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Another sign our revenue system needs modernizing

Yesterday a U.S. District Court in Seattle handed down a decision that Amazon.com does not have to turn over information of sales to the Department of Revenue.  The Department of Revenue had been seeking more detailed information about who purchases on-line so that they can collect sales tax on those purchases.  This is a messy work-around necessary because of an antiquated revenue system;  one that no longer keeps pace with economic growth or is capable of capturing where transactions are increasingly likely to occur, that is, on-line.

There are a whole host of reasons that North Carolina should want to see this changed.  It provides on-line retailers with a competitive advantage over Main Street businesses.  It requires those with the least ability to pay to commit more of their income to the purchase of goods.  It reduces the resources available for the public structures that support on-line AND brick-and-mortar business in the state.

The best opportunity to require on-line and remote retailers to collect sales tax would be through passage of the Main Street Fairness Act. A bill that N.C.’s federal delegation should support.  But this case also is emblematic of just how badly our state needs to modernize its revenue collection. North Carolina policymakers must take up comprehensive revenue reform if the state is to ensure it can continue to collect revenues that support economic growth.

11 Comments

  1. Katherine Jackson

    October 27, 2010 at 11:17 am

    What an idiotic article! I live in North Carolina (please feel free to move here and pay our already ridiculous taxes) and one of the things the stater is asking for is a list of the materials — books, music, etc. — purchased by its customers. It’s an invasion of our privacy, that even the ACLU recognizes. But you just want us to pay more taxes to a government that has misused and abused tax collections in the past, diverting money to pet projects and leaving so many good programs bankrupt while they build bridges to nowhere.

    Tell you what, Ms. Sirota, you pay my share. Between the escalating property taxes, an average electric bill of more than $400 a month, sky-high insurance and a state income tax that is one of the highest in the nation, I don’t have enough left to fix my car when it breaks down.

    The voters here are fed up — we want them out. In two years we’ll send Beverly Purdue and her crowd your way…let us know where you want them delivered. Oh, and please feel free to post a list of all of the books, etc., you’ve purchased on Amazon.

    This is possibly the dumbest post I’ve ever read.

  2. Katherine Jackson

    October 27, 2010 at 11:20 am

    Oh, and if you do live in North Carolina, then I have to note that uninformed people like you are the reason for the high taxes and ridiculous mess that Easly and now Purdue have gotten us into.

    I don’t know a single person who’d vote for that crowd. Not one.

  3. […] This post was mentioned on Twitter by Drinking Liberally, Drinking Liberally. Drinking Liberally said: For your consideration: The Main Street Fairness Act, equalizing NC sales taxes on internet and actual store purchases. http://ow.ly/30gO2 […]

  4. Ed McLenaghan

    October 27, 2010 at 12:40 pm

    Fact: North Carolina tax revenues are well below the national average. In fact, as a percentage of residents’ income, North Carolina ranks 33rd nationally in tax revenues (34th if you include non-tax revenue).

    http://www.census.gov/govs/estimate/
    (requires data analysis)

  5. Stephen

    October 27, 2010 at 3:13 pm

    Katherine Jackson: “I don’t know a single person who’d vote for that crowd. Not one.”

    That says more about who you hang out with than it does about the state of politics in NC. Get a life!

  6. ES

    October 27, 2010 at 3:24 pm

    Katherine: Please educate yourself on the entire tax-revenue system before leaping to emotional conclusions that are unfounded and overly-personalized.
    The author is asking that our tax system be updated so that all taxes are collected properly, and more fairly. We do not want online retailers to have the ability to side-step sales tax while struggling small business owners on Main Street are held accountable.
    In order that we bring ourselves out of a deficit and not cut vital infrastructure (such as public education, water, sewer, and road maintainable – of which I am certain you take advantage of at least one), we must create a more fair revenue system that does not over-tax those who are already struggling to pay taxes (such as yourself).
    Thank you for the article, Ms. Sirota.

  7. ES

    October 27, 2010 at 3:25 pm

    * maintenance

  8. north state politics

    October 27, 2010 at 4:36 pm

    It is unfair to local business owners that Amazon doesn’t have to pay taxes on sales in North Carolina when North Carolina based businesses do (too bad the NC Chamber of Commerce doesn’t work to help small businesses in the state with this). Taxes in NC are, as stated, well below the national average. What we do need is to reform or modernize the system to reflect today’s economy instead of the agricultural and manufacturing economy of the past.
    And if your taxes are so high that you cannot afford to fix your car, I suggest you support a progressive tax system where the rich pay a larger portion of their income than they currently do so the middle class can get some tax relief.
    That’s how it works Katherine.

  9. James

    October 28, 2010 at 9:28 pm

    Ms. Sirota, how much higher should taxes go: 5%, 10%, 20%? If any of those amounts is enough, couldn’t even more be done if the state had a bit more? The truth is that there are political leaders and bureaucrats that will never have enough tax money no matter how much they get it. How about this. Local, state, and national governments unite and agree upon a 100% tax rate. It could be only collected once. People would quit work since they would have no incentive to support themselves and thus become dependents of the state.

  10. IBXer

    October 29, 2010 at 11:54 am

    Ed, the facts you are using here are pretty useless. Okay, so NC is 33 in revenue collected. That doesn’t tell you very much about the level of taxation, though. States with higher populations (i.e. more people to tax) could collect much more revenue with low taxes than a small state with limited population would collect even with high taxes.

    For example, California raked in the most revenue in the data you linked in general revenue whereas Wyoming was at the bottom. But that tells you nothing about the tax rates in each of those two states.

    In NC, when compared to other states, income, gas, and alcohol taxes stand out as high. Corporate taxes are also high in NC which have a cascading affect (i.e. those taxes are passed on to consumers).

    With regard to how tax rates affect the business climate, NC is considered the 9th worst state in the nation to conduct business and is the only state in the south that scores so poorly.

    http://www.taxfoundation.org/taxdata/show/25267.html

  11. Beatrice V

    November 10, 2010 at 3:49 pm

    I agree with the article and the proposed legislation. This is not a new tax. The Main Street Fairness Act is simply modernizing the law to catch up with the reality that so much shopping is now done online. If sales tax is charged in a state, the consumer is already responsible for reporting and paying that tax. Understandably though, many consumers don’t keep track of every purchase and report them. It makes more sense for the seller to collect the tax, just as a bricks-and-mortar store does. Technology makes is easy for anyone to open a Web business, manage inventories, use target marketing, calculate shipping etc. Technology has solved this problem also. There are services available that comply with the Streamlined Sales Tax agreement, at no cost to the merchants.
    It is better that Congress address this issue so that all businesses collect the correct tax. Until then, more and more states are going to be attempting on their own to collect these taxes, which will 1) raise privacy concerns and 2) raise more fairness issues since not all consumers will be contacted to pay up.