In EU internet purchases were always taxed, and yet online-only competitors still manage to compete with brick-and-mortar stores very successfully. So this article is quite bollocks.
Everything was taxed, equally (with a few exceptions like food). No wasted time figuring out which tax to use, keeping up with tax changes, arguing why the brick & mortar store has a 5% rate while the online shop has 10%, etc.
Over the pond it's the same for everybody. Doesn't seem so in the US.
I think you misunderstand. The proposed changes are simply to remove the tax exemption. State sales tax will apply to internet purchases, just like they do for mail order. The confusion comes from the weird sales tax systems in place. I live in Colorado where the sales tax rates change according to a maze of Byzantine laws.
The main thing the EU did to simplify that is require one set of VAT rules per country. They can differ. For example, Denmark charges VAT on books, while the UK doesn't. And, like with the proposed US legislation, it's based on destination: if you order from amazon.co.uk to a Danish address, you pay VAT based on Danish rules.
But what can't happen is a situation where Herning, Ishøj, and Copenhagen charge different rates for different products. That simplifies the system considerably.
This is not what VAT is. Import duty is separate. VAT is paid on EVERY step when the product is sold/resold. So the wholesaler pays VAT when buying a product from the manufacturer, then a local shop is paying VAT while buying the product from the wholesaler, and then the customer is paying VAT once again while purchasing the product. Oh,and if the value of the product is over a certain value, they need to pay VAT again if they want to resale the product to somebody else as well! So you end up paying VAT even several times in this chain from manufacturer to the customer.
While technically true, this is a bit misleading since VAT is often quoted as the total amount (say "15% VAT") and this is not what is charged at each step (as would happen with a pyramiding gross excise tax). Instead what happens is the VAT is split up and a portion of it is collected at each step.
Yes, I know what VAT is. The US does not have VAT, and would need either an import duty or a requirement that sales tax be paid on imports for the situation to be equivalent to the EU... and that is not part of the bill AFAIK.
EasyDNS.. the company that closed my company's paid account over a month before the term ended because I informed them we didn't want to renew. If they think paying a modest sales tax is going to offset their terrible service, they are dreaming.
I got it... I'll get back to you in a bit.. I still have the emails from the ticket.. I'll forward them to you.
I had a very positive opinion of EasyDNS before it happened.. I was lucky enough to have already moved to another service a few days before so there wasn't any site disruption... but your rep didn't know that.
This post seems to imply that we're considering a special Internet tax here. Last I heard, the proposed bill was simply about removing the special exemption Internet and mail order purchases currently enjoy. Since when is there an additional, special Internet tax being proposed?
It doesn't really have anything to do with the Internet or mail order per se.
Businesses have never, in general, been required to collect sales taxes for other states. It doesn't matter if the sale is on the Internet, mail order, or face-to-face. In some states (Washington is one for sure, but I believe there are others) you can even get out of paying their own sales tax for face-to-face purchases. For example, if a resident of Alaska (no state sales tax) has proper ID, he can travel to Washington state and pay no Washington tax on his purchases (you do have to certify that you're planning to take your purchase out of Washington state -- if it's going to be consumed or used in Washington, you have to pay Washington tax).
So re-frame it as the removal of the exemption. Makes no difference how you spell that out, it adds up to an increase in taxes on goods sold / bought for American companies.
> So re-frame it as the removal of the exemption. Makes no difference how you spell that out, it adds up to an increase in taxes on goods sold / bought for American companies.
No, it doesn't. US buyers were already responsible for local use taxes for remote purchases. This just shifts who is responsible for the taxes to the retailer (if the taxing states opt-in, which requires them to adhere to certain tax streamlining provisions and other requirements that make the process simpler for retailers.)
This is a tax simplification and collection efficiency measure that doesn't change the amount of tax due on any sale.
This post is idiotic for at least 3 reasons I can think of:
1. The tax is not "specific to the internet" but is designed to make it so that internet-only businesses are required to collect the same taxes that bricks'n'mortar businesses are required to.
2. EasyDNS's right to sell to US customers is regulated under a giant freaking, bureaucratic law known as NAFTA. If they every got large enough to compete with large US corporations, they could become subject to all sorts of mechanisms to ensure that US corporations can compete with them (countervailing duties for starters). They should shut the hell up.
3. Everything they say also applies to US companies selling to Canadian customers.
Brick-and-mortar businesses collect, at most, two sales taxes. Even if a customer from every single state walks in their door. They can engage one local accountant and pretty much have all their questions about tax classification of different products/services, filing requirements, etc. covered.
Online retailers will have to collect, at most, 53 different taxes, under 53 different tax codes, remitted to 53 different entities all with audit rights. That's not really the same.
> Online retailers will have to collect, at most, 53 different taxes, under 53 different tax codes, remitted to 53 different entities all with audit rights.
More than that, actually; I have no idea where you get 53 from; the relevant entities ("states" as defined in the MFA) include the 50 states, the District of Columbia, 5 named territories, and "any other territory or possession of the United States."
