Obamanation!: Benghazi. Fast and Furious. Alternative energy scams. IRS targeting of patriotic and religious groups. The IRS ObamaCare enforcer. Tapping the phones of Associated Press. Bailed-out Chrysler and GM building cars in China. Military sex. Too many scandals and too little space.
So, while the truth struggles to surface, the Internet sales-tax debate is an issue about which the rest of us can agree or disagree. Here is a basic situation: You are a private individual or a small retailer in, say, Oklahoma, and you use the Internet to offer an autographed copy of a photo of Will Rogers for sale for $100.00, shipping included. Someone in San Francisco, CA, sends you $100.00 and you mail the buyer the photo. So far, simple.
Wait! Hold the phone. Last week, the U.S. Senate a passed bill which, if it becomes law, would allow states to require online and other out-of-state retailers to collect sales and use taxes. As the seller, it would be your duty to figure out how much sales and/or use tax is owed to the applicable taxing districts between you, the seller, and the buyer in San Francisco, and then pay it. In California, the basic state sales tax is 7.5 percent; however, by the time you add on what is due to all of the various taxing districts involved with your sale, the total amount can rise as high as ten percent.
The biggest supporters of the Internet sales tax are California, Illinois, and New York. Three states that have overspent themselves into huge fiscal holes and are looking for tax payers in other states to help them fill in those holes.
Although the Senate bill talks about “marketplace fairness,” the legislation is not fair to the “mom-and-pop” Internet sellers who either sell on their own or use systems such as eBay. The smaller Internet retailers cannot afford the tax lawyers needed to be current on the 9,646 taxing districts that exist in the United States today. But some of the major Internet sellers such as Amazon.com, Best Buy, Target, and Wal-Mart can afford to pay the tax lawyers needed to navigate through 9,646, often murky, tax-code waters.
Also, there are the constitutional problems of “no taxation without representation” and state sovereignty. Should this national legislation become law, you, the seller, may suddenly become, by a permissive act of Congress, a participant in the tax schemes of over 9,646 taxing districts to which you have had zero input. Moreover, the legislation creates a situation where one sovereign state can, in essence, dictate the tax rates for other sovereign states.
Some can argue, with merit, that all Internet retailers, be they large or small, operate to the detriment of brick-and-mortar-mom-and-pop stores all across America. That same argument is made, also with merit, that the big box stores have put many small brick-and-mortar-mom-and-pop retailers out of business. The countervailing argument is made by consumers who flock to the lower prices offered by the big-box stores.
Fortunately, for the hometown, mom-and-pop stores, an Internet search often reveals that it is just as economical and much more practical to have your local dealer or store sell you what you need, install it (if needed), and then stand by their reputation for sales and service. Next week, back to Scandalgate.
Nationally syndicated columnist, William Hamilton, a former intelligence officer, was educated at the University of Oklahoma, the George Washington University, the U.S Naval War College, the University of Nebraska, and Harvard University.