Petition against new Supreme Court Internet Sales Tax decision that will affect ALL products.

[Vinnybagodoughnuts]

Maybe but I really feel more like a father of 1000. Everytime I turn around someone has their hand in my pocket.

 

[ScottP]

I've been using an income tax generator similar to that one but simpler. And agreed, it's not quite that complex. I just hope the info I'm getting is CORRECT. I've been told before that being paid as a contractor, you give up 50% of your income, and that does not appear to be correct, to ME (I've never been a contractor before and it's a higher rate but not 50% unless my calculations are drastically impaired.) But figuring out my Federal, state and county taxes was relatively simple and I'm new to the game. Believe me, I will be double and triple checking my findings, but calculating taxes is not that crazy hard, or so it seems to me.

That 50% quote is not just based on salary but on a total compensation package. First you will pay essentially double the FICA and Medicare taxes (as Myk mentioned), also a contractor will be responsible for their own health insurance which will cost more. Contractors do not get paid time off so that is 2 to 5 weeks worth of pay. Employees can also sometimes get 401k matching that a contractor can't get. Finally some states may require (or at least offer) Worker's Comp insurance on top of everything else. Is it REALLY 50%, probably not, but it is a good chunk of money and it might come close to 50% to get comparable benefits.

What that quote doesn't take into account is that quite often contractors are paid more than an employee doing the same job might get paid. This is because the company paying the contractor knows even with the higher wage, they are saving money by not having to pay those other costs. This makes up a good bit of the difference. So the employee makes less cash but has less expenses while the contractor makes more cash but also has more expenses. In the end I think the TOTAL compensation will end up fairly close either way.

 

[CMD-Ky]

I've been using an income tax generator similar to that one but simpler. And agreed, it's not quite that complex. I just hope the info I'm getting is CORRECT. I've been told before that being paid as a contractor, you give up 50% of your income, and that does not appear to be correct, to ME (I've never been a contractor before and it's a higher rate but not 50% unless my calculations are drastically impaired.) But figuring out my Federal, state and county taxes was relatively simple and I'm new to the game. Believe me, I will be double and triple checking my findings, but calculating taxes is not that crazy hard, or so it seems to me.

Vendors could do it. People could do it. Etc.

Anna

When I ran my own office, each year overhead took about 50% of earnings. The overhead was everything from stationary, to taxes, to libraries, to utilities, to office help and equipment, insurance and then some. It seemed as though everybody in central Kentucky and Washington got to eat at my trough before I got a nibble.

But it still beat working for someone else.

 

[ScottP]

When I ran my own office, each year overhead took about 50% of earnings. The overhead was everything from stationary, to taxes, to libraries, to utilities, to office help and equipment, insurance and then some. It seemed as though everybody in central Kentucky and Washington got to eat at my trough before I got a nibble.

But it still beat working for someone else.

Yes if you have to maintain a home office your costs are going to go up. You do get tax breaks though to help offset that some.

 

[Rossum]

That 50% quote is not just based on salary but on a total compensation package. First you will pay essentially double the FICA and Medicare taxes (as Myk mentioned), also a contractor will be responsible for their own health insurance which will cost more. Contractors do not get paid time off so that is 2 to 5 weeks worth of pay. Employees can also sometimes get 401k matching that a contractor can't get. Finally some states may require (or at least offer) Worker's Comp insurance on top of everything else. Is it REALLY 50%, probably not, but it is a good chunk of money and it might come close to 50% to get comparable benefits.

What that quote doesn't take into account is that quite often contractors are paid more than an employee doing the same job might get paid. This is because the company paying the contractor knows even with the higher wage, they are saving money by not having to pay those other costs. This makes up a good bit of the difference. So the employee makes less cash but has less expenses while the contractor makes more cash but also has more expenses. In the end I think the TOTAL compensation will end up fairly close either way.

That, plus the fact that as an independent contractor, you're likely to have down-time between gigs. Thus the rule of thumb has always been: Shoot for double the hourly rate you would make at a normal, full-time job that has benefits.

 

[Rossum]

My solution is I won't sell outside of where I have a physical presence.

Depending on the nature of one's business, that may or may not be an option. As an example, take a vape shop that does most of its business face-to-face, but does have some on-line presence. They would be a prime candidate for such a strategy, i.e. not shipping anything out-of-state (with the possible exception of the 5 states that don't have a Sales tax).

But for my (not vape-related) business, that's not an option. I have essentially zero face-to-face transactions and my customers are all over the globe. About half my revenues are exports, and that side is mostly wholesale to resellers overseas. However, the domestic side is mostly direct sales to end-users. If I refused to sell to anyone in the US except in my home state (and the 5 states that don't have a Sales tax) I'd lose ~80% of my domestic business, which would be unacceptable. So some sort of alternative will have to be found and implemented.