But its not just "online retailers", its any remote seller. Including anyone who does online and/or mail and/or phone sales, which includes lots of entities that are also brick and mortar outlets. But only if they choose to sell into each of those jurisdictions: you choose where you will accept orders from, and as a consequence of that choice you choose which tax laws you will deal with. Just like with a brick and mortar business, where you choose where you open outlets, and as a consequence of that choice you choose which tax laws you will deal with.
And each of those jurisdictions is required to provide free-of-charge software to calculate tax rates and hold retailers harmless for any errors due to the software.
re: #2 I'm not sure what you mean "if we ever got large enough to compete with large US corporations". It's not like we don't already and at some point we magically hit a point where we have to compete with Godaddy, Verisign et al. We have to compete with them already and ...
#3 yes, you are absolutely correct. Taxes here impede our competitiveness.
Absolutely agreed here, this is just going to give an edge to companies outside the US.
Worse still, it's going to hit small businesses worse because they will simply have no choice but to pay it. The mega corps have their accounting down to an art, they'll figure out a way past it given how many gray areas are inevitable in a completely new form of tax like this.
> The mega corps have their accounting down to an art, they'll figure out a way past it given how many gray areas are inevitable in a completely new form of tax like this.
Its not a new form of tax. Its permission for states to opt-in to a more efficient collection method for existing sales and use taxes if they also agree to certain streamlining requirements for those taxes and certain support mechanisms for the retailers that would be required to collect and remit the taxes.
Where I live, kids under 15 have to wear a helmet while biking. But I never see any kids wearing helmets. Because laws that cannot be enforced will be ignored freely. Piracy is supposedly illegal, but look at the attitudes towards it: it's not considered a crime because it's impossible to enforce.
Perhaps bitcoins while be regulated, but will it not get green-stamped by the general public just like piracy?
Let's put it this way: if it is a crime to exchange USD for Bitcoin, where are you going to get your Bitcoin money? Bitcoin would die overnight if exchanges went away, and most people are not going to send an envelope full of cash to some shady person on the Internet.
The legislation now before Congress simply allows states to collect sales taxes (if the states have sales taxes) on transactions to residents of their states by online retailers. (There was a special act of Congress that exempted online retailers that don't have "nexus" in a particular state from such taxes.) The immediate effect of this legislation, in my opinion, is that Amazon will open a distribution center in my metropolitan area, located in a state with sales tax, and offer same-day delivery for Prime customers. And I will probably take up Amazon on that offer rather than shop in my locally owned retail chains such as Target (walking distance from my home) and BestBuy (which I loathe shopping at, and hardly ever visit). The United States Senators from my state support allowing states to impose sales taxes on online retail transactions, because Target and BestBuy (and some other large retailers) employ a lot of their constituents, and because new tax revenue for Minnesota will be spent by a governor and legislature who belong to the same political party they do. But I will shop at Amazon if this happens. The new law is not going to hurt my favorite online retailer at all.
A few years ago, there was a big case where Massachusetts tried to force (non-internet) retailers in New Hampshire to collect Massachusetts state taxes from people who purchased things in New Hampshire that might in the future be used in Massachusetts. The case got thrown out by the state supreme court because to enforce it would require Massachusetts to force New Hampshire businesses to violate their customers' privacy about where products would be used. New Hampshire in turn passed a law prohibiting retailers from sharing private customer information with Massachusetts auditors.
Trying to make the citizens of one state liable for enforcing the laws of another seems ridiculous by itself. Making them enforce the thousands of arbitrary, convoluted, constantly changing laws of 49 other states and all of their localities is way beyond reasonable.
At least there appears to be a clause that states will have to simplify their tax rules and provide free software to manage it. Although the idea of integrating an e-commerce system with 50 separate bureaucratically-designed systems doesn't really seem that appealing either... If the states also had to pay for every integration and the maintenance of all e-commerce software, then it would be a little more reasonable.
24 states have already certified 6 sales tax service providers. It is expected that most states will certify these same providers. The providers have already integrated their service/software with a significant number of the major e-commerce platforms. After all the integration drives business to them. Depending on the service provider and the features used there may or may not be a fee for the retailer.
Oregon [Senator] Jeff Merkley said he voted no "because the citizens of Oregon have said nine times that we don’t want our families or small businesses burdened with sales taxes."
"It’s a regressive tax. It’s an inefficient tax," he said. "And this bill would force our Oregon retailers to collect this regressive, inefficient tax for other states and municipalities. That is just wrong. I hope the House does the right thing and stops this legislation from trampling on Oregon small businesses.” [1]
The other Oregon Senator (Ron Wyden) was one of the co-authors of the 1998 Internet Tax Freedom Act[2] and is similarly opposed to this bill.
"Today the senate is voting to take a few more inches off the little guy," said Senator Ron Wyden (D-OR), who has fought the bill hard. "You saw ads taken out by some of the biggest businesses in the country. It's easy to see why, Mr. President. With this vote, what you have is big businesses being given the ability to force new regulations onto the start-ups, onto the small businesses."[3]
Recent transplant to California, and I now have to go back to Oregon whenever I make a major purchase. A weekend trip to see friends, have an Amazon order shipped to them.
