How Will The Proposed Online-Sales-Tax Affect You?

proposed sales tax on internet purchases will cost consumersUp until now, consumers have been saving hundreds, if not thousands of dollars buying from online retailers. Not only are prices often cheaper, there’s no sales tax charged on purchases. This makes for a win-win in most consumers’ eyes.

However this could all be set for change; and it could change soon. In the beginning of May 2013, the Senate passed a bill that’s supposed to make it easier for online retailers to charge sales tax.

Understanding The Current Online Sales Tax System
Right now, retailers with brick-and-mortar stores have to collect tax regardless of whether the purchase is made in store, by catalog or online. Even stores like Amazon, need to collect sales tax because they have warehouses in the state and directly or indirectly hire employees to work in those warehouses.

Now, however, the government wants to implement a universal sales tax that would affect every retailer who does business online, and it could mean that your hard earned money won’t go as far as it currently does.

The History of Online Sales Tax
Implementing a universal sales tax is nothing new. It was first addressed by the Supreme Court back in 1992 with a case called the Quill corporation case. At that time the Supreme Court asked Congress to deal with the issue. While it’s rarely top news, there have been bills proposed regarding online sales tax every year since this first case.

Why Now?
So, why can’t things just keep going on as they have been? The simple answer is that online shopping has become so popular that the government is seeing an opportunity to make more money slipping away if it doesn’t pass this online sales tax bill.

Many states are hurting for money and this bill allows them to collect revenue that is actually due, even though exclusively online stores are not legally obligated to collect tax.

Effects of the Online Sales Tax
The online sales tax will likely mean that businesses will need to hire more staff to deal with tax regulations. This increased cost in business operation could be passed to you, the consumer.

You will inevitably end up paying more for your purchases, though hopefully the strong competition between online retailers for your custom might be enough to keep prices from skyrocketing.

Philip

4 Comments

  1. The change has already affected me and my purchasing habits. I think it is just a way for greedy government agencies to make more money. The reason for taxation is because a brick and mortar style business is utilizing services in a certain area in a certain state. The resulting product is then being sold to a customer by that vendor in the same state. Online taxation is just wrong.

  2. This change will affect me very much, and most likely not for the better. I was speaking with one of my politician friends the other day, and he made kind of an off comment about hurrying up to buy all his things off of Amazon before the sales tax went into effect, but he made it clear that he felt it was no big deal. It’s definitely a big deal for me! A large percentage of my income comes from online sales, and if my customers have to pay extra, they’ll most likely just go somewhere else. Not to mention the huge headaches that it causes for smaller scale entrepreneurs who now have to handle a whole new section of taxes. This is yet another blow dealt to the middle class by politicians who can not identify with us at all.

  3. Of course! “the government is seeing an opportunity to make more money “… Will the government make us pay taxes for the air we breathe? We live in such greedy times, it’s unbelievable. Plus, Amir is right! So many people are making extra income from selling stuff online or being affiliates with programs such as Amazon. This will affect them a lot, in a bad way.

    • If there is one thing that you can always rely on the government to do, it’s to come up with new ways to tax us.

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