I suspect that has nothing to do with the fact that eBay’s President and CEO, John Donahoe, personally emailed me this morning. “Congress is considering online sales tax legislation that is wrongheaded and unfair,” he said, “and I am writing to ask for your help in telling Congress ‘No!’ to new sales taxes and burdens for small businesses.”
I’m all for no new taxes or burdens on small businesses (or their customers).
Voters seem to have a different idea.
Voters haven’t figured out that when they tell the boneheads they elect to “stick it to the rich businessman or rich businesswoman” what they are really doing is making their own cigs or Twinkies or wife-beater t-shirts cost more.
Most states levy a sales and use tax on merchandise.
Here are the arguments, pro and con.
PRO: Sales tax proponents say taxing goods bring economic growth, savings, and investment. I’ve seen no reliable data proving that. Still, the rooms and meals tax here in South Florida is about to ratchet up another thousand percent to finance Dolphin Stadium. That’s OK, though, because that tax fleeces only the tourons.
If a sales and use tax on merchandise is legit, then online sellers should charge it the same way local stores do. After all, people who use stuff owe the tax no matter where the stuff is bought.
CON: Sales taxes are regressive. (A regressive tax is defined as “a tax that takes a larger percentage from low-income people than from high-income people.”) I discussed the how much a bigger bite of your paycheck a sales tax takes here last week.
I don’t believe sales and use tax on merchandise is a fair or equitable way for a state to raise funds so no online merchant should collect it; the local stores ought not charge it either.
Mr. Donahoe thinks the solution is simple: if Congress passes online sales tax legislation, eBay says small businesses with [fewer] than 50 employees or less than $10 million in annual out-of-state sales should be exempt from the burden of collecting sales taxes nationwide. Mr. Donahoe wrote “less” there, but I corrected that, too.
eBay’s solution is the worst of all possible worlds. If the tax is due, exempting one group from collecting it is an accounting (and marketing) nightmare, not to mention probably unconstitutional.
And what happens when a $9,999,990 business sells an extra $10 this year? They didn’t collect tax all year. Do they go back to all their customers? Do they suddenly have to find the $5 or $600,000 in taxes owed from their own revenue?
“So what is the fair and equitable way for a state to raise funds?” Liz Arden asked me.
If We the Overtaxed people really really understood how much it costs us to employ 22,267,206 federal plus state and local government civilian workers, we would have thrown the always-on-vacation bums out of office decades ago.
And that, dear reader, is why there will never, ever be tax reform in these United States.
(The U.S. Census reports, in a file called “APES,” that our federal government civilian employment plus state and local government public employment payroll for March of 2011 was about $86,500,000,000.)
Did you know you can deduct the state sales tax you pay from your federal tax return?