And yes, there are many jurisdictions and NO I am NOT advocating for this in any manner. I just don't think it would be impossible to figure out and honestly I would expect the government (if they had any sense, they don't so they probably wouldn't) to provide such a list to vendors. But they probably WOULDN'T. It would be a complicated and time consuming START up and each year, possibly, as the tax code changed (and I also assume that municipality and towns can change their tax code at any time.)

I don't think it will be impossible either. One alternative is to sell through someone like Amazon and let them worry about dealing with the taxes. I think they take about a 15% cut when you do that; not great, but not totally unacceptable either. Another alternative (and the one I'm probably going to pursue) is to use a service like the one that has the map I linked to a few posts back. They have software that hooks into many e-commerce platforms (including the one my business uses) that talks to their own database and looks up the correct tax rate in real-time and applies it at the time the order is placed. But more importantly, they also handle filing and remittance with all those jurisdictions on your behalf. I don't yet know what they charge for this service, but I don't imagine it's more than a percent or two of the gross, which although it rubs me the wrong way, is a tolerable cost of doing business, much like the 2-3% one gives up by taking credit cards or PayPal.

 

[CMD-Ky]

Yes if you have to maintain a home office your costs are going to go up. You do get tax breaks though to help offset that some.

If you don't have a home office but rather rent or own (clients in the home in my business would not have been desirable), Katie bar the door.

 

[Myk]

Depending on the nature of one's business, that may or may not be an option. As an example, take a vape shop that does most of its business face-to-face, but does have some on-line presence. They would be a prime candidate for such a strategy, i.e. not shipping anything out-of-state (with the possible exception of the 5 states that don't have a Sales tax).

But for my (not vape-related) business, that's not an option. I have essentially zero face-to-face transactions and my customers are all over the globe. About half my revenues are exports, and that side is mostly wholesale to resellers overseas. However, the domestic side is mostly direct sales to end-users. If I refused to sell to anyone in the US except in my home state (and the 5 states that don't have a Sales tax) I'd lose ~80% of my domestic business, which would be unacceptable. So some sort of alternative will have to be found and implemented.

I certainly wasn't suggesting my way as a solution for all. Just my solution.

My solution for all is that if it's OK to charge taxes across state lines that's a double edged sword that cuts both ways. It's much simpler for the point of sale be the determining factor for the tax rate and which state receives it.

But of course a state like IL won't like that because all the mail order businesses will find a no sales tax state to move to.

 

[Rossum]

If you don't have a home office but rather rent or own (clients in the home in my business would not have been desirable), Katie bar the door.

Yes indeed. I started my business in my house. For the first two years, it was just me, them me and my wife. That was fine. Then we hired a guy to help out with tech support on the phone. That was still OK. But by the fourth year, I had five people showing up for work at 9:00 every morning and my wife put her foot down....

 

[Myk]

But by the fourth year, I had five people showing up for work at 9:00 every morning and my wife put her foot down....

Hope she didn't step on anyone and cause a comp claim.
I can barely fit me working at home.

 

[stols001]

Well it appears that I won't have to deal with being a contractor and quite frankly doing the calculations I will make approximately 30% MORE not to mention the benefits are non Arizonian and hence, sane. LOL.

I considered a home business, two words: Credentialing with insurance companies. Oh if it was for SOMEONE ELSE, I could probably do it in two weeks, but I don't work well for ME. That's probably some apocryphal or archetypal issue or something, but it remains a fact. My self care skills have improved, but the only way I'd be a TRUE self-success would be if I had muti-personality disorder or something. Plus the husband forbade the home office idea, he somehow thinks that people with Issues are "dangerous."

He married a "Chick with Issues," so I don't quite get all that. I'm just glad that I investigated a BUNCH and being a recruiter who tried to HIDE such issues in NO WAY made the recruiter's cred go up.

Seriously at one point I was correcting the dude who FINALLY gave me the "benefits plan." He said it was BCBS, and when I read it, it was United Health. I died a little inside but I was also like, "Any company who hired THIS TWIT as a recruiter is NOT a company I want doing a level 6 clearance on me." I mean I get they outsource it BUT ALSO,

I'd have wound up in jail for someone else's charge and with actions on my license. And the last thing you want is actions on your license. You really don't.

LOL, I'll be making a better overall wage, with compensation. It works for me etc.

Anna

 

[Myk]

Plus the husband forbade the home office idea

IL taxes are such that even if you don't deduct a home office on your federal taxes you have to figure your IL taxes as if you did (take the time to figure up the deduction you didn't take to subtract that from your business costs to pay the state more money) if you were allowed the deduction.
I would forbid on those grounds if the state is as bad as IL.

