« MN SRC PRESS RELEASE: “SENATE REPUBLICAN CAUCUS: SENATE DFL’S PLAN FOR $2 BILLION IN TAX INCREASES WOULD CREATE HIGHEST INCOME TAX RATE IN COUNTRY” | Home | SHOCK: OBAMA MAKES FUN OF THE SPECIAL OLYMPICS ON NATIONAL TV »
SENATE DFL TAX CHAIR CONSIDERING RAISING TAXES INTERNET PURCHASES AND MUSIC DOWNLOADS
By Michael Brodkorb | March 19, 2009
This certainly won’t help Senator Bakk’s campaign for governor.
###
“The chair of the Minnesota Senate Tax Committee says he’s willing to consider raising state income taxes and applying the sales tax to internet purchases and music downloads. DFL Senator Tom Bakk of Cook said today that those are just some of the ideas he’s considering to help balance the state’s budget. Bakk and other Senate Democrats have a budget plan that cuts spending across the board and relies on $2 billion in new revenue. Bakk said the new revenue would include a mix of tax hikes.
‘I’m not taking the sales tax off of the table,’ Bakk said. ‘I just offered you up a couple of solutions where we’re going to look at expanding the sales tax to music downloads and we’re going to look at some online purchases where you can. Our sales tax base is eroding with all of these internet transactions and we’ve got to find a way to get our arms around that.‘” Source: MPR, March 18, 2009
Click here for the complete story.
###
This is a reminder that I work for the Minnesota Senate Republican Caucus. Minnesota Democrats Exposed is my personal blog and it is not created, endorsed, sponsored, or authorized by any political party, candidate, or candidate’s committee.
Tags: Uncategorized
Topics: Uncategorized | 148 Comments »
148 Responses to “SENATE DFL TAX CHAIR CONSIDERING RAISING TAXES INTERNET PURCHASES AND MUSIC DOWNLOADS”
Comments
You must be logged in to post a comment.
March 19th, 2009 at 8:56 AM
Exempting internet transactions from the sales tax is just about the most indefensible tax policy I know. We are discriminating against those who do business in the state, peoples and companies who provide jobs and pay taxes, and are in all kinds of ways good corporate citizens, in favor of those who don’t.
Is it possible for a policy to be more wrongheaded?
March 19th, 2009 at 9:34 AM
For years we’ve heard liberal Democrats talk about taxing the rich. We heard the same liberal Democrats accuse Republicans of giving tax cuts to the rich and peanuts to the middle class.
It’s amazing to watch the same liberal Democrats in Minnesota and Washington, D.C. In Minnesota, they want to tax essentials like clothing as well as purchases made by almost all income levels on the internet. They also plan to raise income taxes for all tax brackets. In other words, they’re not going after the rich; they’re going after the middle class as well. The reason is because it’s more important to continue their welfare state than it is to help hard working middle income Minnesotans.
The same is true in Congress. Democrats pushed through their stimulus package and what did individuals get? $14 a week! Middle income families received an average of $2300 a year under the Bush tax cuts.
It’s truly amazing that Democrats are more interested in re-creating the great society and (in the case of Minnesota) adding to the welfare state than they are helping middle income families and small businesses.
March 19th, 2009 at 9:46 AM
“In Minnesota, they want to tax essentials like clothing as well as purchases made by almost all income levels on the internet.”
Why do we give tax preference to companies that don’t do business here?
Isn’t that precisely and exactly the wrong policy?
March 19th, 2009 at 9:47 AM
Hiram,
There is a reason why taxing the internet is asenine. I recently bought something from a small business that is based in Florida. This business has a web site. Other than having a web site, they have no contacts with the State of Minnesota or any state other than Florida. Why should a small business owner in Florida have to set up 50 different accounts to make sales tax payments to the various states? He has no connection to Minnesota and certainly no duty to support our state. It’s a penalty on him to have to go through the hassle and expense of setting up a terminal to pay Minnesota sales tax. And if he doesn’t want to go through the expense of collecting the sales tax, we as Minnesota citizens can’t buy anything from him. It’s hard to believe that in a free society, our state can tell us who we can and can’t do business with.
You can say that the big companies can afford to do this, and you’re right. But a lot of the big companies already do business in Minnesota and their internet sales aren’t tax exempt. Any company that has a physical presence in Minnesota must also collect sales taxes on internet purchases.
This doesn’t have anything to do with fairness for Minnesota companies. Because those businesses already collect sales taxes. This is about the government coming in on you and I personally and saying that we’re not paying our share because we dare buy things from people and businesses that are outside of our state. It’s outrageous. What are they going to do next, have customs agents on our borders and airports to collect taxes on things we buy in neighboring states or while we’re on vacation?
March 19th, 2009 at 11:29 AM
“Why should a small business owner in Florida have to set up 50 different accounts to make sales tax payments to the various states?”
To compete fairly with those who do business in the state.
On this website, Al Franken came in for a great deal of criticism for his failure to pay taxes in all the states he happened to have worked in. The complexity of multi-state taxation didn’t seem an excessive burden then.
The fact is that it would be very easy to create programs and systems that could be used by businesses engaged in multi-state transactions to pay taxes in states where they take orders. In this modern computer age, that just isn’t a big deal at all.
“This doesn’t have anything to do with fairness for Minnesota companies.”
Why in heaven’s name not? I can tell you that Minnesota companies lose a huge amount of business to out of state companies who have the competitive advantage of not charging sales tax. How could that possibly be considered fair?
March 19th, 2009 at 12:44 PM
Bakk is stupid. MN Businesses already collect the internet sales tax from MN residents who buy over the internet. Compelling MN businesses to also collect internet sales tax from out of state residents is unprecedented, ludicrous and anti-Minnesota. I don’t think any state does it. Compelling the middle class in MN to pay additional internet sales tax voluntarily, through costly beefed up enforcement, or some other way is equally stupid and anti-Minnesotan.
People who setup internet business in MN are Mom and Pop or people who are staying in MN for the sake of their aging parents.
Bakk would punish us through his expanded internet tax to enlist help in sustaining a welfare state that is never trimmed back.
March 19th, 2009 at 12:49 PM
We need to be thinking of ways to retain businesses – tax cuts and such.
March 19th, 2009 at 12:56 PM
The middle class will be PUNISHED by the state of Minnesota under Bakk.
This is something only the Minnesota Democrats could dream up. Taxing the internet. You had better make sure you have done all the research in regard to sales tax policy and jurisdictions before you propose something like this. It wouldn’t surprise me if Bakk and the Minnesota Democrats have done that research. That just shows how determined and desperate they are to impose more taxes on the middle class to sustain their anti-business welfare state in the short term without regard to long term livability standards.
March 19th, 2009 at 1:57 PM
“Compelling MN businesses to also collect internet sales tax from out of state residents is unprecedented, ludicrous and anti-Minnesota.”
I think he is talking about requiring out of state merchants to pay sales tax on items sold in Minnesota.
There are constitutional problems, by the way. There is a Supreme Court case from early in the history of the web that held these taxes unconstitutional, I believe. The Court, in fact, accepted the argument made by the earlier poster, with which I disagreed, basically that these taxes would be too burdensome to interstate commerce. The court simply did not anticipate that software could be created that could handle these transactions quite easily.
March 19th, 2009 at 3:41 PM
Exempting internet transactions from the sales tax is just about the most indefensible tax policy I know.
The truth is, taxing internet purchases is the most indefensible, idiotic, small-minded, anti-small business tax policy there is.
Talk about the Kill Small Business Act.
March 19th, 2009 at 3:44 PM
Bakk is stupid. MN Businesses already collect the internet sales tax from MN residents who buy over the internet. Compelling MN businesses to also collect internet sales tax from out of state residents is unprecedented, ludicrous and anti-Minnesota.
You are right, it is stupid. But it is not unprecedented.
Our business is forced to pay CA sales tax even though we have no nexus there. It’s because our distributor does and sued them to force them to collect it from online retailers like us. Whether we want to or not our distributor invoices us for it and if we don’t pay it we’re closed down – so we pay, under protest.
March 19th, 2009 at 4:07 PM
The truth is, taxing internet purchases is the most indefensible, idiotic, small-minded, anti-small business tax policy there is.
I don’t quite understand this small business thing. Exempting internet transactions from the sales tax discriminates against in state companies in favor of out of state companies, not small companies against large companies.
What about Minnesota small companies, who have to compete against out of state companies who may be either small or large who are given an automatic price advantage by this discriminatory practice? Why aren’t we concerned about them?
March 19th, 2009 at 4:09 PM
Hiram defines the DFL. They do not understand business at all. All they understand is taking other peoples money and giving it to their supporters.
March 19th, 2009 at 4:11 PM
“Whether we want to or not our distributor invoices us for it and if we don’t pay it we’re closed down – so we pay, under protest.”
Why should California favor you over their local businesses? Do you do business in California? Do you hire employees there who contribute to the community and who pay taxes?
Why should you get a break here?
March 19th, 2009 at 6:14 PM
“I think he is talking about requiring out of state merchants to pay sales tax on items sold in Minnesota.” Well then he is an idiot. Thanks for confirming.
Thanks for the correction Average Joe. It would be very interesting to challenge CA authorities on the requirement which is, as I said, ludicrous. Minnesota Democrats want to follow in the footsteps of California. In case you Democrats have been in a cave California is an economic basket case. They won’t ever restore their budget to the black with anti-business tax policy like that. Most people will just go elsewhere to shop online.
March 19th, 2009 at 7:16 PM
“In case you Democrats have been in a cave California is an economic basket case.”
Do you really think that California’s economy would be improved if it discriminated in favor of out of state businesses against it’s it’s own? The people who live in and support their communities?
How could that possibly make any sense at all?
March 19th, 2009 at 7:45 PM
Hiram, why do you hate business so much?
March 19th, 2009 at 8:13 PM
Hiram not only hates business he hates logic and advocates Democrat policies that harm Minnesota.
Any tax or enforcement effort on out-of-state businesses selling to out-of-state internet consumers from Minnesota will also affect native Minnesota-based companies selling to out-of-state internet consumers. Duh.
Let’s talk about introducing pro-business policy in Minnesota for a change. People may already be inclined to move to Minnesota from elsewhere for our standard of living. Let’s build on that by introducing pro-business policy so people can better make a living here in Minnesota.
March 19th, 2009 at 8:24 PM
why do you hate business so much?
I love business. I love how what it does for the community. I love how it creates jobs in our communities. In creating tax policy why should favor businesses that don’t do those things, as opposed to those it deal. Shouldn’t the playing field between businesses that contribute to our comunities, as opposed to those who don’t be at the very least, level?
March 19th, 2009 at 8:29 PM
“Any tax or enforcement effort on out-of-state businesses selling to out-of-state internet consumers from Minnesota will also affect native Minnesota-based companies selling to out-of-state internet consumers.”
Why do you think you should receive a competitive advanatage just because you contribute nothing to the local community where you sell your product? What sense does that make?
“Let’s talk about introducing pro-business policy in Minnesota for a change.”
Let’s talk about exactly that. Why are our sales tax policies favoring out of state companies to the detriment of companies that do business in our state? How is discriminating against local companies good for Minnesota businesses?
March 19th, 2009 at 8:40 PM
“Why are our sales tax policies favoring out of state companies to the detriment of companies that do business in our state?”
