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10 Reasons Internet Sales Should Not Be Taxed
There is currently a push by numerous states – 44 at last count – to require internet businesses to collect sales tax on purchases made on their websites. This, despite the fact that they do not have a physical presence within most of the states for whom they would be acting as tax collectors. This is a bad idea, and I will explain why. The following are 10 reasons why internet sales should not be taxed:
- The argument in favor of taxing internet sales is based in part on the notion that internet businesses enjoy a competitive advantage over brick-and-mortar companies that are required to collect sales tax. The case was the same in 1992 when the U.S. Supreme Court made their decision in Quill v. North Dakota, which still stands today.
- We have more than enough taxation as it is. Why would we want to effectively put the brakes on a segment of our economy that is thriving, rather than allow it to continue to grow?
- It makes no sense that a company with no physical presence in a state should be required to collect taxes for that state, especially since that business enjoys none of a taxpayer’s benefits.
- The fact is that consumers are presently obliged to pay their own taxes on internet purchases. Just because most fail to do so shouldn’t mean that the responsibility ought to be passed onto a business that isn’t even in that state.
- If the argument goes that Online Company A is getting an unfair advantage over Local Company B by virtue of not having to charge tax on their goods or services, then to require them to do so for the purpose of creating a more competitive market would be tantamount to placing a tariff on them, not a sales tax.
- The precedence of instituting this taxation will open up a cans of worms, in the form of states mandating taxation of all sorts of companies that do business within their states without having an actual physical presence within their respective states.
- Consumers are already paying a premium on internet purchases via shipping costs. Having to pay sales tax on top of that could put the internet businesses at an unfair disadvantage.
- Internet businesses, as a shopping alternative for consumers to brick-and-mortar firms, act as a hedge against excessive taxation.
- Requiring taxation on internet purchases would in effect constitute an increase in constituents’ taxes without the benefit of a vote.
- The loss of tax savings to the online consumer would be a detriment to this country’s overall economy and have the opposite effect of what this legislation hopes to achieve
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