It doesn’t matter where the customer lives in determining who pays the sales tax and who doesn’t pay the sales tax. The determining factor is where the business is located. Californians, Arizonans, Floridians, New Yorkers, Koreans, Canadians, Germans….it doesn’t matter. The store is located in Nevada, so anyone who makes a purchase in that store pays the Nevada sales tax.
Now, when a Nevadan travels out-of-state and, say, shops at a Wal-Mart in Utah, he or she pays the Utah sales tax because the store is located in Utah. The Nevadan doesn’t pay Nevada’s sales tax just because he or she lives in Nevada…which makes perfect sense.
But the Retail Association of Nevada (RAN) wants to change this, at least when it comes to e-commerce.
According to RAN’s recently-announced high-priced PR/lobbying campaign, if a Nevadan purchases a product online from a business located in another state, that business would be required to charge you the Nevada sales tax and remit it to the state. This is part of a multi-state effort to get around a pre-Internet 1992 Supreme Court ruling that mail-order companies do not have to collect sales taxes from out-of-state customers.
So intent is the government on taxing the Internet, they are twisting the Supreme Court decision and declaring that a company is considered located in a particular state even if all the company has is a warehouse there – like Amazon.com has in Fernley, Nevada.
But even that nebulous connection isn’t enough to satisfy the hunger of the tax eaters.
Many ‘net taxers are now claiming it’s not even necessary to have a physical distribution center or warehouse in a state to force the company to collect sales taxes from out-of-state customers; that if the company has an “economic nexus” – something as ridiculously benign as running a radio commercial or newspaper ad in the state! – then they have to collect and remit that state’s sales tax.
And make no mistake: Amazon.com and other e-commerce companies won’t be paying this Nevada sales tax if RAN gets their way….YOU WILL! Make no mistake; this is a tax increase on YOU.
For now RAN and its members only want you to cough up the sales tax for purchases made online from an out-of-state business. But how long will it be before everything you, as a Nevadan, buy out of state – even while on vacation – is charged the Nevada sales tax?
For Nevada to force Amazon.com to collect the Nevada sales tax on purchases a Nevadan makes from their business in Seattle is NO DIFFERENT from forcing Disneyland to collect the Nevada sales tax on purchases a Nevadan makes in its gift shop in Anaheim.
Bottom line: If this RAN bill passes, you’ll start paying taxes you’re not paying now. It’s a tax hike. It’s a tax hike. It’s a tax hike! And it’s nothing more than an effort by Nevada brick-and-mortar stores to screw their out-of-state online competitors – and YOU’RE the one who’s going to get stuck paying the price.
This is so wrong on so many levels, it ain’t even funny – and we haven’t even gotten to the constitutional issues yet!
The Retail Association of Nevada has convinced legislators that this is an issue of “fairness.” It’s no such thing. Not if you’re the poor consumer who will suddenly be forced to pay sales taxes on out-of-state purchases. And not if you’re the out-of-state company that will suddenly be forced to do the government’s dirty work in collecting a tax Nevadans shouldn’t have to pay in the first place.
RAN has sold this to legislators as “found” money; a way to suck more dough out of your wallet without it being called a tax hike. And legislators have bought it. But it IS a tax hike. And $50,000 worth of PR propaganda won’t change that fact.
(Mr. Muth is president of Citizen Outreach and publisher of Nevada News & Views.)