E-Commerce and Sales Tax

Companies need to provide an omnichannel experience to their customers in order to keep them. However, with the huge variety of retailers and brands, it is becoming harder and harder to maintain customer loyalty. Another problem may arise from the fact that currently the U.S. legislators are enforcing laws on making online retailers to collect sales tax. Up until now, the law has been enacted in at least 12 states.

People do not enjoy talking about taxes because they are too political, confusing, and depressing. It is no secret that the American tax code is a mess and something many economists describe as too broken to fix. Despite this, politicians have never stopped from trying to “fix” the code, yet they have had very little success. The U.S. Government’s tax code currently comprises “more than 67,000 pages of complexities” (Boortz, Linder, & Woodall 14). The Americans for Fair Taxation (AFFT) was founded in 1995 with one goal: create the simplest and best tax reform plan that would work in the modern market and economy. The AFFT’s best solution was a bill which they promptly called the FairTax.

Sales tax is a tax imposed by the government at the point of sale on retail goods and services.(Investopedia Contributors) It is collected by the retailer and passed on to the state.(Investopedia Contributors) Every Time you swipe your credit card, according to your state’s law, a percentage of the total amount worth of the goods is paid to the government. Inside the City limits of Tulsa, the sales tax and use tax is 8.517%.(“sales tax in Tulsa”) But when you go to another state and shop, such as california, the standard statewide rate of 7.50%.(“California City $ County Sales $ Use Tax Rates”) But when you shop online, it’s a different case, whether to pay sales tax depends on the retailer’s location. The current default rule throughout the United States is that you must collect sales tax on Internet sales to customers in those states where your business has a “physical presence”. (Steingold)

In states without state income tax, higher sales, property and other assorted taxes can exceed the annual cost of a state income tax. Texas is one of seven states that do not levy an individual income tax. The Tax Foundation, a conservative-leaning research group, ranks Texas ninth-best on its State Business Tax Climate Index, largely because of the state’s lack of an income tax. On three of the foundation’s other major rankings — property taxes, sales taxes and corporate taxes — Texas ranks in the bottom 20 states. Texas does not have a statewide property tax, but local property taxes remain a crucial complaint among businesses and homeowners. (Terrence, 2002) The main benefit is that states with no income tax become a beacon for growth. They 're better at creating jobs and keeping a core of young, educated workers from moving to other states. The issue is undoubtedly controversial. Public opinion usually swings with the size of one 's paycheck and the role people think governments should play in shaping society. Texas has an above-average sales taxes, and Texas also has higher-than-average effective property tax rates. Cutting the income tax will boost take-home pay for everyone. It 'll make the state more attractive than its neighbors, creating jobs, drawing new businesses, and sparking an influx of talented workers.

The lack of representation has resulted in the “cut off from the seats of power by geography, alienated by the state’s left-leaning politics and tendency toward regulation, enduring stubbornly high unemployment, facing the decimation of traditional industries such as logging, and harboring few prospects for economic growth”, says Goodyear. All these problems could be resolved by one simple, but very complex solution; separating California into two different states: The State of California and The State of Jefferson. Separating California into two or more states would be the most effective option in lowering taxes

Many states view collecting use tax on smaller purchases as burdensome, therefore states have customarily attempted to collect a use tax only on big-ticket items that require licenses—such as cars and boats. Many states over the last several years are increasing enforcement efforts of the use tax laws to get the state population to pay the taxes due in an attempt to combat internet ordering. The realities of limited resources as well as the complexities involved with tracking down minor purchases and demanding that a use tax be paid are limiting the collection efforts.

In this paper I explore the relationship between the tax structures of South Carolina and Texas. Through research into tax rates, tax brackets, and the different types of taxes used to create government revenue in the state, I seek to explore the benefits and detriments that the differing tax structures bring to taxpaying citizens in the state and to the business environment in each of the states. I researched taxes placed on individuals, in state businesses, and multistate businesses. Based on the research I concluded that Texas is the better state for business activity with a higher economic growth projections and a top ten rating of Forbes list of top states for business. South Carolina, however, does have benefits for multistate corporations due to a recent change in apportionment formulas and clear Supreme Court Rulings.

