Internet Tax Cheats and Taxes

Internet Tax Cheats and Taxes was Originally Posted on May 5, 2013 by lavarock

A bill is scheduled in the Senate for Monday that may well pass and become law. When that happens, you may well be required to pay taxes on every item bought online. Most states reguire that you pay anyway, but most people do not.

Suppose you live in Hawaii and buy an item at a brick and mortar (local) store in Hawaii, you would pay Hawaii’s tax. If you lived in Hawaii and bought the item from a store in California, at this time, most companies don’t charge California tax and even so, Hawaii says you should pay Hawaii tax for an item regardless of where the store is located.

Do you see why I favor a flat tax instead off an income tax? Here I would be taxed when I earn the money and then taxed when I spend the money, and that spending tax might be to two states. Rather than come up with more ways to tax, I suggest finding ways to reduce how much the states and Federal government use and need.

I submit that one reason the states are not as concerned with pot being legalized is that it is yet another product like soda, that legislators want to TAX.

As for collection of state taxes for small businesses, it will be horrible in some cases. Also, the states will want to collect tax for themselves when we sell overseas, although that has not yet been proposed.

So as a citizen you might pay 10 to 35% of your income directly to IRS. Then when you buy something, another 5% to state tax, your church might take 10% tithe, you pay a property tax of perhaps a couple thousand a year, and city tax and county tax, car registration of perhaps a couple hundred a year, dog registration, gasoline tax, cigarette taxes and so on. Most of that is all tax and they add up.

I just saw cartons of cigarettes for sale in Virginia for $50 a carton, yet sell here for $80 a carton. Does it cost $30 to ship a carton of cigarettes here? No! Gosh, what could cause that price to zoom up like that?

Decades ago, Ham Radio licenses were perhaps $25 every 5 or 10 years (I don’t remember the exact amounts but this is probably close). Then a ruling came down that the licensing was unfair and that cellphone companies, radio and television and common carriers were the bulk of their business and that Hams being licensed were such a small part of the mix that their licensing frees should be reduced to a fee that more closely reflected the work involved to grant and renew licenses. That cost turned out to be ZERO.

It’s another case of getting everyone to foot the bill for those that use the service.

Recently, our property taxes were recalculated. They doubled the evaluation of the properties, but reduced the tax rate. Thus we paid the same taxes and nobody realized what was up. Now the tax rate can be raised for everyone and nobody can complain because their assessment won’t change. It is akin to raising the sales tax rate, everyone is in the same boat and no one can complain that they are being singled out.

As for the collection of sales taxes, it can be very difficult and time consuming to collect especially for small businesses. The shopping cart I use has a module that will calculate and distribute automatically sales tax to each state and do the paperwork for the store owner. Not all processes would be that easy. The group supporting the project is a collection of states who want their taxes.

So states got together and made it very easy to collect and distribute taxes, even before the bill was passed. Too bad they did not set up a department to reduce the revenue they needed rather than find ways to easily collect more money.