"Toys are going to cost more" Topic

Flying under the radar but will impact all of us.
link

Dave

Well you in the US. Our tax, VAT, is collected by the supplier, who then offsets what they pay, and pay customs the difference.

You may have noticed that from outside the EU you can get your goodies tax free.

That is, of course, assuming one hits the VAT threshold of £79.00 GBPk per year and is registered for VAT.

Otherwise there is no V added T to deduct…

I didn't realise this was flying under the radar – the Economist's reported on it a few times in recent months, and that's in the UK.

The implementation of FATCA compliance is more likely to have an effect.

Ultimately, financial institutions will be required to use enhanced due diligence procedures to identify US persons who have invested in either non-US financial accounts or non-US entities. The aim of FATCA is to restrain tax avoidance by US citizens investing offshore.

Starting in early 2014, banks, custodians, trust companies and funds outside the US will start registering as a foreign financial institution (FFI) under FATCA, which has started new processes in customer due diligence and reporting requirements which represent a complex and costly compliance task being forced upon Cayman based FFIs.

Financial Services firms outside the five partner countries (UK, Germany, France, Italy and Spain) will need to determine if they wish to continue to do business with US customers and whether they wish to continue to trade in US assets.

I gather some banks are considering it's better not to have US customers than have to comply with US rules…

Maybe I'm thick, but I don't see how the implementation of FATCA compliance will affect the price of minis for US consumers?

I am already paying PA sales tax for Old Glory, and they are the major market for my purchases.

As someone who is considering opening a very small online craft business this imbibes liquids sharply. I have always thought that if you want to see the market at work and consumers benefit you would apply sales tax based upon where the seller is, not the buyer. That way the seller only has one tax rate to remember and states could compete for the best business climate.

Edit:
After reading the bill there is an exemption for companies selling less than $1,000,000 USD so I probably will not have to worry about it except for the inevitable forms to prove that I have not sold over a mil.

I think every nation's constitution or basic core laws ought to include a provision that politicians and members of the government who have any say or decision making ability or enforcement ability regarding taxes should have to pay a rate twice what everyone else pays (at the highest level), and should not be permitted to hire or accept assistance from anyone with regards to filling out tax forms, but must do these solely on their own (or in cooperation with a spouse) AND be subjected to an automatic tax audit every 5 years.

You'd see politicians tripping over their own feet to clean up the tax mess right quick.

Yeah, this is another "The sky is falling" Henny Penny type situation, similar to the suit about reselling goods from overseas that just got resolved (without changing anything for the average online seller). Why don't we put off complaining about this stuff until AFTER it actually happens instead of assuming it WILL pass and raise miniature prices across the board?

Internet sales have sidestepped taxes for years now, and although I'd rather it didn't happen I think it was always somewhat inevitable. Time will tell whether it'll happen right now, or not…

You're probably already supposed to be reporting out of state purchases and paying "use tax" to your state, so this will just facilitate that collection.

Naz, since you live in NC as I do (and some other
TMP'ers), do you really feel that Internet sales have
sidestepped sales tax, at least here in NC ?

I mean, here in our State, part of the income tax form
has an area to calculate 'estimated' out-of-state
purchases (including on the internet) based upon
your Federal gross, on which you then pay tax on the
form.

Usually not a lot of money, but annoying.

How about a new law establishing hobby shops that sell miniatures in each county of the US? I live a VERY long way from any such store. So I buy my miniatures online, or not at all. I'm sure I'm not alone. At least I'm not the only one in this kind of situation.

Sure that's there, Ed, but how many people keep track of online purchases, or are truthful about them if they do? I would say not many since it is up to the individual… hence, sidestepping the taxes.

I kind of agree with Nazrat in that it's way too early to get worked up about this as the details don't always translate into action at the end. Having said that, however, internet shopping taxes in the U.S. are coming at some point. The government needs new sources of revenue(cutting spending is never really considered) and at some point both sides will agree to something small to get started that will then escalate.

