> Grover Norquist, president of the anti-tax group Americans for Tax Reform, said in a statement, "Today the Supreme Court said yes -- you can be taxed by politicians you do not elect and who act knowing you are powerless to object."
That doesn't follow. The people being taxed are the people living in that state, and their representatives are enacting that tax. As usually Norquist is making up BS to scare people.
Maybe a more precise wording is "you can be forced to collect tax from others and must pay registration fees to collect said tax by politicians you do not elect and who act knowing you are powerless to object."
While that may be true, it's meaningless. As a tourist, you are also subject to tax that was enacted by representatives you didn't elect. You can choose not to go there, just like a business can choose not to sell to someone who lives there. In California, every city has it's own sales tax, so every city I go to is taxing me without representation.
There are many many cases in the US where you are taxed without a choice of the representatives. You have a choice not to be taxed though, by not going there or doing business there.
I despise Norquist, but I believe the words above are not true in a consequential sense. The law may say 'the state taxes the consumer', but who is meaningfully affected?
The business handles the mechanics of collecting and paying the tax. And whose pocket the tax really comes out of depends on the elasticity of demand, IIRC my economics. That is, it depends on how much the business can raise the price without hurting profits:
If the product is highly price sensitive, something like a can of peas, then the business can't raise the price very much without hurting demand and the tax will effectively come out of the business' profits. If the product is highly price insensitive, such as life-saving drugs, then the cost of the tax will be passed on to the consumer.
The sales tax is collected after the transaction, so price elasticity has nothing to do with it.
What you wrote applies to other things like an increase in rent or property tax, which has to be built into the cost of the product. But it doesn’t apply to sales tax.
I'm not sure what you mean - would you explain? To the degree demand is inelastic, the seller will pass on the cost of the tax to the buyer. The buyer knows what the final bill will be, regardless of when the government collects the tax.
(Also, when I buy things in U.S. states with sales tax, the tax is on the bill and even if it's not part of the advertised price, I expect it and it's part of my purchase decision. People regularly cross state lines to avoid sales tax.)
The business isn't paying the tax though? If the people paying the tax don't want it, they should replace their reps or move to a state that doesn't have that tax.
So we could think of it from the point of the business but that wouldn't be based in fact.
They tried that for 10 years and it didn't work. Very few people pay use tax like they should. But it wasn't cost effective to enforce every individual offender. So now they're trying something different.
Thus forcing the businesses to pay or be punished. The business likely has the option of not passing the cost along to the consumer, but in the end they are the one being forced to pay the state.
No, they are forced into being tax collection agents. But they aren’t being forced. They could just not sell to people in that state if they don’t like it.
For example, at my company, I won’t hire anyone from Kentucky because their employment costs are too high. It’s a choice I get to make. I limit my employee pool but I also avoid costs I don’t like.
Being based in California I can’t choose to follow California tax law or not, but I also get to vote here.
Both you and Cerium are correct. Depending on buyers to collect sales tax from themselves hasn't been working. And forcing someone in a different jurisdiction to do it might not be defensible.
Wrong. If you live in a state without income tax, buy a product from a company in the same state, and then ship the product to your friend in Texas, you have to pay Texas sales even though you have never been to Texas.
That's because you asked the company to ship it there. That's the company collecting tax on your friend's behalf. If you buy it and ship it to yourself, and then ship it to your friend, there would be no tax, because then you bought it and they have no way of knowing it is going to your friend.
Technically, your friend had to pay use tax when they got it from you. But they probably didn't. Which is why they want the retailer to collect the tax for them.
If a state the business doesn’t operate in imposes the requirement to collect sales tax on your business out of state, you do have a multitude of costs and issues as a small business. If the federal government wished to circumvent this with a VAT split amongst the states, that is one thing, both sane and constitutional in the face of this, but this invites a mess.
First, if you are required to possess a sales tax license with that state, and potentially municipalities or jurisdictions within the state that require the fees and paperwork yearly, there is one huge cost, both in time and fees. No software will absolve your liability of this if you mess it up or dont pay the fees, you as the business own it.
If you are required to file monthly or quarterly statements with the state along with any remittances, there is time and costs there. File late, file incorrectly, fees and interest on top of the tax obligation. Refuse or forget to pay the tax to a jurisdiction in backwater Alaska, time and money to wrestle with tax auditors from another state if they pursue action. How will the states negotiate auditors and tax authorities stepping all over eachother within their jurisdictions.
Need to purchase extra services to juggle the spiderweb of compliance, reporting, and remittance issues, there is also more cost, whether in your additional time ($), accountants ($), or third party services ($). Keep in mind, none of these things absolve you of liability if you mess this up.
You aren't being forced though. You can just choose not to sell to anyone in that state if you don't like the terms. The only place you can't do that is the place where your business actually is, and in theory you get to vote there.
So he's totally wrong -- you're not being forced to do anything. You're choosing to pay the tax.
I too would prefer to see a federal VAT, but that would not receive Norquist's blessing any more than this has. Anyway, this decision leaves the door very much open for Congress to step in and fix things; it just throws out the nexus rule created by the Court in the Quill decision. One would think that Republicans would celebrate the reversal of an example of "legislating from the bench".
That doesn't follow. The people being taxed are the people living in that state, and their representatives are enacting that tax. As usually Norquist is making up BS to scare people.