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Congress should end tax break for online sales

Wednesday, January 9, 2013
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Internet sales were crazy on Cyber Monday and throughout the holiday season, as people took advantage of online shopping’s convenience and low prices. But what’s really crazy is Congress continuing to deny state and local governments the right to collect the tax on those sales that they so desperately need. And are due.

Congress’ refusal to act has meant the states have been operating under a 1992 Supreme Court decision that said catalog mail-order businesses could be required to collect sales tax from customers of a particular state only if they have a physical nexus to that state.

Some states, such as New York, have pushed the definition of nexus, as well as encouraged their residents to pay “use tax” on the goods and services they buy online. But with limited success, as evidenced by the estimated $23 billion in tax that is going uncollected nationwide.

So, at a time when the states need revenue more than ever, not only are they not getting it from Internet sales, they are taking in less overall because so much business is being conducted online. That, of course, means Main Street businesses are also suffering lost sales. And, unlike those retailers in who-knows-where, they pay property taxes (the primary means of funding local government), employ local people, sponsor Little League teams, etc. If they are forced to cut back or close, the whole community suffers.

This would not be a new tax, as congressional Republicans, who have been the most adamant opponents, suggest. It’s a tax that already exists, but some are allowed to avoid. There’s no free lunch, though. Someone has to pick up the cost of Congress’ gift to online retailers, and it is state and local taxpayers, who have to pay more of other taxes or see their services cut.

The nation’s governors, Republicans as well as Democrats, are lobbying lawmakers hard for the right to tax all online sales, and it’s time.

 
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comments

January 9, 2013
7:35 a.m.
manjoe says...

Sales taxes are a terrible way to raise money and very regressive since the poor spend a higher percentage of their income on basic goods than the rich. A better solution is to end sales taxes altogether and reform local government so the money isn't needed, starting with consolidating towns into counties, school districts with few children into larger districts and dissolving cities like Schenectady into county government.

January 9, 2013
8:22 a.m.
albright1 says...

Well stated Manjoe....liberals like the gazette writers always seem to think our money belongs to the government and we are allowed to keep some. It is supposed to be quite the opposite. It is our money and the government takes it away from us to pay for things that are generally quite bloated.

January 9, 2013
3:18 p.m.
robbump says...

Sales taxes may very well be a terrible way to raise money. But just as terrible is for small local brick and mortar businesses who MUST collect the sales tax while internet giants get the competitive edge on prices sans sales taxes.

Internet commerce is no longer in its infancy with a need to be coddled. Treat it no different than any other business.

January 10, 2013
7:53 a.m.
wmarincic says...

Here goes the Gazette again advocating for more tax. Don't we pay enough taxes in NYS? By the time I take home 53% of my pay I have school, property, cell phone, gas, sales and dozens of other taxes to pay. Enough is enough, stop with the damn waste, the Sandy Bailout had billions of dollars of pork to Hollywood, Nascar and a dozen other things. When are we going to start using some common sense?

January 18, 2013
12:52 p.m.
robbump says...

This isn't a case of more tax, it's a case of the collection applied evenly.

Why should my company have to collect sales tax from a customer who can buy the same product online SOMETIMES FOR A HIGHER PRICE but less overall, factoring in the sales tax?

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