
California lawmaker pushes to tax online sales - taylorbuley
http://www.latimes.com/business/la-fi-internet-tax-20110120,0,2567343.story
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brc
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.

~~~
guelo
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.

~~~
RiderOfGiraffes
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.

In short, play nice.

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gergles
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.

[1] Article 1, Section 8

~~~
innernette
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>

[1]
[http://bulk.resource.org/courts.gov/c/US/504/504.US.298.91-1...](http://bulk.resource.org/courts.gov/c/US/504/504.US.298.91-194.html)

~~~
newman314
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.

~~~
innernette
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.

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Tpsoc
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.

~~~
guelo
The California budget has been cut every year for the last 4 years.

~~~
1337p337
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.

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jdp23
with state budgets in such a mess, expect to see a lot more of this. in
California, it passed in 2009 but Arnie vetoed it.

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ScottBurson
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.

~~~
1337p337
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.]

~~~
iwwr
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.

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kgermino
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.

~~~
rbritton
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.

~~~
ericd
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.

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VengefulCynic
Just ask New York how that's working out for them. (hint: they seem happy,
money-wise)

[http://www.amazon.com/gp/help/customer/display.html?nodeId=4...](http://www.amazon.com/gp/help/customer/display.html?nodeId=468512)

I can't imagine it makes the online shoppers happy, though.

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schwit
Maybe they should fix their pension plans first:
[http://online.wsj.com/article/SB1000142405274870331540457525...](http://online.wsj.com/article/SB10001424052748703315404575250822189252384.html)

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anamax
Part of the argument for sales tax used to be that the biz imposed costs on
govt/community and the sales tax paid those costs.

If all of the sales tax goes to where the customer buys, who pays those costs?

