Taxing and E-Commerce Essay

2104 Words 9 Pages
Taxing and E-Commerce

With the advent of the Internet, e-commerce exploded, and in 2003, the estimated value of online sales was 95.7 billion dollars (epaynews). It also is estimated that 30% of online users buy online (epaynews). As e-commerce and the revenues from e-commerce increase, so do the questions and problems concerning taxes. Because of the global nature of the World Wide Web, and more than 30,000 tax jurisdictions in the United States (US), (Internet Taxation) it is easy to see the complications that exist in the taxation of e-commerce. Who do you tax? How is it collected? Can taxes be collected from a sale that was made in another state, and what is considered a substantial “nexus” in the buyers state. Because 75% of the
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Some of the issues with this type of tax are whether it should be per use, per month or per year. Another issue involved with this tax is how it would be implemented and whether there would be extra fees related to the type of connection. For example, would the fee be changed based on a DSL vs. a regular modem connection? (Internet Taxation). The second type of tax involves intangible goods or downloads such as: emails, software, music etcetera. Obviously, this tax would involve all those that access this type of material. The administration of such a tax again poses a problem, for example, how should international emails be handled or an international user who download software from an American company web site. The final type of tax that could be levied is a sales tax. Although it would only affect those who purchase items on line, it would have potential to be an enormous source of revenue. Currently, the sales tax “is the largest revenue source for federal, state and local governments.” (Internet Taxation) In 2003, online retail was estimated at 68.4 (epaynews) billion dollars, all of which would be taxable and would increase the federal state and local tax revenues. Again, administration and division of revenue cause a problem, but there is also the problem of classification of the product. This is a problem because it is only subject to sales tax if it is classified as a good. As seen, there are many different types of Internet taxation to be

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