With lawmakers all across the U.S. looking for ways to close budget caps and find innovative ways to raise money, some are surfing the internet as a way to tap into resources previously considered to be off limits.
Online shopping has been basically tax free, unless you live in the state where you are purchasing the item and then you're responsible for that state's sales tax. But on the whole, tax-free shopping is enjoyed all across America and some legislators think it's time their respective states should start collecting those taxes as a form of revenue.
It all goes back to a 1992 U.S. Supreme Court ruling that prohibits a state from forcing businesses to collect sales taxes unless the business has a physical presence, such as a store, in that state.
Amazon is the largest online retailer which doesn't have to collect state taxes and they are resisting, since it's one of the biggest draws with consumers.
According to one report in the Detroit News, legislators in Illinois just passed a law requiring Internet companies with affiliates in that state to collect taxes on sales to Illinois customers. In Vermont and Arkansas, similar bills scored initial legislative victories. New York, North Carolina and Rhode Island adopted similar laws.
And now, billions of dollars are at stake.
So how much are we talking about here? A 2009 study estimated online sales taxes could total $10.14 billion this year on trillions of dollars in sales.
And now, Texas lawmakers are also considering such legislation. Rep. Otto, John from District 18 is sponsoring HB 2403, that looks at collecting sales taxes from online shopping in Texas.
We asked local Representative Four Price for his thoughts on taxing internet sales in Texas. Here are his reponses.
"I favor fair competition and a free marketplace. I don't support an increased tax. I do, however, want fair and equal treatment. By clarifying what a business nexus is to the state for sales tax purposes, Rep. Otto's bill attempts to level the playing field and supply some predictability. That is useful for all concerned. As business and technology advances, we need clarity so laws keep pace with the times. I recognize that a delicate balance exists between keeping business in Texas and fairly levying a sales tax. Consequently, I will continue to evaluate Representative Otto's bill should it come to the House floor for debate."
Online retailers such as Amazon.com and Overstock.com Inc. disagree with any actions to colelct state slaes taxes across borders, and they're fighting back. After Illinois passed its law, Amazon and Overstock said they would dump their affiliates in that state Amazon on April 15, and Overstock on May 1.
