Solving the Internet Sales Tax Dilemma

UncleBob

UncleBob

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I'm curious - this topic has come up on here a couple of times... many people on here have admitted to cheating on their taxes by failing to pay into their state for taxes owed on internet purchases.

Many states (and several businesses) and working to come up with a way to force internet retailers to collect state sales tax (where applicable, of course).

What's your thoughts?
 
Until you file your tax return you don't pay those online sales taxes at checkout. That's what makes some online retailers superior to others. You don't have to pay that money until later.

I would be in favor of all internet retailers collecting state sales taxes.
 
I have no problem with online retailers being forced to collect state sales taxes based on your state of residence.

Expecting consumers to pay it on their own is unrealistic. I order hundreds of things online every year (I buy pretty much nothing locally but food, toiletries and clothing) and can't be bothered to keep receipts for all that and estimate my sales tax on them.

I order online for convenience of not wasting time going to local stores, dealing with crowds and useless employees etc. Not to save money on sales tax. So I'd order just as much online if I had to pay sales tax as I do now.

None of us like paying more but, but with the huge state budget shortfalls I support raising tax revenue to close the gaps before it does any more damage to the public school systems etc. And this seems one of the easier ways to raise taxes with a smaller amount of uproar than raising the overall sales tax rates or state income tax rates.
 
To me it would make more sense that the taxes go to the state where the company is headquartered.
 
In this case, I think you should be subject to paying the sales tax of where the business is incorporated and not based on your residence. After all, if you are in another state and purchase something, you are subject to the local sales tax and don't get any refund if your state of residence has a lower tax rate. This would also encourage the more fiscally prudent states to keep sales taxes low to attract internet businesses and encourage local job growth.
 
That makes sense on the one hand, but I think it's better to do it by state of residence so that the sales tax revenue gets spread around to every state rather than just those in states that happen to have major online businesses.

Most every state is in a major budget crunch, and there are only so many major online retailers like Amazon out there. So better to do it by state of residence so every state sees an influx of revenue and can work on fixing their budgets, improving failing education systems etc.

States have other ways to try to attract businesses and create jobs.
 
This is in regards to the "news" (probably not news) that big box stores and other retail corporations are pushing for the sales tax issue. Newflash you dumbass corporations: This isn't going to affect shit for you, because of:

[quote name='dmaul1114']
I order online for convenience of not wasting time going to local stores, dealing with crowds and useless employees etc. Not to save money on sales tax. So I'd order just as much online if I had to pay sales tax as I do now.
[/QUOTE]

This. I don't think anyone regularly buys online just to avoid paying sales taxes, except for perhaps on rare expensive purchases like TVs. They do it for the convenience and the often lower prices above and beyond any sales tax "savings." And even on big purchases like TVs and shit the internet is often much cheaper than B&M regardless of any taxes. This isn't going to affect shit for retailers, but they are too stupid to realize this.

Corporations are dumb.
 
@Dead - Many people shop online for that reason. If I can save $8 for every $100 I spend, regardless of large purchases or not, it makes a big difference. This is the same reason why I shop for clothing in CT instead of NY. I am close enough to the border that saving on tax makes a huge difference. I don't care if it's tax fraud or not, or what the laws change to, I pay enough in ridiculous taxes and fees that saving a little on my purchases really allows me to have greater purchasing power. TVs and other large ticket items are AWESOME without sales tax, but when you think about how much you spend through the year, even savings that 8 cents per dollar adds up.
 
I've actually bought things on amazon that were slightly more expensive than newegg because the lack of tax actually made it cheaper overall (newegg has a warehouse here in TN). Although the free shipping also contributed to it, as newegg shipping lately has been much higher than in the past.
 
Yeah, I think people like Retom7 and Clak are common. Hard to say how common. Definitely common here since this is a forum of Cheapasses! :D

I've actually sometimes paid a little more for things on Amazon than I would have locally as I just hate going to the store anymore than I have to. I wouldn't go any extreme amount, but I'm fine paying a little more for convenience of home delivery.

