Taxing Internet Purchases

[guido911]

Yeah, the curious thing is that I seek a level playing field as well. I really don't like that states collect sales tax. They should be eliminated. Tax a business income or charge a license fee that represents the true cost of them doing business in your state, period. The state has certain obligations that they are expected to fulfill and its increasingly difficult under the current system.

Property taxes and sales taxes are horrible ways to fund government and education.

They fluctuate so much that any budget has to be set at a small percentage of expected returns with the idea that a "safety stock" can build up to cover the slow collection periods. But our state lawmakers either spend that sinking fund or return it to taxpayers in $50 checks.

Oklahoma does charge a business activity tax on each business. Property and sales taxes are horrible? How do we fund our government without those revenue sources, by making businesses pay for everything or with an income tax? And who would make up the difference? Oh, I know.

[AquaMan]

What race to the bottom? Oklahoma does not have a Tony Luke's cheese steak restaurant. I bought that product on the internet. Why should Oklahoma collect a tax on something it doesn't have. I have to agree with the courts that hold that if a company is not present in the state, then they should not have to collect a tax.

Would you support a state that would make the same rule? If Oklahoma decides to legislate that a company with no presence in the state may not sell in that state? That is in effect what our legislators have done with >3pt alcoholic beverages. They must pass through state warehouses and pay state tax to be legally distributed here.

That court ruling sets states and businesses at odds with each other. It is a free ride for internet businesses who may locate in the Bahamas and distribute to OK through "associates" in Georgia.

[AquaMan]

Oklahoma does charge a business activity tax on each business. Property and sales taxes are horrible? How do we fund our government without those revenue sources, by making businesses pay for everything or with an income tax? And who would make up the difference? Oh, I know.

They are a horrible way to fund education and operations. I don't know how the business activity tax works or how much it brings in for the state.

H is right that property taxes are raised during inflationary times but never decline because budgets are tied to them. They are not based on the real value of the property. Then our crazy state legislators spend that money on non-education items with the hopes that casino revenues will make up the difference. Then they spend that money on something else and education budgets get cut. That is the historical behavior of our state.

Sales taxes drop during poor economic times while the fixed costs of government remain the same or even rise during the same period. That means budget shortfalls, delayed maintenance on infrastructure and government shutdowns.

The very taxpayers, rich or poor, you seem to champion are harmed equally by these flawed systems of taxation.

[carltonplace]

Any one else want some pop corn? This thread is high drama; hit the pause button until I get back.

[Conan71]

Assuming the feds will never allow a national consumption tax with a split to the states, states might fare better in this day and age of internet commerce to get rid of sales tax and figure out a logical increase on income tax to reflect approximation of use tax.  That would also possibly keep more money within a state's economy when the "free tax" advantage of the internet is taken from the picture. 

The only problem I see with that is municipalities then having trouble getting their proper distributive share out of the state tax commission.  That and it would somewhat render tourism as useless since the immediate jolt to tax coffers in the form of sales tax is gone.  It would find it's way back in as corporate or personal taxes eventually assuming that all the profits from tourists  aren't going to an out-of-state entity.

[Hoss]

Assuming the feds will never allow a national consumption tax with a split to the states, states might fare better in this day and age of internet commerce to get rid of sales tax and figure out a logical increase on income tax to reflect approximation of use tax.  That would also possibly keep more money within a state's economy when the "free tax" advantage of the internet is taken from the picture. 

The only problem I see with that is municipalities then having trouble getting their proper distributive share out of the state tax commission.  That and it would somewhat render tourism as useless since the immediate jolt to tax coffers in the form of sales tax is gone.  It would find it's way back in as corporate or personal taxes eventually assuming that all the profits from tourists  aren't going to an out-of-state entity.

That leaves Texas out as they wrote an addendum to their state constitution some years back forbidding the addition of an income tax (if I recall correctly).  No wonder they're so strapped for cash.  They don't have a sales tax on groceries, nor do they have a state income tax.

[Conan71]

That leaves Texas out as they wrote an addendum to their state constitution some years back forbidding the addition of an income tax (if I recall correctly).  No wonder they're so strapped for cash.  They don't have a sales tax on groceries, nor do they have a state income tax.

IIRC, I believe their property tax is insanely high.  There's a trade off, regardless of the mechanism, on how a state collects tax.

[Hoss]

IIRC, I believe their property tax is insanely high.  There's a trade off, regardless of the mechanism, on how a state collects tax.

Their excise tax on auto purchases is in the neighborhood of 8 percent (unlike the 3 percent in OK), so you have a point.  I never owned while living there but do know the rent was higher.  BUT, you also got paid a bit more compared to here, so in some ways, it washed out.

[guido911]

Any one else want some pop corn? This thread is high drama; hit the pause button until I get back.

All I want is for Oklahoma stay out of the way of me getting my Tony Luke's cheese steak which I purchased far from here. What is the problem with that? 

[nathanm]

What race to the bottom? Oklahoma does not have a Tony Luke's cheese steak restaurant. I bought that product on the internet. Why should Oklahoma collect a tax on something it doesn't have. I have to agree with the courts that hold that if a company is not present in the state, then they should not have to collect a tax.

Oklahoma should collect the tax because ownership was transferred in Oklahoma.

