On Demand
A Taxing Debate
Thursday, July 17, 2008
Should New Yorkers be taxed for making purchases from Amazon.com, even though the online retailer has no physical presence in the state? Governor Paterson is fighting Senator Schumer and other New York lawmakers on Capitol Hill over the issue. Tax counsel Joseph Henchman joins us to sort through online taxes. We also discussed this in April.
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is it fair to your local brick and mortar bookstore that amazon isn't taxed and they are?
New Yorkers have ALWAYS been taxed on Amazon purchases. There's a use tax section on the NY state tax form. This law just makes it harder to evade those taxes.
Last year, Britons _rejected_ a Blair proposal to lower taxes (part of poodle Blair's attempt to be more like the Americans). Britons recognized that taxes are actually _necessary_ for the state to operate.
BUT if New Yorkers are going to have a fit over taxes, how about repealing the "temporary sales tax surcharge" that was imposed in NYC after 9/11?
Buy.com is charging NYC residents 8.75% sales tax when it should be 8.375%, who's getting the difference, Buy.com or the state?
As much as it hurts me financially since I do a fair amount of online shopping, YES this should be taxed. It is not fair to the brick and mortar, it is just not fair that I pay a tax at my local bike shop but can buy the product tax free from a thousand miles away.
They are not taxing the business they are taxing the customers.
Sorry to say this, but Internet purchases should certainly be taxed at the prevailing rate of the location the goods are delivered to. It is only fair - to local merchants who may find their very existence threatened by Internet commerce and to the states and localities themselves, who need the tax revenue. The alternative is raising local sales taxes, quite a distasteful prospect where some localities already have sales taxes around 9 percent.
NYS residents are, by law, required to pay sales tax on all purchases, whether within NYS or outside.
NYS just wants Amazon to collect these.
Yes it is HJS. If my local brick and mortar bookstore catches fire, the FDNY puts it out. If there is a break in at the local brick and mortar, the NYPD answers the call. If the warter main breaks... and on and on and on. I support my local brick and mortar and don't buy online, but the taxes go to support local services.
online taxes are unfair for the consumer because on top of the taxes they would have to pay for shipping service which drives the total cost of the item up from if they had just bought it from a local store. This could drive consumers away from online retailers.
service supported by sales taxes help not only the store, but the customer. how about an arrangement whereby the customer pays a "customer's share" of the nominal brick's and mortor sales tax (or maybe just split the difference) ?
Also keep in mind that as the economy slows, oil goes up, and inflation changes prices for the worse, that shipping costs are going to be something people do not want to pay extra for.
Internet businesses are at a disadvantage, there.
I own an internet business-- and I am fine to tax people in NY. But-- I don't agree that I should tax to where I'm selling to. Brick and mortar shops aren't doing that, either.
It should be mentioned that on our NYS income tax, we are supposed to pay sales tax of items we bought from out of state sources. There is a default amount for us to pay and if we want to pay less, we may have to prove we did not buy from out of state sources.
Voter
and amazon uses NYS roads to ship to u
New York state wants to charge sales tax on items purchased while shopping OVERSEAS. WHAT is the justification for THAT?
The "taxation without representation" argument is baseless. The collected taxes ostensibly go to services for the state and locality where the recipient reside. Obviously these residents and business are represented by their elected state and federal officials.
As one caller stated, whether our officials use this money wisely is another matter.
oops, missed this one so all i can say is the tax foundation looks like a good organization and so i support joseph henchman.
but that's not very useful is it? however this segment is over, so who's going to read this? only the faceless who are keeping track, i suppose. :)
that was just a joke. no worries.
The comment about the difficulty about calculating taxes is a lot of nonsense. That's what computers are for, and they do it well. A tax calculation program would be easy to write and distribute to all internet vendors.
Keeping track of the hundreds of tax rates is not even close to a problem. This is simply accomplished by accessing a database. You can bet that these will be even more readily available from credit card merchants and online shopping software providers if the laws change to require online merchants to collect taxes.
By the way, I dislike taxes as much as the next guy, but fair is fair. And I am NOT an Internet merchant.
Kim brings up another important point. Are shipping and insurance less than just paying the local sales tax; let’s say on a purchase like a book or two?
And Chris O, how should taxes on out of state businesses be spent? Corporate welfare for local businesses that can’t compete and have nothing unique to offer?
HJS,
Amazon doesn’t use NYS roads to ship anything to me since I prefer to use brick and mortar stores. Amazon also doesn’t use NYS roads to ship anything to you as well… they use the USPS, or Federal Express and United Parcel Service which have branches in the state. I’m sure FedEx and UPS play plenty to use our roads, use our runways, buy fuel in our state, pay property taxes and run their brick and mortar locations across the state.
ok i should have said amazon uses NYS roads via USPS, or Federal Express and United Parcel Service to ship via to one.
regarding the tax, for example that ups pays, so if i pay gas tax yesterday i shouldn't have to pay sales tax tomorrow? works for me!
