I poked my head into Usenet for probably the first time in a year, and reminded me of something to pass along. It touches on Radio, Federalism and the coming budget crunch.
If you used the Internet about 15 years ago when it first was made available to the public, chain letters circulated about “They’re going to tax the internet!!!” in a number of various forms. Most people never really understood the issue, and that’s about to become clearer.
Radio has been harping on the “Performance Tax” thing for a couple years – trying to convince its listeners that the radio station shouldn’t pay the performers for using their music, trying to bait people into thinking “Oh, a tax, I hate taxes!”…. when it isn’t a tax at all.
The “Internet Tax” was this – to encourage the development of the Internet, the Federal Government passed a law that said “No State may impose a sales tax on internet services” – preempting state’s taxing rights. “Internet Services” is the fee you pay each month to AT&T, Comcast, AOL, etc… That’s it.
People heard “Yay, there is no tax on the Internet” and thought that law meant the Inernet is a tax free zone – you could set up a business on the Internet, and you wouldn’t have to pay taxes on the Income. You could sell merchandise over the Internet and not charge sales tax. The first is NOT true and the second is only partly true, and what is going to change very soon.
If you make potholders and sell them on eBay, you owe income taxes on the profit, period. Whether the IRS will catch you is a different matter – but you still owe the tax. As revenues fall and people on 99 weeks of unemployment have been looking for ways to earn non-reported income, the IRS is gonna get more and more curious.
Sales Tax is a state matter – states have very limited ability to impose a tax on people from another state. If you purchase a computer over the Internet in another state, and they don’t charge you sales tax from your state, you are required to file a “Use Tax” report to your state and report the purchase and pay the sale tax as the consumer. [Assuming your State has a sales tax]. The reality is that almost nobody knows that or does it.
If the seller operates any brick and mortar “facilities” in your state – a storefront, a distribution center, a customer support center – then they are required to charge you sales tax. (and you’ll go to a different online retailer in another state :))… Texas is right now fighting with Amazon which is trying to avoid collect sales tax on Texas customers, despite having a distribution center there. Amazon has called the bluff of Texas and is announcing it will close its distribution facility in Texas and take the jobs elsewhere.
Congress has threatenedd to get involved several times to create a national law requiring retailers to collect sales taxes on every purchase (very hard given that many sales taxes have local variances) or report all out-of-state purchases to the revenue agency of the State where the buyer lives to match up with Use tax reports.
With the looming budget problems at the states, I think you can count on seeing this happen very soon.
“The power to tax is the power to destroy,” oft quoted and attributed both to Chief Justice John Marshall and to Daniel Webster, leaves the upshot of taxation unstated. It is of course, every liberal’s wet dream — the power to CONTROL.
What is the “power to spend”?
During Clinton’s terms he would constantly send up trial balloons, and taxing the internet was “in flight” a lot back then. As was taxing everything else.
When Barry Osama first came into office, it was all you heard from ALL the Dems: they were gonna tax this and they were gonna tax that. I must have heard the word tax at least 50 times a day.
If they impose a new internet tax, the solution is to have a tax strike. Beyond basic groceries and gas and mortgage/rent payments, don’t buy anything else until they repeal any new internet taxes.
A general digital strike called by tea partiers!
It would be augmented by constantly emailing to Congressmen and the media what we are doing and why. Use the Internet to bash them overthe head until they had to back down. It wouldn’t last long, because they would lose HUGE quantities of existing taxes.
I can’t believe that Americans didn’t boycott GM when the government bought them. I did.