SCOTUS rules states can collect sales tax on Internet purchases

[braumeister]

Either eliminate sales taxes and replace them with something else or have citizens pay them no matter where (in the USA) they make the purchase and whether the delivery involves a face-to-face pick-up or a delivery made via interstate commerce.

That inches toward a Value Added Tax (VAT) which most European countries use instead of sales tax. The VAT has been debated in this country for many years and has never gained any traction.

Part of the problem, despite the greater efficiency of a VAT, is that it bypasses the states and localities, many of which rely on sales taxes as a significant source of income.

Another part, often ignored, is that VAT is subject to fraud, just like sales taxes are.

I apologize for this digression, but I'm afraid the thread is drifting toward politics and policy and losing its connection to FIRE and Money.

 

[samclem]

My state has a 6% sales tax (no local sales taxes), but the "use tax" I pay when filing my state income tax return has a formula that simplifies the process and seems quite favorable to me. If I have all the receipts (which I seldom do), I can calculate the tax myself, but they make it easy on me.

On my state tax return, they let me use a table based on Adjusted Gross Income.

AGI	Tax
0 - 10K	$4
10K - 20K	$12
20K - 30K	$20
30K - 40K	$28
40K - 50K	$36
50K - 75K	$50
75K - 100K	$70
Over 100K	AGI * 0.0008

I wonder if these sorts of AGI-adjusted sales tax scheme will go away under the new provisions.

Use taxes cover a pretty wide swath of goods--I bought an airplane in another state, and had to consider the use tax I might have been liable for (it turned out I wasn't, as it was considered a "casual sale" based on the type of item and the number of times I'd done it, IIRC). Making the laws more consistent and simpler (e.g. exemptions for food? What types of food? When is a candy bar a food?) would make this all a lot simpler, but I don't think I'll hold my breath waiting for that.

 

[Chuckanut]

Hopefully soon followed by their website showing, "Error 404."

I was thinking more like: People who have been considering buying a new TV or whatever, may do it very soon since it will take a while for the sales tax collection machine to get working.

 

[youbet]

What should I be charged?

It depends on the scheme Illinois comes up with. I suspect there will be a flat tax (probably the state level sales tax percentage) that applies. Counties and localities will be SOL.

You buy a $100 item from an out of state vendor who ships it to your address in Illinois. The vendor charges $106.25 and remits the $6.25 to Springfield. The vendor doesn't get involved with any county or local collections/remittances.

Just my guess. It's all speculation at this time. With the normal amount of time it takes Springfield to do anything, what makes you think you could possibly still be alive when a scheme is enacted? You'll be 117.

 

[youbet]

it will take a while for the sales tax collection machine to get working.

There's the understatement of the day!

 

[Chuckanut]

Here's an interesting article on the decision:

https://arstechnica.com/tech-policy/2018/06/get-ready-for-more-sales-taxes-on-online-purchases/

This quote helps us understand why the SC believed that the ruling that lead to the current system is flawed:

For example, a business that maintains a few items of inventory in a small warehouse in a State is required to collect and remit a tax on all of its sales in the State, while a seller with a pervasive Internet presence cannot be subject to the same tax for the sales of the same items.

 

[RonBoyd]

Why Amazon is the winner of the Supreme Court sales tax ruling - https://www.cnbc.com/2018/06/21/why-amazon-wins-with-supreme-court-sales-tax-ruling.html

Since Amazon already collects sales tax in every state on the products it sells directly, which account for roughly half of all units sold on its site, the court ruling should have less impact on how much it charges for its products.

Amazon shares were down less than 1 percent Thursday. Overstock, however, saw its shares drop over 6 percent, while Wayfair shares dropped by roughly 8 percent before recovering.

"We see limited impact on Amazon," Colin Sebastian, an analyst at Baird Equity Research, wrote in a note published Thursday, adding medium-sized merchants that do not already collect sales tax in most U.S. jurisdictions will be most exposed to the ruling.

 

[bUU]

I was thinking more like: People who have been considering buying a new TV or whatever, may do it very soon since it will take a while for the sales tax collection machine to get working.

The last few violators aren't doing to be the major concern. The compliance aspect of this is really about ending this brand of (use) tax evasion for the duration.