I am slightly bemused by the fact that the US - which in Europe is often seen as very lax on taxes - is doing this and it is not even being considered in Europe. That might change, sure, but Europeans tend to like taxing things. And if this haven't even made a consideration among European lawmakers, just how far from the pack have the US lawmakers gone?
The author and you are confused. There is no internet specific tax being discussed in the US. The "Internet tax" bill just allows states to require companies to collect state sales tax when they sell an item to someone in the state. This is the same tax which is collected by brick and mortar stores within the state. Currently if I buy items online each year when filing my state taxes by law I must declare the value of my online purchases and pay the sales tax on them. As you can guess many people don't declare the purchases as required. The "Internet tax" bill is really a bill to change allowed tax collection methods to ensure that all currently applicable taxes are collected.
So as a hypothetical business owner in Washington who sells things online, I have to keep track of the tax laws of the other 49 states, and remit 50 checks quarterly (or maybe annually)?
> So as a hypothetical business owner in Washington who sells things online, I have to keep track of the tax laws of the other 49 states, and remit 50 checks quarterly (or maybe annually)?
Well, you have to either keep track of those laws for the states you choose to sell into, or use the free software provided by each state that has opted into the arrangement (the MFA provides an opt-in regime for states, with conditions including the provision of free software, with retailers not liable for any failure to collect and/or remit tax that is due to errors in the software.) But, yeah, you have to pay each taxing "state" (which will probably be less than 50 initially, but more than 50 in the limit case, since "states" under the MFA include the the 50 states, DC, plus other US territories and possessions.)
Or, instead of using the State-provided software and doing it yourself, you can pay a "certified software provider" to do it, and be immunized against liability for any errors that are the fault of that provider.
No, you don't. There are certain conditions which the states have to meet before they can start requiring collection. One of which is to certify one or more service providers which can be used to determine the appropriate sales tax to be collected. Currently 24 states have already certified 6 service providers including one free one. It is expected that most states will certify one or more of the existing 6 providers. If you use a certified service provider to determine the tax to be collected and the service provider makes an error you are indemnified from liability. Many e-commerce platforms already have integration with these providers. Besides determining the tax rate the providers can provide reporting regarding taxes collected and automatically file your tax returns to the states. For more info regarding the law go to http://www.marketplacefairness.org/
Europe is already taxing all internet purchases made within it's borders. I was buying some shoes in UK and only after I assured the seller that Ukraine was outside of EU was the tax taken off the price.
The U.S. one isn't a specific internet tax either. The U.S. legislation is just trying to implement what the EU already has: purchases will have tax collected based on the destination jurisdiction.
The current situation in the EU is that if you order a book from the UK to Belgium, you pay Belgian VAT for the transaction. There is also an exception that sellers below a certain volume are exempt from dealing with the cross-border VAT. That is precisely what the new situation in the US will be, if this passes: cross-state purchases will be taxed based on the destination state's sales tax, with sellers below a certain volume exempt.
The 2003 VAT on e-Services laws are: they are a modification of the general VAT laws to better level the playing field between companies inside and outside of the EU for digital goods downloaded over the Internet. Before, companies in the EU had to collect VAT on all purchases (including from people in other countries), and companies in other countries did not have a realistic way to collect VAT from countries in the EU. Since the inception of that law, companies in the EU do not have to collect taxes on sales to other countries, and companies from all countries must collect VAT for sales to customers in the EU. They established a simplified registration process by which companies can register in a single jurisdiction and then remit collected VAT in a single currency, accompanied with a breakdown of which countries are owed which amounts. (None of this applies to physical goods, nor would such things be necessary, because those are taxed at the point of collection based on the declarations goods stated on the import/export documentation.)
> But that's because of the internal market, that isn't some specific internet tax, is it?
Despite the dishonest label "internet sales tax" frequently used by the media and opponents, the US measure being discussed "isn't some specific internet tax", either. Its a feederal law that gives permission, with conditions, for states to require remote retailers to collect and remit sales and use tax that are already due on purchases (and which, for remote sales, would otherwise generally have been the responsibility of the purchaser to report and remit). It is neither a new tax, nor is it "internet specific" in any way.
Essentially, the article is saying that if you could save money by buying a physical product from a foreign country, domestic businesses would suffer.
Those conditions exist today with the ability to buy things from China, and all of the accompanying downsides will apply to buying something from Europe. It takes weeks instead of days to ship overseas at acceptable rates. Who do you call to complain/return/get service? Do they even speak English? Does this product meet safety standards? Do I even have legal standing to sue the company if I am defrauded/injured?
All of these go away buying domestically, and are not a fair trade off for a marginally lower price.
>What lawmakers fail to understand is that taxation specific to the internet, ostensibly to boost revenues into government coffers, in practice will probably diminish them as US businesses lose competitiveness against foreign companies.
And what you fail to understand is that if everything is sacrificed in the name of "competitiveness", then every country will be in a race for the bottom.
It already happens, with outsourcing, cheap foreign labour, tax heavens etc. A successful US company used to benefit American society at large (beyond merely paying some wages) -- and this is what made the US rich with a large middle class etc.
