Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24
US House Prices Trend Forecast 2024 to 2026 - 11th Oct 24
US Housing Market Analysis - Immigration Drives House Prices Higher - 30th Sep 24
Stock Market October Correction - 30th Sep 24
The Folly of Tariffs and Trade Wars - 30th Sep 24
Gold: 5 principles to help you stay ahead of price turns - 30th Sep 24
The Everything Rally will Spark multi year Bull Market - 30th Sep 24
US FIXED MORTGAGES LIMITING SUPPLY - 23rd Sep 24
US Housing Market Free Equity - 23rd Sep 24
US Rate Cut FOMO In Stock Market Correction Window - 22nd Sep 24
US State Demographics - 22nd Sep 24
Gold and Silver Shine as the Fed Cuts Rates: What’s Next? - 22nd Sep 24
Stock Market Sentiment Speaks:Nothing Can Topple This Market - 22nd Sep 24
US Population Growth Rate - 17th Sep 24
Are Stocks Overheating? - 17th Sep 24
Sentiment Speaks: Silver Is At A Major Turning Point - 17th Sep 24
If The Stock Market Turn Quickly, How Bad Can Things Get? - 17th Sep 24
IMMIGRATION DRIVES HOUSE PRICES HIGHER - 12th Sep 24
Global Debt Bubble - 12th Sep 24
Gold’s Outlook CPI Data - 12th Sep 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

U.S. Government Set to End tax Free Internet Shopping

Politics / Taxes Apr 24, 2013 - 05:20 PM GMT

By: Money_Morning

Politics

David Zeiler writes: A controversial Internet sales tax moving through Congress will mostly benefit big corporations and state governments while hurting thousands of small businesses and consumers.

The Marketplace Fairness Act would essentially end tax-free Internet shopping by forcing online retailers with revenue of $1 million or more to collect sales taxes for the states in which their customers reside.


As it stands, online retailers do not have to collect sales taxes from out-of-state customers unless the retailers have a physical presence in that state, like a store or a warehouse.

Yesterday (Monday), the bill passed a procedural vote in the Senate by a 74-20 margin, which strongly hints at passage in the upper chamber in a vote expected later this week.

While there's more resistance to an Internet sales tax in the House, the bill is known to have bipartisan support there as well. President Barack Obama also has voiced support for the bill.

If it becomes law, the Marketplace Fairness Act will radically change the online shopping landscape.

"It really should be renamed the Internet Tax Collection Act because it is going to make online businesses the tax collectors for the nation," complained Sen.Kelly Ayotte, R-NH, one of the most vocal opponents of the bill.

Who Benefits from an Internet Sales Tax
The Internet sales tax will almost certainly become a reality because those that will benefit the most are almost all big and politically powerful entities.

In particular, state governments have been clamoring for an Internet sales tax for more than a decade. To be fair, the uncollected state and local sales taxes from online sales are by law still owed by consumers, but almost no one bothers to pay them.

Estimates of the never-collected tax revenue range from $11 billion to $23 billion annually - money that state governors and legislators coping with massive budget deficits would love to have back.

And as more Americans do more shopping online, the amount of lost sales taxes has continued to increase. Last year, online retailers had revenue of about $226 billion, a 16% increase from 2011.

The other major players lobbying in favor of the Internet sales tax are big-box stores like Wal-Mart Stores Inc. (NYSE: WMT), Target Corp. (NYSE: TGT), Best Buy Co. Inc. (NYSE: BBY), Home Depot (NYSE: HD) and OfficeMax (NYSE: OMX).

The big-box retailers have complained that the present system gives online merchants an unfair advantage in pricing and encourages "showrooming" - a practice in which customers check out a product at a large local store, then go home and order the product online to avoid sales taxes.

Somewhat surprisingly, the biggest online retailer, Amazon.com (Nasdaq: AMZN), is actually in favor of the Internet sales tax after having fought it for years.

Amazon's desire to offer same-day shipping meant that it needed more distribution centers in more states, which under the current law required the company to collect sales taxes in those states.

Having already surrendered that advantage in many key states, Amazon realized it was in its interest to support an Internet sales tax to force all of rivals, both big and small, to do the same.

Who Gets Hurt By an Internet Sales Tax
Which brings us to the most outspoken opponent of the Internet sales tax - eBay Inc. (Nasdaq: EBAY).

Many of the businesses that operate through eBay have between $1 million and $10 million in revenue, which means they'll have to collect sales taxes for as many as 9,600 different jurisdictions.

The company says the Internet sales tax will put a crushing administrative burden on small online retailers, and has asked that the threshold be raised to $10 million.

"EBay believes the bill would impose unfair tax burdens on small businesses, and does not include a reasonable protection for small businesses," Tod Cohen, eBay's general counsel, told The Wall Street Journal.

Although the bill in Congress now requires each state to provide software to assist in the collection of the sales taxes, small businesses still would need to manage the dozens of software packages.

That concerns some members of Congress.

"This legislation doesn't help businesses expand and grow and hire more employees," said Sen. Max Baucus, D-MT. "Instead, it forces small businesses to hire expensive lawyers and accountants to deal with the burdensome paperwork and added complexity of tax rules and filings across multiple states."

The broadest group to suffer from an Internet sales tax, however, will be the American consumer. The billions of dollars that the state governments so desperately want will come straight from the pockets of U.S. consumers, putting another dent in consumer spending.

That means the Internet sales tax will end up as yet another drag on the weak U.S. economy, although that doesn't seem to be a part of the congressional debate.

Given that the bill seems to have sufficient support from both sides of the aisle - a distinct rarity in recent years - it looks like consumers should start bracing themselves for another bite in the wallet.

"I don't think it's a matter of if, but a matter of when" the legislation passesCongress, Rachelle Bernstein, vice president and tax counsel for the National Retail Federation, told The Los Angeles Times.

Source :http://moneymorning.com/2013/04/23/internet-sales-tax-sticks-it-to-the-nations-little-guys/

Money Morning/The Money Map Report

©2013 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in