Tell me exactly where that’s happening. If it is it should happen more. We do not excessively welcome business here in Minnesota. If businesses are setting up satellite offices here to sell on the internet that’s good. They can do the exact same thing in NY or CA but they choose here. We can win by attracting more such out of state business. Do not discourage it. Then build on it.
March 19th, 2009 at 8:43 PM
“Why do you think you should receive a competitive advanatage just because you contribute nothing to the local community where you sell your product?”
They rent property in some cases do they not? They need Minnesotan involvement, don’t they? They have committed to whatever extent to the Minnesota brand, haven’t they?
March 19th, 2009 at 8:49 PM
Hiram we are not exactly a commerce hub. Far from it. Let’s build on our strength – quality of life. What do people need once they buy that white picket fence nestled on the bank of a Minnesota river town? The means to sustain their modest Minnesotan lifestyle. The Minnesota legislature can do alot better. Go back and bring me pro-business ideas so we as a state can weather this Democrat storm that is the largest, most intense unfunded government spending in the history of the world.
March 19th, 2009 at 9:46 PM
Hiram was exactly correct in an earlier post. Three key things about sales taxes – and Minnesota has both a sales and use tax.
I investigated this for a company in the early 90′s so some of the details may be dated, but I believe are substantially correct today.
A company must have nexus (property, payroll, etc) in Minnesota to be required to collect and remit sales taxes. Few out of state internet fulfillment houses have that nexus.
When I did the research there were some 1,600 individual sales taxing authorities. That includes Metrodome-like taxes, car rental taxes, hotel taxes and watershed district taxes, etc., etc.
These are onerous burdens on the “foreign” sellers.
Finally, Minnesota has a Use Tax. If you buy something of more than deminimus value you are legally supposed to compute and remit the Use Tax yourself to the Revenue Department.
This will not be a trivial undertaking.
That
March 19th, 2009 at 10:11 PM
Has any state enforced Use taxes since the 70′s? Aren’t they redundant?
March 19th, 2009 at 10:36 PM
Hiram, Bakk, and all Minnesota Democrats now scheming to reinstate the Carter style tax culture of the 1970′s with Obama’s imprimatur, should realize the size of federal taxes coming down the pike because of federal foolishness. You had better realize you will need to defend your proposals every step of the way and that nobody – and I mean nobody – will accede to tax hikes when a) you just graffitti’ed the Minnesota constitution with another Democrat tax amendment – this time it’s a sales tax – and b) your party is now wondering how to spend billions in borrowed unfunded tax-payer loot from Pelosi Reid Obama Murtha and Schumer. We are in no mood for tax hikes. Apply for stimulus money if you need something – there is no reason other than opportunity to raise taxes now.
March 19th, 2009 at 10:47 PM
Tell me exactly where that’s happening.
Minnesota. We tax in state business but not out of state businesses. It’s as simple as that.
“If businesses are setting up satellite offices here to sell on the internet that’s good.”
They are not. They are doing the opposite. They choosing not to set up businesses here so they can sell in this state tax free.
March 19th, 2009 at 10:49 PM
“The Minnesota legislature can do alot better. Go back and bring me pro-business ideas so we as a state can weather this Democrat storm that is the largest, most intense unfunded government spending in the history of the world.”
One real good idea is not to discriminate against local businesses. Wouldn’t it be really great if we could assure companies that come to Minnesota that they would not suffer from an unfair tax burden with respect to their out of state interstate competitors?
March 19th, 2009 at 11:16 PM
Hiram your phony fairness issue is a ploy to raise taxes which will result in the targeted businesses – already not quite committed to Minnesota by your own admission – to flee Minnesota for good.
“They choosing not to set up businesses here so they can sell in this state tax free”
Where? What are you talking about exactly? And why not encourage those same businesses to expand here? They obviously see something in us … although it’s probably not the taxes. It would “really be great” if someone in this state – anyone – would stick up for a large business – any business – at the planning level without going overboard or indulging in the out-and-out bribery that some businesses demand – stadiums, subsidies, TIF etc.
It would “really be great” if Minnesota as a whole was competitive with other states in attracting small niche internet based companies that don’t necessarily threaten other states’ business communities but which help establish Minnesota as a pro-biz talent-based state that values individuals, liberty, integrity, government financial standards and government responsibility.
Do you really think we will gain tax revenue by enforcing tax collection by businesses that are only marginally committed to Minnesota to begin with?? No – they will flee!
March 19th, 2009 at 11:49 PM
“Wouldn’t it be really great if we could assure companies that come to Minnesota that they would not suffer from an unfair tax burden with respect to their out of state interstate competitors?”
You’re assuming Minnesota businesses are currently burdened by collecting Minnesota sales tax from non-Minnesota residents. They are not in many cases nor should they. From my eBay experience, each resident of a state pays sales tax to only merchants in the state they reside, with a few exceptions as Avg Joe noted. Tax due to a state from it’s resident buying from an out-of state merchant is amiguous – Federal or state Use, the resident’s state or the merchant’s state all have a tenuous claim to the tax but no tax authority can claim it for good until legal precedent is set on who gets it.
Since it’s not settled law noone should be collecting that tax despite conflicting 70′s style state and federal tax code.
Further, the states who do collect it – such as CA, are hurting themselves and their businesses and eventually the tax revenue may only cover the enforcement costs because business is driven away.
March 20th, 2009 at 1:44 AM
Hiram,
Who in the hell do you think pays sales taxes? It’s individuals, not businesses. So what you’re proposing is to add to the tax burden paid by average Minnesota consumers. Which is typical of Democrats who are showing that they don’t really care about middle income average families as the tax increases they’re proposing is directed toward middle income earners.
Further, it is a burden to out of state businesses which would have to incur significant expenses to sell to people in Minnesota. That’s different than an individual, like Al Franken, who earns income in other states. There is no excessive burden on the individual because there are IRS mechanisms in place (such as filing 1099s) to account for the income.
You are correct that there are many cases on point regarding the dormant Commerce Clause which prevents states from discriminating against out of state business and also from enacting state laws which interfere with the nation’s stream of commerce. See, e.g. Gibbons v. Ogden and Quill Corp. v. North Dakota.
March 20th, 2009 at 2:36 AM
Minneapolis has a sales tax surcharge. In theory a Minneapolis resident is supposed to report their purchases made outside of Minneapolis and pay the Minneapolis sales tax surcharge or something like that. I get an insert on it in my water bill occasionally. I suspect that compliance is extremely low.
As for internet purchases the majority of mine are on ebay or it’s companion half.com. Sometimes I get a book from bookfinder.com I generally use paypal or plastic to pay. I bank at TCF and the Credit Union it’s convenient but my regular “pay” is direct deposit. I deal with under a dozen checks to me a year, I could handle these with an out of state bank.
Enforcement would be very intrusive, basically it would require giving the state government your complete state spending records. Scarey!
As for music downloads, I have never done it or paid for one but these are handled by large firms because of the royalty issues. It might be possible but it would involve only very large firms. Amazon, to give an example, is, in large part an Ebay wannabe. The other side of Amazon is the “fulfillment centers”. That could potentially be taxed because it is large.
Basically, the “fulfillment center” at Amazon can do “turnkey” distribution. Let’s say I write a book “How to game the internet tax” Ebay, could have a few cases at their center and when it gets ordered online they take care of the shipping and payment. When the inventory gets low they can email me and if I don’t tell them not to they can order up another press run. This means very little work for me so I can concentrate on “How to game the coming CO2 taxes”. I could also do it from home, with an account the post office will pick up the outgoing books with each mail delivery. (A rep was at my Post Office who answered all my questions on this). The tax collection of internet purchases, even if it passed constitutional muster would drive people away from the “turnkey” distribution centers.
March 20th, 2009 at 5:45 AM
Who in the hell do you think pays sales taxes?
People who buy things to which it applies.
“it is a burden to out of state businesses which would have to incur significant expenses to sell to people in Minnesota.”
Oh, not really. It’s a problem easily managed by software these days. I would even be very open to the suggestion that the state pick up some of the burden of paying for such software for out of state businesses.
“That’s different than an individual, like Al Franken, who earns income in other states.”
How so? Lots of us travel for business and are required to file such income tax returns. Such returns are a lot more complicated then the sales tax forms, and I for one, am not in the business of filing tax returns. I don’t get a 1099 from anyone when I make an out of business trip. I have to make those calculations myself.
March 20th, 2009 at 5:48 AM
“You are correct that there are many cases on point regarding the dormant Commerce Clause which prevents states from discriminating against out of state business and also from enacting state laws which interfere with the nation’s stream of commerce.”
There isn’t anything at all dormant about the interstate commerce clause, and I agree the case law is against my position. But Congress under the commerce clause has the power to change the law, and even without Congressional, I think these ancient and foolish decisions should be retested.
A constitutional provision which says that interstate commerce cannot be discriminated against should not be construed to mean that it must be preferred.
March 20th, 2009 at 5:55 AM
“the states who do collect it – such as CA, are hurting themselves and their businesses and eventually the tax revenue may only cover the enforcement costs because business is driven away.”
How are businesses driven away when they aren’t in the state in the first place? How, in the name of all that economic, is California hurt when people do business locally instead of with companies which have no connection to the state?
March 20th, 2009 at 6:58 AM
“How, in the name of all that economic, is California hurt when people do business locally instead of with companies which have no connection to the state?”
CA and any state that compels online business to collect sales tax from out of state consumers for that state will eventually lose their online businesses. They will always have the local buyers. The competition is for online business and what states companies may want to establish a presence in to sell online. Don’t make businesses collect a MN sales tax from everyone.
The local business is set already. Even when online shopping, I will always choose a local business and it’s local sales tax to save shipping, cheaper return capability and a face to face transaction. eBay removed the search by state feature 4 years ago possibly for this reason. Online shopping is only about getting items cheaper or getting better items online than local and is of little threat to local business regardless.
If you believe otherwise you may as well run for governor under the ludite banner, or have a “back to the 70′s” campaign theme.
March 20th, 2009 at 7:00 AM
“I would even be very open to the suggestion that the state pick up some of the burden of paying for such software for out of state businesses. ”
Ha! How generous of you!
March 20th, 2009 at 7:08 AM
Hiram your suggestion to compel MN sales tax collection from ALL merchants in ALL 50 states is ludicrous and damaging to Minnesotans. This is nothing more than imposing a new tax directly upon all of us Minnesotans and making us undesirable consumers on the internet. You are crazy for suggesting that such an idea is actually fair helpful or good.
March 20th, 2009 at 7:33 AM
Hiran is a typical liberal and never met a tax she didn’t like.
March 20th, 2009 at 7:36 AM
“CA and any state that compels online business to collect sales tax from out of state consumers for that state will eventually lose their online businesses.”
Since California gets no benefit from those out of state businesses, but gets a whole lot of benefit from the in state businesses that will inevitably take their place, why should they care?
“The local business is set already.”
Hardly. Local merchants are struggling against online competitors from out of state. The discrimination they suffer hurts their profit margins and will put some of them out of business particularly in this difficult economy.
Nothing is ever “set” in business.
“Even when online shopping, I will always choose a local business and it’s local sales tax to save shipping, cheaper return capability and a face to face transaction.’
That’s nice, but huge numbers of shoppers don’t.
March 20th, 2009 at 7:41 AM
“your suggestion to compel MN sales tax collection from ALL merchants in ALL 50 states is ludicrous and damaging to Minnesotans.”
