Auditing Mr. Bouser on Internet sales taxes

The Pilot, our local newspaper, runs unsigned staff editorials in each edition — much like many other papers across the country.  (Steve Bouser, The Pilot’s nearly-retired editor, writes most all of the unsigned editorials.)

Mr. Bouser is a reliable leftist — surely making his bosses, the former owners of The N&O, very happy.  Republicans are bad, taxes and government spending are always good  …

In Wednesday’s paper, Steve penned an editorial about online shopping — of course, calling for businesses to be shaken down by government for more money —  that made him look flat out misinformed:

There are pragmatic reasons to think this way. If you take North Carolina’s sales tax, for the purpose of illustration, and apply that percentage to the projected Internet sales in just three short years, the total in lost tax revenue is almost $17 billion.

Those are taxes that, until very recently, were being collected by state and local governments. It’s a direct loss of revenue to nearly every state — and in the trickle-down process, nearly every local government in the country.

This issue puts a lot of pressure on local retailers, too, who work at an automatic 6.75 percent price disadvantage in North Carolina because they have to charge sales tax, while Internet businesses do not.

In the interest of simple fairness, maybe it’s time to begin treating Internet sales the same way we do sales from brick-and-mortar businesses. Many of those local Main Street retail stores have been stressed to the breaking point all over the country, first by big-box stores, and then by a three-year recession.

 OK.  Where do I begin?  

First, if you file a North Carolina tax return, you are required to report ANY online purchases you made during the tax year where NC taxes were not collected.  I am surprised Steve does not appear to know this.  He is a good liberal who believes paying taxes is a patriotic duty.  I am sure — with him being a successful journalist with a best-selling book that is earning royalties — that he has been diligently reporting his income to the North Carolina Department of Revenue.  I am surprised that he does not seem to realize that you get asked about online purchases on your state return.

Second, if you are a retailer with a brick-and-mortar store in North Carolina, you are required to charge your online customers residing in North Carolina SALES TAX. 

Third, how on Earth do you expect to efficiently, effectively, and lawfully collect sales tax from merchants located ALL OVER THE GLOBE?  I have friends who have bought online from UK-based businesses.  How do you collect NC sales taxes from a British business with no brick-and-mortar presence in North Carolina?

Demanding that EVERY E-commerce firm collect state taxes from its online customers is unreasonable.  You would add an incredible amount of operating cost to these businesses. For a business with customers all over the U.S. and in foreign countries, can you imagine the amount of accounting labor to keep all of those taxes straight?  It’s easy for something the size of Wal-Mart.  How about for the small one or two-person startup?

The rise of e-commerce has given individuals the power to do business — from the safety and comfort of their homes — with parties around the country and abroad.

 I know a couple of women here in Moore County who sell their artwork over the Internet to customers all over the country.  Does Steve expect them to enlist an accounting firm to keep track of the tax laws in all 50 states?  Also, it is pretty easy to disguise your physical location on the Internet.  Your business would also have to maintain IT staff on standby to verify the actual physical location of EVERY customer visiting their web site.

I am a fan of e-commerce.  I also do plenty of shopping in local stores.  In a lot of cases, there are great benefits to being able to touch / try on / examine goods before buying them.   I seriously do not see e-commerce threatening ALL businesses.  (Book stores and record stores are an exception.  iTunes and the Kindle are tough to compete against.)  The Internet is a tool to help businesses — big and small — tap markets they could not otherwise.

The first instinct for Bouser and his comrades on The Left is to call for squeezing more money out of people who have worked hard for it.   Why not call for government to tighten its belt, and start being more responsible with its spending?

Instead of handicapping entrepreneurs using state-of-the-art technology to tap new markets, why not not repeal or water-down oppressive government regulations that make it such a challenge to keep the doors open on a brick-and-mortar or cyber-business?