Universal Online Sales Tax Imminent?

Tyler Durden's picture

That Congress has had aspirations on collecting sales tax on online purchases, which comprise an increasingly bigger portion of all retail sales in the US, in the past is nothing new. However, following last night's passage of the Marketplace Fairness Act in the Senate with a cloture-busting 74 votes for (and 20 against), the US may be very close to finally adopting a uniform standard taxing all online transactions, regardless of physical jurisdiction or any other geographic boundaries.

As Ars Technica reported last night, "your tax-free days of online shopping are numbered. If S743, also known as the Marketplace Fairness Act, becomes law, the millions of Americans who have been able to avoid sales tax online will have to start paying it. Given the broad support shown by today's US Senate vote, some version of it is likely to come to fruition."

And since a tax is a tax is a tax, it means that the purchasing power of online shopping Americans will be uniformly reduced by some X%, depending on what the final tax structure is agreed upon, which also means that the volume of all online transactions will have to decline by a corresponding amount all else equal, in turn leading to lower overall revenues and profits for online retailers. But at least the Federal government will have more cash to waste on such high ROI generating projects as Solyndra and Fisker.

From Ars Technica:

The bill will compel companies having annual online sales of more than $1 million to collect sales tax on those purchases. Interstate sales have long been exempted from sales tax, but brick-and-mortar businesses have just as long complained about the edge that online businesses have since they avoid collecting taxes. A key opponent of online taxation, retail giant Amazon, recently switched sides after losing some key legal and political battles over taxation. Amazon already collects taxes on sales in nine states, including California, New York, and Texas.


"We've had a lot of innovation in the online space, but federal laws have failed to keep pace," said bill supporter Sen. Mark Udall (D-CO). "Today nearly one in ten sales occur online," and the lost sales tax revenue is hurting state coffers. "It just makes common sense... the Marketplace Fairness Act is about equitable treatment for all sales."


Opponents have already shifted their focus to limiting the scope of the bill through amendments, but it remains unclear if that will make much headway.


"A vote for the Marketplace Fairness Act is a vote to subject a senator's home state Internet [sales] companies to tax collectors in state courts around the country," said Sen. Ron Wyden (D-OR). Instead, states should look to "voluntary compacts" making it easier for companies to voluntarily collect sales taxes, rather than being compelled to do so.


In addition, the act is an attempt to apply "local laws to the international medium that is the Internet," said Wyden. That could inspire other countries in their own efforts to regulate the Internet, with taxes or with outright censorship.

Curiously, for all the vocal rejection of "austerity" in recent days following the R&R excel gaffe, the amusing aspect is that European governments had never actually implemented spending cuts (as we have shown in the past here and here), and it was the tax hike component to austerity that infuriated most people. It is therefore amusing to watch as the same people who denounce austerity in Europe and around the world, are those who are pushing for an online sales tax, which as the name implies, is simply another form of taxation, and less real disposable income going to end purchases.

We can't wait to see in one or two years whose excel errors will be trotted out for public consumption when this latest taxation proposal backfires and crushes already razor thin retail margins further, leading to yet another downward economic swoon.

Luckily, by then it will be the Fed that will be the end buyer of not only securities, but goods and services as the central bank insanity takes another step-function leg higher, and when "more of the same" fails to stimulate the economy, the only logical response is to do "much more of the same."

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NidStyles's picture

Yay! Now the economy can comence fully imploding.

Skateboarder's picture

Hah, that's child's play. Throw a 20% VAT on top of a 10% online sales tax and now we're talking.

slimething's picture

Yep, that's the goal. Tax and tax and spend and spend and re-elect and re-elect.

francis_sawyer's picture

Lemme take a wild guess... It was tucked into the bill that they gave themselves pay raises...

flacon's picture

The last straw for me was learning that our "government" is actually a "for profit corporation", much like Wal-Mart, and NOT the original organic government that it was intended to be when the constitution was written. 


"...these united states of America" vs.



Two completely different entities. 

Thisson's picture

Nonsense.  Stop parroting tripe you read on the internets.

toys for tits's picture

This thing will have more unintended consequences than imaginable.

1) Krugman's pet inflation lie, the Billion Prices Project, will be fucked.