Not all merchants, just those wishing to do business in Minnesota. If they don’t want our business, there are plenty of people, in this community, our friends, our neighbors, our local businesses which contribute so much to this great state who do. I am not saying that our local businesses which do so much for all of us should be given an advantage over their out of state competitors. I am just saying we should search for ways to allow them to compete on even terms with businesses that add literally nothing to our quality of life.
March 20th, 2009 at 8:47 AM
“Not all merchants, just those wishing to do business in Minnesota.”
Well then you’re just stating how it is now. MN businesses already charge MN residents sales tax.
Again, we need to know exactly what it is you are targeting and talking about. Please state specific businesses you’d target. What businesses do you see as currently taking advantage of us.
March 20th, 2009 at 8:58 AM
“Please state specific businesses you’d target. What businesses do you see as currently taking advantage of us.”
Amazon.com.
March 20th, 2009 at 9:18 AM
How is that Hiram? Many small businesses use Amazon.com to sell stuff. If they had to collect and pay taxes in every state many of these same businesses would not be able to and would have to close their doors.
Hiram you really need to educate yourself on the issues with internet taxes before using the tired and failed DFL tax everyone who is being successful arguments.
March 20th, 2009 at 9:32 AM
“Many small businesses use Amazon.com to sell stuff.”
Indeed they do. They use the good offices of Amazon.com to compete with the small businesses in the state. And it would seem to me that a company as large and as technologically sophisticated as Amazon.com would find it very easy to provide access to software that would help their partners collect sales tax.
I have to ask, why should a business small or large that doesn’t have any presence at all Minnesota be given a competitive advantage over those who do? What do we lose if they don’t do business here?
March 20th, 2009 at 9:43 AM
Well then don’t require MN businesses to charge MN residents a sales tax. Problem solved.
March 20th, 2009 at 9:45 AM
The fact is there is no problem – Hiram is creating pretext for a new tax
March 20th, 2009 at 10:02 AM
Correction: Hiram is unsuccessfully trying to create a pretext for a new tax against Minnesotans.
March 20th, 2009 at 10:08 AM
What worries me is if Hiram and Bakk have such a narrow specific argument there is probably something on the national level brewing against Amazon and other similar businesses in the Schumer Pelosi conversations.
March 20th, 2009 at 10:12 AM
Hiram,
Are you with the Gestapo? Because it’s really amazing how willing you are to punish individuals (not businesses) who make purchases outside of Minnesota. As I said several posts ago, why don’t you just put Minnesota Revenue agents on our borders and in our airports and allow them to search vehicles and tax Minnesotans who have bought things in other states? There really isn’t much of a difference.
Regarding the Dormant Commerce Clause, it’s a legal term from case law which prohibits states from interfering in the flow of Interstate Commerce. While you’re correct that the case law goes back to the late 1700s, the case law has been affirmed over and over again including as recently as 2007. There is no way a Supreme Court is going to overturn the Dormant Commerce Clause cases (unless maybe Obama stacks the Court with committed Socialists). States cannot use their laws to (1) discriminate against businesses outside of their jurisdiction and (2) interfere with the flow of interstate commerce. Taxing sales from businesses which are not subject to the state’s jurisdiction violates both prongs of Dormant Commerce Clause case law.
With respect to individuals filing tax forms in multiple states, there is also a difference. You actually choose to travel to another state and have sufficient contacts (another legal term) to become subject to the state’s jurisdiction and, therefore, its taxation. I used the 1099 example because a lot of people who do work and get paid in multiple states receive 1099s or other tax forms to show the income (which gets reported to both the IRS as well as the state revenue officials).
Again, Hiram, this is really about punishing Minnesotans. It’s amazing how greedy DFLers in our state have become that they want to tax Minnesota citizens in every aspect of their lives.
March 20th, 2009 at 11:00 AM
“Are you with the Gestapo?”
A little bit of free political advice. Avoid Nazi analogies. They never work out. Any one who compares a discussion of tax policy with the greatest crimes of history, can only come off as looking silly.
“Why don’t you just put Minnesota Revenue agents on our borders and in our airports and allow them to search vehicles and tax Minnesotans who have bought things in other states? There really isn’t much of a difference.”
Because it’s kind of a weak argument, and I preferred to respond to stronger, more thematic ones. To begin with, the sales tax is not applied to purchases outside the state. If you bought something in another state, you paid the sales tax there, and it would be unfair for you to pay sales tax again here. That would be bad tax policy. As to how what I am proposing would be enforced, that’s a practical objection with lots of easy answers. The software would be very easy to devise, and I am sure already exists. Lots of companies who do business on the internet do charge local sales tax where appropriate with little or no problem.
March 20th, 2009 at 11:04 AM
“With respect to individuals filing tax forms in multiple states, there is also a difference. You actually choose to travel to another state and have sufficient contacts (another legal term) to become subject to the state’s jurisdiction and, therefore, its taxation.”
Well I actually choose to do business on the internet, but I as am subject to jurisdiction here where I have lots of contacts legal and otherwise.
Don’t let the legal argument drive the economic one. The law is a whole lot easier to change than basic and fundamental economic principles.
March 20th, 2009 at 11:26 AM
Hiram,
Weak, weak, weak. The Gestapo spied on German citizens and regulated them in their own homes. The term is now a colloquialism for someone who goes after private citizens for their legal activity. Don’t throw the Hitler crap at me considering how many people on the Daily Kos and MoveOn.org called Bush and Cheney Hitler.
You also claim that it would be an easy thing to tax people using software. But there are literally millions and millions of businesses out there. Why should a person who lives in Florida, has a small business in Florida, has never even been to Minnesota — be required to buy software and use it to tax Minnesotans? It’s not just the cost of the software, it’s the cost of the labor and paperwork. If I lived in Florida, I’d tell Minnesota to go get screwed.
Finally, thanks for admitting that the tax scheme is illegal and unconstitutional. It’s bad economics too. But most of all it’s amazing that Minnesotans would advocate reaching into someone else’s pocket and taking their money. I have an idea Hiram: if you like paying taxes so much, pay mine too.
March 20th, 2009 at 11:31 AM
P.S. Hiram,
If the argument is revenue generation, who cares if the people paid sales tax somewhere else. Search the cars and tax them again! That will teach the people of Minnesota to shop somewhere else!
March 20th, 2009 at 11:33 AM
“The Gestapo spied on German citizens and regulated them in their own homes.’
I am against that too. So shall we move on?
“You also claim that it would be an easy thing to tax people using software. But there are literally millions and millions of businesses out there.”
The potential profitability of developing such software is incredibly exciting. The economies of scale are just dazzling.
“Why should a person who lives in Florida, has a small business in Florida, has never even been to Minnesota — be required to buy software and use it to tax Minnesotans?”
Because he wants to do business in Minnesota. It’s entirely possible to construct state specific software to handle sales tax issues. Turbo Tax and others do it with income tax and the problems there are vastly more complicated. Lots of companies that do have nexuses in states routinely charge sales tax on their internet transactions without any great problems.
March 20th, 2009 at 11:33 AM
If the argument is revenue generation, who cares if the people paid sales tax somewhere else.
It isn’t, and I do.
March 20th, 2009 at 11:58 AM
Hiram,
He’s not doing business in Minnesota. His computer is in Florida, connected to a network that’s based in Florida. His products are sent from Florida. It has nothing to do with Minnesota.
This is about adding another layer of taxes to the people of Minnesota, who already pay enough. You know, Wisconsin has 480,000 more people than we do yet they spend $5 billion a biennium less than we do. It’s called cutting spending. Maybe we should give it a try.
March 20th, 2009 at 12:56 PM
“He’s not doing business in Minnesota. His computer is in Florida, connected to a network that’s based in Florida. His products are sent from Florida. It has nothing to do with Minnesota.”
If he has nothing to do with Minnesota, where’s the issue? But if, just picking out something at random, he once to sell to people in Minnesota, then he should have no problem at all complying with Minnesota law.
“This is about adding another layer of taxes to the people of Minnesota, who already pay enough.”
No. It’s exactly the same layer. Companies who sell to Minnesotans in Minnesota should do so on the same terms. Simple fairness requires that. There is no meaningful distinction between companies that do that online from out of state, and those located here, except the ones located here benefit our community. Why on Earth do we have a tax policy that hurts our friend, and our neighbors and ourselves to benefit those who do literally and absolutely nothing to benefit our state?
March 20th, 2009 at 4:24 PM
Hiram,
Your argument is asinine. What you’re saying is that if you want to sell (by the internet no less) to people in Minnesota, you have to abide by Minnesota laws? So if Minnesota has a higher minimum wage than Florida, for example, does that mean that you should have to raise your wages if you want to sell to people in Minnesota? Or if Minnesota has a requirement to have 15% ethanol in your cars and Florida doesn’t, that you have to start putting 15% ethanol in your cars? That’s ridiculous. People who sell things over the internet have no connection to Minnesota and are not subject to our jurisdiction. No court has, or ever will, rule that a person with a website has “sufficient minimum contacts” with the state to grant the state jurisdiction over that person under the Constitution. Businesses and corporations are considered persons under the Constitution.
Your notion about businesses in other states amounts to nothing but unconstitutional trade barriers between Minnesota and the rest of the country. These are the exact kind of trade barriers that have been struck down by the Supreme Court as unconstitutional for violating the Dormant Commerce Clause — and for good reason.
But regardless of the law, it’s amazing that Democrats can say they’re for the middle class and specifically put a target on their back for daring to buy something from a business that isn’t in their state. Democrats used to say they were for the middle class, but after the budget proposals, it’s clear that if you make more than $1.99 a year, Democrats want at least half.
March 20th, 2009 at 4:48 PM
Employers who have employees in Minnesota must follow Minnesota law. Does anyone dispute that? Trucks belonging to out of state companies must follow Minnesota law when they are in Minnesota. Etc.
“Your notion about businesses in other states amounts to nothing but unconstitutional trade barriers between Minnesota and the rest of the country.”
Providing that out of state firms who sell into ha Minnesota not receive preferred tax treatment doesn’t strike me as a barrier. It would be a barrier if we charged out of state firms a higher sales tax rate, or charged sales tax twice. I would oppose that on both legal and policy grounds.
We have made a policy decision to have a sales tax. What policy interest is served by the loophole we have created. Why should Minnesotans who buy exactly the same item from an internet company get a better deal than those who buy from a local merchant? Does mastery of a computer keyboard imply some special quality that we as a state should reward? With a 7% discount?
March 20th, 2009 at 5:09 PM
Hiram,
What you don’t get is that businesses in other states aren’t doing business in Minnesota. Period — end of story. There is no difference between the internet, catalog sales or telephone sales which have all been sales tax exempted.
I have no doubt that a court would strike down our internet tax scheme as an unconstituional trade barrier under the Dormant Commerce Clause. The reason is because a state cannot discriminate against out of state businesses in favor of in state businesses. The reason it would be considered a trade barrier is because of the argument that you want to punish consumers for buying an item from an out of state business by making that out of state business (which doesn’t have sufficient minumum contacts to come under Minnesota’s jurisdiction) collect and remit sales taxes.
Our policy decision to have a sales tax — it’s 6.5% not 7% — is a decision to tax in state sales. It has nothing to do with the “mastery” of a keyboard. It has to do with the freedom of consumers to decide for themselves where to purchase goods.
March 20th, 2009 at 6:17 PM
“What you don’t get is that businesses in other states aren’t doing business in Minnesota.”
Then where does all that stuff in the amazon boxes come from?
“There is no difference between the internet, catalog sales or telephone sales which have all been sales tax exempted.”
