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Speaking of Taxpayers, August 24 (AUDIO): Online Sales Tax Threat Looms in Washington
Posted By:  - 08/28/12

Subscribe to NTU's podcast "Speaking of Taxpayers" via iTunes!

      
   
   
   
   
   

NTU's Andrew Moylan joins the podcast to discuss the subtle forces mounting a push for federal mandated online sales taxation & NTUF's Demian Brady discusses the plethora of post office re-namings taking Congress' attention.
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The Late Edition: August 27, 2012
Posted By:  - 08/27/12

Today's Taxpayer News!

Forbes contributor Peter Ferrara cuts through the political chatter and assumptions about Mitt Romney’s tax proposal.

A recent analysis by the Congressional Budget Office note how 2012 will become the fourth year in a row that the Federal government will be operating with a trillion-dollar deficit. The report confirms the need for Washington to act now to reduce spending and rein in the deficit.

 

 

 

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Governor Kasich's Alternate Reality
Posted By: Lee Schalk - 08/27/12

It’s time for a reality check. Over at Opportunity Ohio, our friend Matt Mayer just released this report, listing 10 erroneous claims being made by Governor John Kasich to defend his severance tax hike plan. While the tax plan isn’t law yet, it’s already posing a serious threat to Ohio’s economic growth and has caused Ohio’s “attractiveness for energy exploration” ranking to plummet. We’ve also seen that Ohioans aren’t falling for the tax scheme. Yet somehow, Governor Kasich still insists on defending it. While this is a perfect time to reduce Ohio’s burdensome income tax, lawmakers should look at common sense trims to spending and avoid taxing the promising energy industry. The following excerpt from the Opportunity Ohio report explains why, fundamentally, this type of tax is not in Ohio’s best interest:

  • Kasich Claim #5: Higher taxes will result in more energy activity in Ohio.
    • Fact: As free market economist Milton Friedman and President Ronald Reagan both noted, if you want less of something, then tax it. It simply defies common sense that Ohio will get more oil and gas activity by increasing the taxes on that activity – even if this one tax remains lower than other states. If Ohio wants more oil and gas activity, it should leave the tax rate at its current level to ensure the gap between Ohio and other states remains as big as possible. Why risk chasing away energy companies, the jobs they will create, and the economic activity in hotels, restaurants, hardware stores, and other secondary goods and services providers? A Fraser Institute survey of energy company executives showed that Ohio fell from #2 to #14 in terms of attractiveness for energy exploration because of Governor Kasich’s severance tax hike plan.

Clearly, Ohioans deserve better than a tax plan that undermines investment and hurts job creation in their state. The growing energy economy has been estimated to generate over 200,000 jobs, increase output by over $22 billion and taxable wages by over $12 billion. Ohio’s leaders should strive to turn those estimates into a reality while reducing spending that grew by 43 percent (even adjusting for inflation and population growth) from 2000 to 2010. Let’s hope they come to their senses sooner than later.

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Ohioans Aren't Falling for Kasich's Tax Scheme
Posted By: Lee Schalk - 08/07/12

Ohio Governor John Kasich should have scrapped his energy tax proposal by now. I wrote last month that Ohio fell from second place to fourteenth place in attractiveness for energy exploration thanks to the governor’s proposed severance tax hike plan. Really, this came as no surprise. Tax hikes on a promising industry are a surefire way to hamper economic growth and cause investors to run for the hills.

Now, it’s not just oil and gas executives who are up in arms over Governor Kasich’s tax scheme. Ohioans clearly have a deep understanding of how higher taxes would impact them. According to this recently released battleground survey, 72 percent of Ohioans believe that higher taxes on the energy industry will be passed on to them, 40 percent think job creation in Ohio will be hindered, and 49 percent feel that government spending should be slashed to pay for a state income tax cut. That’s a lot of angry taxpayers. Hate to say it governor, but you really should have seen this one coming.