2) Paying for sales taxes on PM's?

3) As mentioned retaliation from other countries.


whotookmyalias's picture

I already pay sales tax on any PM purchases under $1K.

The government has no clue. It looks at tax as easy money and then acts shocked when the unintended consequences arrive.

NotApplicable's picture

Honestly, I'm surprised it took them this long, as state and local govs have been crying about this ("losing revenue") since the day Amazon set up shop.

Abiotic Oil's picture

Amazon will need to lower their progit margins from .0001% to .00001%.


e_goldstein's picture

Frankly, it does a shitty job of turning a profit and should have gone under long ago.

Sofa King Confused's picture

If our gov't was a for profit corporation; I think they are doing something drastically wrong.  Unless they see everything in America as their assests.  People, buildings, land, 401 k's, IRA's and all bank accounts.  If that is the case then the debt doesn't look all too bad.

TPTB_r_TBTF's picture

The international bankers see everything in the UNITED STATES as their assets.

As an instrument of the international bankers, the UNITED STATES owns you from birth to death. It also holds ownership of all your assets, of your property, even of your children. Think long and hard about all the bills taxes, fines, and licenses you have paid for or purchased. Yes, they had you by the pockets. If you don't believe it, read the 14th Amendment. See how 'free' you really are. 

The UNITED STATES Of America  is a corporation owned by foreign interests


Like any debtor, the Federal United States government had to assign collateral and security to their creditors as a condition of the loan. Since the Federal United States didn’t have any assets, they assigned the private property of their “economic slaves,” the U.S. Citizens, as collateral against the federal debt. They also pledged the unincorporated federal territories, national parks, forests, birth certificates, and nonprofit organizations as collateral against the federal debt. All has already been transferred as payment to the international bankers.

The United States exists in two forms...

aerojet's picture

And any court that flies a flag with a yellow fringe around it is an admiralty court whose decisions are null and void.  You still go to jail, though, mysteriously.

TPTB_r_TBTF's picture

 A court under admiralty law is like a ship.  Under admiralty law, when a ship is in harbor, and you set foot onto it, you are subject to the whims of the ship's Captain.  You left the jurisdiction of the land behind you and you enter the Captain's jurisdiction.  (This is just an example of admiralty law, assuming it applies to the ship you set foot onto.)

The same applies to an admiralty court, when you set foot into the court room, you are on their turf, and they can do with you as they please.  Even if they drag you there, admiralty law applies as soon as you see the red/white/blue and *yellow*.


Their flag it has four colors, four colors has their flag...

Pseudo Anonym's picture

and that's not even half of it

our "government" is actually a "for profit corporation",

there's more: http://tinyurl.com/dfztye

Antifaschistische's picture

Maybe they don't realize how much is invested in "internet" stocks.

Do they think this sin will go unpunished in the marketplace?

more 401k/Pension Fund destruction right around the corner...

NotApplicable's picture

Marketplace? LOL WUT?

Destruction is here regardless. All they're doing is pretending to "fix" it.

Long_Xau's picture

The expected tax revenue is the pay raise.

Hopefully, the actual consequence of the bill is their death sentence.

docj's picture

Bingo - hello VAT.

And the "conservative" geniuses who are supporting the placement of all the infrastructure necessary to make a VAT a reality will say when it passes "nobody could have seen that coming".

LasVegasDave's picture

This will be a boon for Bermuda, Cayman, Isle of Man, etc., where Amazon, Cheaper Than Dirt, etc. will set up subsidiaries to operate tax free.

stupid congress critters are always behind the curve

NotApplicable's picture

That won't work. You either play ball, or else they'll block your IPs from reaching the consumer. Fedgov controls the core routers.

LasVegasDave's picture

its amazing the tax breaks a few well placed campaign donations will buy you.

hang 'em all.

knukles's picture

Is the Isle of Man like a Chicago Bath-house?

LasVegasDave's picture

youll have to ask otto.  thats more his gig

Long_Xau's picture

It is not like such government actions actually achieve whatever they are intended to achieve. In this case people could just use anonymization networks such as TOR.