Telephone sales, obviously, should be subject to the sales tax as well, for exactly the same reason.
“I have no doubt that a court would strike down our internet tax scheme as an unconstituional trade barrier under the Dormant Commerce Clause.”
It quite simply isn’t. The Commerce Clause, dormant or otherwise, doesn’t require discrimination in favor of out of state goods.
“The reason it would be considered a trade barrier is because of the argument that you want to punish consumers for buying an item from an out of state business by making that out of state business (which doesn’t have sufficient minumum contacts to come under Minnesota’s jurisdiction) collect and remit sales taxes.”
Sales tax collection isn’t a punishment. And as long as the sales tax is the same for both in state and out of stae goods, consumers are not being sanctioned for their decision to buy over the internet. The current situation punishes consumers for buying in state. Isn’t that a barrier to commerce?
March 20th, 2009 at 6:22 PM
“Our policy decision to have a sales tax — it’s 6.5% not 7% — is a decision to tax in state sales.”
In Hennepin County, it’s more because of the Twins and to Conservation.
“It has nothing to do with the “mastery†of a keyboard. It has to do with the freedom of consumers to decide for themselves where to purchase goods.”
I am totally in favor of the freedom of consumers to decide where to purchase goods. It’s just that I am against punishing them for choosing to deal with their neighborhood businesses. And that’s what the current policy does.
I am really at a loss here. Why is everyone around here so eager to subsidize people who don’t contribute to our community, to the detriment of those who do?
March 21st, 2009 at 1:42 AM
Hiram,
I’m really trying to be polite and I have to admit that I’ve enjoyed our debate on this issue. But can’t you get it through your mind that just because someone ships something to our state doesn’t mean they are doing business here. They are doing business in their own state or even another country. You know, I buy things from other countries too. Do you think they should have to pay Minnesota Sales Taxes?
I’ve tried educating you about the Dormant Commerce Clause case law. I understand you aren’t an attorney but I’d recommend you to Google the term and to read about the cases I’ve cited and others as well. There is a whole set of case law involving state tax schemes which discriminated against out of state businesses in favor of in state businesses. You can’t erect trade barriers like that. The reason you can charge in state businesses sales tax is because they fall under your jurisdiction. If you’re concerned about in state businesses competing against out of state businesses, then eliminate the sales tax for in state businesses.
Your continued use of Amazon.com and other large companies is misguided. I’ll tell you about a purchase I recently made on the internet that is probably far more typical than that of Amazon. I ordered a custom made pyramid humidor made from African Bubinga wood from a company in Florida. The company employs three people and has a website. There is not a similar product being offered by a Minnesota company. Why should the company in Florida, which employs people in Florida, buys materials in Florida, manufacters the product in Florida, has a computer and website that’s based in Florida and packs and ships the item in Florida be subjected to Minnesota sales tax rules? It shouldn’t.
You mentioned that Hennepin County has higher sales taxes than the rest of the state. Here’s a question for you: if a person from Hennepin County orders a product from Rochester, should the business in Rochester charge the Rochester rate of sales tax or the higher Hennepin County rate of sales tax?
By the way, the fact that we aren’t taxing purchases made in other states isn’t a subsidy to those businesses. It means that the consumer is having less money taken out of their wallets and family incomes by the government.
March 21st, 2009 at 6:35 AM
“But can’t you get it through your mind that just because someone ships something to our state doesn’t mean they are doing business here.”
Sure it does. When I pull up the amason.com screen on my home computer, the company is quite litereally in my house in a way that was beyond the imagination of the court when they came down with their decision decades ago. The company here to far greater extent than the Barnes and Noble located miles away. The contact with me, here in Minnesota, with a service that searches for books, provides reviews, and even recognizes who I am while providing personalized recommendations is a contact far more than mimimal.
But the minmimum contacts argument is purely a legal one, out of step with the underlying economics which have changed since the doctrine was created and itself easily changed by statute.
March 21st, 2009 at 6:46 AM
“I’ve tried educating you about the Dormant Commerce Clause case law.”
Thank you and it has been very illuminating but that’s a point I largely concede, at least with respect to long ago and out of touch case law.
First, that’s something that could be changed by an Act of Congress. That’s what the Commerce power provides.
Second, the commerce clause prohibits placing undue burdens on interstate commerce, it doesn’t eliminate them altogether, and it should not be held to favor out of state businesses over in state businesses as it currently does.
I can tell you that if I actually did think that requiring internet seller to pay sales tax actually did put an unfair burden on internet sales, I would agree that such a sales tax was unconstitutional. That’s what the Supreme Court believed when it rendered it’s decision. But back then, the internet had barely emerged from the pentagon, and no one anticipated the development of software that could make these transactions easily. That software does exist now, and we must understand that when the facts change, so does the law that applies to the facts.
March 21st, 2009 at 6:51 AM
“Your continued use of Amazon.com and other large companies is misguided. I’ll tell you about a purchase I recently made on the internet that is probably far more typical than that of Amazon. I ordered a custom made pyramid humidor made from African Bubinga wood from a company in Florida. The company employs three people and has a website.”
My guess is that amazon.com transactions are far more typical. The reason they or rather require you to pay sales tax in Minnesota is that they want your business in Minnesota. But again, I am totally in favor of finding ways to make the transaction as easy as possible. And if you could convince me that somehow this transaction was unduly burdensome for small businesses, I would be open to considering execmptions for certain kinds of small businesses or smaller transactions. But believe me, if anyone is buying a million dollar widget on the internet that could have been purchased locally, they should be paying the sales tax.
March 21st, 2009 at 6:57 AM
“if a person from Hennepin County orders a product from Rochester, should the business in Rochester charge the Rochester rate of sales tax or the higher Hennepin County rate of sales tax?”
Your question defines the away the disputed legal issue. Legally, it’s a question of what the statute says, and as a state statute, it may not violate the intersttae commerce clause although it could. As a policy matter, I think the difference between the Rochester tax and the Hennepin County tax is minimal and isn’t worth the effort to collect in this situation. The difference in sales tax from out of state purchases is far from minimal, and in many cases, might very well exceed the profit margin for merchants in competitive markets.
March 21st, 2009 at 8:11 AM
“isn’t worth the effort to collect in this situation.”
So if it’s worth it you would do it. That’s the principles upon which Hiram’s and Bakk’s tax “policy making” is based.
Never mind it’s illegal. Never mind there is no legal precedent. Never mind it will hang an economic yoke around Minnesotans’ necks.
You guys need to better define what mischief you believe is being engaged in by overstock.com and amazon.com. Bakk fails completely here:
http://tpt.org/aatc/videos/2009/03/18/almanac_at_the_capitol_march_18_2009
Bakk’s problem is he somehow believes an item on amazon.com sold to a Minnesotan is actually on Target.com
March 21st, 2009 at 8:27 AM
The outgoing DFL budget meister, Dick Cohen, would never have been so stupid as to accuse a business of mischief possibly on the basis of his first internet shopping experience.
If Target.com is the one complaining about this they need to go out to other states and do the same thing – not whine to Minnesota legislators, who know next to nothing about commerce, about changing established internet business.
March 21st, 2009 at 8:30 AM
So if it’s worth it you would do it.
Well if the effort was worth it, I would do a lot of things, I suppose.
“Never mind it’s illegal. Never mind there is no legal precedent. Never mind it will hang an economic yoke around Minnesotans’ necks.”
If it’s illegal, I wouldn’t do it. There is no constitutional barrier to enacting a statute reguiring the sales tax to be collected that way. As an intrastate transaction, you would have to go out of your way to apply the interstate commerce clause to it.
“Bakk’s problem is he somehow believes an item on amazon.com sold to a Minnesotan is actually on Target.com”
I have to tell you, on my computer, Amazon.com’s website looks very similar to Target.com’s. For tax policy purposes, I see no reason at all that Target, a company that’s based here in Minnesota, which in numerous ways, has been a terrific corporate citizen, a company that is really part of the fabric of life for all Minnesotans, and a company which has off and on employed my sister, should be put at a tax disadvantage for precisely all those reasons?
Why should we favor Amazon.com just because, unlike Target, they do nothing for our community?
March 21st, 2009 at 8:43 AM
Speaking of asinine, I am reminded of Mr. Bumble in Oliver Twist:
“If the law supposes that,†said Mr. Bumble,… “the law is a ass—a idiot. If that’s the eye of the law, the law is a bachelor; and the worst I wish the law is that his eye may be opened by experience—by experience.â€
Dickens, among other things, was a very astute observer of the processes of the law. He had been a court reporter in his youth, and themes related to the law are found in many of his novels.
We don’t have to be an ass here. We can learn from experience, and change the law to adapt to what we have gained from experience. In Dickens’ wise novels, the failure to learn from experience is invariably disastrous. Maybe it’s time to stop making mistakes in the future, simply because we have made them in the past.
March 21st, 2009 at 8:59 AM
“Why should we favor Amazon.com just because, unlike Target, they do nothing for our community?”
We should favor neither in considering tax policy – we should preserve the existing tax policy which is fair.
Target.com, to the extent it feels amazon.com is stealing business away, should look to the other 49 states and do the same thing. What amazon.com is doing is not mischeivous or illegal – target.com can compete nationally hed to head with any internet business. And they should.
March 21st, 2009 at 9:09 AM
“We should favor neither in considering tax policy – we should preserve the existing tax policy which is fair.”
Agreed. That has been my consistent position on this matter from the start.
“Target.com, to the extent it feels amazon.com is stealing business away, should look to the other 49 states and do the same thing.”
Target can’t do the same thing because Target is not only a great corporate citizen for all the reasons I have stated in Minnesota, it is a great corporate corporate citizen in 48 other states as well. I believe the only state they don’t have a store is Vermont.
I don’t think amazon.com is doing anything mischievous or illegal. They are following the law, and it is perfectly proper for them to do so. They would be violating their fiduciary obligation to their shareholders if they did anything else. It’s the policy I have a problem with, not Amazom.com’s compliance with it.
March 21st, 2009 at 9:13 AM
“we should preserve the existing tax policy which is fair.â€
My fault. I did what one should never do, accept other people’s words without close examination. No, the existing policy isn’t fair. It isn’t fair that the same item when purchased on the target.com’s website costs 7% more, just because Target is a great local citizen employing our friends and our neighbors and on occasion my sister. I am not saying Target should be rewarded by our tax policy for all they do for all of us, but it just doesn’t make sense to punish them for being a great part of our community.
March 21st, 2009 at 9:26 AM
“it is a great corporate corporate citizen in 48 other states as well”
Well that’s the real issue isn’t it.
There are other internet sellers based in MN that do NOT have business in the other states. Penalize them for the sake of Target.com? No.
March 21st, 2009 at 9:30 AM
Target.com has to collect tax for each of those 48 states it is in. Perhaps they should weigh the benefit of having those brick and mortar presences in all those states. If they decide it is beneficial then quit distracting Minnesota legislators like Bakk with your yammering whine and needlessly complicating budget talks. If it is not, close up those stores and pull out out of those states.
March 21st, 2009 at 9:43 AM
There may be solutions for Target.com beyond the scope of this conversation. We can talk about it. The fact that someone, probably Target lobbyists in St. Paul, framed Target.com’s issue in the context of another new DFL tax effort, though, is a mark against it.
March 21st, 2009 at 9:49 AM
Penalize them for the sake of Target.com? No.
