I agree that businesses should be required to collect some sort of sales tax, although I'm not entirely sure how. It's one thing to say that businesses have to collect sales taxes for the state the product is shipped to but what about local sales taxes? In Illinois the state gets 5% but in downtown Chicago the total rate goes up to 11.5% That's still a significant difference and one could argue that Chicago/Cook County are still getting ripped off. If companies pay all of the local taxes then life get complicated quickly, especially for a larger company like Amazon. However I'm certain that someone would come out with a fairly automatic solution for this problem so I'm not necessarily opposed to the idea.
Another option is to charge the tax based on where the company is based, or better yet tax based on the district that the warehouse or store that the item is shipped from is located. I.E. if you buy something from amazon.com and they ship it from their warehouse in Madison WI (not sure if there is one there, just an example) then your purchase is taxed as if you drove to Madison and bought it. This is still relatively complicated but I believe that it is the best solution, especially since it's closest to what would happen if you drove to a store. However I haven't put much thought into it so please let me know about any problems you see or better ideas.
I disagree. I believe you should only have to collect sales tax in and for the jurisdiction where you do business (i.e., the city/county/state combo). Washington state changed how they require sales tax a couple years ago and now charges sales tax based on where you _ship_ the end product. Out-of-state is zero as in every other state, but in-state is where it gets miserable. The table the department of revenue publishes has something like 150000 rows where, to get an accurate sales tax jurisdiction code and rate, you have to look up by the full Zip+4. Remittance monthly/quarterly/annually requires YOU to do all the work of breaking it out by jurisdiction. With any volume at all it's absolutely miserable.
Yeah, unless the federal government manages the coordination of maintaining an easily accessible nationwide database of these varying tax rates, or there's a mandate that the state tax code and collection be vastly simplified for online stores, I think this is likely to smother small e-commerce companies and discourage new ones from starting up.
I still think that paying sales tax _only_ in the district where the business is based isn't right either because when a company gets large enough (Think Walmart) that's a ton of money going to one town. However I don't see why you can't tax based on where the product is shipped from, or the closest company office to the buyer. That's no worse than a company that has stores in different districts and spreads the revenue closer to what it would actually be in a retail store.
> I agree that businesses should be required to collect some sort of sales tax, although I'm not entirely sure how. It's one thing to say that businesses have to collect sales taxes for the state the product is shipped to but what about local sales taxes?
It's not just variation by geography, but variation by product.
Different things are subject to sales tax in different jurisdictions.
Politicians are so short sighted. Something that has already created hundreds of thousands, if not millions of jobs, is already paying for itself. In California we could solve our budget problems any number of ways. Five off the top of my head: Outsource Caltrans construction projects to competitive bidders, reduce state employee compensatory packages to be competitive with the private sector, cut our prison budget by 50%, decriminalize and start collecting sales tax revenue on cannabis, nationalize and start collecting income taxes from the undocumented workers our state relies on. Five suggestions who hurt nobody but the prison industry and overpaid workers with too much job security.
I think it's all nuts that people are arguing how best to implement a messy sales tax and not trying to work out how to cut expenses by $300 million per year. I bet any decent entrepreneur could find $300 million savings per year in the California state budget.
In Australia there was a big push by a coalition of major retailers to force international internet sales to be taxed at the National Goods and Services Tax, which is 10% - or to exempt them from sales taxes for items under $1000. This backfired as everyone laughed at them, pointing out most people purchased on the internet for savings of 50% or more, and then asked how they were going to track every shipment into the country and collect tax on it. As a double insult, the major retailers actually paid for a campaign to advertise that people can make big savings shopping at their online competitors. You couldn't make this stuff up.
The only law that I think should change in California with relation to sales tax is that it should be illegal to advertise a price without sales tax included - in other words, all advertised prices should be inclusive of sales tax. It's a nightmare trying to work out how much something is when you have to know the tax laws yourself.