Now (with outsourcing, factories in China, money kept in foreign accounts that never make it back to the US, tax havens enabling the company to pay almost nothing in taxes etc) a company can be American in name, but of no more benefit to the US as a country than Toyota or Samsung.
And no, places that are strongholds of industry and innovation don't help much either. A 100 billion new innovative product out of Silicon Valley can be as lost a boon to the country as any innovation coming from Tokyo or Europe.
Of course, for those owing or running companies and benefiting from the whole thing, business hasn't been better. But those benefiting are increasingly fewer (and the few tend to benefit all the more, hence huge imbalances in inequality).
I'm not saying that amazingly successful companies cannot come out of this situation. I'm saying that this success trickles down to the overall country/society, far less than what it did in the past. Coming to a point where it will be possible to be the host of the worlds greatest companies AND having a population living like in a third world country.
The only reason everything has not collapsed already is because there are other advantages beyond "cheap" that keep companies throwing a bone to the US. The infrastructure, the engineering savvy, and of course the inherited middle class and large market, from better times. But those things are rooted in the past and are transient.
>To our American friends, easyDNS is a foreign company, so don't let us stop you.
And how about you aren't let to serve customers in the US unless you pay taxes too?
How would you feel about losing the rich US market then?
And how about people in Europe and other affluent societies conspired so that you cannot sell your crap without paying proper taxes to someone?
(I'm not even arguing in favor of the internet tax. Just against the arguments easyDNS used here against it. Heck, I'm not even American. I just know that those same issues affect my country too).
> I'm not even arguing in favor of the internet tax. Just against the arguments easyDNS used here against it
Is that what you did? The main point was that corporations outside US jurisdiction will have a competitive advantage simply by not being in the US. You rebut claiming competitiveness is a non-factor in considering regulation, citing outsourcing and cheap foreign labor as evidence?
> a company can be American in name, but in no more benefit to the US as a country than Toyota or Samsung.
What does this mean? Toyota and Sumsung are a huge benefit to the American economy. A Toyota Tundra has more US manufactured parts than most "American" trucks. It seems you fail to realize the benefits of a globalized economy, and therefore promote American isolationism to bring us back to our glory days.
>Is that what you did? The main point was that corporations outside US jurisdiction will have a competitive advantage simply by not being in the US. You rebut claiming competitiveness is a non-factor in considering regulation, citing outsourcing and cheap foreign labor as evidence?
No, I never claimed "competitiveness is a non-factor in considering regulation".
I merely said, in a lot more words, that competitiveness should not be the BE ALL END ALL factor in considering regulation. And I argued that competitiveness can also be a BAD factor in considering regulation.
Moreover, I said that this kind of "competitiveness" while great for the company that benefits from it, it's not that great for the country that hosts the company and its general population, and it can be a race to the bottom.
Let me give an exaggerated example. If some regime had a huge competitive advantage against the US by forcing people, including children to work on their factories for almost nothing, should the US, and other affluent markets, consider introducing slavery and child labor again, in order to remain competitive?
No, they should embargo, tariff, and tax the hell out of that regime's products, to ensure that competitiveness is due to improvements in engineering, efficiency, innovation, etc, not backwards practices and "a race to the bottom".
>>a company can be American in name, but in no more benefit to the US as a country than Toyota or Samsung.
>What does this mean? Toyota and Sumsung are a huge benefit to the American economy. A Toyota Tundra has more US manufactured parts than most "American" trucks. It seems you fail to realize the benefits of a globalized economy, and therefore promote American isolationism to bring us back to our glory days.
It means that the "benefits of a globalised economy" are mainly for company owners, moguls, managers, golden boys and the like, and more often praised than seen in reality.
I'm not talking about numbers in balance sheets, but about how those numbers trickle down to the country's economy. Samsung (or Apple) can make billions in the US market, but that doesn't mean you get to add those to the GDP and be happy about it.
(The fact that Toyota also makes parts in the US is just a diversion from my main point. It's the "throwing a bone" to the US market action that I referred to in my comment. Toyota can open some part factories in the US (to silence the worries of the locals) and still pay piss all in taxes through labyrinthine out-of-country logistics and accounting -- and that's on top of tax cut deals made with the US government for them to agree to open their factories in the first place)).
> I merely said, in a lot more words, that competitiveness should not be the BE ALL END ALL factor in considering regulation.
Who was making that point?
> Moreover, I said that this kind of "competitiveness" while great for the company that benefits from it, it's not that great for the country that hosts the company and its general population, and it can be a race to the bottom.
How do you know? Would countries that employ child labor be slingshotted into the first-world because they adopted effective regulations? I speculate they'd be unemployed and go hungry.
> It means that the "benefits of a globalised economy" are mainly for company owners, moguls, managers, golden boys and the like, and more often praised than seen in reality.
Again, how do you know? Did Michael Moore tell you?
> Samsung (or Apple) can make billions in the US market, but that doesn't mean you get to add those to the GDP and be happy about it.
What? How does Apple not affect the GDP? What aren't you happy about?
Lots of people. Including the EasyDNS post, implicitly.
>How do you know? Would countries that employ child labor be slingshotted into the first-world because they adopted effective regulations? I speculate they'd be unemployed and go hungry.