Following the same rules as everyone else is not a penalty. But the logic for Minnesota internet companies doing business elsewhre is the same for internet companies doing business here. The fact that they don’t contribute to the local community should not serve as a reason for them being given preferential tax treatment.
March 21st, 2009 at 9:54 AM
Target.com has to collect tax for each of those 48 states it is in.
Yup.
“Perhaps they should weigh the benefit of having those brick and mortar presences in all those states.”
You betcha they do. Current tax policy provides an incentive for them to shut down those expensive piles of bricks an mortar which contribute so much to the communities in which they are located.
Why do we create that incentive? How is it in the interests of those communities and our own, to encourage Target to shut down those beautiful stores, to lay off all of those great people who earn a living in them?
March 21st, 2009 at 9:56 AM
We have more creative manufacturers in MN than brokers selling products from elsewhere. Therefore such a tax policy would hurt us. Not to mention the principles mentioned before.
March 21st, 2009 at 10:03 AM
[...] New Wars put an intriguing blog post on Comment on SENATE DFL TAX CHAIR CONSIDERING RAISING TAXES INTERNET…Here’s a quick excerptThere are other internet sellers based in MN that do NOT have business in the other states. Penalize them for the sake of Target.com? No. [...]
March 21st, 2009 at 11:14 AM
Hiram,
I would like to again compliment you on this discussion. Unlike a lot of other people who post talking points or call names, you’re a true believer and have backed up your opinions with examples. I have enjoyed this discussion with you and I hope you have as well.
Now that the compliment is out of the way (j/k), I’d like to tell you where you’re wrong about the dormant Interstate Commerce Clause case law. While the case law goes back literally to the founding of our country, it’s been affirmed over and over again by our court. In fact, it was affirmed again in 2007. The case law has struck down many state tax schemes.
As for internet taxation, you’re correct that Congress could pass a law to allow states to tax the internet. However, that law could also be challenged in Court as being an unconstitutional barrier to interstate commerce for the reasons I’ve previously stated. While large companies like Amazon.com would have the ability to track, charge and pay different amounts of sales taxes to the fifty states, it would be a huge burden on small business. It’s not just a software burden. It’s a bookkeeping nightmare for small business.
Again, Hiram, Amazon (or any out of state internet retailer) is not doing business here. When you turn on your computer and go to the internet, you’re hitting their servers which are out of state. If Amazon.com did something to you and you had to take them to court, you couldn’t sue them in a Minnesota court either. Also, a company doesn’t have to be based in Minnesota. It just need a brick and mortar presence here. Since Apple has stores in Minnesota, you already have to pay sales tax on your iTunes purchases. Since one of my favorite stores, Neiman Marcus, has a store in Minneapolis, I have to pay sales tax on NM Online purchases (unless, of course, I’m buying clothes which for now are not taxed).
The point remains twofold: (1) the dormant Interstate Commerce case law prohibits this kind of tax scheme which puts burdens on out of state businesses to help prop up in state businesses and (2) the DFL continues to propose literally every way, shape, manner and form possible to tax every aspect of a person’s life. This isn’t about going after the rich. It’s about going after everyone in order to continue the welfare state. It’s truly an outrage to hard working Minnesotans.
March 21st, 2009 at 11:16 AM
P.S. Hiram,
My example of taxing Hennepin County purchases made in other parts of the state is no different than what you’re advocating here. If you don’t think Hennepin County residents spend millions and millions of dollars elsewhere, you’re wrong. Since the extra sales taxes go to Hennepin County projects (like the Twins stadium), I really would think that you’d call for making Hennepin County residents pay their sales tax rate all over the state.
March 21st, 2009 at 11:51 AM
“We have more creative manufacturers in MN than brokers selling products from elsewhere. Therefore such a tax policy would hurt us.”
If we have better products, we will do just fine. Even if we have to compete on even terms.
March 21st, 2009 at 11:59 AM
Hiram,
One other observation. People don’t buy products on the internet to save sales taxes. Although there’s no doubt that it’s a savings. People buy products on the internet to (1) save money and (2) get things that aren’t available in a Minnesota retailer. It’s not about whether we have better products or even about competing on a level playing field.
March 21st, 2009 at 12:00 PM
‘I’d like to tell you where you’re wrong about the dormant Interstate Commerce Clause case law. While the case law goes back literally to the founding of our country, it’s been affirmed over and over again by our court. In fact, it was affirmed again in 2007. The case law has struck down many state tax schemes.”
I don’t dispute the case law. But that’s something that can be remedied by statute.
“When you turn on your computer and go to the internet, you’re hitting their servers which are out of state.”
Actually, I am looking at my screen, which is right here in Minnesota. This is a legal argument, which is out of step with economics, and again can be addressed by statute, or perhaps by a Supreme Court who gets things right as opposed to getting them wrong.
“If Amazon.com did something to you and you had to take them to court, you couldn’t sue them in a Minnesota court either.’
So is this a reason for giving them a break on sales tax?
March 21st, 2009 at 12:04 PM
“People don’t buy products on the internet to save sales taxes.”
Of course they do. It’s one of the main advantages of buying on the internet.
“People buy products on the internet to (1) save money and
And that includes the 7% sales tax, which I view as a very significant savings.
“(2) get things that aren’t available in a Minnesota retailer”
The books and whatever available from Amazon.com are just about all available from Minnesota retailers.
March 21st, 2009 at 12:11 PM
Hiram,
Case law can’t be remedied by statute. Case law from the United States Supreme Court is the highest law of the land. It supercedes statute. You’re right that Congress could lift the ban on internet taxation, but the Supreme Court could strike down the law based on precedent.
The legal argument is not out of step with economics. I’m not sure if you’re in business or not. But if you are, you surely know that where you employ your workers, where you make your goods or sell your services is your place of business. A person selling something online does not make them subject to another state’s jurisdiction and for good reason. Let’s say a person buys something from you and they live in Alaska. The item is defective and they decide to sue you. They don’t even give you the chance to make the transaction right — they just sue you. Should you have to go to Alaska to defend the suit? The answer is no. And no Supreme Court would ever say otherwise.
Finally, your comment about giving a company a “break” on sales tax is ass backwards. It’s not the company which PAYS the sales tax. It’s the good people of the State of Minnesota. A company from another state isn’t “getting” anything — let alone a “break.”
I’d like to ask why you think it’s a good idea to raise the sales tax on hard working Minnesotans who happen to buy a product or a service online from another state? Why do you advocate punishing the people of Minnesota with higher taxes?
March 21st, 2009 at 12:15 PM
Hiram,
Amazon.com is one retailer. I don’t know why you think that Amazon.com is the whole internet. People don’t buy from Amazon.com to avoid sales taxes anyway. They buy from Amazon.com and a whole host of other internet retailers because the camera or the book that’s being sold on Amazon.com is 30% cheaper than the same camera or book or iPod that’s being sold at a store in Minnesota.
Most internet retailers charge shipping which costs more than the damned sales tax anyway. It’s about finding products online in a more convenient way and at a cheaper price for consumers. Why do you insist on punishing consumers Hiram?
March 21st, 2009 at 12:17 PM
Let’s review the legal arguments.
The Interstate Commerce Clause. The constitution gives the Congress the power to regulate commerce among the states. One thing that means is that Congress has the power to legislate on these issues. They could pass a law giving the states the right to impose sales taxes on interstate internet transactions.
Absent such Congressional legislation the Supreme Court has held that Congress’ right to regulate interstate commerce is exclusive. That is, that states cannot regulate interstate commerce themselves. This is a difficult concept, and a changing one. When the Constitution was enacted, it took three days to travel from Boston to New York. Commerce among the states didn’t happen all the much, and the economies of the time were very localised. Things have changed since then. For the internet, state boundaries simply do not exist. The web is not just national, it’s global. When you have a presence on the web, you have a presence everywhere. The contact far from being minimal, is substantial. That is the economic reality. It just so happens the courts are slow in recognizing it.
I am thoroughly opposed to imposing undue burdens on commerce on the web. But the burdens go both ways. If treat companies unequally, there has to be a burden somewhere, and in the case of the internet, I argue very comfortably that that burden falls on the company that has to pay sales tax to the advantage of the one that doesn’t. Since Target, like Amazon.com, is engaged in interstate commerce, I argue that the disparate tax treatment is an unconsitituional burden on trade between the states.
March 21st, 2009 at 12:20 PM
‘Case law can’t be remedied by statute.”
In this case it can for the reasons I explained earlier. Actually, case law can just about always be remedied by statute. Case law is what we have in lieu of statute.
March 21st, 2009 at 12:24 PM
Hiram,
A state can tax and regulate a business within its jurisdiction. It cannot impose regulations on states outside of its jurisdiction. There’s no way in hell that there is a disparate tax treatment in interstate commerce between the states because a state cannot tax commerce outside of its jurisdiction. Target isn’t involved in interstate commerce because Target has stores in all 50 states. It’s involved in intrastate commerce.
Regardless, and this is the point you’ve failed to address, businesses DON’T pay sales taxes. CONSUMERS DO!!!
March 21st, 2009 at 12:26 PM
Hiram,
One other point about case law. When the Supreme Court rules on a case, it’s the law of the land. Even if Congress passes a new law, it doesn’t mean that the law is Constitutional. The Supreme Court has the sole right to interpret the Constitution. The Supreme Court can strike down any law passed by Congress that is unconstitutional.
March 21st, 2009 at 12:27 PM
“where you make your goods or sell your services is your place of business.’
Amazon.com sells me it’s goods right here in Minnesota, at my home computer.
“Most internet retailers charge shipping which costs more than the damned sales tax anyway.”
Some do, some don’t. Amazon.com often doesn’t. But that’s just one of the costs of doing business.
“Let’s say a person buys something from you and they live in Alaska. The item is defective and they decide to sue you. They don’t even give you the chance to make the transaction right — they just sue you.”
Civil jurisdiction is a different issue from tax policy which is a different issue from interstate commerce issues under the constitution. But in this case, I would point out that the case has to happen somewhere, either here or in Alaska, and either way, it operates to the disadvantage of someone.
March 21st, 2009 at 12:32 PM
“There’s no way in hell that there is a disparate tax treatment in interstate commerce between the states because a state cannot tax commerce outside of its jurisdiction.”
If you aren’t shipping products into a jurisdiction, that may be true. But Amazon.com is.
“Target isn’t involved in interstate commerce because Target has stores in all 50 states. It’s involved in intrastate commerce.”
It quite simply is. It would be engaged in interstate commerce if it had only one store outside the state of Minnesota. And a more aggressive interstate commerce argument wouldn’t require even that, because it deals with products that are in the stream of interstate commerce.
March 21st, 2009 at 12:40 PM
Hiram,
We’re going around in circles so I’m not going to refute any of your points because it’s the same arguments we’ve already covered. I will just say that your knowledge of the dormant interstate commerce clause and personal jursidiction is lacking. Which is only natural because these are complex concepts even for attorneys. I will just say that Target is not operating in interstate commerce when it has brick and mortar stores in teh 50 states. Amazon.com is operating in interstate commerce because it ships goods from its warehouse to the 50 states.
That said, you’ve completely failed to address my singular point which is: why are Democrats hell bent in taxing every aspect of a consumer’s life? Why are you so forcefully (and even in the face of the law of the land) advocating punishing hard working Minnesotans?
March 21st, 2009 at 12:42 PM
P.S. Hiram,
If you’re so worried about going after companies, then why don’t you propose taxing the profits they make on the goods they ship to Minnesota? No doubt the DFL will be proposing that next.