For regular taxpayers, personal exemptions and the standard deduction are tax benefits since these are deducted in the calculation of regular tax. However, AMT has become an obligation for some married taxpayers with children, since personal and dependency exemptions are disallowed in the calculation of AMT. Therefore, family size does not make a difference under the obligation of AMT. Additionally, state and local sales taxes, which are benefits for regular taxpayers, are disallowed under AMT rules. Consequently, more taxpayers living in high tax states fall under AMT rules. Under regular tax rules, the deduction of state and local sales tax acts as an incentive for local governments to increase taxes, but the effects of this is counteracted under AMT (Tritz, 2015).

People are becoming aware of the financial discrepancy between upstate New York and New York City. Today, the state cuts taxes across the board and letting the market operate; the state has opted to launch some targeted public and public/private initiatives to reenergize the economy Upstate. New York State will do better by making itself more tax-friendly to businesses and

Recent proposed legislation (H.R. 2887), titled the No Regulation Without Representation Act of 2017, seeks to codify the “physical presence” standard for sales tax nexus. The bill attempts to prevent states from imposing sales tax collection on sellers beyond their respective jurisdictions. The physical presence standard, infamously established by the U.S. Supreme Court case Quill Corp. vs. North Dakota 25 years ago, has not been widely adopted by states; only 10 states maintain this standard . Most states have adopted an “economic presence” standard to better capture the commerce being conducted within their jurisdictions. Twenty-five years ago, when Quill was established, consumer use of the internet was nowhere near the level of

The current tax system in California is not sufficient in its efforts to provide adequate income to California because it does not collect enough taxes to sufficiently fund state programs, while the CTA’s proposed system of tax fairness would generate ample income to fund numerous state programs. The CTA acknowledges that the current system of taxing individuals is not fair by stating that, “the bottom 20% of wage earners in California pay 11% of their income in taxes, while the top 1% of wage earners only pays 7.8%.” (“Tax Fairness”). The tax system does not equally collect taxes from all income levels, which results in deficit income for the state. This deficit income results in the formation of debt because the state does not have enough money to fund public works. The graph above depicts how without making efforts to close corporate loopholes and other tax breaks, California will never be able to generate enough money to eliminate the deficit and adequately fund public works such as education. The CTA believes that the only way to adequately fund the education system and other public works is by withdrawing the tax breaks offered to high-income individuals and large corporations. The owed revenue collected from these sources could significantly increase the funding of LCFF plan and prevent the occurrence any debt. Increased revenue would eliminate any questions regarding from where in the existing state budget the proposed increased funding for education would

Retail sales taxes are one of the best ways to collect tax revenue. If the tax rates are high in one state, then a consumer can shop online to avoid excessive sales taxes in another state. This is why many states are pushing Congress to adopt legislation to make all online retailers pay sales-tax regardless of their state of operation. Sales taxes through internet transactions have become a hot topic in the political arena, and there are plenty of politicians who are in agreement of collecting taxes from the internet including Alabama. Economically there are some states that are losing a great deal of tax revenue because certain businesses that are out-of-state are not required to collect sales-tax. According to William T. Lundeen and Tracy D. Williams (2002), “Congress cannot alter the protections provided by the Due Process Clause” (p. 18). Therefore, the Supreme Court ruled on this issue in 1992, saying that out-of-state tax collectors cannot force retailers to pay taxes.

On the other side of the issue, the liberals or pro side on Internet taxation mainly use logos arguments to get their point across. Many state leaders are frustrated that collection of taxes on mail-order transactions has been banned and do not want to lose another source of revenue such as the Internet. David Coursey, an Internet industry analyst argues that, “If e-commerce is to grow, it needs to pay its own way before we wake up one morning and realize that communities have lost big chunks or their precious local tax dollars” (Internet Taxation par. 33). This could all be a

In addition to economic issues, taxation is also a political issue. Political leaders formulate tax policies to bring reforms in the taxation system in order to promote their agendas. The major tax reforms include: increasing or decreasing the tax rate, imposing new taxes on certain products and changing the definition of taxable income. It is evident from the research studies that no one deliberately wants to pay taxes. U.S’ tax policy reflects expression of influence - i.e., those who have power are successful in paying low taxes and their burden is shifted to people who have no power. Therefore retired individuals, small business owners and farmers find ways efforts to reduce their tax burden. Since its existence, tax policy has been enormously used for promoting political and economic agendas.

c) Tax Rate: Use of a tax rate derived from the summation of state and statutory taxes instead of the firm's marginal tax rate