That is bad, but the devaluation of the dollar, due to the Fed printing bills as fast as they can, is far worse than the taxes on them.

Okay, here's the thing that brick and mortar suppliers don't want to hear – it's not the sales tax. It's that most retail shopping is often an unpleasant exercise in futility, and always has been. Store purchases in the 20th century were made in a "fog-of-war" environment, where you simply did not know if a competitor would have an item for cheaper, or even at all. Catalog purchases took 6-8 weeks when things were going well, with no status updates of any kind. Jeff Bezos made all of that go away when you deal with his company and became a tycoon when many (including me) figured he'd crash and burn when the dot-com bubble burst. This is because he understands that customer service is more than profuse apologies when you screw up.

Here's the thing the states don't want to hear – this won't mitigate your money problems. Those stem from utter failure to understand (or at least act upon) some basic financial principles, like that it's best to fund pension plans when you start them instead of out of the operating budget 30 years later, or that taking in more money than you spent for a change isn't a "surplus" or perpetual.

It would make a lot more sense, and be easier, as someone already pointed out, if the tax was based on where the seller was, not the buyer. Of course, then businesses in crazy high local tax jurisdictions would cry since someone in Nevada, Delaware, or Montana, where they don't have sales tax, would be making more sales.

Yep, that'd add another nail in the coffin to the California and New York businesses, amongst other states with the highest taxes in the nation.

Would serve them right though, and might give them an incentive to be a little more realistic.

State taxes are for police, firefighters, state employee salaries and pensions. Why should people in Virginia contribute to California infrastructure and local services? Especially as Virginians have no say on how California spends its tax revenues or on how those tax rates are determined. Monumentally bad idea.

Besides, contrary to the anecdotal evidence, online sales are less than 5% of purchases in dollars.

It would actually make more sense to have what's called an origins based system where if you're a Virginian you pay Virginia tax on online purchases. This way you're not subject to tax authorities from another state. Do you really want California tax authorities coming after you in the event of a dispute?

This will cause more offshoring as businesses try to create better value for their customers.

I always love how they assume that once the legislation is enacted, buying habits will remain exactly the same and worse that they count on this calculated revenue stream to increase their already redundant programs.

Eggheads

DM

>>>After reading the bill there is an exemption for companies selling less than $1,000,000 USD

That will change. Before we know it the number will be "less than $10,000 USD" if recent history is any indication.

DM

Seems simple in theory to tax at the buyers' location rate, but isn't, since it's frequently a different rate for every county (not just the state), and/or city, within a county, or state. In some cases, you get a tax for both the county and/or state, and then a surtax for the local city too.

So, small businesses will suffer accordingly, since they'll need some, if not all of the following, if this occurs: an expensive tax software and shopping cart system; an automatic way to transfer the appropriate payments to those 1,000+ counties/cities, every month; a CPA to oversee the process; a computer programmer to make sure all the changes in tax rates, as they occur, are kept up to date; and a tax lawyer to ensure they are up to date on the changes to the laws, and to respond to, and/or fight lawsuits, when they don't get it right.

As DM mentions, the level at which this applies will no doubt drop, soon after the change is implemented, just like the politicians recently exempted themselves again from "insider trading laws", shortly after making a big show of putting them in place (lasted about six months, if I recall correctly, and was secretly done away with in just the last week or two, with no publicity, or explanation at all).

This also seems to be right near the level of reporting in the recent law changes, for dealing with suppliers. There was a new law enacted, that requires reporting of any supplier that companies do $1,000 USD, or more in business with annually.

I think the latter may have been given a grace period, or temporarily waived, but it is on the books, so will be coming soon, if it doesn't still apply now.

Can you imagine the headache for reporting that, if you deal with multiple, small suppliers, and are one yourself.

Large corporations love this stuff, and pay lobbyists to help back this legislation, since they have the personnel and ability to pass the costs on to the their customers.

