The Ridiculous Stupidity of Internet Sales Tax

So… A store in another state that pays no rent in Colorado, no employee salaries or wages in Colorado, no State Unemployment Taxes in Colorado, no utilities in Colorado, and whose employees also have absolutely nothing to do with Colorado, but that does pay all of these expenses in another states (or country) must somehow cough up extra dough, which absolutely will wind up being paid for by the citizens of Colorado.

Huh.  Ok…  And local mudstream media everywhere have become shills for their blitheringly idiotic state governments.

Let’s see what NOLO has to say about this:

“On June 21, 2018, the United States Supreme Court fundamentally changed the rules for collection of sales tax by Internet-based retailers. In its decision in South Dakota v. Wayfair Inc., the Court effectively stated that individual states can require online sellers to collect state sales tax on their sales. This ruling overturns the Court’s 1992 decision in Quill Corporation v. North Dakota. The Quill case prohibited states from requiring a business to collect sales tax unless the business had a physical presence in the state.”

Looks to me like the U.S. Supreme Court’s 1992 decision absolutely nailed it whereas their 2018 decision cow-towed to unlawful pressure by the states.

By “unlawful,” I’m referring to this gem from the Sales Tax Institute:

“For many years, states argued that they were losing a lot of money by not being able to collect sales tax on Internet sales to customers located in their states.”

Combined with this consideration:

“For many years, states argued that they were losing a lot of money by not being able to collect sales tax on Internet sales to customers located in their states.”

State legislators are undoubtedly jumping up and down in greedy glee, thinking about all the extra money they’re going to receive, but when reality sets in, most will be weeping and wailing at the destabilizing effect they’ve created and the massive tax revenues they will soon LOSE as a direct result of their stupidity.

Very soon, states will be arguing that they are losing money by not being able to collect sales taxes on Internet sales by businesses located in their states. Not only is this robbing Peter to pay Paul, but it’s a tremendous setback for the greatest justification for Internet sales to begin with:  It’s far cheaper for customers to pay for shipping, whereby their item represents perhaps a tenth of a mile worth of travel for that FedEx, UPS, or USPS delivery van than for them to travel all over their own state’s roads trying to find items, travel that tears up those roads at SIGNIFICANT EXPENSE TO THE LOCAL MUNICIPALITY AND STATE.  Oh, those states who pushed for this failed to consider that one, huh…

Let’s look at this another way.

John lives in Colorado but travels to Wyoming to buy grass-fed beef, usually half or whole head that he’ll split with friends in his hometown.  He pays sales tax in Wyoming.  It’s not very economical to drive all the way to Wyoming so he and his friends jump for joy when the seller announces they’ll ship either frozen or refrigerated anywhere in the U.S.

But, oh, now John and his friends have to pay sales tax in Colorado?  What the hell?  Nothing has changed!!!  100% of the business remains in Wyoming, including state income taxes on the business, SUTA, workman’s comp, veterinary bills, etc.

The ONLY thing that changed is that instead John and friends supplying their own shipping, they hired a shipper.

So, instead of using the Internet, John and Friends are now phoning in their order and paying Wyoming sales tax like they were before.

Whoops!  What?  Yep.  John and friends now own the goods at the point of sale in Wyoming, and as private owners they have every right to bring their OWN PROPERTY across state lines, the same as if Dave moved from Wyoming to Colorado, driving his first car and shipping his second, brand-new car he’d just purchased the morning of his move.

Are you starting to see the full picture, here?  Are you beginning to understand why the U.S. Supreme Court’s 1992 was far better as it accurately reflected REALITY?  Whoa, what a concept, adhering to reality…

Here’s another scenario:

USAA Federal Savings Bank, headquartered in Texas, does a great deal of business with most people who are in the military or related to anyone in the military.  But those people are spread out all over the world.  In years past, if someone picked up the phone and made a trade with USAA’s brokerage services, taxes on the commission would be paid to the State of Texas.  But now, because that trade was placed through the Internet, Suzy in Cincinnati is now paying taxes to Ohio, who had absolutely NOTHING to do with that trade?  What?