 

[Rossum]

I would forbid on those grounds if the state is as bad as IL.

Relatively few states are.

 

[Philabos]

If Internet Sales Tax is going to be Collected, it would seem like the Most Realistic would be for each State to have a Single, Fixed Rate. This Rate would Not Exceed the Highest Sales Tax Rate inside an Individual State. And could be Revised on a Annual Basis.
.

I agree. This would greatly simplify the issue.
Sadly, we are dealing with government taxing authorities that would prefer you just go out of business rather than miss out on a dime. No state government is about to simplify where the state would receive the revenue but cut out the many chirping mouths beneath the state level.

You are also quite correct about Congress. The big guys would also prefer to see the smaller outfits driven out of the market or be forced only to sell only through the online mega retailers.

 

[zoiDman]

I agree. This would greatly simplify the issue.
Sadly, we are dealing with government taxing authorities that would prefer you just go out of business rather than miss out on a dime. No state government is about to simplify where the state would receive the revenue but cut out the many chirping mouths beneath the state level.

You are also quite correct about Congress. The big guys would also prefer to see the smaller outfits driven out of the market or be forced only to sell only through the online mega retailers.

Seems like Congress spends a LOT of Time arguing over the 10% they Don't Agree with in a Bill. Then Passing Bills that just Include the 90% that they Do Agree with.

News Flash: Write Narrow Legislation.

But this is Probably starting to Teeter on an OUTSIDE Topic. So I'll just say that and step away.

 

[Chodi]

As someone who does not live in the US I would point out that most countries do charge a VAT tax on internet sales. The amount varies by country but in general is at least 8% and in some countries far more. The US states were losing so much revenue from retail sales that they had to do something to recover this. It is part of the changing buying habits in favor of online sales. This decision in the US was inevitable in my humble opinion.

 

[Myk]

As someone who does not live in the US I would point out that most countries do charge a VAT tax on internet sales. The amount varies by country but in general is at least 8% and in some countries far more. The US states were losing so much revenue from retail sales that they had to do something to recover this. It is part of the changing buying habits in favor of online sales. This decision in the US was inevitable in my humble opinion.

Most countries are equal to one of our states is how we are supposed to be. Louisiana = France, USA = EU. Our states have always taxed in state mail order. That is allowed.

The states were "losing" nothing. That assumes they have something to lose before they have it, namely my money. I am not a subject owned by the government.
What the states have lost is businesses by taxing them so much they've left the state.

SCOTUS isn't supposed to make decisions according to what the states want or changing sales habits. They make decisions based on the Constitution.
Amend the Constitution don't ignore it.
"No Tax or Duty shall be laid on Articles exported from any State."

 

[Chodi]

You will notice it was mostly the Blue States that were pushing the hardest for this tax. They can't continue giving away free stuff to their poorest citizens and illegals without massive cost. If the Democrats elect a slate of Socialists in the fall then this will get much worse. I feel your pain. I have been an expat American for over 20 years and I am sickened by what I see on the news.

 

[Myk]

You will notice it was mostly the Blue States that were pushing the hardest for this tax. They can't continue giving away free stuff to their poorest citizens and illegals without massive cost. If the Democrats elect a slate of Socialists in the fall then this will get much worse. I feel your pain. I have been an expat American for over 20 years and I am sickened by what I see on the news.

At least a law would probably have a possible way of following it.
SCOTUS making an unconstitutional rewrite of the Constitution saying I have to keep track of 10,000 taxing bodies' laws is not possible.

The reason states like IL want it is because they're chased all the businesses away. It's not all the free stuff, it's the corruption. Chicago being centrally located should have us as the biggest internet sales hub who attracts new businesses with ease. Yet they go anywhere else.
If we had those businesses we could afford the free stuff.

 

[untar]

May I ask why this is perceived as a (D) push?
I'm not an expat, don't live or vote in the US and don't have a preferred party there. Just asking because states didn't have a say in the SC decision, SC is (R) appointed majority, the state that brought the relevant lawsuit is South Dakota which I believe is a so called "red state".
Trump himself declared it

Big victory for fairness and for our country. Great victory for consumers and retailers.

Somewhat unrelated, B&M retail where I live is awful, mostly due to the employees whose main qualification seems to be to know how to operate a cash register and that's it. They don't refrain from constantly wanting to give me "help and advice", blatantly showing how little they now while at the same time getting butthurt when I don't want to follow their suggestions, to the point where I get angry and leave.

Might as well not drive around for 1h for that experience and just order online what I want. I'd probably still order online if it was a few bucks more than B&M (which it already is for some things if you don't make big orders).
If retailers want my business they should have competent personnel. The few shops I still go to have great employees with a passion for what they're selling so somehow they didn't lose out vs internet retailers...