[IP] Fed Internet Sales Taxes

I hear this a lot and I always wonder: Will they tax 800-number orders

as well? They are the same thing, just two ways to get a company to

mail you a product. The "web" is just a way to remove the human

operator from a mail order service.

The Quill case, which is the 1992 case the article refers to, was about
paper mail order catalogs, presumably with telephone ordering, since the
catalogs that Quill sends me have always had a phone number to call.

I've never understood why this sales tax question has been framed as
an Internet issue, when in fact it applies equally to mail order
catalog sales, which are still about the same size as online sales. I
suppose online stores are new and sexy while mail order is so 19th
century. But the tax issues are the same.

Incidentally, I've been making the same points this article does for
many years. A decade on the board of my village, including three
years as mayor, let me see up close and personal how unfair it is to
both the local services that are paid for by sales tax (most of our
budget goes to police, fire, and public works) and to the local
merchants who have collected the taxes all along. If online stores
can't exist in 2008 without an artificial 5% or 8% price advantage due
to tax quirks, they're in the wrong business.

Regards,
John Levine, johnl@iecc.com, Primary Perpetrator of "The Internet for Dummies",
Information Superhighwayman wanna-be, http://www.johnlevine.com, ex-Mayor
"More Wiener schnitzel, please", said Tom, revealingly.

On May 21, 2008, at 10:11 AM, David Farber wrote:

Begin forwarded message:

From: Robert Atkinson <rca53@columbia.edu>

Date: May 21, 2008 10:07:38 AM EDT

To: David Farber <dave@farber.net>

Subject: For IP: Internet Sales Taxes

Dave,

A call in Wall St. Journal for imposing sales taxes on internet

commerce:

http://online.wsj.com/article/portals.html

Excerpts:

Real World Needs 'Net' Taxes

May 21, 2008; Page B9

Do you think that billionaire Internet moguls should continue to

benefit from a tax loophole that hurts parks and schools, and makes

it harder for your neighborhood bookstore to keep open for business?

I didn't think you did.

***

For starters, by giving online businesses a permanent advantage

over their bricks-and-mortar competitors, it helps those who need

it least -- huge, profitable e-commerce companies -- at the expense

of often-struggling local retailers.

In addition, the tax policy is regressive. It disproportionately

benefits the upscale citizens most likely to shop online. Worst of

all, as commerce increasingly moves online, state and local

governments are being deprived of the sales-tax revenues they rely

on to run schools, build roads, pay police and firefighters, and do

all the other things they're supposed to do.

A dozen years ago, one might have been able to make the case that a

holiday on collecting sales tax would help the fledgling Internet

get off the ground. I don't think that was particularly true even

in 1996; it certainly isn't now.

***

Opponents of the tax collection are fond of the effective but

dishonest slogan that collecting a sales tax would amount to a new

"tax on the Internet." But making Amazon collect sales tax on books

is no more "taxing the Internet" than requiring stores to collect

taxes on Valentine's Day chocolates amounts to "taxing falling in

love."

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