And you thought $120 a barrel was bad

By Jeff Quinn
Special to the Bonanza
May 2, 2008

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Get ready for the “tax the hell out of the Internet” era.

And from where else, but the great state of New York (home, if you believe in fairy tales, of one Hillary Rodham Clinton). And can Elliot Spitzer be far behind? Indeed, he had been pushing this for many moons.

Seems that the New York budget has been suffering, recently. (Heard that before? Like from right here in Nevada?)

Anyway, in the never ending search for stuff to tax, the New York legislators recently approved a bill which would require online retailers to begin collecting sales taxes on shipments to the state of New York, even though they may have no physical operations or employees working there!

For a while, now, it has generally been the case that “E-tailers,” like Amazon.com, for one, who may have had no particular “brick and mortar” situs in a particular state, were not obligated to collect sales tax on orders shipped there — to the great dismay of “physical presence” competitors who sensed a discernible competitive disadvantage, as a result. You walk into Joe Sixpack’s shop and buy a widget; you pay sales tax. You order the same thingamajig via internet, and pay eight or nine percent less, because the Governor doesn’t get a cut. That’s the way it works — unless New York gets its way. And can California and other moneygrubbing jurisdictions be far behind? Indeed Nevada is surely watching developments here.
We hear that New York expects any new rule such as this will generate $50 million in revenue per annum. Fixes a lot of potholes.

And while we're on the subject, that economist of note, Barak Obama (who’s also seeking the presidency of this great nation) might want to check out a few facts published by the Congressional Budget Office (and others) as reported, recently, by Credit Suisse, before pontificating further about how much he would like to raise the capital gains tax rate and/or the Social Security/Medicare tax rate for that matter.
For instance, a graph published by CS, depicting tax revenue in this country, as a share of gross domestic product over the last 40 years or so clearly shows a high point in 2001 (beginning the “Era of Dubya”' and his tax cuts) of nearly 30 percent, eclipsing only the early ‘80s — Reagan was in charge and tax rates plummeted. The ratio then was call it 28 percent. Contrast these years to the Carter era, when the ratio hovered in the 26 percent neighborhood and the tax rates were at stratospheric levels, as some of you greybeards out there might recall.

Memo to Barack: check your history book, sonny, before notifying all of us how your “audacity” plans will enhance the economic picture.

CONSULT YOUR TAX ADVISER - This article contains general information about various tax matters. You should consult your CPA regarding the implications to your own particular situation.
Jeff Quinn, the author of this article, is a shareholder in Ashley Quinn, CPAs and Consultants, Ltd., with offices in Incline Village and Reno. He is also a contributor to the recently published eleventh edition of Tax Savvy for Small Business, published by Nolo. He can be reached at 831-7288, and welcomes comments at jquinn@ashleyquinncpas.com.