Small companies don't, which is why the small business startups are so weak during the current "recovery". This is the weakest recovery since either The Great Depression, or even back into the 1800's. I've heard both claimed, but haven't independently verified that.

Given unemployment rates and the increasing number of people having to rely on food stamps though, it sounds accurate to me.

Small businesses are: literally choking on new regulations, are too scared to start up a business due to possible new ones coming down the pike, can't afford to start up a business due to the new health care laws, and/or can't get financing due to the new regs issued by the government.

No matter to me, I never order anything on-line. I am not giving one ounce of personal information to anyone, and CERTAINLY not credit card numbers.

Even when on the phone when someone calls and says

Me "Hello."
Them "Mr. Schmidt?"
Me " I'm sorry I can neither confirm nor deny that the person you are talking to is Mr. Schmidt, or if such a person has existed in the past, does exist now, or will at some point in the future exists."
Them "Oh-- Is this XXX-YYY-ZZZZ?"
Me "I'm osrry I can neither confirm nor deny that the sequence of digits you have spoken is a phone number, that you have reached that phone number, or that that phone number has existed in the past, exists now, or will exist in the future."
Them "But our records show that we have Mr. Schmidt at that number. "
Me: "I'm sorry I can verify the accuracy of your phone records as they exist now, have existed in the past or will exist in the future.
Them: "Well then who am I talking to?!"
Me" I'm sorry, I can neither confirm nor deny that this conversation is taking place, or that the entities indicated by the words "Who" and "I" exist, have existed or might at some point in the future exist."

and so on and on and on.

Sometimes I've been able to keep them on the phone for an hour the end high-lighted by tears of frustration on their part.

Don't believe in e-commerce.

Right. Well, now that we've gotten that 0.005% of the buying population covered, let's get back to the real deal.

This bill is fraught with problems. For one, it's not a "state's rights" issue, as some are claiming (pointing to the 10th Amendment), but an "interstate commerce clause," issue, which was fundamental to why the Constitution was created in the first place— the question of state tariffs on goods imported from other states, which had a horrible effect on the nascent USA's economy. And that's still the problem today, because not all states have sales tax and the sales taxes differ among the states and within the states. So the bill penalizes businesses in no sales tax states (I believe Vermont is one) and muddles up the accounting process for businesses in every other state.

Also, who is going to do the collecting, and how? Are states going to sue businesses in other states in federal court in order to gain sales taxes if the business in question refuses to pay or simply mis-collects? Do we really want to add that expense and case load to our federal court system? Or are we going to have to foot the bill at the federal level for an over-arching federal agency to administer and collect the various sales taxes and then redistribute them to the states? That sounds like both a horribly expensive proposition, as well as potentially direct intrusion by the federal government into a state's internal business climate and economy— and that *would be* a state's rights issue.

I see the point of it all— that Internet sales hurt local sales because of the tax difference— but this is a can of "unintended consequences" worms that I don't think anyone has really thought through, and the rush to pass it is a very, very bad sign. I don't trust any bill that anybody wants to "hurry through the process," no matter which party is behind it. If you're in a hurry, it's because you know there's something wrong with it, or something most people won't like.

"Also, who is going to do the collecting, and how?".

That one's an easy softball. Please try harder in the future, when posing questions.

The IRS of course!

They're adding extra agents to enforce healthcare, so pretty easy to just add more on top of that, for this as well.

Minor correction to the above, e.g. 10,000 different entities to deal with, and send tax payments to, not just a few thousand.

Didn't want to oversell it before, but apparently that is the current estimate of state, local, and city entities companies will have to deal with, if the law is changed.

By the way, to correct the record I had the wrong twin of the yin-yang states. It's New Hampshire that has no state sales tax. My apologies to any states or citizens of the same that were appalled at my error. Put it down to Southern ignorance of Yankee affairs. Either way, mail order maple syrup ain't oughta be taxed no more than it already is. That stuff is pricey! (But dang good on some Southern buttermilk pancakes with a side of buttered grits… Mmmmm.)