Mitchell’s laws:
●The more budgets are cut and taxes increased, the weaker an economy becomes.
●Until the 99% understand the need for federal deficits, the upper 1% will rule.
●To survive long term, a monetarily non-sovereign government must have a positive balance of payments.
●Austerity = poverty and leads to civil disorder.
●Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
==========================================================================================================================================
Online sales taxes involve several issues. The proposed solutions make the situation worse, not better, and new thinking is needed.
States, Congress rallying for an e-sales tax
Washington Post, By Amrita Jayakumar, Published: July 8, 2012A wave of states have passed laws that will require consumers to pay sales tax on all Internet purchases as soon as next year.
For states struggling in the troubled economy, this could mean $23 billion in new revenue each year. The movement in state capitals is driving newfound support for a proposed bill in Congress that could make collection of sales tax a standard practice on the Web, no matter where a consumer logs in to shop.
Bricks-and-mortar retailers are cheering the moves. For years, their online rivals have resisted charging sales tax, giving them a price advantage. They have cited a 1992 Supreme Court ruling that let online companies off the hook if they didn’t have a physical presence in the state where the customer lived.
A Web trade association that includes eBay, Overstock.com and Facebook is fighting the new bills. But notably, Amazon.com appears to have waved the white flag and supports the sales tax measures.
Prices are so low online that retailers have long decried what they call the “showrooming” effect. Customers visit shops, try out different products and then buy them cheaper online, sometimes on their smartphone while they are still standing in the store.
On the other side is Net-Choice, the trade association of e-commerce companies. Its argument is that tax calculation for thousands of jurisdictions country-wide is an impossibly complicated task.
“The burden falls disproportionately on a small business,” said Steve DelBianco, executive director of NetChoice. The new bill exempts online businesses making less than $500,000 a year from collecting sales tax. NetChoice says that threshold is too low.
Buried in this article are at least five issues. Let’s briefly comment on each:
1. The states need the money: Unlike the federal government, the states are monetarily non-sovereign. They cannot create dollars at will, so must rely on income to pay their bills.
For long term survival, a monetarily non-sovereign entity must have income from outside its borders. Some states rely on a positive balance of trade — exports such as oil, agricultural products and tourism — and most states enjoy income from federal spending.
Because state taxes are internal, they merely recirculate dollars within the state, and do not provide long term, financial support. A portion of online tax dollars would come from outside the state, so would provide needed support, while negatively impacting other states’ economies by taxing their citizens.
Online sales taxes are a “beggar-thy-neighbor” strategy.
2. Collecting online taxes will burden the lower income 99% (who spend the largest portion of their income on purchases of goods). This tax will increase the net income gap between the 99% and the upper 1%.
3. Retail fairness: “Brick-and- mortar” stores have an advantage, too. They allow people to handle merchandise and be helped by in-person representatives. Is this “unfair” to online retailers?
On the other side, brick-and-mortar store require people to travel to the store, to see the merchandise. Is this unfair to them? States tax some in-store merchandise, while not taxing other in-store merchandise. Is this unfair to some manufacturers? Some states tax more than other states. Is this unfair to the taxing states?
It is not the role of the federal government to support various definitions of retail “fairness.”
4. Complexity: A retailer in my town collects Illinois, Cook County and Wilmette taxes on every purchase. Multiply this by thousands of taxing bodies in America, and you have massive complexity.
Yet, a computer program — probably an inexpensive app –could handle this complexity easily. In today’s computer world, complexity is not a valid excuse for non-compliance.
5. Would the counties, villages et al receive their fair share of online taxes? Each state would handle this differently, but I suspect that for the most part, the counties, villages et al would be screwed. The states would keep all the money.
The federal government should not step into state internal business and address this “unfairness”.
——————————————————————–
So there are at least five issues:
–State money needs
–The gap between the 1% and the 99%
–Retail fairness
–Complexity
–Intra-state tax allocation fairness
All of these issues could be resolved by the simple expedient of federal, per capita support for the states.
Recommendation:
State and local government tax collections totaled $1.4 trillion in the 12 month period ending March 2012 (U.S. Census). This approximates $5,000 for every man, woman and child in America.
What if every state, county, city et al gave up the costly, arduous and economically unfair practice of levying, collecting and adjudicating myriad taxes, and instead received from the federal government, $5,000 per capita.
There would be no local income taxes, no sales taxes, no property taxes — no lost time filling out tax forms, no non-productive cost of tax collection, no non-productive cost of prosecutions for tax avoidance, no unfair burden on the lower 99%, no burden on businesses, in fact, no tax burden at all. It would be pure economic stimulus.
The whole, local tax payment/enforcement process, as it currently exists, is the most monumental waste of human resources in America. We need new thinking.
Instead of that waste, each year, the federal government should provide America with a $5,000 per capita stimulus, benefiting not only the national economy as a whole, but individually, the economies of every state and local government.