As anyone who regularly works more than 40 hours a week (or has kids while working full time etc.) can tell you, some of us reach a point in our lives where time and convenience is more important than saving a few bucks.
 
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[quote name='dopa345'] After all, if you are in another state and purchase something, you are subject to the local sales tax and don't get any refund if your state of residence has a lower tax rate.[/QUOTE]

I don't know if this is nationwide, but in Utah you actually can get a tax credit for sales tax paid to another state.
 
[quote name='Dead of Knight']This is in regards to the "news" (probably not news) that big box stores and other retail corporations are pushing for the sales tax issue. Newflash you dumbass corporations: This isn't going to affect shit for you, because of:



This. I don't think anyone regularly buys online just to avoid paying sales taxes, except for perhaps on rare expensive purchases like TVs. They do it for the convenience and the often lower prices above and beyond any sales tax "savings." And even on big purchases like TVs and shit the internet is often much cheaper than B&M regardless of any taxes. This isn't going to affect shit for retailers, but they are too stupid to realize this.

Corporations are dumb.[/QUOTE]

I also regularly buy online to avoid taxes. I have every store I need within a half mile walking distance but will still order online for no taxes.
 
I don't pay the sales tax on online purchases and like doing it for a few reasons, one being major.

The major reason is food is taxed here and I DON'T mean restaurant food. Why the fuck should I bother paying sales tax on anything online if I can get away with it when they're charging me tax on a bag of rice or a can of food or a lemon. That smacks of bullshit. Just recently they passed a sales tax hike of 1% too, including food.
My feeling is they can go fuck themselves unless they get rid of that.

Also past that it depends. If they don't have free shipping making people pay tax is unfairly penalizing the online, what with shipping costs AND tax. It slants business over to B&M quite CLEARLY.
 
[quote name='dmaul1114']I have no problem with online retailers being forced to collect state sales taxes based on your state of residence.

Expecting consumers to pay it on their own is unrealistic. I order hundreds of things online every year (I buy pretty much nothing locally but food, toiletries and clothing) and can't be bothered to keep receipts for all that and estimate my sales tax on them.

[/QUOTE]

So, you can't be bothered to track and pay your taxes, but the internet retailers that you purchase from should do it?

I think that a state should only have the authority to regulate companies that have a physical presence in that state. A state's taxing authority should end at its borders. So, IMO, nothing needs to be solved.

As far as state budgets are concerned, I think that there is still lots of room to cut expenses. If more revenue is still needed, states should raise taxes on the people and companies that they actually represent, not try to regulate companies in other states. If people aren't reporting their out-of-state purchases as required by state law, increase the penalties. If the people don't like that, they can vote for someone else.
 
[quote name='chiwii']So, you can't be bothered to track and pay your taxes, but the internet retailers that you purchase from should do it?
[/QUOTE]

Sure. They're getting my hard earned money so if there are going to be taxes required on online purchases that's a service they should provide for me just like brick and mortar stores do.

Not like it's a big deal to build in taxes based on states in the system and to transfer the tax dollars to the states. They already do it for states where they have physical presences, so it's a simple software update to do it for every state if that's the way the law goes eventually.
 
I know there are some states with no state income tax but I don't believe that's the case with sales tax.

edit: Dr Mario Kart, will you ever be getting a 360 or PS3? :whistle2:(
 
[quote name='Sarang01']Please tell me you're not for this and like me dmaul, in that you're actually paying tax on food in the grocery store.[/QUOTE]

No tax on groceries here. Wouldn't change my mind if I did.

Working in higher education I see the impact the state budget crunch has on students with tuition increases, cuts to the state scholarship program here, larger classes as part time instructors have been let go etc.

And it's even worse for public K-12 schools who don't have tuition dollars, donations etc. to help weather the storm.

