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    Who are the NERD fund donors Mr Snyder?

    Raise the curtain.

    Unintended Consequences?

    By JGillman, Section News
    Posted on Sat May 12, 2012 at 09:19:43 AM EST
    Tags: Main Street Fairness, DICK Durbin Plan, Rick Snyder, Tax Enforcement, Internet Sales, Online Model, Small Business, Michigan, Equal, Taxes, More Taxes, More Paperwork, Commerce, 9-9-9, Herman Cain, Federal, Sales Tax (all tags)

    Everybody wants to operate under a fair taxing field.

    Certainly this is the premise which the main street fairness act is being pursued. It is a means under which sales nexus will be identified, and taxes would be collected for sales made online for anything coming into the state that was purchased online.  It has the support of our governor, and looks to be heavily pushed with the claim that even elected conservatives are interested in it.

    Not this one.

    This is another one of those deals where instead of removing the regulatory misery under which retailers and business owners operate, it is presumed the better way toward fairness is to inflict it upon as many others as possible.   They are suffering, so can you. Share the pain.  And our governor Rick Snyder is now embracing it.

    What will this mean to online wholesalers like myself?

    I will ultimately have to deal with a number of sales tax licenses and a nightmarish bureaucracy entanglement.  I will have to report to not only my own state, but others within this compact agreement to be able to ship within those states legally.  I will not be able to ship to my customer's customers in Michigan directly, without revealing the transparent drop ship patterns.  Other states that are not a part of the compact would have their own plans which would cause harm to my model (California is already doing this) by imposing their own nexus rules even possibly based on volume shipped to their states.

    It will hurt folks using my business model from the crushing paperwork aspect alone.

    And it's just more big government making sure nothing escapes their grasp, by pretending small business actually wants it.

    However, there may be a legitimate reason to pursue this, but it needs to be done in a completely different way.

    YES, we are supposed to pay sales tax on our purchases online.  YES, there are local retailers that feel they are operating under unfair conditions, with customers "shopping them" and buying online without the sales tax added.

    But the last part is not as much an issue as one might think.  When shipping costs can add 5-10% easily anyhow, the difference in cost is simply that of the ability to compete (or desire) in the free marketplace.  The ability of online retailers to ship from more local warehouses does present a competitive advantage, but the ability to show and demonstrate is a far better sales tool than price advantage alone.  The balance for fairness is already there.

    Yes, there is a built in fairness mechanism already, yet the state does not collect in all cases, and that is what is being chased.

    OK.  If the states trying to collect these taxes feel they must enact some type of mechanism, there is a constitutional means that would be easier for the retailers who engage in online sales. But it would involve all states at once, and probably a new federal government entity.

    Yeah, not my favorite route either.  And there should be a great deal of study into the possible side effects before implementing.

    We (businesses) all pay fed taxes quarterly anyhow.  We have certain reporting requirements that require us to send forms on a regular basis to our masters in Washington. Here is how it could be done:  (And yes, we should not be sure it can be held off permanently)

    1. We track sales numbers collect sales tax, and take a small cut for processing when shipping or drop shipping.  Drop shippers STILL remain anonymous since they handle no financial transactions with end user.  Money collected for online sales 3-4% sales tax goes into into fed clearing house with monthly or quarterly taxes and report to fed.
    2. State treasuries get a printout for taxes paid on products delivered into their states.
    3. Treasurers CLAIM the monies minus a minor processing fee to cover cost of clearing house operation.

    It doesn't make it easier for the current online small business model, but the current 'main street' plan sure as hell won't either.  It does keep the operation commerce clause friendly however, and unfairness for compact states and those not operating under those is avoided.  It also may have a good side effect of preparing the country for a shift in tax code to a 9-9-9 program such as that which Herman Cain has promoted, or even a fair tax model using sales taxes to replace income taxes.

    That might be a worthwhile end.

    No, I'm not the guy who likes to agree with any more misery spreading through regulation or more taxes.  I am against increases of taxes, adding of taxes, or making it harder for business to operate.  But if we are going to get it anyhow, it should be used to replace those systems which are far worse anyhow.

    For now however, the main street fairness efforts should be abandoned unless the states are willing to see their smaller business entities once again burdened to the point of extinction.  Thinking twice would be good before we put before the people this new method of financial extraction.

    Short sighted oppressive revenue raising methods are hardly good policy.

    < Glad We Got Rid Of That Tax Hiking Granholm | A Wonderful Sales Leader in Michigan >

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    One important question still needs to be asked. (5.00 / 1) (#1)
    by KG One on Sat May 12, 2012 at 10:15:00 AM EST
    WHY does Michigan need more revenue in the first place?

    Don't get me wrong here. I agree 100% with the idea of revamping the entire tax system. When this mishmash of property, incomes, sales, MBT, etc along with the volumes of regulations that are easily addressed with the right lobbyists, simplifying it along the lines Herman Cain advocated is a huge start.

    But people have already sadly forgotten that Michigan is projecting a budget SURPLUS for multiple years.

    For the governor to have the chutzpa to argue that additional revenue is "necessary", is troubling at best.

    The first thing that popped into my head... (none / 0) (#2)
    by Rougman on Sat May 12, 2012 at 12:12:15 PM EST

    Doesn't need the money?  DOESN'T NEED THE MONEY!!!

    Don't you think that the public workers unions alone could figure out a way to use the few extra mill squeezed out of online shoppers?  

    What about the children?  And the elderly?  Who's going to make sure that new businesses have enough toilets available, that Michigan consumers are using enough green electricity, or that my devious neighbor hasn't piled some carrots under his apple tree?  What are we going to do about toilets that flush too much water and about cider mills that sell unauthorized firewood?  Who's going to save us that 20 minutes of travel time between train stations in Dearborn and Chicago if not for government visionaries?  

    Why, there are millions of regulations already that aren't being properly enforced while there are millions more that need to be enacted to keep us potential criminals on the straight and narrow.  Besides, who among us thinks that Detroit city officials or Robert Ficano couldn't find a way to spend a little extra cash--there is machinery to grease!

    Our ever protective and benevolent government needs all the cash it can get, and if a few employers have to cut back on staff, or if a few consumers have to shell out a few extra non-productive dollars on bureaucracy, so be it!

    Long live the nannystate!  


    Okay, what was the topic again?

    Maybe I'm misunderstanding the concept here (5.00 / 1) (#3)
    by Bruce on Sat May 12, 2012 at 05:29:16 PM EST
    but why should you collect sales taxes for other states and why should retailers in other states collect sales taxes for Michigan?  Especially since the Michigan tax forms already have a place to calculate sales taxes for items purchased out of state?

    Sounds like the state is looking for the most complicated way to get their bit of "wealth redistribution."

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