As a Californian I think Australians should pay a tax to California everytime they tell us what we should be doing without knowing what the hell they're talking about.
As a comparatively impartial bystander, I think that remarks like yours don't really add much of value to Hacker News. At the risk of being auto-hoist petard-wise, I also find it astonishing that any American can take umbrage at a person from one country telling people in another country what to do. That feels a lot like a pot calling a kettle black.
I think all such comments should be left outside of HN, and people should concentrate on following the guidelines of the site owner and provider. Add value where you can, be civil and constructive. Don't simply complain, but offer information where possible, and corrections where necessary.
The state needs to figure out how to cut back. They keep looking for ways to tax or lease or sale state owned properties and eventually run out and realize that they should cut spending.
Depends on what "cut" means. It's been lower than projected, but still is higher than the previous year. The education budget, for example, is constitutionally prohibited from cuts; in fact, it's required to grow. The most recently decried "cut" that the teachers' union staged a strike over was really just their budget's growth being slower lower than they hoped.
If you have numbers on actual spending, year over year, then I'd love to be proven wrong on this, but I've not seen cuts anywhere in the sense of spending decreasing every year for four years.
This is complete hokum. States aren't allowed to tax interstate commerce -- it's in the Constitution as a power reserved for Congress [1]. I have long wondered why no constitutional challenges to "use tax" have been brought (the last one I could find in an admittedly not-very-exhaustive search was brought in 1937 - excepting one brought recently in the USVI that wasn't related to this issue because everything had already been taxed in other jurisdictions and Internet purchases generally aren't taxed at all), and can't. (I've seen plenty of state supreme courts that have ruled it's OK by them - surprise, surprise.)
There's simply no basis for such a tax, and to be blunt, California can blow me if they think I'm going to remit a penny for things purchased out of state. Amazon doesn't use state resources, there's no logical justification to pay state sales or "use" taxes, period.
That the Constitution grants Congress a power (e.g., taxation) does not mean the states are forbidden from exercising similar power (see Amendment 10). Absent a Federal law prohibiting such taxes, the states would be acting within their sovereign power. Some even argue that eliminating such state-erected barriers to trade was the purpose of the Commerce Clause.
Of course modern legal thought would approach this issue by reasoning that interstate commerce can be reached by the states if it exerts a substantial economic effect on intrastate commerce.
You're right about states not being prohibited from enacting laws governing interstate commerce, I think the clearer argument is one of jurisdiction. States have no right to compel a company that is not doing business within their borders to collect sales tax.
States can and do collect tax on interstate purchases, they just do it by compelling the individual taxpayer to report and pay tax on those transactions. The problem is, without any way of auditing those transactions, there's basically no way to enforce this rule.
There are two big concerns with a state's ability to tax: the due process clause and the "dormant" commerce clause[0]. Quill Corp v. North Dakota[1] is the most recent SCOTUS case on point, and it really confused more issues than it settled.
The short, minimally accurate version goes like this: The analysis under the due process clause and the commerce clause looks very similar—they both deal with fairness and the connection ("nexus") the taxpayer has to the state. There is older precedent, Bellas Hess, that required a physical presence for nexus under both the due process and commerce clause. In the 67 years after Bellas Hess, the due process doctrine changed a lot, so courts around the country began to wonder if Bellas Hess was still relevant. North Dakota jumped the gun, and tried to overrule Bellas Hess for the Supreme Court. The Court was not pleased. So Quill holds that the nexus requirement is different under the due process and commerce clause. Due process does not require physical presence, but the Bellas Hess physical presence test is still the law under the commerce clause.
There are some state court decisions applying Quill every which way.
Why does this all matter? The due process limit is unavoidable, by the courts, the federal government, and the states.
The commerce clause, on the other hand, is a limit on states, but it is within congress's powers to redraw. For example, Congress clarified the state's power to tax income in P.L. 86-272.