But I also make ok money and don't have to worry about paying bills though as I also live under my means, so paying sales tax on online purchases would be no real financial burden to me. Anything I order online is a non-essential luxury purchase for the most part anyway, so easy to cut back if I some day needed to.

[quote name='Dr Mario Kart']Are there states with no state sales tax? Seems like something would have to be done federally if there are.[/QUOTE]

I wouldn't think so. It would just mean online purchases get charged the sales tax rate for the state the person ordering lives in. If there's not state sale's tax in that state, then they don't pay any taxes.

I don't see why online purchases should be any different than buying locally when it comes to sales tax personally, and have no issues paying the same tax on my online orders as I do local purchases. *shrugs*

[quote name='Sarang01']I know there are some states with no state income tax but I don't believe that's the case with sales tax.
[/QUOTE]

Delaware and Montana have no sales tax of any kind. New Hampshire and Oregon only have sales tax on prepared food.

Full break down here--see the color coded chart at the bottom.

http://en.wikipedia.org/wiki/Sales_taxes_in_the_United_States#By_jurisdiction
 
[quote name='Clak']I've actually bought things on amazon that were slightly more expensive than newegg because the lack of tax actually made it cheaper overall (newegg has a warehouse here in TN). Although the free shipping also contributed to it, as newegg shipping lately has been much higher than in the past.[/QUOTE]

Clak... I guess you've heard that amazon is building a distribution center in Tn... actually I've heard 2 (not sure why)... so either way we're going to get hit with sales tax looks like.
 
[quote name='dmaul1114']Sure. They're getting my hard earned money so if there are going to be taxes required on online purchases that's a service they should provide for me just like brick and mortar stores do.[/QUOTE]

I don't think your local stores are collecting sales tax as a service for you - they're doing it because they're required to. If brick and mortar stores stopped offering that "service" and let people figure out their own taxes, I wonder if they would lose a lot of customers.

[quote name='dmaul1114']Not like it's a big deal to build in taxes based on states in the system and to transfer the tax dollars to the states. They already do it for states where they have physical presences, so it's a simple software update to do it for every state if that's the way the law goes eventually.[/QUOTE]

You must not be a business owner. When it comes to the government, nothing is easy. Beyond all the extra work of dealing with registering and paying taxes to multiple states, rather than just the ones where you actually have a physical presence, companies will also have the possibility of being audited, fined, and sued by the taxing authorities in any state that decides to regulate them.

Companies like Amazon will be able to handle this, most likely without a huge effect on their bottom line. Little companies won't be able to absorb all these extra costs so easily.


[quote name='dmaul1114']
I don't see why online purchases should be any different than buying locally when it comes to sales tax personally, and have no issues paying the same tax on my online orders as I do local purchases. *shrugs*
[/QUOTE]

You seem to have a problem with it, since you don't actually do it. At least with Amazon, it's not hard to pull up all of your purchases over the last year, multiply the total by your sales tax rate, and pay it with your income taxes.

I don't see why online purchases should be any different than buying out-of-state, because that's what you're doing. If I go to a different state to buy an item, they don't ask me where I live and tax accordingly.

In some areas, citizens get to pay three sales taxes on local purchases - state, county, and city. Should internet retailers be responsible for collecting all of those taxes and remitting them to the proper taxing authorities?
 
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[quote name='Dr Mario Kart']Are there states with no state sales tax? Seems like something would have to be done federally if there are.[/QUOTE]

New Hampshire has no sales tax which is why in Massachusetts they require MA residents to pay MA sales tax on goods bought in NH. They even pushed to require NH retailers to report purchases made by MA residents.... yeah good luck with that.
 
We're taxed on everything but medicine here, always thought it was bullshit that people are taxed on something so essential like food.

So amazon is building a warehouse here, darn.
 
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[quote name='chiwii']I don't think your local stores are collecting sales tax as a service for you - they're doing it because they're required to. If brick and mortar stores stopped offering that "service" and let people figure out their own taxes, I wonder if they would lose a lot of customers.

