Fight Over Online Sales Taxes: Marketplace Fairness Act

Occasionally I might or might not purchase items from Amazon and other online retailers. When I file my tax returns the State of Michigan insists that I give it a listing of online purchases and estimate and provide the sales tax I then owe to the state. Now it takes more than a bit of chutzpah to bogart your way into a private transaction that neither involved you nor took place in your jurisdiction and then claim that the actual parties to that transaction owe you a cut and need to let you wet your beak, or else. But that's how states tend to behave when there's money at stake.

For obvious reasons I won't discuss my answers to my state's nosy little questionnaire. But in general some higher sales tax states and "brick and mortar" retailers aren't pleased with the explosion in online sales. Apparently some of my fellow true blue Americans don't see the point of paying taxes to their state for transactions in which that the state had no role. Even excessively honest people tend to get amnesia about the $1500 or so they spent online last year without paying sales tax. Retailers who aren't primarily online get annoyed with people using their stores as a showroom or to price check for items they intend to purchase online. Some consumers visit a bookstore or electronics shop with no intention of purchasing anything therein. All they're doing is getting a hands on experience before ordering elsewhere. This makes some retailers rather peeved, as you might imagine. They have less money to kick up to their mob captain, state.

Some people have come up with a solution. That is a solution from their point of view, not necessarily mine. This solution will of course require you to pay more taxes. It's only fair right? I mean why should some states go without what they view as their tax revenue just because some consumers have decided it's better to order things online on occasion.

Legislation that would empower states to tax online purchases cleared a key hurdle in the Senate on Monday after winning an enthusiastic endorsement from President Obama. 

Senators advanced the bill in 74-20 procedural vote on Monday evening, just one vote short of the backing it received in a test vote last month. Twenty-six Republicans joined Democrats in moving forward with the bill..

Major retailers are putting all their lobbying muscle behind the legislation, arguing it would close an unfair loophole that benefits online merchants over brick-and-mortar stores. The National Retail Federation, which represents chains such as Macy’s, and the Retail Industry Leaders Association (RILA), which counts Target and others among its membership, announced it would score lawmakers’ votes. But signs of trouble for the bill also emerged as Wall Street groups urged the Senate to slow down and eBay began marshalling its users in a massive campaign to kill it.

The Securities Industry and Financial Markets Association and the Financial Services Roundtable said the measure could pave the way for financial transaction taxes on the state level, an idea that Wall Street and its supporters fiercely oppose.  “It’s important for Congress to explore all the possible outcomes and costs of the proposal, especially the impact on consumers,” Scott Talbott, the senior vice president of public policy for the Roundtable, said in a statement...The Marketplace Fairness Act would empower states to tax out-of-state online retailers, but would exempt small businesses that earn less than $1 million annually. 

Under current law, states can only collect sales taxes from retailers that have a physical presence in their state. People who order items online from another state are supposed to declare the purchases on their tax forms, but few do. The proposal has the support of a host of governors, including Republicans Chris Christie of New Jersey, Rick Snyder of Michigan and Bob McDonnell of Virginia. Passage of the bill could bring billions of dollars in new revenue to state governments. The bill has split the tech industry, pitting eBay against the retail giant Amazon. 

In email to eBay users, eBay CEO John Donahoe argued that the bill would “penalize small online businesses,” urging the site’s millions of users to contact their members of Congress and voice opposition.The company is lobbying for Congress to increase the small-business exemption from $1 million to $10 million.  Donahoe also took a shot at Amazon, a key supporter of the legislation. “Amazon, for example, has fought harder than any other company to require all businesses to collect sales taxes online, while also seeking special tax benefits as it expands its warehouses throughout the country. It’s bad tax policy,” Donahoe wrote....

LINK
So as you can see some of this is a case of the elephants fighting and the grass getting trampled. I don't think that Wall Street cares about whether I pay the proper use tax on books or cd's I order online. But Wall Street is very concerned about states attempting to put financial transaction taxes on services that take place in cyberspace. For example California, which has a political class much friendlier to higher taxes than some other jurisdictions, might decide that every transaction which takes place between consumers in California and bankers or financial service companies based in say New York, is now subject to a California tax.

This sort of backdoor tax was disallowed in a 1992 Supreme Court ruling in which North Dakota attempted to tax Quill Corporation, a business which had no sales force, retail outlet or other physical location in the state. Amazingly North Dakota tried to argue that Quill's floppy disks and sales flyers were physically located in the state and therefore so was Quill. The Court rejected this line of reasoning but evidently said that Congress could change the law if it wanted to do so. And now it looks like Congress wants to do so.

I think this is a bad idea and also unfair. If you're a business who is only physically located in one state why in the world should you have to figure out the tax policies of 49 other states, and various counties, cities, townships and territories. That's expensive. Additionally this new online tax proposal would seem to discriminate between online purchasers and physical purchasers. There are states who do not have sales taxes or have different sales taxes than my state. That's their right. If I happen to drive across the border to purchase goods or services that's my business and my right to do so. My money doesn't automatically belong to my state or the businesses that reside within. If I order something online from a state with no sales tax like New Hampshire my state wants to be able to track that transaction and get its cut. But if I drive to New Hampshire and purchase something my state is just out of luck? Does that makes sense? Or is Michigan also going to try to put GPS on my car to track down any such trips? 

