On taxation of online sales

1
On taxation of online sales

• Jan Babiuch-Hall
• John Barret
• Owen Barton
• Caroline Dobyns

2
Reasons for an internet sales tax

• The lack of an internet sales tax creates an
  unfair competitive advantage for online
  businesses.
• Local businesses become showrooms for online
  businesses.
• Lower sales for local businesses means fewer jobs
  in the community.
• Local businesses often provide other benefits to
  the community besides selling a product or
  service.
• The state where the customer resides should tax
  the purchase as this is the fairest way to
  distribute tax revenue.

3
Reasons for an internet sales tax

• When you aren't able to collect sales tax from
  online sales shipped into your state, everyone
  who pays sales tax in your state will pay a
  little bit more than they otherwise would have.
• State and local government will have to raise
  revenue in other ways, by increasing income or
  property taxes, or by cutting spending.
• State governments are losing more than 7 billion
  a year because online purchases don't get taxed.
• Each year about 10 billion in tax on Internet
  sales go uncollected.
• Tax-free Internet shopping shifts more of the
  sales-tax burden to those who can least afford it.

4
Reasons against an internet sales tax

• Having online purchases be tax-free creates an
  incentive to purchase online, which is desirable
  because online stores are more efficient.
• The issue of which state collects the tax is
  moot.
• Instituting a tax on online sales creates a legal
  hurdle for entrepreneurs wishing to start an
  online business.
• The benefits of tax-free online sales are
  available to all customers

5
Reasons against an internet sales tax

• Since online shopping is subject to shipping
  costs, adding a sales tax could make online sales
  unprofitable and hurt the online sales industry.
• Enforcing online sales taxes is unduly
  burdensome.
• Online shopping has a global market situations
  would arise where it is unclear of how to apply
  the tax for international sales.
• A sales tax dependent on what state the item is
  shipped to introduces a high risk of sales tax
  evasion.