March 21st, 2009 at 1:00 PM
“I will just say that Target is not operating in interstate commerce when it has brick and mortar stores in teh 50 states. Amazon.com is operating in interstate commerce because it ships goods from its warehouse to the 50 states.
That said, you’ve completely failed to address my singular point which is: why are Democrats hell bent in taxing every aspect of a consumer’s life? Why are you so forcefully (and even in the face of the law of the land) advocating punishing hard working Minnesotans?”
Thank you Chris for expressing these sentiments. And you are right it is not about manufacturers vs brokers. It is about the DFL going tax happy once again.
I feel an unfair anti-small-business sentiment in Hiram’s tone. Few MN businesses are large enough to have brick and mortar in 49 states. Yet MN businesses who do maintain all those satellite offices are the only ones who benefit from this legislation. If large MN businesses with brick and mortar satellites are established in MN, they ALREADY, a long time ago, decided that the high MN business tax is acceptable. So why make it harder for younger MN businesses not yet at that size? It makes no sense. It would be needlessly making the MN, and indeed the national, business climate toxic. Ironically it is liberal tax happy legislation in 49 states that is raising property tax for Target and driving it to this lobbying effort. Target should enlist Republicans for help in it’s trouble, not the very party (Democrat) that is the cause of the higher property tax it must pay for all it’s satellite offices and stores.
March 21st, 2009 at 2:01 PM
“why are Democrats hell bent in taxing every aspect of a consumer’s life?”
Well the narrower and better question is why should the sales tax cover internet transactions?
The first reason is that not to do creates an irrational distortion of commerce favoring out of state companies over in state companies. Better policy is to do the reverse, or a the very least provide for equal tax treatment.
The second reason, from the consumer perspective is that we have made the policy decision that these kinds of transactions should be taxed. That being the case, there is no rational basis for exempting out of state transactions. From a consumer perspective, the experience of buying from Target.com is exactly the same as buying from Amazon.com, and once you make the policy decision that such transactions are to be taxed, there is no reason to treat them differently. The arcane legal issues aren’t relevant to the consumer. The policy, and whatever benefits that derive from it, is very relevant.
March 21st, 2009 at 2:06 PM
“Which is only natural because these are complex concepts even for attorneys.’
I don’t think they are that complex, and I have tried to give my view of them as clearly as I can.
If you can provide a convincing case that requiring out of state companies to pay sales tax is unduly burdensome, I will concede the argument. But the fact is, it really is not. Companies routinely perform much more complicated tasks. And I would be glad to insist that the states be required to find ways to ease these transactions, perhaps by providing the required software themselves. Practical objections are notorious for having practical solutions.
March 21st, 2009 at 2:12 PM
“I feel an unfair anti-small-business sentiment in Hiram’s tone.”
There is a sort of half-formed notion out there that merely by reciting the magic words, “small business”, all arguments just melt away. I think small businesses are just as likely, or more likely to be damaged by internet transactions, because they have a hard enough time competing on price, and the sales tax differential just kills them.
How many neighborhood bookstores has Amazon.com killed off. That said, I would be open to considering exemptions for small companies engaged in small transactions. In the alternative, I would make sure they get the needed software at free or reduced prices. It isn’t my intention to burden interstate commerce here.
March 21st, 2009 at 3:53 PM
I purchase books and other merchandise on Amazon on a regular basis. I base my decision on the purchase price and shipping/handling charge. I never have taken sales tax into consideration since most of the products I purchase are not priced high enough where it makes a significant difference.
I suppose I might consider taxes if the item costs more than $20. If I did and purchased a book from a retailer that only does business in South Dakota I would not pay any taxes. If I buy it in Minnesota I would pay taxes.
To me that makes a case for Minnesota not charging any sales tax on internet sales because it makes the Minnesota retailer less competitive and most likely results in less jobs being created.
March 21st, 2009 at 4:51 PM
“I purchase books and other merchandise on Amazon on a regular basis. I base my decision on the purchase price and shipping/handling charge. I never have taken sales tax into consideration since most of the products I purchase are not priced high enough where it makes a significant difference.”
Then you shouldn’t have a problem if your order costs 7% more.
“To me that makes a case for Minnesota not charging any sales tax on internet sales because it makes the Minnesota retailer less competitive and most likely results in less jobs being created.”
In those circumstances, the Minnesota retailer would be less competitive, because he would be charging sales tax.
March 21st, 2009 at 7:43 PM
Hiram you have not considered small business at all. Reduced s/w means nothing. Again this is established liberal business vs small biz – with a DFL tax ploy thrown in as a twist on the plot. Republicans I know will always side with Walmart Republicans, not the big biz seeking regressive remedies to competition.
March 22nd, 2009 at 2:52 AM
Hiram,
A few observations…First, you didn’t answer my question which is why are Democrats like you hell bent on raising the taxes of ordinary hard working Minnesotans? It’s not the rich who buy things from the internet. It’s virtually every Minnesotan. For years liberal Democrats have talked about giving the middle class tax cuts and only going after the top 1% or 2%, but the internet sales tax scheme is a tax hike for all Minnesotans, not just the rich.
Second, notwithstanding your hubris, you do not understand the complex legal questions of jurisdiction and the dormant Commerce Clause case law. If you did, you wouldn’t make absurd arguments that Target is in the business of interstate commerce at its brick and mortar stores in all 50 states and that Amazon.com is no different than a brick and mortar business in Minnesota. Your opinion is factually and legally unsupported.
Third, businesses don’t pay sales taxes. Businesses don’t pay sales taxes. And businesses don’t pay sales taxes. Consumers pay sales taxes which are collected by businesses. If you don’t think it’s burdensome for a business to have to account for and report its monthly sales (because sales taxes are usually paid monthly) to the 50 different states, then I don’t believe you’re in business.
Fourth, if you don’t like Amazon.com then don’t shop there. The notion that Amazon.com is putting neighborhood businesses out of business is asinine. There are just as many anti-capitalists like you who don’t like Amazon.com as there are free marketers like me who are looking for the best deal. Why do you insist on punishing consumers for shopping for the best value?
Finally, it’s not your money. It’s not the government’s money. Keep your hands out of my wallet and leave the internet alone. It’s not any of your business or the government’s who or where I shop. If I choose to shop with a company that is in state, then I pay the sales tax. If I choose to shop with an out of state business, then I don’t pay the sales tax. And, for the record one last time, the sales tax rate is 6.5%. Just because you people in Hennepin County keep raising your sales tax for various slush funds doesn’t mean the rest of us pay it.
March 22nd, 2009 at 6:43 AM
didn’t answer my question which is why are Democrats like you hell bent on raising the taxes of ordinary hard working Minnesotans?
Because we need the money?
I think I did answer a form of your question when I talked about the policy of the sales tax. We have already decided to tax sales as a matter of policy. There simply is no relevant policy reason why internet sales should be excluded from that tax. For the reasons, I have stated, that exempting internet transaction is discriminatory. Your arguments on this really just generalized complaints about taxes, and shouldn’t we find ways to allow people to avoid them arbitrarily, by pure luck of the draw as happens when they happen to do business with a website that doesn’t charge a sales tax as opposed to one that does.
March 22nd, 2009 at 6:46 AM
“Second, notwithstanding your hubris, you do not understand the complex legal questions of jurisdiction and the dormant Commerce Clause case law. If you did, you wouldn’t make absurd arguments that Target is in the business of interstate commerce at its brick and mortar stores in all 50 states and that Amazon.com is no different than a brick and mortar business in Minnesota. Your opinion is factually and legally unsupported.”
Target is obviously and indisputably engaged in interstae commerce. Hubris or not, on this point, I am right, and you are beyond all shadow of a doubt, wrong.
March 22nd, 2009 at 6:54 AM
“If you don’t think it’s burdensome for a business to have to account for and report its monthly sales (because sales taxes are usually paid monthly) to the 50 different states, then I don’t believe you’re in business.”
This is a crucial point. Is paying a sales tax, not just burdensome, but excessively burdensome? I think it may have been when those Supreme Court cases were decided. Back then the software didn’t exist, the internet itself was in it’s early stages, it’s commercial possibilities not fully understood, especially by the elderly and out of touch lawyers that form our Supreme Court. That has changed. Computers now perform vastly more complicated tax transactions easily. Money travels easily through the web. Many, many companies routinely handle these sales tax transactions, such as Barnes and Noble.
It just isn’t that big a deal, and to the extent that it is, the states should make reasonable efforts to ease the burden. Let me say once again, I am totally opposed to placing undue burden on interstate commerce. When a customer is deciding which online service to use, in state, our out of state, local tax considerations should be a non factor. Any other policy burdens interstate and intrastate commerce in an unacceptable way.
March 22nd, 2009 at 7:00 AM
“Fourth, if you don’t like Amazon.com then don’t shop there.”
Victim of hubris though I may be, not even I would argue that state and national tax policy should be dictated by my personal likes and dislikes. As it happens, I like Amazon.com just fine.
This is a form of an off the shelf conservative argument heard all the time on talk radio. Basically it goes, if you think taxes or too low, why don’t you send the government a check. The response is that just because I don’t agree with a policy doesn’t mean I don’t have to follow it. This isn’t about me, it’s about tax policy generally.
March 22nd, 2009 at 7:02 AM
it’s not your money.
No, but it’s my tax policy. Or to put it with less hubris, it’s our tax policy, one that we all have a hand in discussing and deciding, which is what we are doing here.
March 22nd, 2009 at 7:31 AM
“Target is obviously and indisputably engaged in interstae commerce. ” What happened to your warm and fuzzy picture of Target as a community member in each of the 49 states it is in, Hiram? Doesn’t being a community member under your definition mean collecting sales tax for the state you are in under existing law? Target is not an internet business. Leave the internet alone.
March 22nd, 2009 at 8:18 AM
“This is a form of an off the shelf conservative argument heard all the time on talk radio. Basically it goes, if you think taxes or too low, why don’t you send the government a check. The response is that just because I don’t agree with a policy doesn’t mean I don’t have to follow it. This isn’t about me, it’s about tax policy generally.”
Bakk, whose stupid new tax idea youre spending all this time defending, complains about high property tax in the March 18 TPT video. How is that different from conservatives complaining about high tax? Learn how to govern. Drop your obsession with new ways to tax. Cut spending.
March 22nd, 2009 at 8:19 AM
“What happened to your warm and fuzzy picture of Target as a community member in each of the 49 states it is in, Hiram?”
Still there. Actually, I have a warm and fuzzy view of interstate commerce as well. I like interstate commerce, and I am emphatically of the opinion that Target should not be discriminated against because it opens great stores, employs great people, and makes great contributions, in 49 out of the 50 states.
“Doesn’t being a community member under your definition mean collecting sales tax for the state you are in under existing law?”
Yes, it does, and target does collect such taxes. My position is that their internet competitors should too, and to do otherwise gives those competitors an irrational and unfair advantage.
“Target is not an internet business.”
Target is in the internet business. You can check out their website at target.com.
March 22nd, 2009 at 8:23 AM
How is that different from conservatives complaining about high tax?
There is a difference between complaining about high taxes, and criticizing specific tax policies. Where internet tax policy is concerned, I could suggest that the change I am proposing be made revenue neutral, that is the tax rate could be reduced by an amount sufficient to cover the increased revenue equal tax treatment would bring in. That would solve the policy problem caused by the current discriminatory tax policy without increasing the taxes people actually pay.