In the words of our good friend Matt Mayer, “Ohioans just don’t support tax hikes on small business energy entrepreneurs, farmers, and landowners. There is a better way to provide tax relief to all Ohioans.” The 13,500 Ohio members of the National Taxpayers Union wholeheartedly agree. Our simple suggestion is this: trim back wasteful spending and reduce the burden of government! Consider the following numbers from NTU Vice President Andrew Moylan’s June 5th letter to Governor Kasich:

In 1990, general fund expenditures for Ohio stood at just under $11.6 billion. By 2009, they had grown to roughly $27 billion, an increase of 131 percent. Even adjusting for inflation, Ohio’s budget swelled by a staggering 41 percent. If Ohio’s political leaders simply had restrained spending to annual inflation plus population growth over that period, Ohio’s general expenditures in 2009 would have been roughly $7.5 billion less. By comparison, in Fiscal Year 2010, total state and local individual income tax collections amounted to $7.88 billion.

It’s painfully obvious that modest spending restraint in recent years would have allowed for a near complete elimination of the state income tax. Keeping these figures in mind, Governor Kasich should inject some common sense into his tax plan by pairing state income tax cuts with reductions to spending. The people of the Buckeye State are too smart to fall for the governor’s tax proposal as it currently stands.

Once again, don’t hesitate to pick up a copy of Matt Mayer’s Taxpayers Don’t Stance a Chance: Why Battleground Ohio Loses No Matter Who Wins (And What To Do About It) if you’re interested in Ohio politics.

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The Amazing Illegal Tax Discovery from Today's Commerce Hearing
Posted By: Andrew Moylan - 08/01/12

Today's Senate Commerce hearing on the awful Marketplace Fairness Act, a bill the likes of which we've been crusading against for more than a decade now, was a comedy of errors that would have been funnier if it weren't so sad. Despite a stacked panel of six supporters testifying against just one opponent, the proceedings proved that there are huge problems for taxpayers inherent in legislation to allow states force enormously burdensome sales tax collection requirements on remote retailers WITHOUT any physical presence there. In addition, the hearing led to a stunning discovery that one panelist's business may well be collecting sales taxes incorrectly and illegally. So much for "easy" and "accurate" tax collection.

Steven Bercu, CEO and co-owner of BookPeople book store in Austin, Texas, told the committee that he felt so strongly about collecting sales taxes that his business did so even for sales into states where he has no physical presence. He has no legal obligation to do so, but he likened it to a kind of civic obligation to support infrastructure and services in other states (nevermind the fact that shipping companies that help deliver his items already do plenty of that through income and gas tax burdens of their own).

The revelation of illegal tax collection came when Steve DelBianco, Executive Director of NetChoice, gave his testimony. In it, he presented a screenshot of a purchase he made on BookPeople's website this morning which showed that he was charged what was purportedly Virginia state sales tax of 8.25%. There's only one problem: Virginia's sales tax is 5%. Mr. Bercu quickly proclaimed that a mistake had likely been made and that he'd look into it with the provider of the service that calculates sales tax collection for his business. It turns out that 8.25% is actually the prevailing sales tax rate in Austin, Texas, where BookPeople is physically located. In all likelihood, this is the source of the mix-up.

While it was somewhat amusing to uncover this mistake, it also suggests that the tax was illegally charged to DelBianco. If BookPeople collected and remitted on behalf of Virginia, they illegally overcharged him because no business can collect more than the legal sales tax rate. If they collected and remitted to Texas, they illegally charged DelBianco on a transaction which was not subject to sales tax. Under current law DelBianco has no sales or use tax obligation whatsoever in Texas and if BookPeople charged him one, that was just as illegal as a grocery store charging someone sales tax on something in a state where food is exempt from it.

