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Online Taxes Aren't New Taxes


Policy Fugue by Kenneth Corbin (bio)

Tracking the loveless marriage of technology and government


As we brace for another policy fight over collecting sales taxes on online shopping, let's get one thing straight: this would not be a new tax.

Before you read one more article that leads, "The free ride might be over for tax-free online shopping," remember that purchases made on the Internet are subject to taxes now, whether the online merchant charges the tax at the time of the sale or if it's left to the consumer to report on his state income tax return.

This is called a use tax, but it is rarely collected. In either case, the tax is owed (unless you live in one of the five states with no sales tax).

I felt it's worth mentioning because, possibly as early as this week, twin bills could be introduced in the House and Senate that would require e-commerce companies like Amazon and eBay and Overstock to start collecting sales taxes on purchases shipped to states where they don't have operations.

Efforts of this sort tend to bring out the pitchforks and torches, as angry consumers begin fuming about politicians scheming to contrive new ways to bleed taxpayers out of their hard-earned money. As a result, the debate in populist circles is broadly drawn as a fight against taxing the Internet.

That characterization is unfair ...

[Continue reading this blog post at Policy Fugue by Kenneth Corbin]