And another:

State M is a high manufacturing state, but with a lower population, shipping 90% of products produced in that state all over the U.S.  Used to be, people placed orders through catalogs, with tax being paid to State M the same as if a person had driven to State M and purchased the goods in person.  I know, as I still have old copies of Popular Mechanics, which clearly state that if I buy that wood splitter, then I have to pay state sales taxes to New Jersey, even if I have that wood splitter shipped to Colorado.

Now, however, because a rather large number of blitheringly idiotic state legislators in most states convinced the U.S. Supreme Court to change their mind, New Jersey DIES for no other reason than people place their orders via the Internet instead of their Phone.  Speaking of which, my VoIP phone runs through the Internet, so if I place a phone order, is that really an Internet sale?

If you say, “Yes,” you’re completely missing the point.  The point is that our Constitution very specifically states the following:

Here’s another issue:

North Dakota passed a law in 1987 requiring out-of-state mail-order houses to collect and pay a use tax on goods purchased for use in the state. Quill Corporation refused to comply and the state of North Dakota took them to state court. The trial court ruled in Quill’s favor and found that based on Supreme Court precedent in a 1969 case (National Bellas Hess, Inc. v. Department of Revenue of Ill.) the law created an unconstitutional burden on interstate commerce based on the Fourteenth Amendment’s due process clause. In addition the Supreme Court found it conflicted with the commerce clause because, “The very purpose of the Commerce Clause was to ensure a national economy free from such unjustifiable local entanglements. Under the Constitution, this is a domain where Congress alone has the power of regulation and control.” – Source

Wait… What?  You mean this was decided before now?

Yes.  It DOES NOT MATTER whether a person places an order by mailing in a cereal box top, by phone, or by, well, smart phone.  The mode of communication DOES NOT MATTER.  All that matters is where the goods were produced, and to a lesser extent, if there were any intermediate supply chain staging within the state of delivery (nexus).

Bottom Line:  Tie the sales taxes to where the goods and services are PRODUCED, not where they’re sold.  Please note that wholesalers may produce in one state, ship to retailer in another state, who will then pay sales taxes to the state in which they’re sold.  The taxes paid by the wholesaler fall under net taxable income, not directly off sales.

In a similar vein, when I purchase directly from Sony, they’re the wholesaler, and I’m a retailer with a customer base of 1.

So, to all the stores who sell goods on the Internet, here’s how to beat it:  WRITE YOUR MEMBERS OF CONGRESS!!!  They have full Constitutional authority under Article. I., Section 8 of the U.S. Constitution “To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes.”  Demand they DO SO, putting a stop to this incessantly stupid and economic throat-cutting practice of states trying to change taxes on goods produced totally outside their jurisdiction.  If it doesn’t cut the throats of the states implementing it thinking they’ll be raking in more money, it’s certainly cutting the throats of states which foster the efficient production of goods consumed by We the People in all 50 of these United States, not to mention around the world.

Internet sales taxes indirectly but greatly harm economies in which goods are consumed.

Internet sales taxes greatly harm economies in states where goods are produced.

Internet sales taxes eschew low carbon footprint online shopping and efficient many-item shipping in favor high carbon footprint physical shopping and personal SUV one- to few-item hauling.

Oh, and Colorado, although I am adamantly opposed to pot, one day the U.S. will legalize it, along with interstate Internet sales shipments, and you WILL LOSE BIG TIME.  You’ll produce it here, but won’t be able to collect any tax here.  Meanwhile, all those workers you attracted by legalizing pot will FLEE Colorado’s high cost of living and high taxes so they can get afford to get high more often anywhere it’s cheaper to live, which is most places, these days.

Way to bring back the Ghost Towns, there, dipshits.