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How about a national sales tax vehicle?

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POSTED May 8, 2013 2:06 a.m.

Editor, Manteca Bulletin,

While reading Dennis Wyatt’s column on the Internet sales tax in the May 7 edition, it occurred to me that Dennis did a great job of articulating the problem but the solution may be complicated because of our predisposed nature of dealing with what currently exists.

He points out that there are over 9,000 tax jurisdictions which are seeking to collect taxes based on the tax code in their area. Is that possible?  As Dennis also points out, somebody could write a smart phone application for these small internet businesses and it would work so it is possible but 9,000 stamps, envelopes and processing would cost about a buck a piece. That would be $9,000 per year if it only had to be done yearly instead of quarterly. It would be $36,000 in additional costs if it had to be done quarterly and most of these small internet businesses don’t earn that much.

The problem as I see it is as follows:

First, the Internet does not exist in any state or have a resident address. Business is conducted in the “cloud”. So why should over 9,000 tax jurisdictions need to be addressed? It looks like a Federal problem to me.

Can we get 9,000 different politicians with 9,000 different agendas and 9,000 different tax codes to agree on a solution? We can’t get two generations of my family to agree on anything involving politics so I am less than optimistic.

Can thousands of Internet entrepreneurs bear the burden of processing the tax payments to the 9,000 jurisdictions? Isn’t this an unreasonable burden for them to bear? The proposed revenue limit for not having to collect the taxes is $1 million  per year. I may be jaded but having this limit would seem to encourage these entrepreneurs to spilt their businesses along product lines every time they reach the $900,000 dollar mark in revenue.so they can keep their sales tax advantage. I would.

Lastly, I must reiterate my problem with politicians. They make everything so complicated. Instead of making each small internet business bear this burden why don’t we just collect 5% on every Internet sale. Then the internet companies can send the 5% minus a 1% processing fee to the new office of “Internet Tax Collection and Disbursement” manned by two people, in case one has to go on vacation, and a computer program that sends the leftover 4% to the states where the purchases originated. The states can disperse it as they see fit.

Who wins in this scenario? The entrepreneur makes an additional 1% so they win. The states win because they are getting 4% instead of nothing. The local businesses win because it closes the sales tax gap. Yes, I realize some states don’t have a sales tax like our good neighbor Oregon. It could be considered a social experiment to see if the brick and mortar store make a comeback because they now have a sales tax advantage,

Who loses? Internet buyers lose because they have to pay the sales tax now.

Does a plan like this have a chance? No it doesn’t. It is too simple and it won’t help government to grow but that is a discussion for another day…just be thankful we don’t get all the government we pay for.

Mark Laurora
Manteca
May 7, 2013

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