As Congress continues to wrestle with the idea of unleashing sales tax collectors across state borders, a lot of buzzwords are recycled. All of them attempt to make a huge and complex tax system look as if it’s benign and beneficial.
But nothing could be further from the truth. In my testimony today before the House Judiciary Committee, I described why proposals like the Marketplace Equity Act will do far more harm than good and act as a drag on online commerce.
We’ve come to expect all kinds of theatrics during policy debates here in Washington. Now Amazon.com has taken to the stage with an act that’s all sleight-of-hand and misdirection, telling Congress that small businesses are the real problem when it comes to uncollected sales taxes on e-commerce.
Amazon wants Congress to force any small business with revenue of $150,000 to collect and file sales taxes for states where they have no presence whatsoever, claiming that, “a $150,000 exception would exempt 99% of online sellers from any collection responsibility on remote sales.”
To arrive at their 99 percent trick, Amazon counted even the most casual online seller as numerically equivalent to, well, Amazon.com. By this measure, you need only find 99 people who sold a baseball card through eBay or a dinner plate through Etsy as the statistical counterweight to every large seller like Amazon, Walmart.com, and Bestbuy.com.
A clever trick, especially since counting the number of sellers distracts attention from the uncollected dollars that state tax collectors are really going after.
Steve was interviewed on CNN’s Situation Room on online sales tax collection.
It’s a tough day for state tax collectors when two different judges in two different states declare unlawful their attempts to skirt the constitutional protections in Quill.
It’s gonna take more than sloganeering and one-sided arguments to address the enormous challenge of reforming federal and state tax systems. That was the key message coming out of today’s Senate Finance Committee hearing on tax reform, and it’s one that advocates of the so-called “fairness” internet tax would do well to heed.
Committee Chair Max Baucus (D-MT) and Ranking Member Orrin Hatch (R-UT) did a good job of highlighting the insane complexity and uncertainty of current state and federal tax systems. And Sen. Hatch also quoted a favorite slogan of his, reminding tax reformers to follow the Hippocratic principle, “First, do no harm”.
Internet sales tax proponents have plenty of their own slogans, too, as in “Fairness!” and “Level the Playing Field!” But their solutions would harm millions of businesses who are using the internet to reach customers around the country, as they struggle to compete with the big-box chains that dominate local retail. So much for the “fairness” slogan coming from billion-dollar retailers like Walmart and Target. Read more
We got a Rocky Mountain high after hearing news that the U.S. District Court for the District of Colorado upheld Article 1 of the Constitution and struck down one of the most noxious state tax grabs in recent history.
The Colorado Use Tax Reporting Regime was enacted in February 2010 and promptly earned a top spot on the iAWFUL list. The bill would have required state retailers to mail both consumers and tax enforcers a list of online purchases made in the calendar year.
Beyond the onerous and expensive compliance costs associated with this bill, the creep factor was shockingly high. Read more
With only a couple of days to spare before the state unleashed its tax collectors to trample Constitutional and Court protections for interstate commerce, Pennsylvania’s Governor delayed the imposition of sales tax demands on retailers with no presence whatsoever in the state. Had this tax grab not been delayed, it would have threatened the livelihood of reporters and struggling media outlets across the Keystone State.
Back in December, the Pennsylvania Department of Revenue issued a “clarification” that imputes physical presence for any out-of-state retailer who places any paid advertisement with any Pennsylvania media publisher. That includes all local newspapers, magazines, TV, and radio stations, and Internet websites.
Pennsylvania tax collectors claimed that any ad placed with a state media publisher creates a physical presence for the advertiser. The new tax grab didn’t require that the ad be commission-based or that the publisher do any kind of “solicitation.” There was not even a dollar threshold for annual sales, so this rule would have covered even an occasional advertiser who serves Pennsylvania customers.
With this rule, Pennsylvania was set to go further than any other state to expand the meaning of physical presence — which limits how states can impose tax collection burdens on remote businesses.
Every once in a while, a rigorous debate will actually sway public opinion.
Yesterday, the Wall Street Journal published an impressive special section on tech issues that featured arguments from both sides. And it included a debate over new sales tax requirements for online retailers.
As I described yesterday, The Journal also published survey results based on a poll conducted weeks earlier, so there were already over 2,000 votes (60%) for the position that retailers should have to collect sales tax for all states — even where they have no physical presence.
I was initially troubled that the survey results were compiled before readers had a chance to understand both sides of the argument. But then, within one day of seeing both sides presented, the poll results were reversed. Read more
Today’s Wall Street Journal features a full-page debate (p.B5) on whether retailers should be forced to collect sales tax for all states — even where the business has no physical presence.
The article includes a debate between Michael Mazerov, who wants force all online sellers to collect taxes for all states, versus my argument in favor of the present national standard established by the Constitution and Supreme Court rulings.
Take a few minutes to compare the arguments. And if you agree that the physical presence rule is the best way to preserve e-commerce as an opportunity for small businesses, please vote in the WSJ online poll. (this morning’s printed poll results came over the last several weeks — before this debate was published ). Read more