A sales tax is not imposed on a business making a sale, but on the end purchaser of the product or service. The business making the sale is acting as a collection agent for the state. The cost to the business is a compliance cost in collecting, reporting and remitting the tax to the taxing authority.
Most states that have sales tax also have a use tax. The use tax is imposed on residents of the state and is meant to collect the sales tax not collected at the point of sale. The problem has been in collecting the use tax. The means of enforcing the collection of a use tax as opposed to a sales tax is more expensive and less effective than collecting the sales tax at the point of sale.
The problem in having an out of state seller collect tax on a sale sent to another state is the complexity of the sales tax system. There are multiple jurisdictions throughout the country that collect sales tax at different rates. In addition, items that are taxed in some jurisdictions are not taxed in others.
Theoretically, your gas taxes and sales taxes are going to pay for different services. FedEx and UPS are using our roads and paying our tolls and fuel taxes to pay for the services we’ve provided for them. You pay that tax in addition to profit to FedEx and UPS when you pay for shipping. Your sales tax is supposed to be going in part to provide health and safety services on that brick and mortar store. If you drive to your brick and mortar, then yes, you should have to pay for use of our roads via fuel taxes and pay for the health and safety protection of the brick and mortar’s surrounding community.
I’m not anti-tax, but I don’t buy the fairness argument presented on here. If you feel this is an unfair situation; realize, the power to support local business is 100% in the hands of the CONSUMER!!! If you don’t support local business by shopping there, then it’s on you. If local taxes are holding you back, buy less and buy local.
There are multiple issues here. One is whether not taxing the sale if done via the Internet puts local merchants at a disadvantage. A second issue is what taxes are imposed and how those taxes are used. A third issue is how to effectively collect the tax imposed and how to do it efficiently.
Taxes should not be creating an uneven playing field. Consequently, collecting the sales/use tax on out of state sales to a state's residents would appear to even the playing field.
A state needs a source of revenue to provide services to its residents, whether it is done via sales tax, income tax, real estate tax or some other vehicle to measure and collect the tax.
The deployment/use of the tax is a political issue. Earmarking a particular source of tax, such as gas tax being allocated to road construction and repair is a political decision.
So you’re saying two things Marc,
One, is that it’s governments job to protect lazy, obsolete, inefficient, or unimaginative and mismanaged companies and the psyche of local consumers from local consumers via taxation. This would level the playing field by compensating for consumers locally irresponsible decisions. Local consumers get to have their cake and eat it too. Buy online from the villainous out of state companies and keep the quaint look of Main Street USA.
Two, taxation should be citizen and not location based. Example: if a NYC citizen crosses the bridge into Jersey to get cheaper gas, they should pay a surcharge to raise the price of the fuel to level the playing field for NYC fuel retailers. It’s only fair. AND it’s also not fair they’re using Jersey fuel to power their vehicles creating wear and tear on NYC streets.
The simple solution is buy local.
I have stopped ordering on Amazon.com and Buy.com because of this. I have found other resources for most of what I would have bought at these sellers.
If NYS stopped doing stupid things like giving tax money to people like Bruce Ratner, I wouldn't mind so much.
As others have noted, this is not a new tax at all. What's new is the requirement that it be collected by the seller instead of voluntarily reported and paid by the buyer. (Look at NYS income tax form IT-201, line 59, and the instructions on p. 66.)
What is astonishing is that the Brian Lehrer Show allowed the guest to set the terms of discussion and that the host, the WNYC reporter of state and local government and politics, went on the air without a good grip on the facts.
Current NY state law is that sales tax is due on everything a resident buys and brings into the state. Every brick & mortar merchant is required to collect this tax, account for it, and pass it on to the state. For internet and mail-order purchases, the buyer is expected to do this. The way it is written and enforced now, most New Yorkers are turned into scoff-laws. Even top reporters don't seem to know this is the law.
Those of us who prepare our own returns know that NY State residents already pay tax on out-of-state purchases, internet or not. See IT-201, Line 59, "Sales or use tax." If merchants were to collect this tax it would save the consumer onerous record-keeping and remove the temptation to cheat. Of course other states would then demand the same from merchants located within the Empire... State.
Why don't we just globalize government via the internet!!!! That way I ( a left if center type)could live in the US but pay high taxes to Gemnany and get all of those great services. I'll sell my McMansion and live in more energy efficient 3 br condo. It may not appreciate in value as much but who needs tons of money in old age when you have state furnished long term care insurance? All the no tax, no government libertarian types can become citizens of Afghanistan and work a deal out with a warlord when Mom needs an nursing home and they're down to their last $50,000.
I just ordered some stuff from amazon, and this was the first time that I got charged tax. Since when did they start charging those taxes?
This week I ordered some stuff from Amazon, and it was the first time that they charged me taxes. Since when did this start?
Henchman’s view: taxes bad, business profits good. The idea that modern technology is not capable of determining the sales tax rate for all the tax districts in the US is ludicrous on its face. Any programmer worth a nickel could design a database that generates the sales tax information for any zip code or address, and, by using mapping software determine what venue the customer is in.
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