Only I made the reverse argument: that countries without child labour should not introduce it to compete with those countries.
And in general, that countries with higher working standards should not lower them to compete with third world countries, dictatorships etc, in a race to the bottom.
But, to also answer your question, I'd rather they go hungry than they use child labor, if that were the two options. Would you be OK with forced labor, ie slavery, if that was their only way to be competitive and not "go hungry"?
All this is a false dichotomy you set up anyway. It's not "child labor" vs "hungry". Child labor is not employed because it's their only hope to compete, it's merely employed because they lack the regulations to enforce otherwise. If the employers in that country (and the huge multinationals that contract them) could not take advantage of 12 year old children in sweatshops, they'd pay a little more and employ their parents.
It's not a case of "we can compete any other way". It's a case, "Hey, the laws here allow me to fuck over these people for an increased profit, so why not do it?".
>Again, how do you know? Did Michael Moore tell you?
Well, for one I'm not an American, and I have far wider horizons than Michael Moore. Should I also assume a caricature of you as some Fox News watching foaming at the mouth republican? It would be of similar quality and subtlety to your Michael Moore thing. Quite provincial, are we?
Anyway, no Michael didn't tell me. Not being provincial, following world economy news, a quite extensive reading on the matter, and travelling (but not as some naive first world tourist), "told me".
> It means that the "benefits of a globalised economy" are mainly for company owners, moguls, managers, golden boys and the like, and more often praised than seen in reality.
Again, how do you know? Did Michael Moore tell you?
> Samsung (or Apple) can make billions in the US market, but that doesn't mean you get to add those to the GDP and be happy about it.
What? How does Apple not affect the GDP? What aren't you happy about?
> Would you be OK with forced labor, ie slavery, if that was their only way to be competitive and not "go hungry"?
You're equating forced labor to slavery. I agree! I also agree taxation is a way of extracting labor via the use of force. So the question is, why do you support slavery so much?
Ideologically speaking, I prefer to argue out of principle -- a main one being non-agression. So no, I don't support forced labor in any shape or form. Furthermor, I don't support any relationship that comes from force or the threat of violence.
> Should I also assume a caricature of you as some Fox News watching foaming at the mouth republican?
Haha, I'd be pretty used to it. The ironic part is republicans think I'm liberal..
>You're equating forced labor to slavery. I agree!
You don't have to agree. That's the definition of slavery.
>I also agree taxation is a way of extracting labor via the use of force. So the question is, why do you support slavery so much?
Well, I never agreed that "taxation is a way of extracting labor via the use of force", so I don't know who you "also agree with" there.
Taxation, in my books, is the voluntary (as decided via the democratic process), transfer of private wealth to the government for use in public works, maintenance of the military defence and such.
>So no, I don't support forced labor in any shape or form. Furthermore, I don't support any relationship that comes from force or the threat of violence.
Agreed. But isn't the dire need to eat and put a roof above you a kind of violence too? For people threatened with that violence (which can be even more dire and hard than a few slaps or kicks), it's common to be forced to accept unfavourable and backwards working conditions, just because their job is a "buyer's market". Child labor is a blatant case of this, but most sweatshop jobs in the third world also are.
As western countries we have set up our standards higher (than, say, Dicken's London, or J.D Rockfeller's miners, paid in company scrip) , we should demand that they are held higher in the third world too, instead of lowering ours to compete with them.
> Well, I never agreed that "taxation is a way of extracting labor via the use of force"
You don't have to agree, it's empirically evident. Try not paying your taxes and guys with guns will come get it. Now, maybe these guys with guns are justified -- but that's strictly your opinion.
> Taxation, in my books, is the voluntary (as decided via the democratic process)
By definition, your definition is wrong. Non-democratic governments impose taxes as well.
Why do you define "voluntary" relative to the political landscape? You're telling me slavery never really happened in the US, because it was voluntary labor -- as decided by the "democratic process"? Why do you defend slavery with such fervor?
>You don't have to agree, it's empirically evident. Try not paying your taxes and guys with guns will come get it. Now, maybe these guys with guns are justified -- but that's strictly your opinion.
Strictly my opinion? Hardly. Some neo-liberals aside (and them constrained in the US) it's the opinion of most of the world. Some people want lower taxes, others disagree with specific tax laws, but statistically speaking, nobody is against taxes in toto. The issue does not even come into play into protests (except from bizarro minorities). People all over the world demand that their government is brought down, that they get better pay, they corrupted officials are punished, and tons of other things -- but "no taxes" is just not on the table.
>By definition, your definition is wrong. Non-democratic governments impose taxes as well.
Which is beside the point. Taxation WITHIN a democracy is voluntary and decided via the democratic process. That a dictatorship can also have taxation doesn't change this. A dictatorship can also maintain an educational system. That doesn't make it non democratic when a democracy maintains one.
>Why do you define "voluntary" relative to the political landscape?
For reasons obvious to any who accepts democracy and is not Ayn Rand? Because a dictatorship forces the people to do stuff, whereas in a democracy they get to vote for what they want to be done. That some people don't agree with the result it doesn't matter, as long as the majority of people agrees with the process -- ie. the polling for the aggregate popular opinion as expressed in presidential candidates and party platforms and representatives.
