The subject of sales tax on internet sales is something to which I haven’t paid much attention. From time to time some of the conservative blogs I follow have written on the subject and invariably they are dead set against the idea. Frankly, I have been left scratching my head as to why. So, I am hoping that you, dear readers, can help educate me on this. I have some questions.
Why is “state” sales tax an issue for the federal government?
From Fox Business_
For the record, you’re supposed to pay sales tax for online purchases (assuming you live in one of the 45 states with a sales/use tax) when you file your state tax return, but most people don’t. Well, soon you may not have a choice in the matter.
The House Judiciary Committee recently held hearings on the Marketplace Equity Act of 2011 (H.R. 3179) – in fact, there are actually three federal bills relating to internet sales taxes floating around Washington, D.C. At the same time, Amazon seems to have dropped their vehement opposition to online sales taxes.
So, my confusion begins. There are three bills floating around Congress and I don’t understand what the federal government has to do with sales taxes that are applied in various states.In the first paragraph of the above quote, it says that if you live in one of the forty-five states that have a sales tax, you are already, in theory, supposed to be paying your states sales tax on all internet purchases. WHAT? This then leads me to my second question.
Why is sales tax on internet purchases an issue at all?
Apparently, states are claiming that if their resident make an internet purchase from any other state, the purchaser must pay sales tax to their state of residence. THIS IS INSANE! Why would they believe that?
The issue of sales tax on internet sales seems very clear to the simple mind of this humble observer. States that have sales taxes apply the tax to every retail outlet in their state. If I am a resident of Missouri and I am in Minneapolis, Minnesota for some and make a purchase there, I would expect to pay what ever state and city sales taxes that they have. Upon returning to Missouri, I sure as hell would not send a copy of my receipt to the state of Missouri along with a check for Missouri sales taxes. That would be nonsense. No retail transaction took place in Missouri. So, it seems to me that when an internet purchaser buys something that is shipped from another state, the internet retailer should collect the sales tax for his/her state just like any other retailer in that state. Large internet retailers like Amazon, I would assume, have warehouses in different strategic states with each warehouse making deliveries to certain states. It seems to me that it would not be that difficult for Amazon to have software embedded on their web page that asks the purchaser to enter the name of the state to which the purchase is to be delivered. The software would recognize which of their warehouses services that state and would calculate for the customer the sales tax that applies. If states like California think their residents should pay California sales taxes on purchases made in one of the other 49 states ( or is that other 56 states?), that is totally illogical, in my opinion.
So, dear readers, what am I missing? Why do states think they have a right to collect sales tax on purchases made in other states? And, for the love of God, what possible involvement is there for the federal government in this issue? I am confused. Am I over simplifying the problem? Honestly I don’t see why there is even a question of whether there should be a sales tax on internet purchases or a question about which state should collect the tax. To me the tax applies at the point of the retail sale.
Well, that is what I’m thinking. What are your thoughts?