Rodger Malcolm Mitchell
Monetary Sovereignty
==========================================================================================================================================
No nation can tax itself into prosperity, nor grow without money growth. Monetary Sovereignty: Cutting federal deficits to grow the economy is like applying leeches to cure anemia. Two key equations in economics:
Federal Deficits – Net Imports = Net Private Savings
Gross Domestic Product = Federal Spending + Private Investment and Consumption + Net exports
#MONETARY SOVEREIGNTY
#Monetary Sovereignty - Mitchell 
whoa, rodger, whoa!! before, you advocated eliminating all federal taxes (often arguing with warren mosler), yet maintaining state/local taxes. now, you’re saying “eliminate all of ’em!!” so, i take it you’ve had a change of mind on this recently…
“There would be no local income taxes, no sales taxes, no property taxes — no lost time filling out tax forms, no non-productive cost of tax collection, no non-productive cost of prosecutions for tax avoidance … the whole, local tax payment/enforcement process, as it currently exists, is the most monumental waste of human resources in America.”
how is military spending more productive (and less wasteful) than spending on tax collection? on this post, https://rodgermmitchell.wordpress.com/2012/07/07/no-its-not-your-imagination-the-upper-1-really-are-screwing-you-more/, you said the following: “The military employs the 99%. Military equipment production companies provide jobs to the 99%…” surely, you can’t be saying that tax collection spending doesn’t employ the 99%. besides, with tax collection spending, no one get killed (or maimed) as a result… well, only a few people…
also, isn’t it the role of taxes (or one of the roles) to induce people to use the state currency? if you eliminate taxes alltogether, then there would be no need to use the state currency and you could have what i would call “currency anarchy” which is what you had to some extent in the 13 Colonies for a brief period before the newly christened US Government began to impose the dollar on everyone.
last question–wouldn’t the e-sales tax bring in tax revenue from overseas customers? if so, how is that not a good thing?
LikeLike
Yuu Kim,
Good points and good questions.
I actually do not believe that all federal taxes be eliminated. I like alcohol and cigarette taxes, and if ever marijuana and other recreational drugs are legalized, I’d suggest taxing them, too. Sorry if I’ve not been clear on that point.
As for “tax collection supporting the 99%”, remember that federal taxes do not support federal spending in a Monetarily Sovereign government. If all federal taxes were $0, the government still could pay all its bills at the touch of a computer key.
Yes, e-taxes would bring in tax revenue from overseas, but the U.S., as a Monetarily Sovereign nation, creates its sovereign currency — dollars — at will. It does not need to ask anyone, or receive dollars from anyone. So dollars coming in from overseas are unnecessary.
Rodger Malcolm Mitchell
LikeLike
How the monetary non-sovereign states balance their budgets on the backs of the poor”
Thus, do the monetarily non-sovereign states destroy American’s standard of living, while the Monetarily Sovereign federal government pretends it “can’t afford” to support the states.
LikeLike
Rodger,
I think you misunderstand the sales tax issue.
If a resident of Arizona buys something from a store in Connecticut, and they do it online, they are required to pay Arizona Sales and Use tax on their purchase, at the same rate as if they had bought it in a store in Arizona and the tax was collected by the retailer. Connecticut is not allowed to impose its sales tax on a product sold to a consumer outside its own borders. There is no import/export consideration for either state. Arizona taxes only its own residents, and Connecticut taxes only its own residents, whether for in-person sales or internet sales. (Ignoring the relatively small number of transactions in which a consumer crosses a border to buy something in another state, and the selling state receives the tax, and the resident state grants a use tax credit to its citizen for out-of-state sales tax paid.)
The problem for Arizona is that the use tax is very difficult to enforce, as compared to the sales tax, which the state can very easily force Arizona retailers (but not Connecticut retailers) to enforce for them.
It is Arizona tax revenues that are reduced, not Connecticut, if the Arizonan buys the thing online rather than in an Arizona store, and fails to confess his transgression and pay the use tax. Requiring the Connecticut online company to collect the proper Arizona sales tax (state, county, and local) is a bookkeeping nightmare, not because the computer would have difficulty applying a tax rate to the transaction, but because of the effort of the retailer in keeping up with tax law changes in 50 states, ?5,000? counties, and ?500,000? cities and towns. Not to mention it would be difficult to know what combination of tax jurisdictions the consumer was subject to. Zip code would not be sufficient to determine that. Whoever wrote the app would make tons of money, but if they did only as good a job as GPS programmers, the errors would be in the $billions.
Nevertheless, your solution works just fine.
LikeLike
Right, the tax applies to the delivery address, which usually, but not always, is a buyer’s home address. There is slipppage with vacation homes, business travel, etc, and this slippage is “beggar-thy-neighbor.”
The brick-and-mortar sales tax has a similar kind of problem in that a traveler pays the local sales tax (unless something is sent to his home).
As for this being a “nightmare,” I’m not sure why delivery zip code would be insufficient. Every taxing body in America legally posts its taxes according to nine-digit zip code, so keeping track would be a relatively simple process — something like Zillow.com keeping track of home sales.
Once the system is in place, tax updates would be automatic for the app supplier.
LikeLike
Zip codes don’t perfectly match taxing districts. I know people who live in Cave Creek, for instance, and pay property taxes to Cave Creek, but get their mail via a Phoenix Post Office branch under a “Phoenix” zip code. Cave Creek has a different local sales tax rate than Phoenix. Probably not more than a couple percent, but enough to want the internet retailer to “get it right” without having to raise a fuss every time. Maybe enough to prompt heavy Phoenix online shoppers to get themselves a billing address in Cave Creek. Or Oregon (no sales tax).
LikeLike
Avalara a web-based service has solved the complex issues around rate rules, boundaries, and taxability issues plus it integrates with just about everything solving the multi-channel technology problem of e-commerce & mobile.
LikeLike
John, Yes, there are special cases.
The Cave Creek zip code is 85331. That’s where 26,000 people actually live and shop. The Cave Creek P.O. Box is 85327, where nobody lives and nobody shops.
Not too much programming necessary to equate 85331 with 85327, which the post office and http://www.zip-codes.com already have done.
At any rate, if there are a handful of addresses that defy computers, a human could input them, but frankly, I’d imagine all are of the “Cave Creek” variety.
Rodger Malcolm Mitchell
LikeLike