Let me state that I don't believe that Mr. Bercu and BookPeople are intentionally defrauding customers or governments. This is almost certainly an honest mistake made in the process of a good-faith effort, but it shows just how difficult accurate sales tax collection and remittance can be. His business was supposed to be the poster child for how easy collection is. After all, it's so easy that he does it even though he isn't legally required to! But even the best of intentions can't iron out mistakes resulting from the confusion of 9,600 taxing jurisdictions with different rules across the country. It also suggests that perhaps the reason Mr. Bercu and BookPeople were so convinced of the ease of collecting is that his business was simply charging everyone Austin's sales tax. Current law would need to change in order to accommodate that, but that sort of an origin-based taxation system is dramatically simpler and easier to comply with than what the Marketplace Fairness Act would impose.

In the end, the hearing was mostly a jumble of minimally-useful talking points from supporters and some brief but passionate questioning from the likes of Senators Jim DeMint (R-SC) and Kelly Ayotte (R-NH). The bottom line for taxpayers is still this: the Marketplace Fairness Act undermines basic taxpayer protections by eliminating the physical presence standard, imposes huge compliance and interstate commerce burdens, and does little or nothing to promote tax reform and revenue neutrality.

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Speaking of Taxpayers, July 20, 2012: NTU’s New State Affairs Manager, Post Office, & More
Posted By:  - 07/23/12

Subscribe to NTU's podcast "Speaking of Taxpayers" via iTunes!

      
   
   
   
   
   

NTU's new State Affairs Manager Lee Schalk joins Doug & Manzanita (in Pete's absence) to discuss state taxpayer issues that are still popping up despite the summer heat. Also the 'Fiscal Five' & 'Outrage of the Week!'
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Majority of Voters Proclaim: “Extend Tax Cuts for All!”
Posted By:  - 07/16/12

A McClatchy-Marist poll shows that 52 percent of registered voters want the Bush Tax Cuts extended for all Americans, including those who make over $250,000 a year.

A view that stands in contrast to the President, who has made it clear that he will veto any attempt by Congress to extend the cuts for all, saying that:

“I would veto it and here’s why…to extend tax breaks for that top 2 percent of wealthiest Americans would cost us a trillion dollars over the next decade.”

This may be a hard sell for the President in today’s still tepid economy, especially when he is attempting to secure the youth vote and the Hispanic vote. These two key demographics, both of which are seen as pivotal in the presidential race, favored extending the tax cuts for all by margins of 69-29, and 62 percent to 36 percent, respectively.

Congressional Republicans, as well as presidential candidate Mitt Romney, both favor preventing the tax cuts from expiring on Dec. 31.

 

 

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Getting Closer to Wireless Tax Fairness
Posted By: Andrew Moylan - 07/13/12

The Wireless Tax Fairness Act, a bill that NTU has strongly supported for years, might be a step closer to becoming law if its sponsor Senator Ron Wyden (D-OR) has his way. He intends to introduce it as an amendment to S. 2884, a bill the Senate may consider next week. Wyden's legislation would protect taxpayers by freezing state and local charges on wireless phone service for five years and preventing them from imposing multiple and discriminatory taxes and fees.

This common sense legislation is one of few bills that enjoys wide bipartisan support both in and out of Congress. According to a MyWireless.org survey, 80% of respondents support the goals of the bill and Republicans and Democrats alike have aided its movement on Capitol Hill. Late last year, the House actually passed its version (sponsored by Arizona Republican Trent Franks and California Democrat Zoe Lofgren) unanimously on a voice vote. Wyden's amendment gives us hope that the Senate will pick up on that sentiment and pass the bill promptly.

As it stands today, wireless tax rates across the country are mind-numbingly insane. Legislators constantly proclaim the importance of wireless access because it supports economic opportunity and growth, but the taxes they levy on it tell a very different story indeed. Five states charge more than 20% in taxes, 23 states charge combined rates of higher than 15%, and in only ONE state in the nation (Nevada) will you face a lower charge on wireless services than for ordinary sales. Simply put, most states are levying "sin tax"-like charges on a technology they claim to love and support.