You must not be a business owner. When it comes to the government, nothing is easy. Beyond all the extra work of dealing with registering and paying taxes to multiple states, rather than just the ones where you actually have a physical presence, companies will also have the possibility of being audited, fined, and sued by the taxing authorities in any state that decides to regulate them.

Companies like Amazon will be able to handle this, most likely without a huge effect on their bottom line. Little companies won't be able to absorb all these extra costs so easily.

You seem to have a problem with it, since you don't actually do it. At least with Amazon, it's not hard to pull up all of your purchases over the last year, multiply the total by your sales tax rate, and pay it with your income taxes.

I don't see why online purchases should be any different than buying out-of-state, because that's what you're doing. If I go to a different state to buy an item, they don't ask me where I live and tax accordingly.

In some areas, citizens get to buy three sales taxes on local purchases - state, county, and city. Should internet retailers be responsible for collecting all of those taxes and remitting them to the proper taxing authorities?[/QUOTE]


I'm not a business owner so I don't give a shit as it's not my problem. Stores are there to serve me. If they don't meet my level of service, I take my business elsewhere even if it means paying more (which is why I don't shop at Wal-mart for one example).

I get the problem with small businesses, but they have to find ways to adapt and get me to spend my money there instead of the big stores like Amazon as I'm going where I get the best ratio of low prices and quality service. I'm not a particularly altruistic person, I'm not going to spend more money, or go through more hassle, just to help the small business owners. They have to give me a reason to give them my patronage over the bigger stores.

As for sales tax, taxes have to be as convenient as possible or I'm not fucking with them. The state revenue department can come after me if they want. My time's too valuable to bother with that kind of shit with online purchases.

Taxes should all be automated like income tax or sales tax at local places now, as well as online sales tax where applicable currently. The only taxes that should be manual are for people who are self employed who then obviously have to make income tax payments themselves.

Otherwise we shouldn't have to go through hassles to have the government take our money. Automate it or at least send me a yearly bill like for property taxes. You shouldn't have to do any work to hand over your money to stores or the government. We already work hard enough for our money in the first place! Parting with it should be easy!
 
I remember a few years back people were up in arms when the state proposed a state income tax. It was defeated, and the sales tax was increased instead. People still felt like they'd won something somehow.
 
Well the sales tax was obviously increased when people were out partying. It's what usually happens.

I think it's inevitable that all states will charge a tax on internet sales and there's nothing we can do to stop it.
 
Here's a scenario. Say that a state gives a company a tax break to build there (as often happens), shouldn't that state get the sales tax since they're the ones who took a hit to get the company there to begin with?
 
[quote name='Clak']Here's a scenario. Say that a state gives a company a tax break to build there (as often happens), shouldn't that state get the sales tax since they're the ones who took a hit to get the company there to begin with?[/QUOTE]


actually with amazon in Tennessee the state was looking at giving them exempt status on state sales tax due to the jobs the would create. of course the retailers are up in arms...

http://www.metropulse.com/news/2011/mar/16/walmart-adds-clout-amazon-sales-tax-battle/
 
[quote name='Clak']Here's a scenario. Say that a state gives a company a tax break to build there (as often happens), shouldn't that state get the sales tax since they're the ones who took a hit to get the company there to begin with?[/QUOTE]

Not really.

It's just two types of free markets really.

1. States compete in various ways to get business to locate in their state. Some offer tax breaks.

2. States have to set tax laws (including sales tax) in a way to make it attractive to residents and not drive consumers to other places, while still making enough revenue to function at a high level.

I don't have much of a dog in the fight, just playing devil's advocate really.

I just think it's not fair for sales tax to only go where online stores have a physical presence as most tax revenue will only come from the really big online stores and there's only so many states that can have those businesses have a presence in their state.