>You're telling me slavery never really happened in the US, because it was voluntary labor -- as decided by the "democratic process"? Why do you defend slavery with such fervor?
Why do you insist in using BS non-sequiturs to make some bizarro point?
Slavery was not voluntary labor because the subjects of slavery weren't part of the democratic process that allowed it to happen. For one, they didn't vote. Even worse, they were victims of abduction and deprived of any citizen rights. They were mere objects to private masters.
In the sense that it's not fact. It's a personal preference which you and many others hold.
> Hardly. Some neo-liberals aside (and them constrained in the US) it's the opinion of most of the world.
And here lies the crux of your argument. That by being a majority you're justified to act in a way you normally wouldn't. Taking x % of someone's income is normally unjust, but if you outnumber the guy -- all is fair. Because a mob approves of theft, you redefine it as taxation. I can go with that, but don't paint me as the bizarro one.
>What lawmakers fail to understand is that taxation specific to the internet
What I fail to understand is what this internet specific tax is. The Marketplace Fairness act currently under consideration doesn't create new taxes - it just pushes the responsibility for collecting existing taxes on vendors instead of relying on consumers to pay those taxes voluntarily, like they are supposed to do right now. (at least in my state. YMMV)
The world, sir, will get along just fine as the US slinks into its sunset years. As an American citizen, I can assure you the writing is, and has been, on the wall.
“[T]he United States cannot afford another decline like that which has characterized the past decade and a half….[O]nly self-delusion can keep us from admitting our decline to ourselves.”
– Henry A. Kissinger, 1961
I guess if you repeat it long enough, you'll eventually be right.
As an American citizen, I can assure you this guy is talking out of his ass, and America will continue to be a leader in many cutting edge fields for years to come. American economic prowess may decrease relative to the rest of the world as they finally catch up, but "the writing is on the wall" is sensationalist bullshit. I will never understand the correlation between technophiles and Libertarian pseudo-economic bullshit; 0 empirical evidence to back it up, yet the same stupid causal chain of events is brought up all the time.
> American economic prowess may decrease relative to the rest of the world
Not just decrease but get overtaken by.
- Our public K-12 education is a pile of shit and our colleges are riding on a public dollars bubble that makes the housing crash look like spilled water. Any attempt to deal with the problem ignites fury over teachers' rights, causing policy makers to run shitting their pants to the nearest podium to apologize.
- At every possible juncture, policy decision is leaning on pervading status quo: patents, bullshit municipal license bureaucracies, congressional players pandering to businesses, not constituents
- Health is a disaster, and even with Obamacare, it's looking like it got neutered just enough to do precisely shit for the long term. People go bankrupt to get care, if they can even get it.
- Culturally, a sweeping wave of anti-intellectualism has taken hold and bolsters everything above. We can't get anyone to care about any of these issues if they're fucking retarded.
- All the while, the smartest, very smartest people in our country are jacking each other off in silicon valley inventing the next cat-picture collection app, while the economic, technological and social divides keep growing. They're more interested in becoming their idoled psychopathic CEOs than actually fucking solving real problems. They're living in an absolute bubble, unaware of what 60% of the country cares about or actually needs.
How are we supposed to be the leader of anything if we're in a constant state of regression?
I agree that America is doing many things wrong, and has many challenges facing it now and likely well into the future. However, I would also like to remind you that America is as a nation, 237 years old. It is a country that was founded by rebels and is often in some sort of crisis and or revolution at any given time. Despite(because of?) this, great things and great people consistently grow from here, and I have no doubt that will continue well into the future.
I am surprised when I hear people talk of our current issues as if they will be what does us in. Think of the big picture here, do you really think America is going to get "overtaken" in the 21st century when in many ways we are leading it? And I do agree we are behind in some ways as well, but we don't have to be number 1 at everything to be successful, or at the least survive and progress as a nation.
These aren't "issues of the day." These are systemic and fundamental problems that lead to downfalls of nations.
During our greatest advancements, we maintained a well oiled machine of an educated constituency, a public-private partnership and a middle class bursting at the seams with potential and opportunity.
Those things have all either been stripped, scammed or atrophied out of the public, and what we're left with is a paralyzed public sector and a private sector that's racing to the bottom of the moral barrel. I just don't see any hope in anything short of some sort of awakening. Call me pessimistic and dismiss me, or at least recognize that something has to change.
People in Silicon Valley are making cat picture apps, haha right. You fucking idiot, gtfo people like you are shitting up the forums. America is more intelligent and wealthy than any nation in the history of the universe, stop crying on the internet and go be a part of it.
My only real problem with a "race to the bottom" is when the competition is between countries with differences on subjects like human rights, since then it puts pressure on those involved to lower their own standards on those important issues as well, until they reach equilibrium. Otherwise I'd call it healthy competition, which I consider constructive in any democracy.
> What will probably happen is that affected businesses will have to "eat" the tax and drive their margins down...
Or e-commers will do what they always have done when legislation change. They "move" their cloudy servers to somewhere where said laws do not exist.