It's not the federal government's job to fix the details of each state's insane tax system, but it is their job to prevent states from enacting dumb tax policies that harm interstate commerce. There are few markets that are more interstate in nature than wireless service, so it's perfectly appropriate and necessary for the federal government to exercise its power to eliminate the worst abuses. We'll still have a lot of work to do to fix state tax codes after passing the Wireless Tax Fairness Act, but this is an extremely important first step and it's up to us to make sure Congress takes it soon.

Stay tuned to these pages next week for more information about how the bill will proceed and what you can to to help. In the meantime, we'll be gearing up our grassroots army to push Congress to pass this bill immediately.

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The Internet Tax Threat That Won't Go Away
Posted By: Andrew Moylan - 07/11/12

The so-called “Marketplace Fairness Act," a bill to impose onerous tax collection requirements on remote retailers, is back again for another bite at taxpayers' wallets. We've alerted you to this threat timeand time again, and now proponents and their big-money backers are trying to sneak it through once more. Introduced as an amendment to S. 2237 (a small business tax bill) by Senators Mike Enzi (R-WY), Dick Durbin (D-IL), and Lamar Alexander (R-TN), the measure would add to the burden governments heap upon items purchased online while undermining vital taxpayer safeguards. The Marketplace Fairness Act would…

  • Dismantle Key Taxpayer Protection - Currently, online and remote retailers cannot be required to remit a state’s sales tax unless they have a physical presence there. This amendment would dismantle that taxpayer protection by allowing states to force tax collection dictates on businesses regardless of their location. Dissolving the physical nexus standard for collecting sales taxes could encourage overzealous state tax administrators and lawmakers to reach far across their borders in order to fill their coffers.
  • Impose Enormous Compliance Burdens - The Marketplace Fairness Act could force online businesses to comply with the rates, rules, and definitions of every last one of the country’s 9,600 (and growing) sales tax jurisdictions. Meanwhile, traditional brick-and-mortar retailers generally must contend with the sales tax in a single jurisdiction: the one in which their business is physically located. This would be a distinctly “unlevel” playing field that imposes much more onerous administrative obligations for businesses that dare to operate online. Such obligations won’t be made magically care-free by tax software packages, any more than the billions in payroll income tax compliance costs for businesses have somehow disappeared with the advent of computers.
  • Drain More Dollars from Taxpayers with No Reform in Sight -  Piling complex tax rules on the backs of remote retailers could lead to millions (or billions) of dollars in additional tax money for state governments at the expense of online shoppers. But nothing in the proposal ensures that those new costs aren’t just added on top of the many others borne by taxpayers struggling in today’s economy. The amendment doesn’t include any language to require or even encourage states to reform their sales taxes so that net burdens on taxpayers don’t rise.

It is particularly odious and contradictory to attempt hanging this proposal on a bill purporting to assist small businesses. S. 2237 is problematic for taxpayers in its own right, but is made all the worse with an Amendment that fails on so many counts. As a practical matter, the paltry “small seller exemption” contained in the language means that numerous firms will become ensnared in a web of higher tax-compliance overhead costs. Businesses that could be contributing to a more robust economic recovery will instead squander resources extricating themselves from this trap, or worse, resign themselves to oblivion.

As a philosophical matter, the amendment treats the Internet and e-commerce as a sinister, alien force for small business, when the opposite is true. Where would brick-and-mortar retailers be, for example, without the convenience of online inventory control, or other “B2B” transactions that make management so much more efficient today? What losses would retailers suffer without the new markets for goods and services for which the Internet has provided the portal? How many millions of everyday citizens, who have created thriving online “mom and pop” proprietorships, would be denied the opportunities to provide for their families? To be clear: No Senator who claims to support taxpayers and small businesses should vote for this amendment. There are fairer, less burdensome ways to address any real “level playing field” issues in this area of commerce.

 

It's unclear as of now how the Senate will proceed on this amendment or the underlying small business tax bill, but rest assured that we'll be hammering away to make sure that well-financed lobbyists don't fleece taxpayers and businesses with this awful bill. 

 

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