Taxing Internet Purchases

[Conan71]

My take is this. When you drive to another state to buy a beer or other alcoholic beverage and your sole intent is to consume that beverage in Oklahoma, then by the states' reasoning, you should pay the tax that Oklahoma would levy. Same with cars and other durable goods. That just isn't practical or acceptable to most citizens. Internet purchases are just like driving to Kansas for beer.

This is a huge global change in buyer behavior that business is changing to meet. The states seem unable to understand that they also have to adapt to business changes and not expect everyone to mold their behavior to meet antiquated tax systems.

California is desperate and suffers from a history of long term legislative/executive gridlock. Their solution isn't going to work. Has little to do with immigration law btw. Smaller states like OK could effect some interesting solutions considering that our legislature/executive setup is quite different and pretty much homogeneous in political outlook. This is one area we could actually lead the country if we only had the brain power to do so in OKC. We seem disposed to cutting taxes in the hopes that revenue will miraculously grow. Hasn't worked yet so we simply have a lower standard of living.

edit: Before anyone goes crazy pointing out the differences between beer purchases in Kansas vs avoiding tax altogether using Amazon I would agree. But its similar. Because of the lack of uniform consumption taxes by the states, the consumer merely does what consumers do...look for the best value or the best product and ignore state tax needs. The states are missing an opportunity if they do not meet together and create a strategy that replaces the loss of funding derived from taxing consumer purchases. Me? I wish there were a better method of funding basic government that didn't rely entirely on consumption or property ownership.

IIRC, if you pay sales tax to another taxing authority, you are only liable for the difference between what you paid and what you would have paid in your home area, if there is a difference. 

If you buy a $10.00 T-shirt in Branson, pay 6% sales tax then bring it home to Tulsa, you are supposed to pay Oklahoma a use tax of the (roughly) additional 2.6%

[BKDotCom]

To all these states wanting to collect sales tax for online purchases..
what state/municipality should get the tax?

a) Where the online retailer's distribution center is?
b) Where the online retailer's headquarters are?
c) Where the billing address of the consumer is?
d) Where the home address (shipping address) of the consumer is?
e) Where the user is at the time of purchase?

I really don't see how it could be based on anything but (a)

Oklahoma doesn't have any internet businesses??  Who's fault but Oklahoma would that be?
Consumers go where the goods are cheaper.
Sales tax in Bixby is about 1% lower than it is in Tulsa.
For a large purchase it's certainly no effort to cross 101st & memorial to take advantage.
Should I send Tulsa the other 1%??  Am I cheating Tulsa??  Or is Bixby just more competitive?

This internet tax thing would be like Tulsa forcing me to pay that 1% difference or forcing Bixby businesses to report its sales to Tulsa residents, etc..
(Edit:  which according to the post above, I'm apparently supposed to do??... as if consumers  know that tax in Branson is 2.6% lower and keep track of $10 t-shirt purchases for tax-time)

[Conan71]

BK, as I mentioned before, raising taxes or finding new ways to collect sales tax on out of state purchases is simply a lazy way of dealing with runaway state and local spending.

[BKDotCom]

BK, as I mentioned before, raising taxes or finding new ways to collect sales tax on out of state purchases is simply a lazy way of dealing with runaway state and local spending.

Ya, that's clear from your posts.
I didn't mean to imply that you thought the paying sales-tax differences was anything but ridiculous.     As in how ridiculous we're apparently already supposed to be paying sales-tax differences.

[Red Arrow]

Nobody has mentioned shipping costs.  Even ground UPS and Fed-X is getting rediculous.  I just bought $50 worth of airplane stuff not generally available in OK and UPS ground shipping was $26.   I'd rather pay the sales tax up front and avoid the shipping.

[Red Arrow]

Sales tax in Bixby is about 1% lower than it is in Tulsa.

Not in the Bixby, OK next to Tulsa, OK. 

I forget the exact number but Bixby is over 9%.  Tulsa is still around 8.6%

[AquaMan]

Conan, that's what I mean. Supposed to pay the difference isn't working. Few do so. The latest OK effort to appeal to our honesty in paying a tax voluntarily is humorous to me. We are a nation of liars, chiselers, cheats and thieves. We glorify those who excel at these characteristics. Seen the Yahoo story about the modest home in Illinois that is home to thousands of tax avoidance shelter companies? Facebook, Microsoft, Pharmaceuticals.

BK, note the difference between "consumers follow the cheapest price" vs "consumers follow the best value". They don't always do it consciously but if the former philosophy ruled there would be no Marshall's beer because everyone would buy Lone Star. The cost of travelling to Bixby, both mentally and monetarily, offsets the lower tax rate for me. The risk of internet purchasing sometimes outweighs the lower cost as well. Pictures lie, vendors lie, shippers lie.

I look forward to regional and national governors actually facing up to a new reality instead of merely talking about it then returning home to run on rabid social agendas. They could start like any new business does by taking an accounting of what their real, fixed expenses are and what it takes dollar wise to meet them. Then review which ones can be privatized or eliminated and which ones have to be operated by government for the public good. Finally, recognize how states should form regional tax bases to avoid exploiting each other.

