Interview: Internet tax a states' rights issue
November 18, 2011 By BEN NEARY , Associated Press
This Sept. 14, 2011 file photo shows Sen. Mike Enzi, R-Wyo., at the Capitol in Washington. Enzi is scheduled to explain his proposal Thursday Nov. 17, 2011 that would allow states to require Internet vendors to collect sales tax for all the states regardless of vendor's location. (AP Photo/J. Scott Applewhite, File)
(AP) -- Before he became a U.S. senator, Mike Enzi ran a shoe store and was mayor of Gillette, in the heart of Wyoming's coal country.
Making payroll as a small businessman and sticking to a budget as a local government official drives Enzi now as he leads a bipartisan group of senators pushing legislation to help states recover billions in sales taxes they're losing to Internet sales.
"We need to fix this so that the loophole doesn't exist anymore, and that will take care of those local governments without the federal government having to raise more taxes for them," Wyoming's senior Republican senator told The Associated Press in an interview this week.
Under the Marketplace Fairness Act, the 45 states with state sales taxes could require online retailers that sell more than $500,000 a year to collect sales taxes for them regardless of where those retailers are headquartered. Internet retailers currently must collect sales tax only for those states they have a presence in, such as a store or an office.
In some cases, online consumers are required to pay tax to their home state but don't always do so.
States striving to make ends meet in tough times will lose more than $23 billion in uncollected sales taxes in 2012, the National Conference of State Legislatures estimates.
"I used to be a retailer, and I find it discouraging when somebody comes in and they pick something up and they say, `Now if you'll sell it to me without the sales tax, I'll buy it,'" Enzi said.
"And you say, `Well that would be illegal, I can't do that.' And they come up with some alternate plans for how you could ship it out of state for them. But if you're a brick-and-mortar business, if you actually live in the community, then that's not an option. So they go and they buy it online so they don't have to pay sales tax."
Enzi said he commonly hears from Wyoming retailers that addressing the tax issue is essential for main street businesses that provide jobs and help their communities. Under the bill, state governments would share tax revenues with local governments based on address records of people ordering goods online.
Enzi and Sens. Dick Durbin, D-Ill., and Lamar Alexander, R-Tenn., lead the group of 10 U.S. senators behind the bill.
Internet retailer Amazon.com Inc. has said it supports the bill. The company fought taxation efforts in several states but said it would prefer a federal solution.
Online auction company eBay Inc. opposes the legislation, saying it would place an unfair burden on small retailers to collect and remit sales taxes around the country. Enzi said he believes that exempting businesses with less than $500,000 in sales addresses those worries.
Enzi said he doesn't accept the argument from some Internet companies that they shouldn't have to collect taxes for states in which they don't have a physical presence or use state services.
"They have a presence there, otherwise people wouldn't be able to buy from them," he said. "It's not a brick-and-mortar presence in which there's property tax they have to pay as well. They don't have to pay the in-state employee fees. All of those are things that help to keep things going. I also used to be a mayor, so I know that this is a huge infrastructure and jobs bill."
Enzi also doesn't accept the argument that states should simply learn to live with less.
"Live with less, so that out-of-state retailers can live with more?" he asked. "No, I don't think that's a legitimate one to ask your out-of-state businesses to put your in-state businesses out of business."
The senator said he and his colleagues long have wrestled with the tax issue - and there's a good chance this bill can resolve it.
"I'm very optimistic this time," Enzi said. "I've been working on it for a number of years, and a drastic change that we made in the bill was to make it a state's rights issue, and each state will have to pass a law in order to be part of this."
©2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
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Nov 18, 2011
Rank: 2.8 / 5 (4)
Why do we tax profits and subsidize poverty, unions and big business?
Nov 18, 2011
Rank: 5 / 5 (5)
This isn't a tax on profits, it's a purchaser-paid sales tax. As for taxing profits, what else would you tax?
Nov 18, 2011
Rank: 1 / 5 (3)
The Nerdy-dude, STRIKES again! (I'll bet his Nerdy-ness has pointed ears, green blood, and plays multi-level chess...any takers?)
word-
word-
Nov 18, 2011
Rank: 3 / 5 (2)
I guess I should of said business activity. I suppose we want more of most kinds of business activity.
I don't know, actually. I think I'd tax imports from countries that don't have the OSHA/Healthcare/Environmental/wage burden that US businesses have. I'd tax exports of strategic materials (like lumber, coal, NatGas) and food. I'd implement user fees of every type.
But, more to the point, wasn't there a supreme court decision, long ago, that forbade states from collecting sales tax from sales made in another state?
Nov 18, 2011
Rank: 1 / 5 (1)
Must be those liberal activist judges who don't understand that corporations have feelings too, like greed.
Nov 19, 2011
Rank: 3.7 / 5 (3)
Some states have no sales taxes. Problem solved.
Nov 19, 2011
Rank: 4 / 5 (5)
Nov 19, 2011
Rank: 5 / 5 (3)
I have nothing against the bill. This law or something like it is needed. It is just that the claim that it is States Rights is pure bullshit. If you have to lie to support you ideology it is time to change your ideology.
