Norquist Weighs In But A Bill Moves Forward

Back in December I opened the floor for a debate over whether or not Georgia should require online retailed like Amazon to collect sales taxes. The debate was lively. Recently Grover Norquist of Americans for Tax Reform weighed in and he didn’t like it. Nevertheless some in the House appear ready to move forward with a bill:

Taxing the Internet is a complicated chore. According to current federal law, a company is obliged to pay a sales tax only if it has an actual presence in that state – a “physical nexus.” Amazon.com has no facility in Georgia.

A bill in the works will attempt to tax Amazon.com’s advertisers – “affiliates” that have a physical presence in the state, said state Rep. Matt Ramsey, R-Peachtree City, who is drawing up the measure.

He has small shop owners in Fayette County who complain that they now serve as showrooms for their Internet competitors. Shoppers will come to their stores to get a feel for the item – a grill, a drill, a toaster – and then place their order, via their smart phones, with an Internet store for the tax-free discount.

“That’s just not fair to me. I think that is tantamount to corporate welfare,” Ramsey said. The lawmaker said the bill will include an offset so that the state posts no revenue gain from the bill. Perhaps, Ramsey said, the state will reinstate those sales tax holidays that disappeared at the start of the recession.

I should point out that current Georgia law requires people who purchase items online to remit the sales tax themselves.

40 comments

  1. ted in bed says:

    Here comes the Tax and Spend Republicans. It’s ok because it a fairness issue.

    How about cutting the Sales Tax instead!

    • Dave Bearse says:

      We’ve got to pay attention, John. An overwhelming majority of the Georgia GOP caucus, you know, the group in the Senate that won’t let any legislation proceed to a floor vote unless a majority of them secretly agree, are subservient to Norquist.

  2. GTKay says:

    I really don’t think the sales tax savings is what’s keeping customers from buying items from these small shop owners. Most likely what you save in sales tax, you make up for by paying shipping. I think they’re able to get a better price online – at a significant enough savings that they’re willing to pay shipping and wait a few days for their purchase to arrive. The retailers don’t like Amazon for the same reason that they don’t like Wal-Mart. These online retailers are able to undersell them because they can afford to make less profit on the items they sell. It sounds like these Fayette Co. moms and pops need to do some creative marketing.

    I really don’t understand the benefit or logic of taxing the advertisers, except to just stick it to them. And I think it’s a little dramatic to call this corporate welfare. But residents of Fayette do tend toward the dramatic.

    • CobbGOPer says:

      It’s the same issue as the SOPA legislation for the MPAA/RIAA/etc. It’s companies that refuse to adapt to changing technology and therefore call on government to impose restrictions so they don’t have to change their outdated business models.

      And I agree with GTKay: the shipping costs more than make up for any “discount” in the sales tax. It’s just that people can find almost anything online that they can find in a retail store, and nine times out of ten they’ll find it at a significantly lower price.

      Don’t be fooled by this spin: Georgians aren’t shopping online to avoid paying sales taxes. Like everyone else in America, they shop online to get the most competitive prices.

  3. Three Jack says:

    ‘Rising Star’ Matt Ramsey is singlehandedly working to downgrade Georgia’s economy. First he gives us HB87 which has proven to be a disaster for our number 1 industry, agriculture. Now he wants to tax internet purchases because some local guy who can’t compete whines about Amazon (if a local business is losing sales because of the tax difference on books, grills and other items under $100, they really might want to seek a new endeavor). Just one more reason why the GOP generates almost as much enthusiasm as an Atlanta Hawks home game.

          • The Last Democrat in Georgia says:

            “You are to harsh on the Hawks, they are an entertaining team to watch.”

            Yes, the Hawks are entertaining to watch, problem is seemingly no one in Atlanta or elsewhere is watching them. Though it is not the team’s fault that Atlanta is an ULTRA-transient city located smack dab in the middle of college football country where the majority of the population is from another part of the country or world.

              • The Last Democrat in Georgia says:

                Now if the Hawks were in a market that’s more conducive to pro basketball, lets say Boston, Detroit, Cleveland, etc, for example, they would likely have a much larger fan following, more media attention.

                Heck, put this team in a less-transient market and they might even garner enough attention to be considered, dare I say, a hot item. During the Hawks’ seemingly so-called glory years of the Dominique Wilkins era, the team sometimes struggled to command the attention of the city and the media and that was in a time when the city was much less transient, so I guess it should be no surprise that the team struggles for attention in a city that is much, much larger and many times more transient than the much smaller up-and-coming “Hotlanta” of the ’80’s and ’90’s.

          • Three Jack says:

            I’ve been a Hawks fan since the days of Pistol Pete Maravich, Lou Hudson, Walt Hazzard and Bill Bridges. They are very entertaining, but nobody knows because very few attend the games. Anytime you need tix, let me know…we have great seats first row behind both benches that usually sell below face value.

  4. saltycracker says:

    “Taxing the Internet is a complicated chore.”

    From what I read, that’s not true, software is available to pay from and to anywhere in the U.S.
    I have routinely made purchases from small vendors where they use their smart phone & have detailed reports ready when they get home. A GPS sorts it out even if they move to a different farmer’s market that day. Services can pay the exact sales tax whereever to multiple agencies.

    One process being learned is beating a system perceived as unfair, on two occassions last week I was asked that if I’d pay cash they’d forget the sales tax. That’s like our labor market learning from the illegals and flying under the radar. They can work for cash and even in some cases collect unemployment and food stamps.

    The current tax code, at all levels, is a corrosive influence on our society.

    • saltycracker says:

      P.S. Legislation on top of legislation or helplessness to address variations of internet sales such as out of state sales to GA residents suggests the legislators prefer to pick their own winners and loosers. Technology will be ready when they are.

