Some Online Retailers Are Dropping Affliate Programs

Well, generally a state taxation authority’s, errrr, authority ends at the borders of their state.

Indiana’s tax return documents (IT-40 and IT-40EZ) both have a section where you are supposed to tell them if you made any purchases online (that they can’t prove you made) so you can conveniently figure in how much tax you owe them that they didn’t know you owed them.

Great logic huh?

But wait, it gets better!

A company that does business in a state with sales tax obviously will have to report the sales to residents of the state the company is registered in, so by charging the sales tax, the state effectively makes it cheaper to do business with an out-of-state internet business and just not declare it on your tax returns, thereby sending millions of dollars out of that state because the state determined that it was owed a few thousand dollars.

Government……..

Can we just call this “Scorched Earth State Tax Policy”? heh

It is going to be a mess.

The states with sales tax are chasing businesses and economic flow out into states without sales tax (or at least ones that don’t bother to harass online businesses), in effect they are chasing away millions of dollars of economic activity (which would undoubtedly be spent on some things within the state that *are* taxable) in order to try and figure out how to collect on a few tens of thousands of dollars.

It would be like tuning into Who Wants To Be A Millionaire and finding the guy that refuses the million dollar grand prize because he’s still trying to figure out how to win the $10,000.

The state governments are insane, they are like a bad joke, the are a comedy of dysfunction.

I doubt it will *EVER* be a mess because they’re all too greedy and incompetent to get each other to enforce each others tax laws, and even if they did, they’d *both* want a cut and it would drive the price of the merchandise up to where it’s cheaper to go to a store.

One of two things will happen, either the taxes will go on being unenforceable, or online shopping will be destroyed in total due to state greed.

With the Associated Press demanding royalties to quote passages from news articles. the various state departments of revenue trying to figure out how to impose sales taxes, and Rupert Murdoch insisting that there will be enough idiots out there to PAY for Fox News Online, it’s a wonder that the internet has managed to go on this long.

This is really hard to see happen. Just another reason to make sure you diversify your income. I would feel crushed if I lived in one of those States but I guess you have to go on and prepare yourself for the worst. Very scary.

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For some of us who live in the middle of nowhere…having the online option is a godsend. Looking at it like this…I spend at least $10-12 on fuel in my personal vehicle to get to the nearest store 100 miles away which MAY HAVE the item I want/need. Add on the 7-12% sales tax for the item in question. Let’s do the math on a $400 item like a PC or Ipod or whatever you want:
Buying in person 100 miles away – $12-fuel + $32-8% sales tax + $400-cost of item = $444 total cost.
Buying online – $400-cost of item = $400 total cost.

Since many local merchants refuse to carry products you may need or want…where does the local sales tax come from when you are forced to go to another state/community and pay their sales tax or not pay it at all by ordering online? Why should I reward the state/local government when I can’t get what I want/need locally? Personally…I never buy big ticket items locally or in-state…unless the shipping is as much as the sales tax. If businesses/wealthy individuals can have their tax havens…the poor can as well whenever possible.

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