So you will have many states getting a smaller ratio of online sales tax per capita than other states that happened to land a physical presence from a few online stores. I mean regardless of tax breaks retailers like Amazon aren't going to build warehouses etc. in impractical locations like North Dakota or whatever that are too far from major population centers and so on.

So my preference would be to just charge the state's sales tax rate (and state only, not county, city sales taxes for places that have them as those are truly meant for local businesses) or to not charge taxes for online purchases period. Otherwise it's something that just benefits some states way more than others.
 
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[quote name='dmaul1114']None of us like paying more but, but with the huge state budget shortfalls I support raising tax revenue to close the gaps before it does any more damage to the public school systems etc. And this seems one of the easier ways to raise taxes with a smaller amount of uproar than raising the overall sales tax rates or state income tax rates.[/QUOTE]
Then the states and municipalities need to stop letting their employees and their unions run roughshod over them. Fire the lazy assholes coasting along till retirement while on the payroll and stop giving the "Cadillac" plan health insurance to employees without making them pay a FAIR share like people in the private sector have to at their employers.

If they can do those two things, then I imagine we'd see some of these shortfalls lessen quite considerably.

They need to do this in the state of PA for sure. It cannot take 3-4x longer to replace bridges and pave roads here than in the state of NY, where they replaced not one but TWO bridges in the same span of time it took the lazy pricks here to replace ONE.

As for the tax thing, I'm completely against them trying to suck any more money out of purchases made anywhere by me. It's bad enough the greedy bastards made it so stores such as Gamestop and FYE had to start charging sales tax on purchases made wholly with store credit.

And let's not forget this whole thing right here: http://online.wsj.com/article/SB10001424052748704396504576204791377862836.html
 
Amazon being a bully?! HAH! What a load of bullshit.

It sounds to me like B&M is trying to slant the advantage back to them in pricing as a lot of time I bet if you end up paying shipping AND tax on an online item that B&M is cheaper.
I have the feeling Amazon will be left alone here because I have to pay tax under their auspice, just not through their affiliates. But dmaul, I have to pay sales tax AND city tax.
 
[quote name='KingBroly']Well the sales tax was obviously increased when people were out partying. It's what usually happens.

I think it's inevitable that all states will charge a tax on internet sales and there's nothing we can do to stop it.[/QUOTE]

Perhaps but I could see a big debate over whether it should be taxed based on where the company is located was shipped rather than at the state where it's delivered.
 
Aside from one snippy, useless, typical comment there at the beginning, good conversation so far. Some interesting stuff being tossed around.

A few replies...

[quote name='DarkRider23']Abolish state sales tax all together. Revise the tax laws and implement a Federal VAT. Simple.[/QUOTE]

...Wow... Does anyone support this?

[quote name='dopa345']Perhaps but I could see a big debate over whether it should be taxed based on where the company is located was shipped rather than at the state where it's delivered.[/QUOTE]

The only issue I could see with taxing based on the businesses location would be businesses flocking into states without a sales tax. Good for those states, but doesn't solve the sales tax issue in other states...

[quote name='Sarang01']If they don't have free shipping making people pay tax is unfairly penalizing the online, what with shipping costs AND tax. It slants business over to B&M quite CLEARLY.[/QUOTE]
[quote name='Sarang01']It sounds to me like B&M is trying to slant the advantage back to them in pricing as a lot of time I bet if you end up paying shipping AND tax on an online item that B&M is cheaper.[/QUOTE]

You realize that B&M stores have to pay shipping costs as well, right? The Dr Thunder doesn't magically appear on the shelf. The two big differences is A) the shipping costs are built into the price of the product, instead of billed separately and B) the B&M stores, as far as shipping goes, just have a better business model. Shipping 50 cases of Dr Thunder to your Walmart and having 50 customers come in and pick it up is going to be cheaper (for the company) than shipping 50 cases out to 50 different customers.

