There is a lot of talk in the state Legislature these days about taxes — from tax hikes on marijuana and new taxes for improved transportation to reduced taxes on business personal property and even eliminating taxes on some personal hygiene products.
However, lawmakers may want to add one more tax-related issue to this robust debate — a re-examination of rules that would make the Department of Revenue privy to the personal online shopping habits of Coloradans.
Six years ago, state lawmakers addressed the internet sales tax issue through legislation. It was a fatally flawed law, aimed at increasing collection of sales and use taxes for purchases made online or through catalogs. Lurking in that bill was a dangerous intrusion into the private lives of Colorado citizens.
The U.S. Constitution and Supreme Court precedent protect Indiana’s businesses from the scourge of Chicago and New York tax collectors.
Today, Indiana businesses, whether selling online, over the phone or via catalog, only must collect sales taxes for purchases to Indiana consumers. The businesses only must file taxes with the Indiana tax collectors and face audits from Indiana auditors.
As a result, Indiana’s main street businesses, such as Burton’s Maple Syrup in Medora, easily can use the Internet to reach customers across the country.
But it appears some lawmakers in Indianapolis are prepared to upend these protections and expose Indiana businesses to tax collectors from across the country.
By Jonathan Johnson, Chairman of the Board of Overstock.com
Utah’s Gov. Gary Herbert and other internet tax proponents proclaim Utah’s uncollected e-commerce sales tax has reached $200 million a year. It’s a large number. And it’s largely wrong.
Supposedly, the shortfall results from out-of-state e-commerce retailers not collecting Utah sales taxes. But is $200 million the number right? It doesn’t seem to add up.
Here’s a back-of-the-envelope calculation of all 2016 e-commerce sales taxes due in Utah:
• The 2016 total U.S. retail e-commerce is $392 billion (estimates from Internet Retailer and eMarketer).
• Utah’s e-commerce visit share is 0.84 percent, based on the assumption e-commerce sales are proportionate to visits (Source: Hitwise and Connexity); coincidentally, that figure approximates Utah’s population proportion of about 0.9 percent.
• The average Utah sales tax rate is 6.53 percent (https://www.salestaxhandbook.com/utah).
• Therefore, Utah’s total e-commerce sales tax due — collected or not — would be $215 million: ($392 billion x .0084) x 0.0653 = $215 million.
If this calculation is correct, then either Utah is not collecting more than 90 percent of its e-commerce sales taxes, or the governor’s $200 million figure is wrong
Part 1: We’re losing the battle for online taxes and consumer privacy
Part 2: The ongoing war for privacy and security in the cloud
Part 3: How much online freedom did you lose in 2016?