I think states are losing revenue that is rightly theirs. Amazon has basically built a business model around avoiding sales tax. I like buying cheap stuffs on Amazon as much as anyone, but I also like having state-funded universities, decent roads, and the rest of the goods that sales/use taxes fund. States shouldn't have to suffer because so much of their economy is moving online. As long as states mind the ruptured, tangled mess left of Quill, and follow any rules thrown down by congress, I think states can get theirs without any constitutional problems.
[0] The dormant commerce clause is like the shadow of Article 1, Section 8. Congress has the power to regulate interstate commerce, so even where Congress has yet to regulate (such as use tax land), states are still prohibited from certain actions. See http://en.wikipedia.org/wiki/Dormant_Commerce_Clause
On a somewhat related question, why does the US think it's okay to tax its citizens worldwide? If the money is not earned using US resources, there should be no claim.
Here are a few guesses—
1. The Constitution doesn't prevent it.
2. Citizens haven't voted to stop it.
3. People still want citizenship/residence, so they must be "worth" the tax burden.
4. The tax code doesn't really care about tax-payer's use of resources. Not using public resources is no excuse for not paying federal income tax.
5. The U.S. government is afraid of people hiding income overseas. We lose money. Countries may begin a income tax race to the bottom.
Note, the government doesn't tax all foreign income, only citizens and residents. There are even deductions available to citizens living abroad.
I support this, actually. I think we're long past the point where online retailers need help competing with local ones -- rather the contrary, particularly in the bookselling business. (I won't miss Borders, but losing independent local bookstores is unfortunate, I think.)
I agree, though, that something has to be done to make the information load tractable, such as a single tax rate for the whole state, or else an easily accessible online database.
No, it's a great plan. What California really needs is more taxes. (Please forget that Gov. Davis was recalled just a few years ago for raising vehicle registration taxes.) Not just that, but web retailers have it easy, and encoding ever-shifting tax laws for various localities from which orders might be placed is not onerous at all. (Remember, kids, some states apply sales tax to juice, and some only apply it if sugar is added!)
This totally won't harm business, and is easy to implement.
[To non-residents of our state: California's legislature is pretty disfuntional, and frequently gridlocked over even simple issues. For example, our budget is often months late, tax returns came back as IOUs one year, and the huge chunk of funding appropriated to build prisons due to severe overcrowding that has had us in trouble with the federal government for years hasn't resulted in one new prison.
So don't worry too much over every idea that floats through our Assembly. We're a somewhat pathological case.]
If at least local or state governments were barred from loading on debt, these matters would not arise at all. When today's politicians can mortgage the future to pay for present perks, they will surely do it.
If each increase in expenses were immediately covered by an increase in taxes, it would make the public much more aware of the costs of political promises.
28 comments
[ 628 ms ] story [ 124 ms ] threadAnother option is to charge the tax based on where the company is based, or better yet tax based on the district that the warehouse or store that the item is shipped from is located. I.E. if you buy something from amazon.com and they ship it from their warehouse in Madison WI (not sure if there is one there, just an example) then your purchase is taxed as if you drove to Madison and bought it. This is still relatively complicated but I believe that it is the best solution, especially since it's closest to what would happen if you drove to a store. However I haven't put much thought into it so please let me know about any problems you see or better ideas.
It's not just variation by geography, but variation by product.
Different things are subject to sales tax in different jurisdictions.
http://www.amazon.com/gp/help/customer/display.html?nodeId=4...
I can't imagine it makes the online shoppers happy, though.
If all of the sales tax goes to where the customer buys, who pays those costs?
In Australia there was a big push by a coalition of major retailers to force international internet sales to be taxed at the National Goods and Services Tax, which is 10% - or to exempt them from sales taxes for items under $1000. This backfired as everyone laughed at them, pointing out most people purchased on the internet for savings of 50% or more, and then asked how they were going to track every shipment into the country and collect tax on it. As a double insult, the major retailers actually paid for a campaign to advertise that people can make big savings shopping at their online competitors. You couldn't make this stuff up.