I like Amazon. A lot. I do not like that they gain an artificial advantage over local businesses by not collecting sales tax. The mail order rule was quite understandable in days gone by. However, in this day and age, the collection of the proper sales tax is a relatively simple matter. I think the feds should step in and make every state that collects sales or use tax on interstate commerce participate in the streamlined sales tax initiative and require that mail order businesses operating from within the US use it to collect the appropriate sales tax for the jurisdiction to which the product is being shipped.

[guido911]

Oklahoma should collect the tax because ownership was transferred in Oklahoma.

Please explain that one to me. Taxation is supposed to be about commerce and the cost of doing business. Transfer of ownership? That would invite my scenario where I buy an OU sweatshirt 50% cheaper in another state and I would have to declare it once I came home and pay a tariff.

My point is simple. If Oklahoma doesn't have it, or if the business has no contact with the state. it should keep its nose out of my and theirs business. Most certainly a state (like California) legislating a requirement on a foreign business (like Amazon) not having the requisite contact with that state (like California) should result in that business (like Amazon), seriously, giving that state (like California):



And that's what happened. Who lost? California internet purchasers, California Amazon affiliates, and the state of California since those that made internet purchases and paid their taxes like they were supposed to will no longer have the chance.

[nathanm]

Uh, Amazon does arguably have nexus, which is why they canned their affiliates. It's not like Amazon has stopped selling things to people who live in California.

It's not a great idea to die on Amazon's hill, anyway. They are about the sleaziest company in America when it comes to avoiding the collection of sales taxes. They have wholly owned subsidiaries run their warehouses precisely for the purpose of attempting to avoiding nexus.

Texas tried to bludgeon them with this and they shut down the warehouse. Their position would at least be arguable if they had taken care not to ship items from their Texas warehouse to people in Texas, but they did not. Similarly, they ship items to Kansans from their warehouse in Kansas. It may be mail order, but settled law in all 50 states makes them responsible for collecting sales tax when they have a presence in the state where the item is shipped.

And, uh, sales tax is about taxing sales that take place within a state. A sale takes place where ownership is transferred. This is how Boeing manages to keep their aircraft from being taxed in Washington state. (They fly the plane out over the Pacific and transfer ownership there)

[Conan71]

And, uh, sales tax is about taxing sales that take place within a state. A sale takes place where ownership is transferred. This is how Boeing manages to keep their aircraft from being taxed in Washington state. (They fly the plane out over the Pacific and transfer ownership there)

Also shows that taxation can hinder commerce.  So then the $64,000 question becomes how do you come up with a tax system which is fair and equitable at all levels, whether it's corporate tax or sales tax on bubble gum which would be the magic number to help retain jobs.

And I guess it probably proves the point that tax avoidance is considered socially acceptable at all levels from consumers up to large manufacturers like Boeing.  I'm curious how much that trick costs Washington state every year.  

Either corporations flex their muscle and get favorable laws passed, like the manufacturer's and farm exemption in Oklahoma which is so broad you can drive a truck through it or they move their operations to a more tax-friendly environment.  Or on a personal level, individuals are willing to risk being detected and eventually fined for failing to report use tax on a few hundred bucks worth of internet purchases so they can make their dollar stretch a little further.  Amazon offers me convenience on hard-to-find items or when I don't have time to run all over town to put together multiple pieces for a project.  I can have it delivered to my door.  I've bought a few bike components from them but found the net price before use tax or sales tax is about the same as what I can order parts from one of my team sponsors so I buy from the team sponsor in OKC and everyone is happy, including OTC.

I used own a business which relied on 95% of it's business from mail order and used to have a much more flippant attitude about mail order and saving on sales tax when it came to my purchases.  However, seeing the deteriorating condition of our infrastructure as well as what it really means to support locally-owned business whenever possible, it changed my view on personal responsibility as a citizen quite a bit.

[guido911]

Uh, Amazon does arguably have nexus, which is why they canned their affiliates. It's not like Amazon has stopped selling things to people who live in California.

It's not a great idea to die on Amazon's hill, anyway. They are about the sleaziest company in America when it comes to avoiding the collection of sales taxes. They have wholly owned subsidiaries run their warehouses precisely for the purpose of attempting to avoiding nexus.

Texas tried to bludgeon them with this and they shut down the warehouse. Their position would at least be arguable if they had taken care not to ship items from their Texas warehouse to people in Texas, but they did not. Similarly, they ship items to Kansans from their warehouse in Kansas. It may be mail order, but settled law in all 50 states makes them responsible for collecting sales tax when they have a presence in the state where the item is shipped.

And, uh, sales tax is about taxing sales that take place within a state. A sale takes place where ownership is transferred. This is how Boeing manages to keep their aircraft from being taxed in Washington state. (They fly the plane out over the Pacific and transfer ownership there)

Who's state should collect the tax, the customer's or the purchaser or both? Should I pay a Tax where Amazon is found and Oklahoma? I pay two sales tax. This is just not a simple question. And please point out where the "nexus" tax policy is in our constitution.

[carltonplace]

All I want is for Oklahoma stay out of the way of me getting my Tony Luke's cheese steak which I purchased far from here. What is the problem with that? 

I wouldn't eat a sandwich that came in the mail but that's just me.