fbpx

Sell Globally, Tax Locally

Senator James DeMint (R-SC) has a very fine op-ed in today’s Wall Street Journal, opposing pending federal legislation that would permit state and local governments to impose sales tax collection obligations on internet sellers even if those firms have no physical “nexus” (such as a store or warehouse) in the taxing jurisdiction.  The legislation would compel sellers to calculate and remit taxes for customers in thousands of jurisdictions with differing tax rates, bases, holidays, exemptions, etc.  As the Senator rightly notes (and as I’ve argued here), we don’t impose such obligations on local sellers: the transaction at your supermarket or corner store is subject to the seller’s tax regime, not the customers’. As I’ve argued at greater length here, this “origin principle” would also make sense for interstate sales. That is not going to happen: state and local governments loathe origin-based taxation because it entails vehement tax competition. Still, much would be gained if Congress could bring itself to reject proposals that would authorize taxation and regimentation on a wholly extraterritorial basis.

Reader Discussion

Law & Liberty welcomes civil and lively discussion of its articles. Abusive comments will not be tolerated. We reserve the right to delete comments - or ban users - without notification or explanation.

on August 02, 2012 at 11:00:35 am

Query: Aren't most of the tax systems actually grounded on "Use and Consumption" by an acquiring party (purchaser); and the collection at point of sale satisfies the obligation of the acquirer?

If the tax is not collected at point of sale, the acquirer remains liable for tax on the acquisition for use or consumption within the jurisdiction.

It is the evasion of the "Use" tax that the various jurisdictions seek to defeat.

Some states have reporting forms for the direct, voluntary reporting and payment of such taxes.

read full comment
Image of R Richard Schweitzer
R Richard Schweitzer
on October 13, 2012 at 04:02:44 am

I recently bought a trailer from a company in Iowa. I live in Minnesota. When I registered the trailer in Mn. the licensing bureau collected sales tax from me. It seems to me that the state of Mn. is attempting to regulate interstate commerce, which is the sole domain of the US Congress. Any sales tax is a regulation on commerce. Why does Mn. and any other state get away with this? It seems unconstitutional.

read full comment
Image of Patrick McGee
Patrick McGee

Law & Liberty welcomes civil and lively discussion of its articles. Abusive comments will not be tolerated. We reserve the right to delete comments - or ban users - without notification or explanation.