Ask HN: Congress is Passing an Internet Sales Tax: Why Doesn't HN Care?

It's been a very busy news week. Reid picked just the right time to slide this in -- the air has been sucked out of the room by other stories.<p>Congress had a hands-off approach to the internet for some time, and it took off like wildfire because of it. All that's changing now, it seems.<p>I'm disappointed that there's so many avenues of attack for legislators that it's effectively impossible to cover all of our bases. With big players like WalMart and the states involved, it's a wonder common sense has held out as long as it has.<p>For those of you buying into the "level the playing field" bullshit, I don't want a level playing field. This isn't kid's soccer where nobody keeps score and everybody gets a prize. I want goods and services delivered to me as efficiently as possible. Used to be this was the corner store, then the big box store, then the internet store. Might be something completely new in 20 years. Can I pay it? Sure? Will it bother me? Not a lot, really. The only thing this is going to do is screw poor people over who were getting goods a few percentage points below what they used to get them at. It's terribly regressive -- the very opposite of a "level playing field"<p>Big players coming in and screwing over the poor? It should be a scandal.

from the NYT article: "The bill would allow states to require all Internet sellers to collect sales taxes for the state and local governments of the buyers. State governments would be required to provide software free to Internet retailers to calculate sales taxes. Online retailers with out-of-state sales of less than $1 million a year would be exempt."<p>Internet Sales Tax wouldn't be bad if it were uniformly imposed country wide (what amazon has pushed for). This specific bill, on the other hand, sounds like a nightmare.<p>The only saving grace being that at least states would be required to provide "software" - I can only hope that translates to APIs - to calculate taxes. That would make the problem significantly more manageable but it would still drastically increase the complexity of billing solutions for a lot of SMBs. The million dollar threshold is just too low for this to be anything but crushing for small businesses.

For now I don't care because (1) I'm already paying sales tax and (2) This is a US centric thing, if anything it levels the playingfield / is an advantage depending on where you are.<p>The fact that there was a time when you did not have to pay sales tax should be seen as a gift, if there is one thing that seems to be a certainty over the long run it is that if there is a flow of money sooner or later it will be taxed.

I honestly don't care if retailers have to collect income tax: But municipalities/states SHOULD have to pick off a menu of plans from the federal government for internet tax for their boundaries, and should have to register their boundaries with a federal agency.<p>The burden of dealing with every crazy tax situation and variety in every municipality in the country is the issue. Not the tax itself.

Is the argument that there should be no sales tax, or that online businesses should be exempt from it? Alternatively, is there some specific compliance issue or formulation in the proposed legislation that is poorly thought out?<p>I'm genuinely curious, as (in principle) the fact that online businesses have been exempt from sales tax largely strikes me as an anomaly and not some new standard.

I'd be against this if the U.S. had a progressive tax code to begin with, but we don't. Sure, if you look at federal income taxes only there appears to be a progressive tax system but taxes on capital gains is pretty much "flat tax" loop hole for the ultra rich.<p>Then you look at States who almost all implement regressive taxes, many through sales taxes, and see how States' fiscal woes are self-inflicted. Here's one such examination: <a href="http://www.chicagomag.com/Chicago-Magazine/The-312/January-2013/Illinois-The-Fourth-Most-Regressive-Taxes-in-America/" rel="nofollow">http://www.chicagomag.com/Chicago-Magazine/The-312/January-2...</a><p>In Tennessee, where I have to endure this regressive insanity, asking for a progressive income tax has become a third-rail issue for any local politician. So we have zero income tax and an effective sales tax of 9.25%<p>Why then am I favorable to internet sales tax when I've derided sales taxes as regressive just above? In this case I believe, mainly through intuition, untaxed internet sales are just one more vehicle for the affluent to avoid paying taxes. This makes regular retail sales tax that much more burdensome for the poor who receive fewer services because overall State tax revenue suffers.<p>Until the regressive tax leanings of the states is abated, which I doubt will happen in the next decade, I see this as a necessary evil.

1) There probably <i>should</i> be a sales tax, more and more of the economy is moving onto the Internet, and local state coffers are hurting for it<p>2) Figuring out local sales tax is hideously difficult, it opens lots of great opportunities for new startups as payment processors who "do taxes right"<p>3) Other bigger stories have consumed the media

I think that if they do this, they should require all states and localities to commit to updating an online clearing house of tax rates for their locality based on location and product type. If you fail to do so, merchants are under no obligation to collect your tax. The reason why this loophole has existed so long is that it is very difficult to tax according to 1000s of laws nationwide.<p>I do not think people should be really against this. If you are against paying sales tax, lobby your local government to stop sales tax.

If I were to venture a guess, I'd say it's because we are mostly all too young to remember a small government and too time-poor to do much about it.

