Capitalism online is a very broad subject and I will concentrate on the plans to capture sales tax from businesses who sell online.
If, in a perfect world, internet sales were to be collected, the National Conference of State Legislatures estimates a possible cash flow of $23 billion a year. Cash-strapped states across the country are looking for ways to tax online sales. The National Conference of State Legislatures estimates all states that levy sales taxes are losing $23 billion a year on Internet sales.
The latest(1)to announce a run toward taxing online sales is Indiana State Senator Luke Kenley, R-Noblesville, who said this week he is attempting to convince his fellow state lawmakers to apply the state sales tax to online retailers. While ogling a possible $400 million annual income, Kenley speaks of leveling the playing field for the brick and mortar business of the state saddled with a 7 percent sales tax.
Business passes the tax along to the consumer. This one fact makes online retailers very desirable, especially in today’s economy. The tax, 7 cents on the dollar, does not sound like much but when the price goes to $1000 dollars, the tax skyrockets to $70.
Kenley is quick to state that on a state level, it will probably never happen and that is why he is pushing his colleagues to get the national leadership from Indiana to introduce legislation requiring.
Indiana is not alone on this issue. An October 21, 2011, Associated Press article by Gary Fineout, posted on the Bloomberg Businessweek website, indicates that taxing online sales is one the legislative priorities the Florida Chamber of Commerce. The Chamber announced the plan to introduce legislation through the Florida House on October 20, 1011. When asked about the legislation, State Senate President Mike Haritopoulos said he would not support taxing online retailers unless there is an equal reduction in other taxes.
"I think we have made a pretty firm statement that we will not be increasing taxes," said the Merritt Island Republican. Even if the legislation were to pass, Gov. Rick Scott would not approve it.
To add further complication, by 2010, six states have passed legislation attempting to broaden the definition of physical presence. Nine more states are currently attempting the same, with California among the states recently passing such legislation. However, implementation is delayed in order to give more time for traditional and online retailers to lobby for a national standard. When adding to this the 1992 decision of the U.S. Supreme Court which ruled a physical presence must be established be fore a company can be made to collect sales tax collecting online sales tax is yet far in the future.
According to a census Estimated Quarterly U.S. Retail Sales2: Total and E-commerce report, the adjusted 2nd quarter 2011 figures show 2nd quarter sales(in millions of dollars) of 1,041,726 total with e-commerce comprising 4.6 percent of total or 47,515. This is a 3 percent increase over the prior quarter and 17.6 percent over the same period last year.
Bibliography
1. http://www.businessweek.com/ap/financialnews/D9QFKNR80.htm
2. http://www.census.gov/retail/mrts/www/data/excel/11q2table1.xls