Now, between shipping costs and taxes, you've got one major difference. Shipping costs are determined by the business model. Amazon can open a bunch of B&M stores while Walmart could go on-line only.... those stores get to determine their individual shipping models. Taxes, though, are only determined by the government. Therefore, asking the government to treat stores equally is hardly "slanting the advantage". It's asking for businesses to be treated equally.

[quote name='Afflicted']actually with amazon in Tennessee the state was looking at giving them exempt status on state sales tax due to the jobs the would create. of course the retailers are up in arms...[/QUOTE]

Of course they are. How many people in Tennessee does an Amazon warehouse or two employ? How many people in Tennessee does Walmart, Target, Best Buy, etc... employ? Does it make any logical sense to tell one business "Hey, you're bringing some jobs... we're going to give you some tax breaks." when several other businesses bring more jobs and don't get those tax breaks?

[quote name='Clak']We're taxed on everything but medicine here, always thought it was bullshit that people are taxed on something so essential like food.[/QUOTE]

You get into a nasty situation here. Let's say I'm going to buy food for a wedding dinner of 100 people that averages out at about $1,000/plate. Hardly essential, right?

This is something I really like about the FairTax. Everyone's taxed on food (as well as all other new goods and services), but receives a monthly "prebate" check for the amount of taxes that you'd have to pay on the standard income up to the poverty level. This means, if you live right at the poverty level, you pay exactly $0 in taxes at the end of the month - but if someone buys $1,000/plate dinners, they get taxed.

[quote name='chiwii']I think that a state should only have the authority to regulate companies that have a physical presence in that state. A state's taxing authority should end at its borders. So, IMO, nothing needs to be solved.[/QUOTE]

While I agree that there's likely a lot of trimming in most state budgets, the issue comes up in that Amazon is poised to become the largest retailer in the US. If internet sales continue growing (and I see no reason for them not to), it can really put a crimp on some state budgets.
 
Wouldn't it be easier to just make everyone under a certain income level exempt from sales tax rather than sending them a check each month?

And as far as Amazon goes, they wouldn't be getting a tax break really, people buying from them would be.
 
[quote name='Clak']Wouldn't it be easier to just make everyone under a certain income level exempt from sales tax rather than sending them a check each month?

And as far as Amazon goes, they wouldn't be getting a tax break really, people buying from them would be.[/QUOTE]

How would the retailers know you're at the exemption level? There's simply no way for them to keep track of that and if there was by using a "tax exemption card," then abuse would run wild.
 
[quote name='Clak']Wouldn't it be easier to just make everyone under a certain income level exempt from sales tax rather than sending them a check each month?

And as far as Amazon goes, they wouldn't be getting a tax break really, people buying from them would be.[/QUOTE]

What DR said... how would you keep track of that?

And what about the CEO who's income is $1/year (not including all of those nice benefits, of course).
 
[quote name='UncleBob']Of course they are. How many people in Tennessee does an Amazon warehouse or two employ? How many people in Tennessee does Walmart, Target, Best Buy, etc... employ? Does it make any logical sense to tell one business "Hey, you're bringing some jobs... we're going to give you some tax breaks." when several other businesses bring more jobs and don't get those tax breaks?[/QUOTE]


Of course Walmart and Target could have went the same way if they had thought out their business model... Neither one of these stores will pricematch their own online prices saying that they are seperate entities. So if they had set them up correctly they would only have to charge tax to people living in states with their online distribution centers. Either that or they're lying about the reason they dont pricematch.

Best Buy I can see having a problem with it since they use their online part as an extension of their brick and morter stores.

Of course the problem with the argument is that whereas Walmart/etc have to employ people in the state they want to do business in... Amazon doesn't have to build a distribution center in any state they don't want to. In fact they've made comments about moving them from states that have gone after state sales tax from them.

On another part of the discussion... Not sure about other states but Tennessee actually charges sales tax on the shipping cost of items as well.
 
