Tax On Internet Purchases Long Overdue


It seems almost incredible that people have been able to buy merchandise on line without having to pay any tax. Of course that isn’t exactly true.  If you live in a state where there is a sales tax, in theory, you are supposed to declare that purchase and pay the appropriate sales tax.  Unfortunately, very few people, if anyone, pays tax on items purchased on the web and there is little chance the government could force them to pay up even if it could locate them.  In order to change this, the United States Senate is expected to vote on the Marketplace Fairness Act which would require online retailers to collect taxes for the states where they ship items.  Obviously there would be no change for states like New Hampshire where there is no state sales tax.  There are three main reasons why this would be a positive development. 1) Most states could use the revenue.  According to the National Conference of State Legislators, states lost out on a combined $23 billion in uncollected sales tax revenue.  That’s enough revenue to change the fortunes of more than a few states.  Sales tax is also the most progressive because you only pay for what you purchase.  Anyone purchasing a fifty inch flat screen TV, expensive handbag or jewelry, can also afford to pay the tax.  2) It would help the big box retailers draw more customers because there would no longer be an advantage to shopping online; a benefit for which millions of Americans now partake.  Smaller retailers would also benefit from the online sales tax.  In addition, the other distinct advantage of online retailers is they have no overhead.  Depending on the size of the company, there’s no rent, no electricity and fewer if any employees.  Mortar and brick retailers have a difficult time competing with that model.  3) It might get some people out of their homes.  While many people consider the ability to live their lives online a positive, there is a school of thought that believes it’s unhealthy.  Walking around and getting exercise, is a great benefit of going out to shop.  Sitting in one’s home and staring at a screen is isolating and can be unhealthy.  Hopefully the Senate will soon pass this legislation.  But even if it does, the earliest this legislation would go in to effect would be October 1, 2013.

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