If the states feel that their tax structure is no longer feasible because of a change in consumer behavior then they are free to do things more efficiently OR raise other taxes on businesses or individuals within their state. I don't think states should be able to compel other businesses or other states to adopt their tax policy on "their" citizens. I think all this law would do, if passed, would be to squeeze out smaller businesses. It's not coincidental that Amazon is in support. Amazon just happens to be selling new tax policy software and has already negotiated tax exemptions for itself. Or maybe I'm just being selfish. Maybe I'm just opposed to paying my "fair" sales taxes on goods I hypothetically order online...

What's your take?

Meet the New Boss: Obama and Domestic Spying

I'm your new boss. I'm SO happy to see you!!!

One of the most intriguing things about human nature is how we respond to surface changes while the substantive policy remains the same. In short, a spoonful of sugar helps the medicine go down.

In New York City for example former Mayor Rudy Giuliani made no pretense of having much use for the black community or so-called black leaders. Under his leadership the NYPD was unleashed to harass and search black and Hispanic citizens, primarily men or boys, who could literally just be walking down the street minding their own business. Occasionally this aggressive attitude would lead to brutal or even deadly uses of force on citizens. People were outraged. They marched, protested and called the snarling churlish lisping Giuliani all sorts of nasty names.


Enter Mayor Bloomberg. Bloomberg is a "feel your pain" kind of guy. He's (usually) articulate, soft spoken, reasonable and can insult you in such a nice way that you'll thank him for doing so. He had no problem meeting with black leaders and making the requisite noises of regret any time there was a questionable NYPD incident. But the underlying policy of stop and frisk, agitate and intimidate wasn't changed. If anything, it expanded. But because Bloomberg's surface persona was much more pleasant than that of the belligerent Giuliani, much of the public controversy over police stops initially subsided. Now, however, thanks to Commissioner Kelly's pugnacity and the aggressiveness of the NYPD in crossing jurisdictional and legal lines, people may finally be starting to resist and fight back.

There's a lesson there. You may recall the Total Information Awareness Program that was aborted under then President Bush. Democrats and civil libertarians all of stripes raged against this in editorials. They thundered against it in on the airwaves. They called it creeping fascism. So the program was "dropped". Soon afterwards Hope and Change arrived.

And then people went back to sleep, content that they had stopped this wicked idea dead in its tracks. But much like the Terminator or the car Christine, ideas like this don't die. They just slowly and patiently rebuild themselves until they are reborn. Now they might have a modified name or use slightly different people as fronts. But that's all window dressing. The bottom line is government is " like fire, a handy servant but a dangerous master". The government will now be storing information on you for five years. The previous limit was 180 days.

The U.S. intelligence community can now store information on innocent Americans for up to five years under new Obama administration rules, expanding previous authority to hold details on individuals with no ties to terrorism.
The National Counterterrorism Center (NCTC) was previously supposed to immediately destroy intelligence information about Americans when there were no clear ties to terrorism, but now new rules that basically justify spying on innocent Americans are being justified by terrorism fear-mongers.

But wait there's more!!! Behind door number two we have this prize for you!

NERMEEN SHAIKH: A new exposé in Wired Magazine has revealed new details about how the National Security Agency is quietly building the largest spy center in the country in Bluffdale, Utah, as part of a secret NSA surveillance program codenamed "Stellar Wind." According to investigative reporter James Bamford, the NSA has established listening posts throughout the nation to collect and sift through billions of email messages and phone calls, whether they originate within the country or overseas. The Utah spy center will contain near-bottomless databases to store all forms of communication collected by the agency. This includes the complete contents of private emails, cell phone calls and Google searches, as well as all sorts of personal data trails—parking receipts, travel itineraries, bookstore purchases and other digital "pocket litter."

AMY GOODMAN: In addition, the NSA has also created a supercomputer of almost unimaginable speed to look for patterns and unscramble codes. James Bamford writes the secret surveillance program "is, in some measure, the realization of the 'total information awareness' program created during the first term of the Bush administration," but later killed by Congress in 2003 due to privacy concerns and public outcry.

Do you get this? EVERYTHING that you communicate electronically, everything that shows who you are, what you read, where you go each day, what sorts of purchases you make, etc is being gathered up in databases where it will be perused and sifted through by government agents.
Now how is this possible if we have a Democratic President, one that taught constitutional law, someone who theoretically has an understanding of the Bill of Rights, of privacy, of individual rights?

It's possible because the neither the Republicans nor Democrats have any real commitment to or understanding of the Bill of Rights. Sure both sides will mouth pious platitudes to certain constitutional guarantees when they are important for some other purpose or to a favored interest group (Republicans and the gun lobby or Democrats and the abortion lobby) but ultimately neither side could give a mosquito's tweeter about the Bill of Rights as a general limitation on the executive branch's ability to investigate, monitor, arrest or compel behavior by the individual. The current President may not have southern swagger or Texas twang or other characteristics or behavior patterns which some progressives didn't like. But when it comes to civil liberties, make no mistake, President Obama is just as dangerous as any right-wing zealot and perhaps more so. Too many people are willing to give him a pass on things they never would have tolerated from President Bush. For example, that recent Supreme Court decision that allowed strip searches of all people arrested, even those arrested for minor non-violent offenses, was supported by the Obama Administration. This cartoon puts it perfectly.

If the below bill were to be proposed today as is with no other changes I don't think it would get passed. I think that Republicans would openly oppose it as a law which protected terrorists. Democrats might say (in front of the cameras) it was a good idea in theory but in practice (once behind closed doors) would carve out so many exceptions while CLAIMING they supported the law that even if passed it would be meaningless.

The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.

What's your take?
Are you bothered by the government gathering information on you?
If Republicans were doing this would we have heard more outcry?

Why aren't civil liberties important to more people?