Just an FYI.
I think this is good. It will make it easier for local businesses to compete.
It really is only fair in this modern age. Nice to have that free lunch while it was around, though!
Well, it had always been there for most, if not all states. I would think that Internet sales would fall under “use tax.” It’s just that most people weren’t paying it.
Yeah, I live in Texas and, previously, California. It puts local businesses on a fair footing with giants like Amazon. I’ve got no problem with it.
This. People talk about “internet sales” as if they are fundamentally different from mail orders or phone orders, but they’re not. Thirty years ago, a paper catalog arrived in your mail. To place an order, you either filled out the included form and mailed it back, or you called the 1-800 number printed in the catalog. Instead of mail or phone, an “internet” sale just uses the internet to communicate your shipping address and credit card info. In each of these cases, the relevant feature is that you have an interstate sale taking place (regardless of how the initial information transfer took place), and sales/use tax is therefore legally owed on the purchase.
The big difference beween now and thirty years ago is that because the internet sales tally is so much larger now than mail/phone order business was thirty years ago, states are much more motivated to go after the tax revenue.
If consumers have been seeing it as a free lunch, then it’s because they were not being honest when they filed their state income tax return (which provides a line where you can calculate the amount of use tax you owe on out-of-state purchases.
You mean to tell me a Republican introduced a bill to raise taxes?
(checks the current weather conditions in Hell, MI)
It’s about time. The system will be a mess for a while, but it had to happen. It was never really necessary, sales tax wasn’t dissuading online sales, just directing them to those businesses with an unfair advantage.
Not to raise taxes, but to facilitate the collection of an extant tax.
I also think its about time. If you are going to tax stuff for sale, it should ALL be taxed (I guess private person to person sales might be another topic though).
But I wonder what the “right” thing to do is as far as where the taxes are levied. Tax where its sold from? Where its bought? Split the difference? Something else?
Most states have a “Use Tax” for exactly this sort of situation, but there is currently almost zero enforcement of those taxes. It’s in every state’s interest to support local retailers, so I guess I support legistation to facilitate the collection of use taxes.
Nothing new. I’ve been paying “use tax” for years because it was simpler than trying to keep track of online purchases.
They’re just going to make it easier for all the states to get what they’re owed.
I can’t complain about the change, but tax-free purchases were nice while they lasted!
How was the average citizen supposed to track their use tax, anyway? We’d have to keep lists of the value of all the shit we’ve ordered online–not gonna happen. And besides, what was the point when there was no penalty for NOT doing it?
Under status quo, the use tax is typically collected in the state where the product is used. So if I have a stuffed spotted owl shipped from a store in Oregon to my home in Michigan, I will owe 6% use tax to the state of Michigan (6% being the Michigan sales tax rate). If someone orders a new car bumper from a store here in Michigan and has it shipped to their home in Oregon, they won’t have to pay any tax (since the state of Oregon has no sales tax).
It’s basically the same as vehicles: no matter where you buy a new vehicle, you’ll end up paying sales tax in (and at the applicable rate of) the state where you ultimately register it.
I, for one, didn’t know you weren’t paying tax on Internet sales.
I’m surprised it lasted this long.
I’d prefer they simply end all sales taxes (too regressive) and replace them with higher income taxes (both higher rates and fewer deductions/exemptions).
In Michigan, when you work through your state income tax return, there is a section where you calculate your use tax. You have the option of either calculating it based on your actual purchases, or if receipts are “unavailable/inaccurate”, calculating it as a percentage of your adjusted gross income.
Lying about it constitutes tax fraud, for which I assume the usual penalties would apply. Although fraud on this particular item is hard to prove, I would expect that entering “0” for use tax owed would put you at substantial risk for an audit, during which they might ask some uncomfortable questions (“Really? You didn’t buy a single goddam thing on the internet last year???”), and possibly uncover some other shenanigans.
I like this too, even though I’ll have to pay more in taxes. Its fair and allows smaller businesses to compete. Plus there’s really no reason why the internet should be tax free
The lack of sales tax was offset by paying shipping. For equal priced items, advantage tips to bricks & mortar stores now.
Any clue as to how many different tax rates there are? It’s not one per state, each city/municipality *can *have a different one. I know of at least 3 in PA, which means programming by zip code, not state.
Yup, the use tax here is a percentage of income. It’s a pretty small number, I’m sure I’ll be paying more under this system.
I thought it was just state taxes - are they really going to make them track city and county taxes as well? That will be a killer for small businesses.