Friday, April 26, 2013
Internet sales tax meets the expected "libertarian" resistance
Is the proposed Internet sales tax, held up in the Senate but likely to pass very soon, unconstitutional? Is it bad policy?
A typical recent story is on Yahoo!, here. The bill would allow all states to collect sales taxes from their own residents on online purchases.
Fox has a similar story here.
Senators from states that do not have sales taxes (like New Hampshire, Delaware) resist the idea of being required to collect sales taxes for those that do. It’s seen as a violation of “states’ rights”. But it may be more like “Full Faith and Credit”, an issue we’ve seen recently in debates of gay marriage and DOMA.
Right now, states can collect sales taxes only from companies that have a physical presence in the state, which gives many states an incentive not to employ people in a particular state. The current policy might not be good for employment.
Many states, including Virginia, stipulate that taxpayers report online purchases with uncollected taxes, but almost no one does.
An Internet sales tax might help “bricks and mortars” stores, especially book and music stores, retain more market share of retail business.
Would bitcoin transactions (on mobile devices) be subject to the tax?
Smaller companies that don’t outsource their sales operations (as to Amazon) could have great difficulty complying.