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Obama’s promised not to raise taxes of any kind on families earning under $250,000 or individuals under $200,000. Earlier this month that pledge went up in smoke by tripling the taxes on cigarettes. Smokers were outraged.
But the government still needs more money to pay for all the spending and budget deficits.
Feds to Tax the Web to Bolster State Revenues
Now Congress and Obama have their eyes on the Internet to help fund more government spending — because most U.S. States are pushing for the new tax rules that require federal oversight — and Washington is ready and willing to help. Congress is expected to introduce a bill this week that would require Amazon.com, L.L. Bean, eBay, Cabela’s and other online merchants to collect sales tax on all online purchases and return that money to the state in which the purchaser resides — which may force business that make sales online to abide by the tax laws maintained by each and every state.
The new bill rewrites the ground rules for mail order and Internet sales by eliminating what its supporters view as a “loophole” that, in many cases, allows Americans to shop over the Internet without paying sales taxes.
Currently, Americans who shop over the Internet from out-of-state vendors aren’t always required to pay sales taxes at the time of purchase. Californians buying books from Amazon.com or cameras from Manhattan’s B&H Photo, for example, won’t pay sales taxes at checkout time that they would if shopping at a local mall because their headquarters are located out-of-state.
“We will have the bill ready for introduction by next Monday,” said Neal Osten of the National Conference of State Legislatures. “We finalized the language and now we’re working out the remaining issues and adding some new provisions at the request of various stakeholders.”
The final legislation is expected to be introduced by Rep. Bill Delahunt, a Massachusetts Democrat, who has championed similar proposals in the past. Delahunt’s office on Wednesday confirmed he was interested.
President Obama is a strong ally of the new tax laws and is expected to sign them into law. Internet companies like Amazon.com, eBay and Google are outraged. Until now, they have remained recession proof by offering products at lower prices than comparable brick and mortar stores.
This is because Congress has been unsuccessful in enacting Internet tax laws for at least seven years.
Advocates of the Internet tax have long argued that reduced sales tax revenue threatens budgets for schools and police, and say that, as a matter of fairness, online retailers should be forced to collect the same taxes that brick-and-mortar retailers do.
While these arguments have been unsuccessful so far, the National Conference of State Legislatures and its allies believe the recession has sliced into sales tax revenue so much that Congress will have to act. In addition, Obama is said to support this legislation, along with a broad coalition of Democrats in congress.
For those used to buying $.99 iTunes or other more tangible items, this will be an immediate price hike. Californians, for example, will pay an extra 7.25%. We’ll see when the bill is introduced it if also included local sales taxes, which can bump this up to 10% or more for most of us.
A song on iTunes: 0.99 cents.
New sales tax: 0.10 cents.
Total cost: $1.09.
Sharp 52″ LCD-TV: $1,415.99 .
New sales tax: $141.60.
Total cost: $1 557.59.
Online bargain hunters, be forewarned: Expect change.