March 22nd, 2009 at 8:32 AM
“Still there.”
Why is there a problem then?
Where is the Uneven playing field?
Your whole premise is Target is unfairly paying sales tax in all 49 states it has brick and mortar.
March 22nd, 2009 at 8:40 AM
There must be a category in some Lawson or SAS software module that defines what an internet company is. Target (TGT) cannot be an internet company because, not only does it have a presence in other states, it has a brick and mortar retail presence. The only state in which you could call TGT an internet company would be Vermont, because TGT does not have a presence in Vermont.
March 22nd, 2009 at 9:03 AM
“Where is the Uneven playing field?”
Purchases at target.com are charged a local sales tax. Purchases at amazon.com are not.
“Your whole premise is Target is unfairly paying sales tax in all 49 states it has brick and mortar.”
My whole point is actually that internet merchants like amazon.com is unfairly not paying sales tax. I think it is fair that Target pay sales tax.
“Target (TGT) cannot be an internet company because, not only does it have a presence in other states, it has a brick and mortar retail presence.”
This must be one of those subtle distinctions understood by thousand dollar an hour lawyers which elude the rest of us. All I know is that when a company has a website on the internet, when you can order things from that website, and when those things show up at your door, such a company is in the internet business.
March 22nd, 2009 at 9:12 AM
“My whole point is actually that internet merchants like amazon.com is unfairly not paying sales tax. ”
Actually your point is that we Minnesotans are not paying sales tax on some internet purchases. And you have software to fix it.
March 22nd, 2009 at 9:22 AM
“Actually your point is that we Minnesotans are not paying sales tax on some internet purchases.”
That’s more of a fact than a point. My point is that that fact discriminates against local businesses who contribute to our community in favor of out of state businesses that don’t.
“And you have software to fix it.”
I don’t actually. But I don’t think creating or finding such software poses a very difficult problem. Lots of internet retailers, like Target, like Barnes and Noble, charge local sales taxes, and that seems to present no insurmountable problem for them. I am concerned with the possibility that requiring internet retailers to collect local sales taxes might impose an undue burden on their businesses, and I am open to all practical suggestions that address this practical problem. States should be required to take all reasonable steps to ease the collection process. They might be asked to make software available, or to defer part or even all of the software costs of internet companies seeking to do business within their borders.
March 22nd, 2009 at 11:13 AM
Hiram,
First, you’re wrong that not taxing the internet is discriminatory. The reason you’re wrong is because states cannot discriminate against out of state businesses. That violates the dormant Interstate Commerce Clause case law.
Second, I find your comment about the Supreme Court being filled with elderly people to be rather ignorant and insulting. These people (whether I agree with them on every issue or not) are among the smartest legal minds in the country. Just because you want to start discriminating against out of state companies in violation of the dormant Interstate Commerce Clause case law doesn’t mean that the Supreme Court is senile.
Third, when one goes to shop at your local brick and mortar Target store, one is NOT engaging in interstate commerce for the purpose of making the sale. There is a difference between going to your local Target store and making a purchase from an out of state company on the internet.
Fourth, you want to tax the internet because “we need the money.” Well, Hiram, I need the money more than you do. This is what I can’t stand about today’s modern Democratic party. Democrats rail against the people at AIG or Merrill Lynch for being greedy and then want to pass laws to take more of my money away from me because they don’t want to have to make any cuts to one of the most generous welfare programs in the country.
March 22nd, 2009 at 11:16 AM
P.S. Hiram,
The whole software thing isn’t about software. If you know anything about collecting and paying state sales tax, you know that you have to account for your sales to the state and that you’re subject to the state’s periodic audits, etc. Compound accounting for sales and sending in the money every month to all 50 states and you have a rather serious burden for business.
You complained about having to file more than one state income tax form as being a burden. Well you only have to do that once a year. Imagine having to account for your sales to all 50 states and then have to do it every month and not just once a year.
March 22nd, 2009 at 2:44 PM
“The reason you’re wrong is because states cannot discriminate against out of state businesses.”
Requiring states to tax businesses selling in the state in the same manner as in state businesses is not discriminatory. If the state taxed them more, that would be discrimination.
“I find your comment about the Supreme Court being filled with elderly people to be rather ignorant and insulting.”
That’s regrettable, but I will also say that describing someone has having a fine legal mind is damning them with faint praise. If someone said that about me, I would be insulted.
“when one goes to shop at your local brick and mortar Target store, one is NOT engaging in interstate commerce for the purpose of making the sale.”
This is simply inaccurate to the point of being untrue. When you buy something, where was it made? Out of state. Obviously, Target is engaged in interstate trade, and so are it’s customers.
“you want to tax the internet because “we need the money.†Well, Hiram, I need the money more than you do.”
Then get the policy changed. Or find a policy reason why it makes sense not to tax the internet.
March 22nd, 2009 at 2:51 PM
“Compound accounting for sales and sending in the money every month to all 50 states and you have a rather serious burden for business.”
Lots of businesses do it. If they don’t want to trade across state lines, they don’t have to.
“You complained about having to file more than one state income tax form as being a burden.”
I don’t know if I complained about it so much as I noted. It’s a lot easier for businesses to do sales tax returns, then it is for many of us to file income tax returns in every state we may happen to have done work in. And bear in mind that where the income tax is concerned, the rule is that you are taxed once, not twice, and not at all. Currently, sales on the internet are not taxed at all.
March 23rd, 2009 at 1:14 AM
Hiram,
This is my last post on the issue. States can discriminate against in state businesses which they have personal jurisdiction over. States cannot discriminate against out of state businesses because that interferes with the Dormant Interstate Commerce Clause.
I did not damn the Supreme Court with faint praise. That argument is asinine. You called the Supreme Court senile because they don’t agree with your uninformed argument about the internet and the Interstate Commerce Clause.
Target may be involved in interstate commerce when they purchase goods from another company. But Target is not involved in interstate commerce when they sell the product to the consumer at their brick and mortar stores. Amazon.com, your favorite punching bag, IS involved in interstate commerce when they sell a product to a consumer that’s in another state. There is a major difference. I’d also note that Target doesn’t pay sales tax on the items they buy in interstate commerce.
The reason you cannot tax the internet is because it’s unconstitutional. What better policy argument can one have? I have another policy argument: cut spending and keep your grubby, greedy hands out of my pocket. Do you know the difference between Bernie Madoff and the DFL’s tax proposals? Madoff stole from rich people.
Finally, this asinine proposal to tax the internet would go after every business on the internet — even sellers on eBay. Your argument that if businesses don’t want to trade across state lines, they don’t have to is the exact reason the dormant Interstate Commerce Clause case law is in place. States cannot restrict the flow of interstate commerce by putting on punative regulations on businesses outside of their jurisdiction. It’s amazing that you cannot see that requiring a business to account for its sales, every month, to all 50 states isn’t a burden. You claim to be in business Hiram. I wish I knew what you did so I could propose screwing with your livelihood and see how you like it.
March 23rd, 2009 at 5:50 AM
“States cannot discriminate against out of state businesses because that interferes with the Dormant Interstate Commerce Clause.”
True. Requiring out of state businesses to pay the same tax as in-state businesses is not discrimination. It would be and is discriminatory not to.
“You called the Supreme Court senile because they don’t agree with your uninformed argument about the internet and the Interstate Commerce Clause.”‘
I believe, I called them elderly and out of touch, not senile. Perhaps we would be better off if they were.
That Target is engaged in interstate engaged in interstate commerce is undisputable. You are simply wrong on that issue.
“The reason you cannot tax the internet is because it’s unconstitutional. What better policy argument can one have?”
I think the Supreme Court’s decisions are if not wrongly decided, at least dated. And constitutionality has nothing to do with whether policy is good or bad. The Constitution accepted the institution of slavery, surely the most disastrous policy in our history.
“cut spending and keep your grubby, greedy hands out of my pocket.”
That’s a separate issue have nothing to do with the sales tax, or the issues we have discussed pertaining to it.
“Finally, this asinine proposal to tax the internet would go after every business on the internet — even sellers on eBay.”
Well that’s what a sales tax does, at least to a limited extent. And the fact is even now, lots people don’t pay sales tax on small private transactions, becuase it’s just too inconvenient or they “forget” or because they just want to save the 7%. And that doesn’t bother me at all that much. But when the business gets larger, and are able to use economies of scale, to ease the burden of taxation, then it does bother me.
“It’s amazing that you cannot see that requiring a business to account for its sales, every month, to all 50 states isn’t a burden.”
It is a burden, but not an undue burden. The fact is, engaging in interstate commerce is full of burdens, and the internet commerce clause should not be construed to mean that all of them must be eliminated. I am very open to suggestions as to how to make the collection of this tax easier. But the fact is lots of companies have no problem at all collecting the tax, and really, let’s not kid ourselves, the reason companies like amazon.com don’t want to collect the tax is that they like the edge in price that gives them.
March 23rd, 2009 at 10:13 AM
This is probably my last post although I may do a summary of this on http://www.DeltonDigest.com.
I was mistaken, as Chris demonstrates, when I said there is unsettled law involved. There is not.
Minnesota consumers’ behavior is perfectly legal despite what Hiram says.
Hiram and Bakk don’t understand the full, damaging ramifications of their idea.
March 23rd, 2009 at 12:05 PM
“Minnesota consumers’ behavior is perfectly legal despite what Hiram says.”
I don’t recall saying anyone has behaved illegally here. I don’t think that’s the case. In not charging local sales tax, Amazon.com is following the law. They could, if they want to, add a 7% surcharge to Minnesota sales and forward the proceeds to the state, but that would be bad corporate policy on their part, and a violation of their fiduciary duty to their shareholders.
March 23rd, 2009 at 12:42 PM
Hiram,
Okay but you insinuate, quite obnoxiously, that Minnesotans are getting away with not paying sales tax on the internet when they purchase from a business with no ties to Minnesota. You say it is “not fair”, and that it puts businesses at a disadvantage. This whole line of thinking is not true. Chris and I showed you.
March 23rd, 2009 at 1:06 PM
Quit trying to guilt the Minnesota consumer into paying a new tax. Quit attacking eBay and other internet sellers in Minnesota with your irresponsible “tax policy”. Leave the internet alone.
March 23rd, 2009 at 2:18 PM
“that Minnesotans are getting away with not paying sales tax on the internet when they purchase from a business with no ties to Minnesota.”
I am not insinuating that at all, I am saying it quite plainly. And I don’t see anything wrong with it at all. I believe that people should believe that people should pay only the taxes they are legally required to pay, no more, no less. It’s the policy, I disagree with, not the people who act according to it’s terms.
“Quit trying to guilt the Minnesota consumer into paying a new tax.”
Guilt has nothing to do with it. I sometimes wonder whether one reason Republicans grouse so much about taxes, is that they fail to act in the vast number of legal ways that reduce the amount of taxes they pay.
March 23rd, 2009 at 4:07 PM
Hiram,
For God’s sake it’s 6.5% not 7%. If you’re going to go after internet sales, at least try to charge the correct amount. Thanks!
March 23rd, 2009 at 4:09 PM
P.S. I’m not sure how old you are, but I wouldn’t call the Supreme Court elderly. Chief Justice Roberts is 54, Justice Alito is 58 and Justice Thomas is 60. I would say that Justice Stevens is elderly at 88 years young. But I’d compare his legal mind to anyone’s — even though I don’t always agree with his opinions.