The only law that I think should change in California with relation to sales tax is that it should be illegal to advertise a price without sales tax included - in other words, all advertised prices should be inclusive of sales tax. It's a nightmare trying to work out how much something is when you have to know the tax laws yourself.
I think all such comments should be left outside of HN, and people should concentrate on following the guidelines of the site owner and provider. Add value where you can, be civil and constructive. Don't simply complain, but offer information where possible, and corrections where necessary.
In short, play nice.
If you have numbers on actual spending, year over year, then I'd love to be proven wrong on this, but I've not seen cuts anywhere in the sense of spending decreasing every year for four years.
There's simply no basis for such a tax, and to be blunt, California can blow me if they think I'm going to remit a penny for things purchased out of state. Amazon doesn't use state resources, there's no logical justification to pay state sales or "use" taxes, period.
[1] Article 1, Section 8
Of course modern legal thought would approach this issue by reasoning that interstate commerce can be reached by the states if it exerts a substantial economic effect on intrastate commerce.
States can and do collect tax on interstate purchases, they just do it by compelling the individual taxpayer to report and pay tax on those transactions. The problem is, without any way of auditing those transactions, there's basically no way to enforce this rule.
The short, minimally accurate version goes like this: The analysis under the due process clause and the commerce clause looks very similar—they both deal with fairness and the connection ("nexus") the taxpayer has to the state. There is older precedent, Bellas Hess, that required a physical presence for nexus under both the due process and commerce clause. In the 67 years after Bellas Hess, the due process doctrine changed a lot, so courts around the country began to wonder if Bellas Hess was still relevant. North Dakota jumped the gun, and tried to overrule Bellas Hess for the Supreme Court. The Court was not pleased. So Quill holds that the nexus requirement is different under the due process and commerce clause. Due process does not require physical presence, but the Bellas Hess physical presence test is still the law under the commerce clause.
There are some state court decisions applying Quill every which way.
Why does this all matter? The due process limit is unavoidable, by the courts, the federal government, and the states.
The commerce clause, on the other hand, is a limit on states, but it is within congress's powers to redraw. For example, Congress clarified the state's power to tax income in P.L. 86-272.
I think states are losing revenue that is rightly theirs. Amazon has basically built a business model around avoiding sales tax. I like buying cheap stuffs on Amazon as much as anyone, but I also like having state-funded universities, decent roads, and the rest of the goods that sales/use taxes fund. States shouldn't have to suffer because so much of their economy is moving online. As long as states mind the ruptured, tangled mess left of Quill, and follow any rules thrown down by congress, I think states can get theirs without any constitutional problems.
[0] The dormant commerce clause is like the shadow of Article 1, Section 8. Congress has the power to regulate interstate commerce, so even where Congress has yet to regulate (such as use tax land), states are still prohibited from certain actions. See http://en.wikipedia.org/wiki/Dormant_Commerce_Clause
[1] http://bulk.resource.org/courts.gov/c/US/504/504.US.298.91-1...
Note, the government doesn't tax all foreign income, only citizens and residents. There are even deductions available to citizens living abroad.
I agree, though, that something has to be done to make the information load tractable, such as a single tax rate for the whole state, or else an easily accessible online database.
This totally won't harm business, and is easy to implement.
[To non-residents of our state: California's legislature is pretty disfuntional, and frequently gridlocked over even simple issues. For example, our budget is often months late, tax returns came back as IOUs one year, and the huge chunk of funding appropriated to build prisons due to severe overcrowding that has had us in trouble with the federal government for years hasn't resulted in one new prison.
So don't worry too much over every idea that floats through our Assembly. We're a somewhat pathological case.]
If each increase in expenses were immediately covered by an increase in taxes, it would make the public much more aware of the costs of political promises.