Friday, November 14, 2008

Cash-Strapped States Consider Online Sales Tax

The government is back- for more of your cash.

This time, they want a slice of the pie from billions of dollars in online purchases. Florida, Illinois, Massachusetts, Texas and Virginia may introduce legislation as early as January, when the new congress takes office.

As a Florida resident, I would be surprised to see Governor Crist and the Republican-controlled state congress favor any form of tax increase, but Massachusetts, Virginia and Illinois are more moderate and may vote in favor of enforcing the online sales tax. Federal legislative intervention will also be required, because a Supreme Court Decision in the 90's declared that states can't require out-of-state retailers to collect sales tax from online sales.

Personally, I think it's only a matter of time before more governors, especially New York's Governor David Paterson, jump on the sales tax bandwagon. Paterson raised eyebrows and took heavy criticism when he suggested the state should sell the Brooklyn Bridge and other infrastructure to reduce the state's $6.4 billion budget deficit. Steven Malanga, a columnist at Forbes, elaborated on New York's budget crisis and poor reputation among venture capitalists.

 

Paterson presumably can understand the complaints of corporate executives recently surveyed by Development Counsellors International (DCI), which advises companies on where to locate their facilities. More than four in 10 of them have ranked New York as the worst state to do business--second only to California in unfavorable mentions.The most common gripes included high taxes and anti-business regulations.
 

Implementing an online sales tax could cripple eBay, which is already facing serious financial problems. Compared to traditional budget-cutting methods, such as reduced spending for public education , an online sales tax may seem like a viable option to citizens. In the spirit of the democratic process, I want you to hear your opinion on an online sales tax. Cast your vote on our poll.

Posted By Matt O'Hern at 03:31 PM
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