  5. CadeThacker says:

    I love how politicians spin something with taxes as corporate welfare. Rep Ramsey has an R beside his name. Maybe he should work for…oh…I don’t know…maybe smaller Gov’t?

    Person/Entity A pays not taxes
    And
    Person/Entity B pays 10% taxes.

    Thats totally not fair, so to fix it lets raise Person/Entity A’s taxes to 10%, then we all sleep better eh? State Government to the rescue!!!!

    Here is an idea! Why not drop Person/Enity B’s taxes to 0%

    Here is a crazy idea. Instead of punishing online retailers, instead why don’t you help the “local” guys by not making them pay taxes?!?

    (Oh, but then we will have to cut some other key program, can’t do that, we have a beast to feed).

    • John Konop says:

      Harry in all due respect that would not replace the revenue from the sales tax. Also cuts and investment in the infrastructure need to be well thought out. I do think like in education we can increase quality while making cuts be re-thinking how we implement education ie combining work study, higher education and 9 thru 12 more efficiently……… We can tackle isuee like healthcare by letting state employees buy drugs thru the VA a 60 percent savings…..My only point is we need to have real nuts and bolt conversations not the same old song dance from our leaders driven by political talking points over real meat……

  6. The Last Democrat in Georgia says:

    Instead of leveling the playing field by taxing internet sales and feeding the bottomless pit that is the big government monster even more, why not just level the playing field by eliminating state sales taxes for both internet and non-internet sales altogether and really staying true to the conservative philosophy to shrink government?

      • The Last Democrat in Georgia says:

        “Please explain how eliminating sales taxes completely will shrink government.”

        Uh, like, less revenue = less money to spend (burn) = less government*.

        I can’t believe that you asked to explain how eliminating taxes (a source of government revenue) will (should) shrink government. Kay, you’re a GT grad where I’m fairly certain that there should be lots of like, uh, MATH, so I shouldn’t have to explain these things to you.

        (*-Applies to state level of government only as state governments are constitutionally required to have balanced budgets and the Feds still have the virtually unlimited power to borrow until our financial system completely collapses under the weight of unfathomable amounts of government debt, see the US National Debt for more details, offer expires when the United States of America goes belly up as a legal entity)

        • GTKay says:

          Oh, I understand the math. But I also understand logic and reality, and although lopping off the sales tax-half of the general fund makes a zinger of a blog comment, it’s just not realistic. They would just hike up the income tax to make up the difference. Elect smart people (they are generally the ones not clammoring for the microphone) to work on paring down unnecessary or wasteful spending, clean up the blood, then lower taxes. It know my way sounds easy, too, but it has the greater chance of effecting change. And engineers are all about the best/cheapest/most logical way to effect change. That’s why we’re so much fun.

          • Calypso says:

            Elect smart people (they are generally the ones not clammoring for the microphone or running for office, unfortunately) to work on paring down unnecessary or wasteful spending, clean up the blood, then lower taxes.

            Fixed it for us all.

            • CobbGOPer says:

              Beat me to it, I was also going to mention that the smart people generally avoid politics like the plague.

              • GTKay says:

                That’s true, but there are many smart ones currently serving. At the risk of being accused of flattery, Buzz is one of them. He’s probably met the other ones, but no one else knows about them because they are just there doing their job – and then rushing back to the full-time job that pays the bills.

                There are a lot of really good people in all areas of our state government, elected and unelected. I’m not denying that there are a lot of stinkers, but to label them all as stupid or corrupt is just an easy dig that’s unproductive.

            • saltycracker says:

              Smart folks are among them – but the environment is so intoxicating they quickly loose sight of doing the right thing. Term limits.

  7. Jane says:

    Internet companies are the ultimate in clean commerce. The should not be taxed as long as the website is hosted in the Untied States and the last mile wharehousing of the merchandise is in the US. Otherwise it is international trade and should be regulated as such.

  8. Harry says:

    Sales tax receipts appear to be about 29% of the state 2012 budget. Income taxes (individual and corporate) appear to be about 47%. From a consideration of tax equity I’d rather see income taxes cut in half, than elimination of sales tax. Georgia could be more aggressive along with other states in getting law passed through congress to eliminate barriers to collection of tax on interstate sales. At the same time, it would be a realistic goal for elected officials to seek ways to cut 25% of the fluff and special interest gifts out of the federal and state budgets, reduce the federal deficit, and reduce Georgia income tax by 50%.

    • Calypso says:

      Harry, what you say here, “Georgia could be more aggressive along with other states in getting law passed through congress to eliminate barriers to collection of tax on interstate sales.” is key to this whole taxing of internet sales issue.

      • Harry says:

        But there should a corresponding offset – other tax reduction and not just spending it up. I am not advocating for more sales tax just to throw more money in the political furnace, but rather because the current situation is inequitable. I understand that brick and mortar retailing is no longer viable in many product lines, and the reality of that has little to do with the sales tax differential. However, it is inequitable to continue to allow this unfair advantage to out of state, and in many cases outside of the US competitors.

      • Harry says:

        The real action is in the enemy’s reaction.
        The enemy properly goaded and guided in his reaction will be your major strength
        Tactics, like organization, like life require that you move with the action.
        –Saul Alinsky

  9. jiminga says:

    The fly in the ointment is those online sales usually have shipping charges which often exceed the sales tax that would have been paid if bought from a store. Based on Ramsey’s comment, perhaps the truth lies in the shop owner’s higher prices and poor service. Adjusting both would surely make him more competitive, rather than looking to the government to to do it for him.

    Also, those shipping charges support companies like FedEx and UPS that provide a lot of jobs.

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