We saw this exact thing each time EU passed some new data privacy law. People stayed in their country, but the servers suddenly poped up in NA, or Ireland, or some small Caribbean island that no one has heard of. Trying to enforce taxes or privacy laws on e-businesses is like trying to shut down the Pirate Bay. It simply moves on to a new IP under the same domain name.
Easy DNS charges $19.95 CAD/yr for its basic package of DNS services for a domain. Amazon's Route 53 charges $0.50 per month, or $6.00 USD/yr. Given the OP claim to be "traditionally anti-big government, pro-free market, pro-capitalist whack jobs," they are offering a service 3x more expensive than a comparable service US company. Maybe EasyDNS has some extra goodies that Route 53 doesn't to justify the higher price. Either way, that is what drives Mr. Smith's invisible hand, and acting like US states enforcing their 6% or 8% or even 8.75% sales tax is some sort of game changer is absurd.
The OP seems to woefully misunderstand that this is not a new tax. This requires any internet business with over $1 million in sales -- which I'm guessing doesn't apply to a lot of startups whose founders/employees read HN, btw, mine included -- to collect any applicable state/local sales tax at the point of sale, just like pretty much every local business. And if these businesses are getting squeezed by internet retailers, I'm guessing it has nothing to do with sales tax. Recently I needed a DisplayPort/DVI adapter, and impatiently went to Best Buy, where the only one I could buy was $30. Then I saw this one on Amazon for $4.95 on Amazon -- http://www.amazon.com/gp/product/B003BHHIA4 -- promptly ordered it, and returned the Best Buy one, even though Amazon sales tax meant I actually paid $5.45. Best Buy is getting destroyed because retailers can sell similar products at a 84% discount, and that would still be true if it was only a 78% discount.
So, to the OP and all the other people I've seen on HN lamenting that this bill is akin to exhuming Adam Smith's corpse and urinating on it: can we please stop acting like this is the end of the world? Making sweeping states predicting economic outcomes without practical considerations (e.g. many internet retailers have a pricing advantage that dwarfs sales tax) and human responses (an effective 6-10% increase on purchases -- 'effective' because this is a tax they should have been paying anyway -- is not really accomplishing much. There are times to get infuriated about the government fucking up the free markets and disincentivizing capitalist innovation and production, but I don't think this is one of them.
I must have missed the memo. Why are we ranting and raving about collecting sales tax on internet purchases? Is there some other internet tax I'm not aware of?
Yes, the "internet sales tax bill" (marketplace fairness act) passed the Senate this week. It has White House support, so only needs to pass the House to become law.
The post implies that there is some additional "Internet only" tax above and beyond regular sales tax. This is the confusion, I believe. The Marketplace fairness act is not imposing extra taxes on top of normal sales tax. It is simply removing the exemption that mail order and internet sales currently enjoy. Jeff Seems to be OK with the idea of Canada's goods and services tax - I'm not sure why he thinks sales tax is so different.
My accountant would not be able to handle a XX-fold increase in the number of tax codes, forms and filings he has to handle per-client. We're going to have to train more accountants.
I have to make an appointment to see my accountant at least 1-2 months in advance if it's anywhere near tax time (late January-May). He's definitely no time to take on more forms per client, let alone advise me properly which states will tax which products at what rates.
I run the online store for my father's retail shop, with several hundred SKUs. We sell fancy health water bottles for example -- some states this is not taxed, some it is, some it is depending on bottle size and whether it meets their definition of water or some other kind of beverage. Someone will have to reconcile every SKU against every state's sales tax classification changes every 90 days. That's not something any accountant does for small businesses operating in a single state right now.
We'll obviously need one (where today this accountant meets all our needs, and has been a family friend for decades), but a small business accountant that can do what's going to be required doesn't exist yet. Only national chains have had to worry about such things.
Again, and respectfully, I don't think handling sales tax filings for a small business is a huge hurdle compared to some of the craziness that even small business accountants are routinely called on to do.
Your point upthread was "no small business person can handle filings to 50 states". I'll stipulate that! My response is just, people with real businesses usually don't (and shouldn't) DIY their taxes anyways.
They dont? And shouldnt? Why not? The point someone here is trying to make is that what was once simple is potentially going to become inordinately difficult. Not impossible but very difficult.
And by who's determination is my business "not real" if I do my own taxes??? At least I do my taxes more accurately than Geithner does or did AND HE got to sign our dollar bills! Was his business "not real"?
Once again, thanks to GovCo, life is getting worse, harder not easier, asinine not smart. There is absolutely NO THOUGHT WHATSOEVER put into anything coming from DC lately. None.
What exactly is your complaint here? Are you opposed to sales taxes on principle? If not, what's your complaint? Properly accounting for sales and business taxes, as well as following other laws, in a jurisdiction in which you do business is a basic cost of doing business. The U.S. just happens to be a country of 50 sovereign jurisdictions, each with autonomy in how they structure their sales and business taxes. Does this make accounting for taxes complicated? Sure. It makes lots of things complicated. But we did it on purpose. Why should Congress insulate you from that reality?
