sales. This same sales tax structure holds for each of the 44 states that has a sales tax and was promulgated by a 1992 Supreme Court ruling regarding mail-order businesses. You do know you can also remit any unpaid sales taxes to your state tax authority on your state tax return if you feel that strongly about it. Look up "use taxes".
By the way, what are "anonymous internet businesses" and what are you buying from them?
And why is it that progressives always want to "progress" back to the 1950's? Is the Internet really that terrifying?
This was my point - if they have a physical presence in California they charge sales tax. So if they are NOT in California, California subsidized them, giving them an unfair competitive advantage over companies located here. What is the sense in that?
how creative. let's continue to pay for the over bloated sinkhole of government without first addressing waste. after all, it's far easier to pick the pockets of working stiffs than to insist on value and efficiency from the federal and state monoliths receiving free money. since when did fry's, walmart, safeway, target or any great number of corporate retailers become local entities? was this after those spiffy tax incentives dolled out during those eminent domain proceedings? want more money for schools, first responders and all essential services, let's go to the corporations and say now's the time to pay your fair share and then dwell into the abyss of governmental bureaucracy and see how it is that we can end the bloat and incestuous relationships between government and commerce. then, let's take what most writers on this post have to say with a grain of salt.
"bloated sinkhole of government without first addressing waste"
Care to identify the "waste" of which you speak? I have NEVER heard an anti-government type say WHAT they will cut, in any amount that makes any difference. Whenever I try to pin them down, they come up with really small stuff, nothing that adds up to even one percent of the massive Reagan/Bush deficits that have run the debt up to ten trillion dollars. We all pay interest on that debt...
Foolishly one day I went to the website of one of the libertarian think tanks and they had a link to their proposed USDA budget, as an example of how they'd trim government. They basically cut the budget by 90% and removed everything except food safety inspections :P
Yes.. Frustrating as hell... let's always raise taxes and give more money to a bunch of self serving incompetent idiots to spend
You really don't like democracy, do you? The government in place is the government that We, the People elected.
Good job Dave! When your asked specific items of interest to your readers, you put them down. You made a mistake in your post and instead of admitting it, you shoot the people for not agreeing with you. While I have read posts of yours in the past I agree with, your blatant tearing down of those who do not agree with you shows your true worth. None.
As a frequent (if not almost total) online shopper, I won't comment about buying locally. That said, I do agree that sales tax needs to be charged on all online transactions. We wonder why our schools and localities suffer from lack of funding -- its because most such local funding comes from sales taxes. I think there should be a 'national' rate for all online transactions, and have it paid to the state where the purchased items are shipped.
Any tax on struggling Americans is a bad one. I shop locally and try to buy most of my needed items here at home. Unfortunately, many of the consumer electronic stores and other specialty stores that I frequent have markups in excess of 100%. Why would anyone in their right mind give them the business when they charge well above their true expenses. I refuse to make millionaires at my expense. Tax high end luxury items and you've got a deal.
"Any tax on struggling Americans is a bad one."
Should we just stop having police and fire departments, then? Should we just stop having schools?
stavros clearly states *struggling* Americans in his comment. In fact, in his last sentence he clearly differentiates between the struggling, and the wealthy.
To paraphrase: Since *general* Sales Tax increases disproportionately impact the poor (in WA the poorest 20% of the citizenry paying almost 20% [17.5% ] of their income in taxes, not the least of which is sales tax.), this is hardly a fair tax. It is essentially punitive against those who need tax breaks the most, whilst being shrugged off by those who can afford the increase and will only notice negligible impact. To this end, steeper luxury item taxes are targeted toward those who, while they may resort to caterwauling, hysterical protestations can certainly afford to take the hit.
The era of mom-and-pop retail is effectively over in any major city in this country at this point in time. The demise has less to do with the Internet, and more to do with Wal-Mart, Best Buy, Fry's Electronics, and the rest of their Big Box/Everything Under One Roof!/Open 24-7-365 business model. A model that consumers have embraced time and again.
Do I agree with it? Not a chance. But to blame the current state of small-business-affairs, and especially near criminal lack of funding for public services on the Internet, or sales thereupon, is, to be blunt, completely asinine.
But, way to waltz way out to the edge of the slippery slope with your straw-man.
Gee Dave. Pardon me for leaving out the word "new" when I spoke of taxes. How about we start taxing commentators who have too much time on their hand that they look for constant ways to take others down. By the way, how do you feel about taxing the ultra rich and removing their tax breaks on luxury items? Hope that's not too much to ask. Maybe you believe in trickle down. How about removing drug commercials from television which are paid for by everyone when the drug manufactures write off advertising expenses? There are many ways to make tax equitable so why not concentrate on the ones that are unfair to the majority?
A 'bit' more??? How about 25% more? Or 50%? No, I will continue to purchase everything I can online. If Fry's wants to charge me $175 for a HD I can find online for $60, then it is they who are greedy and deserve to be put out of business.
WRONG WRONG WRONG.
Period.
Such depth. I salute you.
Loading comments…
Before the largest crowd of his campaign, Democratic presidential contender Barack...
John McCain's famously cozy relationship with the press is getting a bit testy. Taking questions in...
**UPDATE 7/25** ThinkProgress now reports that the bar...
There is one more John McCain gaffe that...
As we have observed throughout the last several years,...
In a flagrant political act, the State Department has...
Major news organizations are drawing...
"Extra" has learned that Heather Mills' publicist, Michele Elyzabeth, has...
Will the mainstream media cover the John Edwards love child scandal put out there by the...
I have a wait problem. I hate to wait. When...
WASHINGTON — Congress approved mortgage relief for 400,000...
Ashcroft Claims Waterboarding...
Posted April 15, 2008 | 03:21 PM (EST)