[quote name='DarkRider23']How would the retailers know you're at the exemption level? There's simply no way for them to keep track of that and if there was by using a "tax exemption card," then abuse would run wild.[/QUOTE]


[quote name='UncleBob']What DR said... how would you keep track of that?

And what about the CEO who's income is $1/year (not including all of those nice benefits, of course).[/QUOTE]
You both realize there are already people with tax exempt status, just expand that program. As for the other part, use tax info and not just solely income.
 
I suppose that could be done, but it is pretty complicated. If they want make certain people (i.e. the poor) tax exempt its easier to just have no income tax on people making under $10K or whatever cut off than trying to exempt sales tax based on income (though I know you just suggested other ways of doing it).

Income isn't stable since people get hired and fired, make money on the side etc. Even having a stable academic job my income bounces around. My nine month university salary is fixed, but then there's the summer months were I can make another 30% of my 9-month salary through grants or summer teaching etc. And I do consulting on the side that's always in flux (been doing $5-10k of that a year so far since graduating).

So best they could base any kind of exempt status for sales tax based on income/poverty would be to base it on prior years tax return reported income I guess since a current year income can fluctuate a ton.
 
dmaul brings up another good point - creating a "poor" class of tax exemption status in the method you described would require individuals to report 100% of their income honestly.
 
[quote name='dmaul1114']I suppose that could be done, but it is pretty complicated. If they want make certain people (i.e. the poor) tax exempt its easier to just have no income tax on people making under $10K or whatever cut off than trying to exempt sales tax based on income (though I know you just suggested other ways of doing it).[/QUOTE]


You do realize that most people making under 10K would be against being exempt from income tax don't you? If they're exempt they wouldn't be able to file their earned income credit and get their 4-8K tax refund from the government.

Which is another discussion in and of itself...
 
[quote name='dopa345']In this case, I think you should be subject to paying the sales tax of where the business is incorporated and not based on your residence. After all, if you are in another state and purchase something, you are subject to the local sales tax and don't get any refund if your state of residence has a lower tax rate. This would also encourage the more fiscally prudent states to keep sales taxes low to attract internet businesses and encourage local job growth.[/QUOTE]

Well... Corporate HQ could go to a state that has very favorable corporate tax rates, the warehouse and merchandise (therefore order picker employees and such) could go to a state with very favorable labor tax rates and the owner of the company could decide to live in a state with very favorable income tax rates
 
[quote name='UncleBob']dmaul brings up another good point - creating a "poor" class of tax exemption status in the method you described would require individuals to report 100% of their income honestly.[/QUOTE]
I was just thinking of something the other day that's related to that. It used to be that you paid for food and tip with cash, which allowed servers to hide at least some of the tips. Now with a lot of people paying with cards and writing the tip in, that isn't as easy to do any more.
 
Yeah, we're moving more and more toward a cashless society. And the more than happens, the less hidden income there will be as everyone gets paid through direct deposit or person to person online banking transfers etc.

My point wasn't so much the accuracy of income reporting, just that many of us don't have a set yearly salary so it would be hard to set an income-based sales tax rate or exemption on anything other than the prior years reported income. Which is fine I suppose. Just has the problem of someone who was poor (say a college student) getting an exemption for an extra year where they make a lot more money than they did in the prior (after graduating and getting a good job if they're lucky).
 
[quote name='UncleBob']dmaul brings up another good point - creating a "poor" class of tax exemption status in the method you described would require individuals to report 100% of their income honestly.[/QUOTE]

I'll never report the work I've done in Swedish Porn.
 
[quote name='dmaul1114']Yeah, we're moving more and more toward a cashless society. And the more than happens, the less hidden income there will be as everyone gets paid through direct deposit or person to person online banking transfers etc.[/QUOTE]

Good point and it's scary as fuck. It straight up gives an open avenue for some scumbag, see ABC government agency, to Blackmail you. Imagine you're a Crossdresser, Gay, etc. Nuff said.
 
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