Frankly, the more and the sooner the corrupt state tries to use coercive powers, the better. How come? Because every time they use coercive power, they actually become weaker, not stronger. Firstly, they need to spend more resources, and resources are never unlimited. Secondly, a citizen fears more what the state might decide to do in the future, not what they are already doing to him/her (and silently accepting). Thirdly, those who have already seen that what the state does is unacceptable and/or untenable leave the system. The more coercion there is, the more people leave. The more people leave, the less power, resources, attractiveness, etc. their corrupt system has. And also, the more people leave, the more power, resources, attractiveness, etc. the alternative solutions have.

If left unchecked, this develops in a clear positive feedback loop. In other words, a virtuous circle (or vicious, depending on your viewpoint). In other words an exponentially increasing trend. In other words the state better start throwing out laws and regulations and generally lower its footprint in every aspect by yesterday, or else they are history.

SilverDOG's picture




Hello bartering !

F U, UASS Govt.

Back to phone ordering.

Trace that, you mother f'ers.

gorillaonyourback's picture

somebody let the dog out,,,,,,, sic em boy

Fukushima Sam's picture

Well, I guess I just won't buy as much.

espirit's picture

Yep, there goes the ole GDP.

yogibear's picture

They will just adjust it again. It never ever goes negative, 

Better GDP, more debt. Revise it up another 50% and they can add up a lot more debt.

espirit's picture

Prolly increase the intangibles tax on intellectual property such as  ZeroHedge for educating the plebes.

Oh wait, that's a VAT isn't it?

Panafrican Funktron Robot's picture

AMZN long then?  I mean, yeah, gravity seems to not apply regardless of, well, anything, but the sales tax thing is a huge market arb for them that's about to go away.  

That said, short with caution.

DosZap's picture

They are not going to stop until they burn the house down.

XitSam's picture

Of course. That is the plan.

This all seems like we're living in an Ayn Rand novel.

Vashta Nerada's picture

Are there 'free' cell phones in this bill too?

NotApplicable's picture

The house has been on fire for a long time.

Papasmurf's picture

They are not going to stop until they burn the house down.

Don't leave out the senate.

Burt Gummer's picture

So does this mean I have to pay sales tax when I buy PM's online?

This is fucking horse shit.



CH1's picture

This is fucking horse shit.

It is, but everyone will comply.

So, why should the overlords give a shit about what we think?

Thisson's picture

Who will be our "Aldo" from Planet of the Apes?

Room 101's picture

Interesting piece of trivia....importation of bullion is duty free. 

smithcreek's picture

Since it will be absurdely complex, most small to medium size businesses will be forced to use a tax collecting service.  Those services, like Amazon already offers to it's "partner" companies will cost about 3% of the tax collected.  So, in the end most businesses will pay for the priviledge to collect taxes for the government.  Nice.

NotApplicable's picture

Which, like ALL business expenses, is ultimately paid for by the end consumer.

Stoploss's picture

Adios E-Bay, adios Amazon.


Adios online retailers, it was nice while it lasted.


NotApplicable's picture

Not quite. Amazon is going to come out waaaaaay ahead from this scam. They will be one of the few entities large enough to profit from this new barrier to entry.

All of their smaller competition will be left with no choice other than to be one of their "partners."

Silver Bully's picture

'Amazon is going to come out waaaaaay ahead from this scam.'

EXACTLY. Why do you think Amazon supports this law? And Google? Because it suppresses their competition wihtout hurting the big boys much. And just wait, I bet Amazon's warehouses will get some kind of tax break to help offset the new sales tax. And Google will get some new subsidy hidden somewhere as well. Meanwhile, the small businessman has to contend with new taxes and new tax compliance costs.

This is crony capitalism at its finest.

Stoploss's picture

Well i was just wondering about all the NEW taxes coming via Obamacare, etc, etc, too many too list here, and how, oh, 90 million people are out of the workforce never to return, who are pretty much broke now any way, with absolutely no hope of ever getting a paying job again, will continue to buy online now that yet another tax is levied.


Waaaay ahead. I hope so..

In another year, the government will have to subsidize every single business that happens to be left standing. We will start with AT&T..  They have an itty bitty, teenie tiny, issue.

Chuck Walla's picture

Hey, maybe the Hopium Addicts might start to understand the real nature of their little tin god, B-Rock?