Ethelred
Nov 19, 2011
Rank: 1 / 5 (1)
It is really startling how ill-informed you are, even for a commie.
Since you're so fascinated with (and envious of) America, I'll fill you in:
This is NOT about any NEW tax AT ALL. Currently, sales tax must be paid on purchases in almost all States and in many localities as well. These taxes are due at the time of purchase.
However, the internet has created a strange situation where an individual is supposed to purchase the item, pay no sales tax (for most retailers), and then LATER personally CLAIM THE SALES TAX on our income tax returns.
The problem is, most people find it to be a real pain, and don't bother to write down every transaction, and remember to pay the tax later.
A proposal has been made that would just require the online retailers to collect it as well.
MANY ALREADY DO THIS!
Nov 19, 2011
Rank: 5 / 5 (2)
Taxes would not be collected -- or even touched -- by the State. The retailer would collect it online just as many already do. And, as ALL do at the point of sale.
The proposal -- not a new one, btw, it's been made a few dozen times -- would force ALL retailers online to collect it.
Here's the interesting part, though: all retailers would then have to go through the HUGE burden of having 50 state tax files, who-knows-how-many municipality (1000s at least) tax files, etc., and makes sure it's perfectly calculated. Then, after collection, is turned over to all those states and municipalities.
Pretty easy stuff for Wal-Mart. But, "Sue's Homemade Bonnets" or whatever would be facing a severe problem. It would probably put a few thousand companies out of business overnight.
Nov 19, 2011
Rank: 1 / 5 (1)
Yeah, except about 90% of us believe quadrupling entitlement programs would be the stupidest move possible. Nice try. Please play again.
Nov 19, 2011
Rank: 1 / 5 (1)
Nov 19, 2011
Rank: 1 / 5 (1)
Nov 20, 2011
Rank: not rated yet
Nov 20, 2011
Rank: 1 / 5 (1)
Hmmm...crazy talk, but at least interesting.
1) You don't understand fascism. Please do some research before posting.
2) The Pope? Isn't he the guy in Italy?
3) NAZI - that's actually a term used mostly in reference to Germany under Hitler. That's ancient history my boy. Please do some more research.
4) My Momma taught me how to complete a sentence. And did a wonderful job of it. No entitlement program was necessary.
5) No, criminals go to jail. My neighbors are nice people I have over for dinner.
You played, you failed! Try again sir!
Nov 20, 2011
Rank: 1 / 5 (1)
Well, the problem with being a commie and a non-American is you probably aren't the best resource for U.S. tax law. On the other hand, as an American and a business owner, I might have a wee bit of useful knowledge.
You are discussing some issues above that are irrelevant in relation to this article and the topic at hand.
This is a simple matter of sales tax collections, and fixing a loophole in the ALREADY EXISTING law. Sorry you can't figure that out. But, who cares if you do? You don't even live here. Now, please crawl back under your rock.
Nov 20, 2011
Rank: 1 / 5 (1)
Yes and, in fact, they already do in many cases. If your State doesn't have a sales tax, then that tax will be zero percent. However, in many U.S. localities there is a municipal sales tax. Some of these are being collected or discussed for future integration with the State for convenience.
Where they are not collected at present, YOU are responsible for recording the transaction and paying it on your tax return. Not sure how you file taxes but, if you use software or an online app, this question will come up and has for several years now.
When we're asked "how much sales tax do you wish to declare", most of us are typing "zero".
Nov 21, 2011
Rank: not rated yet
Nov 21, 2011
Rank: not rated yet
Nov 22, 2011
Rank: 1 / 5 (1)
Wow, does anyone EVER read anything before they post? This has nothing to do with violating the constitution, amending the constitution, or anything at all regarding the constitution. It does not impact current law regarding interstate commerce. In fact, the States themselves have virtually nothing to do with the proposal. We're talking about online retailers collecting sales tax and forwarding it to the right party. Precisely what every retailer in America already does. But, SOME do NOT do consistently online.
Nov 22, 2011
Rank: 1 / 5 (1)
Again, WE ALREADY HAVE TO PAY THESE TAXES!!!
Nov 22, 2011
Rank: 5 / 5 (2)
Then by all means we should be taxing war and weapons sales, and subsidizing love and peace.
Why do American Republicans demand the opposite?
Isn't that right?
Nov 25, 2011
Rank: 3 / 5 (2)
Nov 27, 2011
Rank: 1 / 5 (1)
Unfortunately Kochevnik, your brand of Russian-English translation software probably doesn't carry the nuances very well. Plus, you need to factor in the multiple other posts where I expanded on these topics.
The sentence "precisely what every retailer..." should be read as "precisely what every BRICK AND MORTAR retailer already does..."
Those with online sales are a second category. Those with only online sales (e.g., Amazon) are a third. I shan't go into great depths here just to entertain you, as I've already explained this.
And, by "some", I mean "some". Presumably, your translator can handle that.
Nov 27, 2011
Rank: 1 / 5 (6)
Shootist, I didn't know we did. It seems to me more like we privatize success and subsidize failure.