The internet certainly makes it easier to say take orders from people in many different jurisdictions at once, but why should you get to avoid the other business realities of operating in multiple jurisdictions just because you're an internet business? You might see everyone as just an IP address, but in the real world, groups of those IP addresses are parts of sovereign entities called state and national governments, and each of those groups are governed by different laws. Just being an internet business shouldn't insulate you from the reality that exists once you break through the IP address abstraction.
> I don't have time to read 50 states' tax codes, file 50 tax returns and potentially be audited 50 times a year. What small business does?
If, even with the streamlining and support required for states to opt-in to the provisions of the MFA, you can't do that, you can just choose not to sell into those states. Why should remote sellers be favored over local sellers by not being required to make that choice about where they are willing to do business?
This is a false equivalency. Opening a retail store in a state is not the same as opening a website people in that state can access. There's no conscious decision, or deployment of capital to that state. My website does not use any of the public resources of infrastructure of other states. There's no legal or practical justification for having me taxed by those states.
Laws should also consider practical aspects like whether they're going to dampen the economy, restrain commerce and favor corporations over small businesses. It may be equivalent in your academic mind, but it's not equivalent to the people who will have to do 50 times more work just to continue running their single-location family-owned business as they have for the past 10-20 years.
> Opening a retail store in a state is not the same as opening a website people in that state can access. There's no conscious decision, or deployment of capital to that state.
Yes, its much more expensive to open a retail store, and involves some contribution to the local economy to operate it, so the two are not equivalent.
On the other hand, they are similar in that each is a conscious decision to conduct business with people in the State, and there is no rational reason to favor remote business.
Neither should be favored. If a customer that lives in each of the 50 states walks into our retail store, we still only have to collect a single sales tax and remit it to a single entity. If a customer that lives in each of the 50 states logs into our online store, we have to collect 50 sales taxes and remit them to 50 entities. That's a law that favors retail store owners over online sellers. A law with the same practical effects could be written that favors neither by having a single federally-operated sales tax that's distributed to the states according to the relative sales volume to residents of those states.
It's not make $1mm, it's sell $1mm. At a 3-5% net profit, that's $30-50k/year before taxes, or so small you can't even hire a first employee yet. And that's the category the online store for my father's retail shop is in.
Its not either. Its have over $1 million in remote sales in the prior year.
> At a 3-5% net profit, that's $30-50k/year before taxes, or so small you can't even hire a first employee yet.
Well, since net profit is after operating expenses (including labor costs), that's only "so small you can't even hire a first employee yet" if you expect the net value produced by that employee to be negative 30-50k per annum, in which case you it would be economically irrational to hire the employee even if you could afford it while remaining profitable. (While the numbers change, the general observation is true for any non-negative net profit amount: if you expect a positive return from an employee, you can "afford" to hire them -- and expect to be profitable afterwards -- anytime you have either a non-negative net profit, or a negative net profit that is smaller than the expected net value provided by the employee.)
I'm not comfortable giving out too many details about his store without permission, but here's a list of 83 industries that average less than 5% net margin: http://biz.yahoo.com/p/sum_qpmu.html
How would the US government mandate a non-US business do anything? They can't prohibit US citizens from buying from these companies without violating their own free-trade agreements. That'd be a bad idea, since 41% of the country's exports go to countries we've signed those treaties with.
I imagine the US government could just add said non-US business to an embargo list of some sort. Prevent them from doing any business whatsoever with US citizens.
I guess there's the open question of forcing foreign agents to collect and report IRS-friendly numbers. But it's not like taxing of import items is a new idea or a controversial one. The US government has been collecting duties for as long as it has existed.
I think he's saying that individuals that sell online shouldn't be taxed by state legislators they didn't elect. Congress won't be setting the internet sales tax rates, nor administering the tax, nor conducting its audits -- the 50 individual states will be imposing their individual rules.
If a foreign state I've never stepped foot in can set laws I have to obey, force me to remit money to them, and audit my accounting under penalty of imprisonment, it doesn't really matter who's doing the paying. Today, only people within the state can be forced to obey and be audited by that state. This bill gives the power for a state to create and enforce arbitrary laws on non-citizens. It's at least a sufficiently different situation to debate.
Boy would I prefer a single federal sales tax with the fed doing the distribution to the individual states.
That's what happens when you do federalism only when it's convenient. Right now since "interstate commerce" is extended to cover any activity that may be imagined to be related to commerce (including growing plants in your own garned for your own benefit) it means federal government can force commercial entities to do anything. Including complying with foreign laws (including non-existant foreign laws: http://www.threefelonies.com/Youtoo/tabid/86/Default.aspx#La...).
Single federal sales tax with distribution would result in either grotesquely complicated calculation system or some states sponsoring other states for political reasons. And, of course, all local governments blaming federal governments for the lack of funds and their inability to do anything.
Do you think the US government is unaware of this? I, for one, do not. I bet they will do SOMETHING (not sure what, but @jedmeyers gives a possibility) to ensure that US online retailers will not be defeated by foreign retailers that easily.
The bill allows states to force out-of-state retailers to collect their sales tax, rather than requiring the end-customers report and pay them with a use tax return. Each state will still set its own classes of taxable goods, and services are already taxed in many states.