I'm not trying to lecture, just thinking about how much better our system could be if our governance would start solving these problems instead of gay marriage bans.


Here's a thought and I throw it out for criticism.
........Jettison the sales tax burden.
........Flat rate property taxes, income taxes, estate taxes.
........Institute business licensing based on national, regional and state "footprints".

If your business presence in our state or region creates a larger dedication of infrastructure or resources, then you pay an annual licensing fee that reflects that impact. A business that actually repairs that "footprint" or enhances the development of resources pays a smaller fee or even a rebate. Small businesses may be encouraged to form by deferrals of fees or waivers of fees to accomplish the public good.

States then use those fees to revert to their basic purposes that are so clearly laid out by Libertarians. The state or region that does this could grow quite quickly.

edited for easier readability.

[Hoss]

Price of product x in store: $100
Price of product x on Amazon:  $100

which one is cheaper?
I'd say the one online is about 10% cheaper

Depends on the shipping....

[Conan71]

I look forward to regional and national governors actually facing up to a new reality instead of merely talking about it then returning home to run on rabid social agendas. They could start like any new business does by taking an accounting of what their real, fixed expenses are and what it takes dollar wise to meet them. Then review which ones can be privatized or eliminated and which ones have to be operated by government for the public good. Finally, recognize how states should form regional tax bases to avoid exploiting each other.

I'm not trying to lecture, just thinking about how much better our system could be if our governance would start solving these problems instead of gay marriage bans.


Here's a thought and I throw it out for criticism. Jettison the sales tax burden. Flat rate property taxes and income taxes. Institute business licensing based on national, regional and state "footprints". If your presence in our state or region creates a larger dedication of infrastructure or resources then you pay an annual licensing fee that reflects that impact. A business that actually repairs that "footprint" or enhances the development of resources pays a smaller fee or even a rebate. Small businesses may be encouraged to form by deferrals of fees or waivers of fees to accomplish the public good.

States then use those fees to revert to their basic purposes that are so clearly laid out by Libertarians.

Excellent points, AM.

I hope there is eventually a GOP candidate who will say "Up yours!" to the moral far right on abortion, gay marriage, and legislated morality.

The only reasons I can see there will never be a flat tax is it would make politicians irrelevant to their power base to a certain extent, let's face it, it's not just the GOP which carves out sweetheart tax loopholes for their donors and voter base.  It would also likely get rid of tens of thousands of federal jobs as well as making tax attorneys and tax accountants obsolete.  None of which is a bad thing. 

[Conan71]

Depends on the shipping....

Free super saver shipping on orders over $25.  I was loving all the free shipping on-line this last Christmas season.  I save nothing by shopping on-line with someone like Wal-Mart, Best Buy, or Target and they do collect sales tax, but it sure was nice not to have to visit one of those stores during the holiday season.  That was for the bigger items.  I still try to find as much stuff locally as I can.

[AquaMan]

Yes, change has an impact on those classes, but it creates an even better opportunity for them. The huge influx of capital and population into this state will keep accountants and lawyers quite busy. Lots of federal jobs end up going to newly formed private entities looking for qualified help in meeting regulations.

Regulations will still exist they simply will be internalized into a company who wishes to reduce its footprint thereby reducing the cost of doing business within a region. Of course the real crux is determining an accurate footprint but it can, and is, being done.

As far as politicians and their thirst for power, well, some things will never change but that is another discussion although I believe sanctioning more than two parties to proffer candidates is the answer. This is to me one of those nexus moments in history that my grandchildren may study in economic history classes. What did we do when our technology out ran our ability to manage it?

[guido911]

Not in the Bixby, OK next to Tulsa, OK. 

I forget the exact number but Bixby is over 9%.  Tulsa is still around 8.6%

Although I live in Bixby, I rarely buy anything in this town mainly because I have so much activity in South Tulsa. It is an event for me getting to 121st & Memorial. I never knew the sales taxes were higher.

[BKDotCom]

Although I live in Bixby, I rarely buy anything in this town mainly because I have so much activity in South Tulsa. It is an event for me getting to 121st & Memorial. I never knew the sales taxes were higher.

Der... I did get that wrong..  anyhow, I'm sure there's some adjacent burgs somewhere where it may be worth it to cross the line for cheaper sales tax..

The thing with bixby sales tax I got wrong was...   Someone bought something at Lowes in Tulsa, then returned it to the Lowes in Bixby.   They got back more than they spent because of the higher sales tax in Bixby, and apparently Lowe's is doing it wrong (this was a couple years ago)

[nathanm]

I really don't see how it could be based on anything but (a)

Why not f) Where the goods are shipped?

[BKDotCom]

Why not f) Where the goods are shipped?

It just points out how convoluted / insane the whole sales-tax thing is.
So if I'm an Oklahoma resident and I order something from a store in Arkansas and have it shipped to Missouri.. I should pay Missouri sales tax (or the difference between MO and OK taxes)?
(I guess I intended d. "home address" to also serve as shipping address.. but ya, I guess they could be separate)