March 23rd, 2009 at 4:12 PM
P.P.S.,
For the last time, consumers who buy goods at their local Target store are *not* by definition engaging in Interstate Commerce.
Consumers who buy goods from Amazon.com or any other out of state internet retailer *are* by definition engaging in Interstate Commerce.
March 23rd, 2009 at 5:06 PM
it’s 6.5% not 7%.
In Hennepin County, it is or will be more because some goes to the Twins, and some more goes to conservation. I round up.
“I’m not sure how old you are, but I wouldn’t call the Supreme Court elderly. Chief Justice Roberts is 54, Justice Alito is 58 and Justice Thomas is 60. I would say that Justice Stevens is elderly at 88 years young.”
I was really referring to the court that decided the internet cases. I think it was the case before Rehnquist’s and O’Connor’s relatively recent retirements, the average age of the Justices was at an all time high.
“For the last time, consumers who buy goods at their local Target store are *not* by definition engaging in Interstate Commerce.”
Well, we can be thankful for small miracles. Of course Target is engaged in interstate commerce, and so are the customers who are buying products produced all over the country and indeed all over the world. That is equally true of anyone who buys from Target.com, the more relevant comparison.
.
March 23rd, 2009 at 6:19 PM
Hiram,
The age of the Supreme Court Justices is irrelevant. It’s insulting to infer that they are senile just because the Supreme Court knows the definition of Interstate Commerce and you do not.
As for the sales tax level, you keep mentioning what the sales tax is in Hennepin County. Should an out of state business also have to collect the local sales taxes for each city in a state? There are dozens of Minnesota Cities and Counties which have local sales taxes that are higher than the state sales tax rate of 6.5%. You keep arguing the higher number, which of course is an added burden to interstate commerce because a business in another state cannot be expected to file both state and local sales taxes for thousands of cities and counties across the country.
Also, a consumer who buys a good from its local store is, by definition, engaging in intrastate commerce, not interstate commerce. I hate to beat a dead horse, but I can’t let your ignorance of the law influence others who may be reading our comment thread.
March 23rd, 2009 at 7:44 PM
“The age of the Supreme Court Justices is irrelevant. It’s insulting to infer that they are senile just because the Supreme Court knows the definition of Interstate Commerce and you do not.”
I think the age of the Supreme Court Justices was relevant legally, but I think even then they were out of touch with changing technology, as was I. It remains a free country, and I can insult the Supreme Court justices as much as I like, but it wasn’t over the commerce clause, which even in my senescence, I seem to recall is a clause, not a definition. It says that Congress has the power to regulate commerce among the several states. Congress could for example under the commerce clause, regulate the way states charge sales taxes on interstate commerce.
“Should an out of state business also have to collect the local sales taxes for each city in a state?” An excellent question, one that could be answered by specific legislation. My policy answer would probably be not to require local add-ons like the Twins tax, but it could assuming the Supreme Court changes it’s view on the matter. In general, I think those who disagree with me on this underestimate the power of software to handle this problem and overestimate it’s difficulty.
“a consumer who buys a good from its local store is, by definition, engaging in intrastate commerce, not interstate commerce.”
Intrastate and interstate commerce are not at all exclusive of each other. Anybody doing business at a nationwide company like Target is engaged in both. If your notion that transactions conducted in a store are intrastate only, then I suppose the only interstate transactions would be those conducted on the border between various states.
The Supreme Court adopted a very expansive view of interstate commerce during FDR’s administration. I suppose in some respects the court has retreated from that in recent years, but not where we are talking about national companies like Target extensively engaged in transporting goods all over the country. It’s all in the stream of commerce and the commerce is definitely interstate.
March 23rd, 2009 at 7:47 PM
You know Target, like a vast number of other businesses is subject to a myriad of federal regulations. Take the federal minimum wage law, applicable to Target. Where does Congress’ power to require employers to pay minimum wage come from? If not the commerce clause?
March 23rd, 2009 at 9:07 PM
Hiram,
You can insult the Supreme Court Justices all you want, but that doesn’t make them out of touch or otherwise wrong about interstate commerce. It’s also insulting to say that older people don’t know anything about the internet. The Court knows full well, as I do, that a person who uses a computer in their home to buy a good that is in another state is engaging in interstate commerce. Your claim that everything at Target comes from another state is asinine. What about products like iPods, HDTVs, clothing, etc. that are imported from another country and don’t come through another state? That’s not interstate commerce either. What you’re saying is that unless the good was manufactured in state and sold by a company that is in state, it’s interstate commerce. That’s asinine. What if the in state company uses materials that come from another state? Interstate commerce is defined as a transaction occuring between individuals (corporations are considered individuals under the law) from different states.
As for the federal minimum wage, that’s a floor for all businesses in all 50 states. Congress can pass many mandates on the states and on businesses. A state can have a higher minimum wage than the federal rate, but they can’t have a lower minimum wage. The reason states can mandate higher wages is because they have jurisdiction over employers within their jurisdiction. States cannot make mandates against businesses outside of its jurisdiction if such mandates violate the Dormant Interstate Commerce Clause.
Congress can pass a law which would allow states to tax the internet. As I’ve already said, such a law may or may not be constitutional.
March 24th, 2009 at 6:16 AM
“What about products like iPods, HDTVs, clothing, etc. that are imported from another country and don’t come through another state?”
I did forget stuff that was beamed here from other planets and didn’t cross state lines.
“That’s asinine. What if the in state company uses materials that come from another state?”
Of course that’s interstate commerce.
“Congress can pass many mandates on the states and on businesses.”
Under which of the enumerated powers of the Constitution can they do that? Other than the power established by the interstate commerce clause?
“The reason states can mandate higher wages is because they have jurisdiction over employers within their jurisdiction.”
The constitution rarely addresses issues of state power. Could the states enact a minimum wage law lower than the federal minimum? No. Could Congress repeal state minimum wage laws? Yes. Why is that? Because they have the power under the interstate commerce clause.
There simply is no doubt that Target is engaged in interstate commerce and so is anyone who not only buys products there but simply walks in the store.
March 24th, 2009 at 9:55 AM
Hiram,
Where did you get your law degree from? Because where I received my law degree, I was taught that interstate commerce is between two or more persons residing in different states. Funny enough, there was a question about interstate commerce and the dormant interstate commerce clause on the bar exam when I passed the bar. Also, interstate commerce has to do with the origin of the transactions not the fact that the goods necessarily move through states.
As for federal mandates on businesses, Congress has passed many laws including OSHA, the minimum wage, labor laws, etc. that don’t have anything to do with interstate commerce per se. It has to do with Congress’ supremacy over the states.
I feel sorry for you Hiram. You’re so set in your liberal ideology that you’re unwilling or unable to learn about something new that conflicts with your pre-set world view. I’ve always been told that liberals are open minded, erudite, learned people. You’ve pretty much dispelled that notion.
March 24th, 2009 at 11:14 AM
“Where did you get your law degree from?”
I took a business law course in high school. It was very comprehensive.
“where I received my law degree, I was taught that interstate commerce is between two or more persons residing in different states.”
You were taught incorrectly. If you check the consitution, for example, there is no residency requirement. But you are also incorrectly applying your incorrect law. Corporations like Target work in numerous states and anyone dealing with them is engaged in interstate commerce.
“Funny enough, there was a question about interstate commerce and the dormant interstate commerce clause on the bar exam when I passed the bar.”
Presumably you got that one wrong.
“As for federal mandates on businesses, Congress has passed many laws including OSHA, the minimum wage, labor laws, etc. that don’t have anything to do with interstate commerce per se.”
Are you being honest here? Did you really go to law school? I mean really, you don’t seem to have an understanding of the most basic concepts of constitutional law. For federal legislation to be constitutional, it must fall within one of the enumerated powers of the federal government. Minimum wage laws, workplace safety laws, civil rights legislation all are constitutional because fall within Congress’ power to regulate commerce among the states.
March 24th, 2009 at 11:25 AM
Here is the text of the supremacy clause from Article 6 of the constitution:
“This Constitution, and the Laws of the United States which shall be made in Pursuance thereof; and all Treaties made, or which shall be made, under the Authority of the United States, shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the contrary notwithstanding.”
Note that the text in no way expands the powers of the federal government which are established elsewhere in the document. The clause provides that the federal laws which are supreme are those enacted pursuant to the constitution, that is, within the Congress’ enumerated powers.
March 24th, 2009 at 12:09 PM
Hiram,
Let’s assume your high school business law education is correct. If Target is engaging in interstate commerce with its local consumers in its local brick and mortar stores, then it’s unconstitutional for states to charge sales taxes at its local Target stores.
Like I said, I feel sorry for you that you’re so set in your political ideology that you are unwilling to become informed on issues like the Interstate Commerce Clause and the dormant Interstate Commerce Clause case law.
March 24th, 2009 at 1:32 PM
“If Target is engaging in interstate commerce with its local consumers in its local brick and mortar stores, then it’s unconstitutional for states to charge sales taxes at its local Target stores.”
No. Not as long as the sales tax isn’t discriminatory. You can’t for example charge a higher sales tax on out of state goods.
If you want to bring the case law into it, check out Wickard v. Filburn which relates to the federal government’s power to regulate intrastate transactions under the interstate commerce clause.
March 24th, 2009 at 5:14 PM
I have been wondering what Chris and others were coming from with their lengthy discussion of these really basic interstate commerce issues. My thought that these ideas came from some sort of intramural legal analysis engaged in by conservatives who don’t really understand legal issues. Turns out that Michele Bachmann, who really is a lawyer, is having similar proplems:
http://www.minnpost.com/stories/2009/03/24/7601/treasury_takedown_bachmann_vs_geithner-bernanke#comments_section
Neither Geithner, nor the author of the piece commenting on the exchange, seemed to understand the point Michele was not quite getting at. For Geithner, a non-lawyer, that’s excusable, but for Bachmann who learned the answers to the questions she asked pretty much in the first week of law school, it was inexcusable. The correct answers to the questions Bachmann was asking are in the second comment to the piece.
March 28th, 2009 at 8:50 AM
Internet sales tax would just turn law abiding tax paying citizens into criminals. This is why…
There are 50 states which all have their own sales tax but there are also over 3,000 counties and countless cities all of which have their own tax because of stadium taxes add on taxes and whatnot. Some states charge sales tax on food and clothing some don’t. And so on ……
there is no way the avrage small interntshop with 5 or so emplloyes could ever keep that mess strait or charge the correct amount. That means we have the choice of closeing down or commiting tax fruad and becoming criminals .
This would be an immense obstacle to starting a Internet business , so much that only a small fraction could ever do it. This also means the jobs this creates are gone as well.
in addition there are a handful of states that don’t charge sales tax so we would all move to states like oregon and Montana in hoards …
March 28th, 2009 at 9:14 AM
just to be clear , I am not completely against charging and collecting sales tax but if you are going to do it it needs to be done in a way that you can expect a reasonable person to be able to do it without becoming a criminal. This means a well thought out plan amongst all the states and not some knee jerk reaction to budget problems that doesn’t address how people are actually supposed to collect and pay these taxes.
btw in state law changes like this may not net the state any more money since many companies will move to a neighboring state that doesn’t have all this hassle and doesn’t put them at a huge competitive disadvantage to the rest of the nation. This means loss of the in state sales tax we pay, corporate tax as well as income tax for owners and employees not to mention job losses for Minnesotans and what that costs the state in unemployment and other benefits. Really now is not the time to be stifling job retention and creation