To address a couple of concerns raised here.<p>There is a Small Seller Exemption. If you have less than $1,000,000 in remote sales during the preceding calendar year you are exempt from collection.<p>There are six certified service providers, including one free one, which can be used to calculate the required sales tax. The states certify these providers and agree to indemnify users against liability if the case of an error by the service provider.<p>Before a state can require collection they must change their code to be in compliance with the requirements of the Marketplace Fairness Act. Currently 24 states are compliant and could begin requiring collection if the bill passes.<p>For more information go to <a href="http://www.marketplacefairness.org/" rel="nofollow">http://www.marketplacefairness.org/</a>

Companies like Avalara <a href="http://www.avalara.com" rel="nofollow">http://www.avalara.com</a> must be drooling right now

Because HN readers aren't idiots. We know that it is good and right for sales tax to be charged on sales. And, that the sale occurring on the internet does not make it an essentially different thing than any other purchase of a good or service. I think that, for HN readers, is very important: the internet is a different marketplace, not a different reality, and to treat it differently in some aspects can lead to legal problems and credibility issues down the road.<p>In terms of the nightmare that is implementation, that is another story.

Theoretically, I am OK with the government not giving a wink and a nod to certain classes of business. I am also theoretically OK with not allowing vast amounts of money to pass around without taxation.<p>Practically, of course, implementing these ideas could be very nastily done and make no one happy but certain privileged people who attempt to squash competition.

Existing players are probably fine with Internet sales tax. It's another barrier to entry.

The complexities go far beyond just knowing the rates for each jurisdiction and arranging for payment.<p>Naturally there's going to be a call for some kind of compliance testing. How are you going to catch the cheaters when you don't have access to their financial records, as you would if the business was in your state?<p>Even just the rates themselves can get complicated. Minnesota for example doesn't tax clothing or food, but the specifics of what's included aren't clear - candy bars for example aren't considered food and are taxed. How is somebody from another state supposed to figure this out even with software help?

Disclaimer: Canadian, so I don't know all the rules.<p>I think that a law like this is inevitable and in part fair. States like California have tons of tech companies which are contributing a huge amount of tax dollars to the states coffers. But they are selling goods and services to citizens in other states. Why shouldn't these other states get a grab at the revenue made from the citizens purchasing goods and services while in their state? While the internet is location-independent the purchaser of any item is not.

What is wrong with an internet sales tax? If you live in the US and buy something there is a sales tax associated with that purchase.<p>Why is buying via the internet any different?

This may be a silly question, but does this sales tax also apply to SaaS products that you might sell? Or is this only for physical products a la Amazon?

Does anyone have any idea how this could affect any startups selling software online?<p>This could have huge ramifications, but as usual it's Congress mucking things up.

As far as I can understand this isn't a new tax, it's just a law which makes it easier for tax which is owed anyway to be collected. Nobody likes paying tax but governments need money to provide services. Perhaps I'm a bit blase about this because I don't live in America so this doesn't affect me, but unless you want to not pay tax which you legally should, I don't see the problem.

What is wrong with paying sales tax over things that we buy over the internet again? Isn't the real problem the fact that we have to pay sales tax in general, and/or the sales tax rate? Sales tax income goes to your state. There are states which can sustain without a sales tax (or even income tax); they certainly get that money from somewhere though.

Does anyone know if this would apply to SaaS stuff or only to physically shipped products? Also, the $1 million threshold exemption is good, but could it create scenarios where your product/service takes off and then all of a sudden you gotta figure out if you need to start sticking sales tax in there?

I noticed the $1 million exemption for small businesses. How will that work? If you sell for 11 months without collecting taxes then find yourself going viral around Christmastime and crossing the $1 million mark unexpectedly, are you suddenly liable for all those prior sales?

My senator Ron Wyden (D-OR) is vehemently against this tax. Oregon doesn't have a sales tax so I'm not really sure why he's against this proposal so much. Maybe he thinks we already have a "level playing field" and OR has nothing to gain since we wouldn't collect anything?

So will we see VPNs in Delaware spike from this? It's not clear to me if this is just extending already existing state sales taxes to the Internet, or if these are new, additional taxes.

the government can create all the money it needs to fund itself. It does not need to take it from taxpayers. The entire purpose of the tax code is not to raise money but to control the wage slaves.<p><a href="http://www.naturalnews.com/040027_financial_slavery_money_investments.html" rel="nofollow">http://www.naturalnews.com/040027_financial_slavery_money_in...</a>

Because it is inevitable?<p>Ebay is one of the few large entities fighting it, I think they are trying to get a small sales exemption.

Because we're already obligated to pay sales tax, and they're just attempting to collect it better?

because participating in a hopelessly corrupted system is demoralizing. "activism" brings at the very best a delay followed by a shady deal as soon as your back is turned.<p>viva btc

This is going to be great for Europe!

I expect it to die in the House.

Bitcoin Anyone?

The best result that could come of this Internet/Sales Tax issue is that Sales tax is abolished in favor of income tax.