Greve in Forbes: Internet Sales Tax Arguments Reappear
As the Senate debates the Marketplace Fairness Act that would permit states to collect sales and use tax from remote sellers, Professor Michael Greve offers some observations and suggestions in a Forbes op-ed.
Greve examines such popular concepts as tax "neutrality" and the "origin principle," noting that "Our existing Internet sales tax regime honors neither tax neutrality nor the origin principle" and fails to please any of the involved parties.
In a twist on suggestions by pro-tax states that sellers could use sophisticated software to calculate, collect and remit local taxes, Greve suggests the same could be done by consumers.
"I don't mean to give state governments any ideas, but if we need snazzy computer programs anyhow, why not deploy technology to collect the tax from the people who actually owe it—the local citizens? Put the software online, and make taxpayers report and remit the use tax for all interstate purchases of, say, more than $100 (unless the seller already has collected the tax). The chore is inconvenient, but that is true of all tax reporting. And what price is too high for marketplace fairness?
The Internet Sales Tax Reveals Its Foolish Head Yet Again, Forbes, April 25, 2013. By Michael Greve.
"Bricks-and-mortar operations obviously like the idea, as do most state governments. Some Internet sellers are prepared to go along, provided state and local governments simplify and facilitate compliance with their nightmarishly complex tax regimes. There are nearly 10,000 U.S. taxing jurisdictions, all with their own tax rates, tax bases, tax holidays, etc. Other Internet sellers, such as eBay, oppose the Senate's proposal, as do the states that have no sales tax.
"The debate long predates the Internet—we had the same debate over catalogue sales. Good, bad and idiotic arguments on both sides have been rehearsed time and again. But the Senate's impending consideration of the Marketplace Fairness Act provides occasions for a few reminders."