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Internet State Collected Sales Tax

Updated on March 30, 2018

Internet and You, but where is the protection of the government and from the government?

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Taxing Internet Sales

This article is focused on what do the consumers using the Internet to buy their products get from just being in a state. That is someone living in say California buys a product on the Internet and they have to pay the California sales tax.

The reason that California can tax products sold on the Internet is because they write laws that say they can. There are some rules about the Internet companies having some nexus to California as a means of saying California rules.

But in 2012 states wrote what is ubiquitously know as the Amazon law. That forces Amazon to pay states their sales tax even when there isn't any nexus to the state.


Nexus Smexus or Amazon

The point of this article is not to understand the legal machinations made by the states to force Internet companies to collect their sales tax for their state.

The point here is what do the Internet consumers get back from the states. After all the Internet companies are Only Collecting the sales tax from the consumer. They themselves are not taking any money out of their pocket to pay the state imposed taxes on Internet sales.


What value is added for the consumer?

What is the quid pro quo of this state imposed sales tax on consumers that buy their products on the Internet?

The tax is focused simply based on the location that the Internet purchased product was delivered. What has the state down to protect that Internet customer while they were online making their purchases?

In a brick and mortar based business say one in California there is a physical location that also pays different kinds of taxes. Business based taxes, property taxes, employee taxes, corporate taxes etc.

In that case, California and its subdivisions have to protect these businesses when they are robber, defrauded, burnt down, or any other crime or act of God. California and its political subdivisions like counties, cities and towns provide these California land based businesses with protection.

They provide police, fire and emergency services to these businesses. If someone writes the business a bad check, then the police will investigate and try and resolve the crime to protect the business.

If someone tries to burn down the business the local fire department will come and put out the fire.

This is the kind of quid pro quo that is missing when we do business on the Internet.


Who protects the Internet User.

The Internet is like the old phone company in that it is under the Commerce Clause as an Interstate function. This gives power to the federal government to make a federal case out of it.

The Commerce Clause is only about two lines in length. And yet during the last one hundred years, it is been interpreted by the SCOTUS to the advantage of the Federal Government. This advantage means that it gives federal jurisdiction to matters that should be local.

In one, simply because there was a phone used in a crime, this gave the feds jurisdiction. In another case, a farmer had set aside ten acres for producing produce for his own consumption, and that of his family.

The SCOTUS held that it was covered under the Commerce Clause. The court said that because the farmer had his own local produced food, that he wouldn't be buying that food on the open market. This would have an Impact on Interstate business.

The purpose of the Commerce Clause intended by the founders of this country was to protect goods going across the country. As the goods, usually on trains went through different states to get to its final destination, each state could theoretically tax the goods to its full value.

But the Commerce Clause was the means to make the states apportion their taxes on the goods. That meant that goods just traveling through the states had to be apportioned. Otherwise, goods going through states from coast to coast will have tacked on enormous taxes on the goods.

That was the original intent and reason of the Commerce Clause.

The Federal Income Tax and the Commerce Clause

The SCOTUS has always decided in favor of the government against all arguments about the constitutionality of the Federal Income Tax. The SCOTUS made these decision not based on the constitution but on the need of the government.

Unfortunately, the founders of this country, and probably why they named our country, The United States of America was based on having a limited federal government.

The Commerce Clause was in effect giving the limited federal government the task of settling the conflicts of the states.

However, in 1913 the SCOTUS said that the Income Tax Amendment was constitutional even though it misused the Commerce Clause and turned a blind judicial eye to the mechanism of apportionment to the states.

This was the start of using the Commerce Clause not as it was intended, but to give the federal government the revenue to transcend the limited power of the federal government into the total power of the federal government we see today.

The Federal Government through the Supremacy Clause beat the residual state powers of the 10th amendment.

Conclusion what do the Internet Consumers get in terms of protection from those states that force them to pay sales tax?

After the buildup of the subject on Internet Companies having to pay state sales tax, the conclusion here needs only ask, What do I get in return for these Internet sales tax?

When someone goes on the Internet today, who is supposed or even required to protect them. We have seen how rampant that hacking on even the biggest corporations, and even the computers of the government occur.

The Internet is a dangerous place to do business. It is a place where you can lose your identity, and that is made easier because we are all tagged with a 9 digit tracking number. This is called your Social Security Number which on the original cards, said NOT TO BE USED FOR IDENTFICATION

Today, it is the defacto Identification used on the same level as your passport.

Why shouldn't both the Federal Government who oversee the Internet, and the States that extract sales tax from Internet sales be protecting those that use the Internet?

The conclusion is simple, who is supposed to protect use when we are using the Internet. Shouldn't that job go to the state and federal government that get revenues from Internet Activities.

Yes , the Internet is as vast and unending as the physical universe, but when the government wants to get revenue from it, then they need to give us the taxpayers something in return.

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    • bradmasterOCcal profile image
      Author

      bradmasterOCcal 3 weeks ago from Orange County California

      Eric

      Thanks for the comment, and TAX on the Internet is not just limited to Nexus, The Amazon law like the Income Tax Amendment removes the impediment of Nexus, while the Income Tax removed apportionment.

      My point is that we need the government to give us value for their taxes, and provide protection on the Internet.

      Just a thought.

    • Ericdierker profile image

      Eric Dierker 3 weeks ago from Spring Valley, CA. U.S.A.

      Interesting. I forget the ridiculous case that said that on the internet there is a nexus in all matters to all states. They used to love, and probably still do, suing folks in Ca. in NY just to make internet focused lawsuits harder on the other party.

      Taxing is just plain strange and even if justified should be in the state where the sale is really made.

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